The Economist has quadrupled its subscription profits in four years and in 2017, the circulation business was the single-largest contributor to the group’s profits for the first time in its 174 year history.
That growth has been driven by targeted marketing activity designed to find subscribers willing to pay for the publication’s content, says Steve Lok, Head of Marketing Tech & Ops at The Economist.
Speaking at ADMA Data Day in Sydney earlier this week, Lok said the company decided to focus on growing its subscription revenue when faced with declining ad revenue across the publishing industry.
“We used to be advertising driven like most publications. Quadrupling the profits is great, but really at the base of it is that we’ve now switched over to, at this point, I think about 70 per cent subscription revenue versus ad revenue,” Lok said.
Between 2014 and 2017 the subscription drive caused a seismic shift in the company’s revenue base and those subscription dollars are enough to cover production of the magazine, Lok said.
Despite the growth in subscriber profit 2017 was still a “painful” one for The Economist, operating profit was down 11 per cent even though revenue was up 7 per cent, according to the company’s annual report.
Over that time Lok’s martech budget also increased by a factor of 13 and delivering tangible results has given the marketing department a seat at the executive table.
“The success of this circulation strategy has encouraged the board to increase the newspaper’s marketing budget for the next few years,” Economist Chairman, Rupert Pennant-Rea wrote in The Economist Group 2017 Annual Report.
“We have shown that we can drive actual revenue very quickly,” Lok said. “Completely measurably these days, by being data centric and by using technologies that push that forward. We have a big say of how the company moves now.”
Lok, who was the first technologist to be embedded in The Economist’s marketing team, said research shows The Economist has 73 million English speaking prospects around the world. The company now relies on models to choosing which ones to target.
“The problem is that these days is we’re not going just after the same customer,” Lok said.
There’s no need to market to the 45 to 50-year-old male sitting in the c-suite who wants the economist on his desk because “the content sells itself.”
Similarly there are people who’ll continue to refresh their cookies to access the content online for free and are never going to buy a subscription to The Economist.
“They’re totally happy with a free product, so why waste money on them?” Lok asked.
One new demographic the publication is targeting are millennials, with the help of Snapchat and Instagram.
Using its customer data platform The Economist ran a multi-channel campaign, targeting university students who had a high propensity to actually buy something. 35 per cent of them converted, Lok said.
“The Economist is actually on Snapchat, and the thing is, Snapchat works. It doesn’t make any sense to me, from a sort of intrinsic level, but my god, it works. The advertising, it is fantastic, embedded inside the stories as much similar stuff we to as Instagram stories.”
Lok argued targeting modelled audiences is highly effective and outperforms traditional methods in terms of return on ad spend.
“What was really key was that we only pushed the campaigns out to people that we would model out who had a high propensity to actually buy something.”