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Plus Report - By Thomas Baekdal - January 2011

Converting Traffic to Subscribers

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Avinash Kaushik
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You reach out to your readers by embracing a multi-channel strategy. Connect with them by embracing the link, and by demonstrating your value on things that matter to them

The big question every media company is asking themselves is: "How much of our traffic can we convert into paying subscribers?"

I, too, asked this question when I was planning Baekdal Plus. Could this be a viable business model, or would people just go away and never return? We have all seen the catastrophic effect it had on Murdoch's Times of London. And conversion rates for other newspapers haven't been that impressive either.

No doubt it is exceptionally hard to get people to pay for content.

One big problem is that media companies apply traditional conversion metrics to their online audience. Murdoch believed that he could convert 5% of his visitors. It turned out that the number was much closer to 0.5%. Gigaom has a 0.3% conversion rate and Financial Times has a 1.7% conversion rate.

So, in this article I am going to illustrate how much of your online audience you are likely to convert, based on the calculations I made before launching Baekdal Plus.

One Million Readers is not your real audience...

Let us start with a nice round number-like one million absolute unique visitors. How many of those will turn into subscribers?

The first thing you need to do is to look at "visitor loyalty." Go into your statistics system, and find the number of new vs. returning visitors. This is important because you are never going to convert one-time visitors.

One-time visitors are people who have clicked a link, seen one page and left. These visitors are great for generating extra ad income, but they are not turning into subscribers. Remove them from the equation.

In my case, 63% of the traffic to are one-time visitors. This reduces the number potential subscribers to just 370,000 readers.

The next part is a bit tricky. Unlike traditional media where you buy a magazine and casually flip trough it page-by-page, digital readers only click on the content they are interested in. It is very hard to create cumulative value online.

So you need to look at your content, and divide it into "valuable" and "traffic attracting" content. Which articles are likely to help convert people into subscribers and, which are just good at generating traffic (and thus ad income)?

Articles like Mashable's many "Top 10 YouTube Videos" or Business Insider's "Everything You Need To Know About The Red-Hot, Growing Lingerie Industry" are very good for attracting traffic, but they are utterly hopeless at converting people into subscribers.

Once you have divided you content up into these two groups, look at how many unique visitors each group gets (and prepare to be surprised.) On Baekdal, only 20% of my traffic is reading the valuable content, the rest is attracted by the design articles, or "The Mystery of 100 Cats In Ikea Solved."

This leaves just 74,000 valuable readers.

The 74,000 readers are your potential subscribers. They are all reading your valuable content, and they are returning visitors. The other 926,000 visitors are meaningless. They might generate ad impressions, but they were never potential subscribers.

A huge chunk of your audience just went out the window.

It is the snacking culture. We click and consume, but we do not invest in what we see. You click on a link in Twitter, see the content, and leave. Five seconds later you cannot even remember what site you were visiting.

The only readers who might potentially turn into subscribers are the ones you have established a lasting relationship with.

This is also why it is so important that you connect with your audience. You have to demonstrate that your content is valuable if you want to turn people into subscribers. You do this by turning people into valuable readers by creating a lasting relationship.

You need to connect with your audience. No connection = no subscribers.

Forget the old strategies for getting a higher level of ad impressions, focus on creating lasting value.

Even so, it doesn't stop here. The 74,000 valuable readers are only your potential subscribers. How many of these are likely to turn into actual subscribers? You need to estimate your conversion rate.

There no single way to calculate this. It depends on a lot of different factors, like the price, the perceived level of value, your brand, the type of market you are in, how unique you are, etc. But consider this. Amazon, who is selling another form of content, has a conversion rate of just 4%.

For Baekdal Plus, I estimated that only 3% of my valuable readers would turn into subscribers-within the first 12 months. You might be able to convert more of your readers, maybe 5%.

The result is staggering ...and bit scary. Out of one million absolute unique visitors, 926,000 are just meaningless, and only 3,700 people is likely to turn into subscribers.

The above example is all based on the percentages of returning visitors, valuable traffic, and estimated conversion rate on this site. You might see very different numbers with your newspaper, magazine, or blog.

The concept is the same. Only the people who are returning to your site, reading your valuable content, and with whom you have formed a lasting relationship with will turn into subscribers.

This number is likely to be very low if you have been giving away your content for free. Especially if you have also employed tactics to improve ad impressions. Those tactics might have been really good at attracting eyeballs, but they are also driving down the value.

What about future growth?

The big question though isn't really how much of your existing traffic you will be able to convert into subscribers, but rather how can you continue to grow in the future.

Newspapers and magazines are in a frenzy to put up pay walls, but their strategies are all wrong. You can't grow if you cut the connection to your non-subscribers.

As I wrote above: You have to demonstrate that your content is valuable, if you want to turn people into subscribers. You do this by turning people into valuable readers by creating a lasting relationship. Which means you need to connect with your audience.

No connection = no subscribers.

Creating a paywall disrupts the connection. People can't link to the content. They can't discuss it. They can't take it with them, and they can't use it. The paywall might be efficient at forcing people into becoming subscribers in the short run, but it also completely destroys any chance of ever having a future.

It is a defensive strategy that only looks are your existing traffic. Think of it like this. What if you didn't have one million absolute unique visitors? What if you had to start from zero? How are you going to turn people into subscribers if you have to connect with them first?

The answer is simple. You reach out to them by embracing a multi-channel strategy (be where people are), you connect with them by embracing the link, and you demonstrate your value by focusing on things that matter to them (in contrast to link-bait articles.)

Read also: Forget The Paywalls Build Shareable Paygates.


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Thomas Baekdal

Founder, media analyst, author, and publisher. Follow on Twitter

"Thomas Baekdal is one of Scandinavia's most sought-after experts in the digitization of media companies. He has made ​​himself known for his analysis of how digitization has changed the way we consume media."
Swedish business magazine, Resumé


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