SP Brief #3: Funnels vs monetization maps
1. Funnels are a useful framework to track customer journeys and identify which strategies best lead to conversion
There are many variations of the customer funnel paradigm but each one expects a reader to move through various stages (not necessarily linearly) towards a final end-state
These stages can include: new users, engaged users, qualified users, converted users
In this set up only the last stage generates reader revenue as a qualified user converts
This is an output of having only one type of purchase solution: subscriptions
Monetizations strategies are therefore focused on engaging with readers until they are bottom-of-funnel and convert
2. When you add a second purchase solution, like pay-as-you-read, the funnel paradigm starts to break down
Now every reader no matter where they are in the funnel towards subscription can purchase content without subscribing
This meets the different behaviors and qualities of top-of-funnel readers, including their need for flexibility and affordability
But the funnel paradigm is no longer as useful when you move from a binary-state customer (has or has not purchased) to a multi-state customer (has bought a little, a lot, or not at all, changing month to month)
(Learn the essentials of pay-as-you-read in SP Brief #1: Pay-you-read vs. pay-per-article)
3. A more accurate representation of your readership is therefore to use a ‘monetization map’ as well as (or rather than) a funnel
Monetization maps more accurately reflect your existing readership, provide a new way to segment customers, drive additional insights into behavior, and ultimately help you grow revenue from readers
Publishers can then better optimize their top-of-funnel to monetize and identify casual readers (see more in SP Brief #2: Optimizing your top-of-funnel)
4. The basic axes of a monetization map are ‘spend’ and ‘value’
‘Spend’ reflects the amount each reader is spending within a given time frame (let’s say month-to-month)
‘Value’ reflects the perceived gain each reader receives from consuming and paying for content
Below we have a blank monetization map: new customers start at the top and work their way downwards, similar to the direction of a funnel
Blank monetization map
5. Now let’s populate the monetization map with a typical hard paywall
The colored bands represent the spaces within which readers can occupy the map, heat mapped to reveal where readers would have a positive or negative experience
Near the top are ‘trial subscribers’ who spend a lower amount and vary in the value they perceive to receive
They can then leap up to the ‘Subscribers’ band, where readers spend a higher, maximum amount, again of differing perceived value
Situated towards the green end of the ‘Subscribers’ band are those who perceive high value from the subscription - the ‘loyal subscribers’
Situated towards the red end are those who subscribe but do not perceive to receive sufficient value - the disaffected or ‘zombie subscribers’
Note the enormous amount of white space where no reader exists and no monetization is taking place
Monetization map representing a hard paywall
6. We can adjust the monetization map for a metered paywall
Along the top-right edge we can include casual readers who can consume value at no cost and also registered users who get access to more free articles also at no cost
Casual readers are highly restricted on this monetization map, unable to consume much value and unable to pay at all
Often 80-90% of a publisher’s readership base can be located in this thin section of the map
These readers are enticed to sign up for a trial subscription, pay for content, and eventually upgrade to a full subscription
Typically, conversion is low for the industry, at around 1% or less
Monetization map representing a metered paywall
7. The monetization map looks entirely different when using pay-as-you-read as the only purchase solution
Now there is no white space as any reader on any point on the map can be monetized
Casual readers are not restricted to one part of the map and can purchase content to any level of spend they wish
The customer journey then becomes about moving readers up the spending ladder, enticing them with more value
In this map, 100% of traffic can be monetized and identified with first-party data, not just limited segments of readers
Monetization map representing pay-as-you-read
8. Now let’s combine a metered paywall with pay-as-you-read
With this combination, a publisher can draw regular cash flow from subscribers while also monetizing the remainder of their casual readership
Those casual readers who identify in the bottom and right quadrants are now highly qualified to sign up for either trial or full subscriptions creating powerful pipelines and increasing conversion rates
Again, 100% of traffic can be monetized and identified with first-party data by combining both purchase solutions: subscriptions + pay-as-you-read
Monetization map representing a metered paywall + pay-as-you-read
9. One final variation to explore is a monetization map optimized to capture and monetize high-quality subscribers
In this instance, there are no casual, non-paying readers and no trial subscriptions available
This reduces the pipeline of ‘zombie’ subscribers and de-risks the subscriber base
Instead, the map is optimized to create a pipeline for highly engaged subscribers who are loyal over the long term
Monetization map representing pay-as-you-read optimized for subscription conversion
10. From these maps it becomes possible to segment readers differently and tailor your engagement strategies accordingly
Top quadrant: Readers consuming minimal-moderate content and unlikely to return frequently due to low perceived value
Left quadrant: Readers with high spending but who do not perceive sufficient value (likely a low proportion of readers)
Right quadrant: Readers who get high value from consuming minimal-moderate content and are most likely to increase spending over time, an audience segment primed for active engagement
Bottom quadrant: Power readers who get high value from consuming significant amounts of content, and will most likely convert to a subscription
Audience engagement, pricing, marketing, and editorial strategies will influence the ratio of readers in each quadrant
Reader analytics and insights from each quadrant can then also inform audience engagement, pricing, marketing, and editorial strategies to help shift these ratios over time towards the right and bottom quadrants
11. Next step: Build the foundations of your own monetization map
Conduct a limited, low-risk rollout of pay-as-you-read, testing on small cohorts of top-of-funnel readers and avoiding cannibalization of your existing subscriber base
Gather data based on how your top-of-funnel readers engage with and pay for your content
Extrapolate your monetization map and decide whether pay-as-you-read is a viable solution and should be rolled out further to deepen revenue and reader engagement from your top-of-funnel
Learn if pay-as-you-read works for you. We can give you an awesomely quick 15-min demo.