Managing Director, Carola York and Strategic Development Director, Patrick Knight share Industry Trends at Digital Connections 2016 client day.

Video Transcript
Carola: So, a lot of today we were trying to think about what do we want to talk about. What's the agenda? What do people want to know about? So, there's two aspects. Obviously, we do digital marketing, and we do digital publishing. So, I'm just gonna run through a little bit about some of the top line trends that we're seeing as a business, some of the things that we're coming across, and a lot of the themes through the day today will be reflective of these.

I'm sure those of you who are running an email campaign will know okay, why has the results of this not worked as well? But actually, when you look at actually the sales that you might have got through the email, through your general site or through other channels. Measurement is not straightforward anymore. People are moving about. They're not just doing a simple right, one click on one something and then placing an order. They're jumping about, on the touch points that somebody goes through before they actually end up subscribing, are shifting and moving a lot. So, understanding which channel affects what is really complex, and that's gonna be a theme through today. And you'll hear a bit more about that through some of the sessions today.

We're also finding that a lot of the better campaigns that we see are when there's a joined-up marketing and creative strategy. A lot of the time, people come to us and say, "Can you just run this, this subscription activity, this offer in your PPC campaign?" And actually, they might be doing something very different through their own email channels, or they might be doing something very different in magazine activities. But where we see the best results is when actually, you look at it as a campaign, and say, "Right, okay, for the next month, or week, or whatever time scale works, all of these activities work together," because it fits in with the topic. People are no longer looking at one promotion and going through. They're searching around. They're looking around. They're going to be see different things through, maybe, a social offer than they might see through an email you send them, or they might see on your website.

So, again, this is a common theme that we're going be talking about today, is think about it as a campaign. No longer just think, "Right, okay, I'm gonna just send this promotion out, because I've got this special offer just for this group of people." They will look around. They will see other things that you're seeing, so just think about it in a broader perspective. And just think about what you'll like as a consumer and marry that through.

This is not a big thing that we're finding, but when people pull back on brand marketing, I'm pretty sure everybody's budgets are always under pressure. And that you always look at it and say, "Okay, well, if I've got to cut something, I'm going to cut this activity, because it's got the highest CPA. When actual fact, that activity could be driving somebody to go and search and look online for something else. So, you have to look at it in a broader perspective now, and actually just take that into consideration. It's not as simple as it used to be. So, we're just going to say that...when we see people pull back on traditional brand marketing, it stops the number of people then going online and searching. And then that obviously then has an impact on the total volume of subscriptions that you can generate. So, let's just be aware that there's a broader change and shift going on with consumers and how they're looking.

Another big thing when we're talking, obviously, about digital activity, and particular PPC, publishers actually aren't your main competitors online nowadays. A lot of the people we know have gentleman's agreements between publishers that they'll have somebody say, "Oh, please don't bid on my brand, and I won't bid on yours." And that's fine, but actual fact, you've got other people still bidding on your brand. And we're finding that forums out there discussing some of the topics that you have as publishers, they're bidding on your brand. There's people running events that relate to the topic areas that you cover. People selling products to your market as well. They're actually competing with you online, and they're driving up costs. And even if you can trademark your brand, it doesn't stop somebody actually bidding on your brand. So, it's just to be aware that there's broader issues, and the market's shifting and changing. And you're not all competing with each other anymore. You're competing with a load of other people out there as well.

And lastly, my last point before I hand across to Paddy is mobile. Everybody's talking about mobile, but we mustn't forget that mobile is now people's device of choice. I bet you everybody in the room today has got mobile with you. Few might have a tablet, and that's it. Everybody's got mobile, and everybody's using that. And that has to be absolutely the forefront of everything that you're doing. Make it easy for your customers to do business with you. And just think about in everything you do, whether that's advertising, whether you're running PPC ads, make sure you're looking at the mobile ads. Some of the wording within that, are you making it easy? And what are they clicking through to? If you were running a mobile ad, and you're clicking through to a website that's not mobile-friendly, you've lost your customer. Mobile-friendly emails. I still see emails that come through, and I'm having to go pinch and zoom, or put it sideways. You're not making it easy if you're doing that. Website, comes without saying. Google Now, obviously, from an SEO perspective, are rewarding those who have mobile-friendly websites. Make sure you're doing that.

And make sure you have a mobile-friendly payment funnel as well. Make it easy. That's key. You can get somebody through to your page, wants to subscribe, and then they look at it and go, "Oh my God, you've made it hard work," and you've lost somebody. And then obviously, if you want to have an app as well, mobile-friendly apps. And Paddy can talk a little bit more about that as well. So, I'm now going pass across to Paddy.

Paddy: I thought I'd briefly give everyone some context on who we are, or who I am, because I appreciate that not everyone in the room is a magazine cloner client. We do the apps for over 600 publishers around the world, and we launched in 2010 with the iPad. So we've seen the trends from when it was going to be the savior of the publishing in the world, to the doom and gloom of the last year. We also do digital reporting services, as Carola said. So even for the non-app clients, we have quite a good perspective across the whole industry. So, I think one of the things that I've definitely encountered with publishers is that the information they have on digital editions is quite silo and they don't necessarily have the context of what other peoples are doing. And also, there is a lot of doom and gloom around the industry, because it's not that sexier an area anymore, but it is still valuable revenue undoubtedly. So that's what I'll be talking about today.

So, like I said...last year was a really tough year. And that started back in January 2015, which seems a long time ago now, but that's still playing out now, because Apple changed all of their price tiers, and that meant that basically, if you were paying seven pounds for a subscription before, it was automatically going be eight pounds. But the problem with that was that with Apple, if the subscriptions price rose, it automatically cancelled all of the renewals that you had. So you essentially had the choice of losing all of your European subscribers, or downing your US price by about 20 percent. And so publishers were left in this quandary, where they were either going to lose revenue or subscribers. And in most cases, they lost revenue both ways.

Following that, September 2015, Apple closed Newsstand, which wasn't a glowing indictment for magazine apps, but it was another thing that impacted upon sales. Both of them had a really heavy impact on publisher enthusiasm, because obviously, there are so many challenges in publishing today that having the one area that was meant to be growing suddenly turning to flat or falling was not great for enthusiasm at all. And their focus has switched, understandably, it's not a huge revenue area, so they had to explore other things. So as a business, on the magazine cloner side, we saw a 19 percent fall in revenues year on year into 2015. At start of the year, we were projecting eight percent up, so still, it wasn't the rapid growth that there had been early on, but it was definitely still growth. So that was quite a heavy hit.

At the same time, we've got these new challenges in the industry, which Carola mentioned. We've got this movement towards mobile, so everyone's digital editions were either PDF replica or designed for tablet. Everyone's using mobile, so suddenly, it's completely unsuitable. You've got changing consumption habits. Everyone's snacking on content. They're finding stuff that's more personal for them, and the idea of an issue has changed slightly. The discovery of paid content was compounded by the loss of Newsstand, because magazines had this free area of the App Store, where they were preinstalled on devices. They had their own area. Everyone got featured, and suddenly, you were no longer front of mind for users, so people had to go and find magazines, which isn't something that they were doing that often.

There's this massive sea change to watch free news as well, and Facebook's become an aggregator. You've got Apple News, but for the paid content and specialist content, it's suddenly you're competing in this market where there's free content everywhere. And then also alternate paid models that have come along have decreased yield, so we've got new payment models, all-you-can-eat type Spotify models for magazine. But the reality is that when you sell a magazine through that, you're making about 5 or 10 p an issue, as opposed to one or two pounds. So you've run the risk of moving traffic towards that model, and then you're never going to get it back, because you set a price expectation.

So, there is a lot of bad stuff around, but today's message from me is it's not actually all doom and gloom. In 2016, we've seen a 12 percent year-on-year increase on 2015, and that was before the Apple changes, which meant the revenue share got higher on the second year of a subscription. So, we actually see it as quite positive, and all our recurring revenues are starting to rebuild. And obviously, as with any subscription model, automatically renewing subscriptions are absolutely essential. Myself and Ali who's our client development manager, we're going out and doing publisher audits, and telling them the best practices from publishers who actually didn't go down in that time, or stayed relatively flat, and making sure the publishers are still aware that they've got six-figure revenue, seven-figure revenue, and some cases here, which they shouldn't just be turning away from, they still need to be marketing. And there's still stuff they can do, because it does still sell, undoubtedly.

There were publishers that lost 45 percent, but similarly, we had ones that went up by 10 percent. Those who kept on going and kept pushing. So, absolutely getting back into doing that. And then the importance of web sales. So I think when Apple screwed over everyone with the subscription changes, everyone realised that we were far too heavily reliant on Apple. And so, publisher-owned sales, on their websites, and also Pocketmags for us, have seen a really big growth. So now 23 percent of our revenue comes from the Pocketmags website, which is a huge jump from where it was only two years ago. And that is seen across the industry, and I think it is essential, because you get more control of the price, you get more control of the user, and there's a lot more interesting stuff you can do than with the apps. And then there are also some green shoots in the industry. So, relatively simple app store optimisation techniques are working and having a measurable impact.

And this is at a time where app downloads are falling, so it is essential. But also, Apple have finally made some positive changes for publishers, so they've halved their remit in year two of a subscription. They've now allowed variable territory pricing for the first time, so if you want to have a cheap subscription in America, you can do. And also, finally, you can raise the price of a subscription without losing all of your subscribers, which will be music to the ears of anyone who is combating inflation with their subscription prices. We've also got a new Newsstand from Amazon, which we'll shortly be launching in. Previously, they just had an app store. They're the e-commerce experts, so having them selling it is going to be a great boost. And also that will give us Kindle E-reader editions out of the box, which is actually a really big part of digital sales for most publishers that have them. BBC History, I think about 30 percent of its digital edition revenue is through Kindle.

And then finally, we can be down about the challenges, or we can think what can we do with them? They do create new opportunities. So at 2:35pm, I will be back to talk about what we're doing, and what's new with Jellyfish Connect with digital publishing to make your lives easier. It's not a sales pitch. It's just to say how we're combating these changes. And I look forward to seeing you all again then. Thank you very much.