People, not pageviews: Understanding your best users
By#nbsp;Nadav Shoval, CEO and co-founder of#nbsp;Spot. IM
The word "sustainability" is#nbsp;being thrown around a#nbsp;lot lately when it#nbsp;comes to#nbsp;digital publishing, and for good reason.
From interviews with high-powered execs to spotlights at#nbsp;upcoming industry conferences, players across the industry seem to#nbsp;be#nbsp;recognizing that they’ve arrived at#nbsp;a#nbsp;point of#nbsp;reckoning. Reliance on#nbsp;the old "advertising-only" model is#nbsp;fading and the "sustainable business model" is#nbsp;on#nbsp;the rise. Whereas the push for pageviews once took priority for many publishers, industry leaders now look to#nbsp;more consumer-focused ways of#nbsp;doing business.
While there are many potential paths towards revenue diversification that publishers can take, such as#nbsp;subscriptions, paywalls and e-commerce, they all have one trait in#nbsp;common: a#nbsp;focus on#nbsp;identifying and growing a#nbsp;loyal and valuable core user base.
In#nbsp;the end, the ability to#nbsp;create a#nbsp;sustainable business model relies on#nbsp;understanding one central facet: Publishers must understand who their best users are#nbsp;— and how to#nbsp;better engage them.
Lifetime value: Measure people, not pageviews
If#nbsp;publishers are serious about finding a#nbsp;more sustainable business model, there is#nbsp;one metric they need to#nbsp;start paying serious attention to: lifetime value (LTV). LTV is#nbsp;the average revenue per user (ARPU) calculated throughout users' total consumption time.
When a#nbsp;business zeroes in#nbsp;on#nbsp;LTV, it#nbsp;focuses its attention on#nbsp;who its most valuable users truly are. In#nbsp;turn, this incentivizes them to#nbsp;both identify and grow their own unique "power users" and find innovative ways to#nbsp;increase the value they create. In#nbsp;their drive towards a#nbsp;more user-centric business model, publishers would be#nbsp;well-served to#nbsp;zero in#nbsp;on#nbsp;ARPU and LTV as#nbsp;their metrics of#nbsp;choice rather than more traditional, less nuanced data points like pageviews.
Find what’s driving your high-LTV users
After a#nbsp;publisher identifies who its top users are, the question becomes why those people became power users in#nbsp;the first place. Unlocking that information is#nbsp;crucial to#nbsp;determining what products, features, or#nbsp;offers will incentivize power users to#nbsp;continue engaging. "Power users" on#nbsp;a#nbsp;publisher’s site tend to#nbsp;be#nbsp;people who:
1) Register or#nbsp;log in#nbsp;for each engagement action
2) Engage frequently and for longer periods of#nbsp;time
3) Visit and revisit directly, rather than through aggregation sources like social
Beyond those core trait, each publisher’s power users will look a#nbsp;little different. Once publishers know what’s driving their power users' high LTV, they can begin to#nbsp;optimize an#nbsp;experience that benefits both themselves and their users.
Rise above the race to#nbsp;the bottom
Knowing who your highest LTV users are#nbsp;— and what makes them tick#nbsp;— is#nbsp;the key to#nbsp;unleashing an#nbsp;extremely powerful and underutilized tool: optimization. Social networks such as#nbsp;Instagram and games such as#nbsp;Fortnite are so#nbsp;successful precisely because they optimize for high-LTV users. Indeed, optimizing for ARPU and LTV is#nbsp;applicable to#nbsp;all publishers, even those whose business models are ad-centric. This strategy often includes optimizing advertising and content based on#nbsp;the habits of#nbsp;top users, finding the engagement elasticity for your audience and switching incentives in#nbsp;your newsroom to#nbsp;focus on#nbsp;producing quality content à la#nbsp;The New York Times.
Simply put, understanding your power users is#nbsp;the engine that will drive any sustainable business model, and industry leaders are beginning to#nbsp;recognize this. As#nbsp;Matt Minoff, Meredith’s Chief Digital Officer, reveals: "We've moved from a#nbsp;visit-centric view of#nbsp;the world to#nbsp;a#nbsp;user-centric view of#nbsp;the world… now, when we#nbsp;make changes to#nbsp;our sites, we#nbsp;can understand the impact it’s having on [lifetime value]."
Grow the pie#nbsp;— and make it#nbsp;tastier
High-LTV users are important, and it#nbsp;makes sense that publishers should want more of#nbsp;them. Investing in#nbsp;community isn’t the only solution, but it’s a#nbsp;good place for publishers to#nbsp;start. Community is#nbsp;where power users often thrive.
Features associated with engagement, like commenting, typically require actions that are associated with high-LTV users. Commenters typically register or#nbsp;log in, and as#nbsp;a#nbsp;result they consume more content, stay longer and even view more pages and advertising through those visits. They also provide you with something often overlooked: their individual sentiment about the content you’re creating. In#nbsp;the end, maximizing LTV over pageviews isn’t easy. Chances are that the right fit won’t be#nbsp;found the first time. It#nbsp;takes trial, error, tech, data and even some luck.
The good news? Your core and most valuable users will tell you what they want#nbsp;— you just need to#nbsp;listen.
Nadav Shoval, CEO and co-founder of#nbsp;Spot.IM. Spot. IM's mission is#nbsp;to#nbsp;create exceptional technology that empowers media publishers to#nbsp;protect the free press and develop meaningful online communities.