Newspapers are the fastest-moving consumer goods industry of them all. David Tymm of i-movo explores what brand owners can learn from how they drive loyalty and turn customers into subscribers

The online world has quietly ushered in the ‘Subscription Economy’. Similar to Louis XIV’S Finance Minister, Jean-Baptiste Colbert who declared that “the art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing”, Spotify, Netflix, Amazon and many others have realised that getting customers to pay “little and often” is the best way of maintaining their loyalty.

Perishable, produced from scratch every day and almost obsolete by four o’clock the following afternoon, newspapers are the very definition of a fast-moving consumer product. Notwithstanding the difficulties the industry has experienced in the face of the competition of instant, up-to-date and free online news, there are lessons for brand owners to be learned from this beleaguered sector in terms of maintaining consumer loyalty.

Given the logistical challenges of producing and distributing a new edition every day and the financial constraints imposed by a low product price, newspapers are sold through retailers rather than delivered direct.

Up until 20 years ago or even later, loyalty was forged as a result of tribal support to the editorial line. But, as with many other sectors, the internet ‘changed everything’ – including, for many former loyal readers, the habit of buying and reading a particular title every day.

The response from publishers was to launch subscription schemes, getting readers to commit to buying the paper for a set time – usually a year – in return for a discount on the cover price.

Four times annually, readers are sent books of 90 or so paper vouchers and use these to pay for the paper. The retailers than claim the value of these vouchers back from the publishers. The original theory was that if readers paid in advance, they would be certain to read the paper every day. For the publisher, the sale and associated advertising revenue would therefore be protected.

It’s a strategy that has proven to be partially successful in arresting the decline in sales. By way of a single example, the Daily Telegraph had 796,000 readers in 2007, of which 327,000 were subscribers. Over the next decade, subscribers fell to 223,000, a 32% drop – but that against a 53% fall in overall average daily sales to 377,000.

Paper is pricy

But paper vouchers are expensive to distribute, expensive to process and vulnerable to various ‘practices’ that can result in considerable, avoidable expense for the publishers. In addition, high fixed costs inherent in the production process result in publishers adopting ‘a one or two sizes fit all’ approach to product strategy. Fixed-term contracts with no escape route are also the norm. Both traits are somewhat at odds with consumer expectations of mass-customisation and a belief that subscriptions should be for their convenience, not to predict the revenue of suppliers.

Digital voucher systems dispense with these operational deficiencies and also provide added benefits. Digital provides insight on subscriber behaviour right down to who is using their subscription (or not), at which retailers, on which days of the week and at what time of day. Critical information for customer retention and product development that is lost in the ether with paper vouchers!

As a result, the Financial Times and Guardian Media Group have been the first to move away from paper fulfilment for subscription services to digital

Other fast-moving product categories face a similar challenge to those faced by publishers two decades ago – and they can learn from the experience of the newspaper publishers.

With consumer decisions often made within 30 seconds or 12 feet of purchase, according to some shopper marketing experts, relying on habit for loyalty and constant investment in marketing programs to influence the consumer at point of selection is, I would argue, economically unsustainable.

Also questionable are the considerable sums spent on digital media when the impact of online promotion is difficult to measure in the context of offline sales. Recent media coverage suggests that the party is over and brand managers are beginning to wise up to the state of the current online advertising market. Texans refer to such arrangements as a ‘Goat Rodeo’…a system rigged in favour of the organisers.

Generation Subscription

With financial innovators such as Zuora and GoCardless democratising the recurring payments market for credit/debit cards and Direct Debit respectively, any business can now collect payments easily and inexpensively from consumers on a regular basis and so sell their wares on a subscription basis.

Dollar Shave Club is probably the most famous example of this model. The disposable razors they sell have a predictable consumption pattern and are easy to ship. The less well-known Batch Brew distillery in Burnley makes fabulous but quite pricy gin. If you sign up as a subscriber, they send you a bottle of whatever they’ve decided to brew up that month for a direct debit payment of £30 a month, just below the price/value consciousness threshold of their target customer, I would guess.

Both examples have the advantage that direct payment and direct fulfilment are viable options. But, as with newspapers, direct fulfilment is not feasible for brand owners where such products are frequently purchased across a range of retailers. Brands will also be aware that retail partners will continue to represent the majority of sales and a direct-fulfilment strategy would effectively dis-intermediate them and damage commercial relationships.

Turning consumers into subscribers is not only good for brands in terms of securing loyalty and stabilising revenues. Consumers welcome it too. The Economist reported in 2014 that 80% favour subscription for preferred brands providing it signifies convenience and is not at the expense of flexibility.

For example, an energy drink manufacturer could pre-sell 20 bottles online and deliver a mobile voucher to let the customer collect at a retailer anytime they want one, but without any commitment to consume all 20 by a certain date. Consumers who have already made their purchase decision and paid are unlikely to buy a competitor product.

Alternatively, firms such as Klarna will extend credit to consumers based on their email address. This means consumers would not always need to pay up front – just settle a monthly invoice for what they have consumed. Purchases can also be added to mobile phone bills using services such as ‘Payforit’, which is supported by all the UK’s major mobile phone operators.

Although the options are many and various and set to evolve further, two truths are inescapable: The ‘Subscription Economy’ is here to stay – and brand owners that cannot supply direct need a method for remote fulfilment of their products if they are to take advantage of this generational shift in consumer behaviour.

David Tymm is founder and CEO of i-movo, one of the largest Secure Digital Voucher networks in the world. i-movo works with over 60,000 participating retailers and has delivered over 300 successful campaigns, processing over 20 million vouchers worth over £400m.

Photo by Peter Bond on Unsplash

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Nestlé UK and Ireland has partnered with online streaming service NOW TV to launch a brand new on-pack promotion which will feature on some of its favourite confectionery brands including KitKat, Aero, Yorkie, Toffee Crisp and Rowntree’s Fruit Pastilles.

The promotion, which went live this week, offer consumers the chance to win either a monthly Sky Cinema, Entertainment or Kids pass, or Sky Sports day pass, with 1,000 passes to be won every hour for eight weeks.

The promotion can be entered from 8.00am to midnight every day from May 21^st to July 15^th, with 1,000 winning moments each hour. Entries outside these daily start and finish times will not be accepted.

To enter, consumers need to go online to the promotional site – www.nestle-promotions.co.uk/nowtv – and input a code found on the inside of a promotional wrapper. They will then be told instantly if they are a winner; if they are, they will be able to select the pass that they prefer. Consumers who win will be asked for their card details as part of setting up a free subscription; they will have to cancel the subscription or they will be charged once the free period has run out.

In the Republic of Ireland, companies can only run prize draws linked to purchase if they partner with a charity which has a lottery licence; for this promotion, Nestlé has partnered with Down Syndrome Ireland.

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In a new twist on its #feedingthefuture campaign, The Economist is encouraging Londoners to try free nutritious soup made from vegetables destined for the rubbish bin. Engaging with people through a branded mobile trike, the iconic newspaper is showing people that ugly, discoloured or misshapen produce, which is rejected by supermarkets can still be eaten and tastes great.

The campaign, devised by marketing agency Sense, forms part of The Economist’s successful ‘Real World’ experiential strategy designed to increase the media brand’s subscriptions through bringing its content to life in the real world.

Supermarkets’ and consumers’ obsession with ‘perfect’ fruit and vegetables is contributing to the global food waste problem, with 600,000 tonnes of food thrown away each year in the UK by restaurants alone.

“The #feedingthefuture campaign challenges potential readers to consider new ideas and solutions to reflect on more environmentally sustainable approaches towards food production and consumption,” says Marina Haydn, executive vice president, circulation and retail marketing at The Economist.

Commenting on the latest activation, Sense Senior Account Manager Daniel Hennessey adds: “Giving away warming tasty waste-food soup on a cold winter’s day is a great way to get people talking about The Economist’s content in an engaging way. By challenging people’s perception about the food we throw away, this activity self-selects the globally curious consumer – just the kind of people who enjoy reading The Economist – increasing brand awareness and driving subscription sales at the same time.”

The campaign started on 29^th November in Liverpool Street, before visiting One New Change (30^th November). It will also visit Denmark Hill (4^th December) and Victoria Station (5^th and 6^th December). It will then run from January to March 2018 at various other London locations including Canary Wharf, Waterloo, Paddington, Euston, King’s Cross and London Bridge.

To date, the #feedingthefuture campaign has generated more than 60,000 subscribers globally for The Economist across five continents.

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Hot chocolate brand Options is offering consumers one month’s free membership with the online magazine app Readly, worth £7.99, in its latest on-pack promotion.

Options, which according to Nielsen Scantrack data is the UK’s leading instant hot chocolate brand, is owned by tea and hot beverages company R. Twining & Company Ltd.

The promotion which runs from now until December 31^st, 2017, was created by brand activation specialist Toucan, in partnership with Readly. Consumers can claim one month’s free membership of the UK’s No 1 magazine app worth £7.99, by redeeming the unique codes which feature on jars across five flavours of Options hot chocolate (Belgian Choc, Mint, Orange, White Choc and Salted Caramel). Options hot chocolate jars 220g retail at £3.99.

Claimants are directed to an Options branded landing page where they can set up a Readly account and gain access to over 2,000 magazines across five different devices (so family members can share) without submitting their bank details. The initial one-month subscription can be extended twice for a maximum of three months by buying another two jars.

Andy Corris, Senior Brand Manager for Options said “Options is all about having your hot chocolate moment your way. Our drinkers love the wide range of hot chocolate flavours we produce and partnering with Readly offers something for everyone, really allowing our consumers to tailor their perfect hot chocolate moment.”

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Healthy food brand Graze is giving out one million samples to raise awareness about its on-the-go snack food range, available at retailers.

Brand ambassadors will be handing out packs of Graze’s Veggie Protein Power – which it says is one of its bestselling retail varieties and includes spicy chickpeas, edamame beans and black pepper cashews – outside busy central London mainline rail stations until February 3rd 2017.

Graze has timed the campaign to coincide with the increased interest in healthy eating in January.

The sampling campaign is being handled for Graze by experiential agency Hotcow. Sally Durcan, Managing Director of Hotcow, says: “We know from previous research that brand recognition can increase by over 40% with commuters taking the product to work and having it on their desk. We also know that reminding people of the brand taste has a significant impact in keeping existing consumers buying the brand and new ones moving in to try the brand.”

Graze launched in the UK in 2008. It began by offering an online subscription service where people could sign up for regular deliveries of its healthy food boxes, which can be bought in over 200 combinations. It launched a range of snack products in retailers in July 2015, initially with an exclusive rollout via 850 Sainsbury’s stores. Graze snacks are now available in 7,000 stores across the UK including Sainsbury’s, Tesco, Asda and Boots.

Graze has also expanded into the US market, both via its online subscription model and through a partnership with US pharmacy chain Walgreens, part of the group which ultimately owns Boots in the UK.

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