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Nov. 4, 2021, 2:36 p.m.
Business Models

News organizations have a few things to learn from charities

“Readers want to be contributing to something that is successful. So you have to be careful about crisis messaging, saying, ‘Oh gosh, we’re going to go under if we don’t get support.'”

Hal Crawford publishes a weekly podcast and newsletter about media, journalism, and technology in Australia and New Zealand. The Q&A below is adapted from his recent podcast interview with Margy Vary, the partnerships manager at news funding platform PressPatron and an independent publishing consultant helping with reader revenue models. She was the marketing director of The Guardian Australia for six years, during the time that the organization was building its contribution model.

Hal Crawford: Can you tell me how it went at The Guardian with with getting money out of readers?

Margy Vary: It was a fascinating learning experience. I think when I started in 2013, reader revenue at The Guardian mainly meant we were sending the Guardian Weekly magazine, but also this huge array of merchandise from books to garden spades.

When I started, I came from an airline with a strong customer service mentality. I was very quickly put in my place by the audience editor for talking about “customers,” because they weren’t customers, they were readers. And so I had to get into this mentality of, you know, the audience engagement language.

But at the same time, everyone could see the writing on the wall for advertising revenue. There was a big scramble to launch a viable reader revenue business. And this meant there was a big cultural shift coming. And from the start at The Guardian, the paywall was just not in line with the mission and purpose. It’s a very purpose-driven organization.

We had been getting some great traction with live events and master classes. We started with this big, grand plan for a multi-tiered membership model, with different types of discounts for events and other soft benefits. We very nearly even bought a big events venue in London — we were that committed to it. The problem was the cost of sale; it turned out to just be a bit too much and too expensive to run. And I think ad revenue fell even faster than expected that year. So at Guardian Australia we held back a year launching membership, just to see how the UK went.

We very quickly realized that, first and foremost, there was a need to eliminate any cost of sale. So even while the UK was giving away branded bags to new members, instead, I asked our cartoonist, First Dog on the Moon, to create a JPEG certificate that they could print out and stick on the fridge. And it was a kind of joke in a way — it was a satirical act, because it meant we were technically selling a product, not just taking donations. But there were zero costs of sale.

That meant that we could focus on just converting the most loyal, sort of dyed-in-the-wool Guardian fans first and foremost, by using the message that all their money would go to support the journalism. This was a key insight based on audience research that showed that Ozy readers just didn’t really want to be given stuff; they wanted to help The Guardian survive and grow. So we looked at the digital e-commerce industry but also at charity models to develop the program. From charities, I learned a lot about cause-related marketing.

In those early days, there was this huge fear — I think there still is — around the reduction of diversity in Australian media. It produced a groundswell of support in giving. And then once this model had proven itself to be viable, the team in London started investing in hiring experts. They had researchers, loyalty marketers, customer experience and retention experts, put their results into it, but most importantly, connected this contributions program closely with the newsroom and with editorial through a membership editor, which meant that the journalism continued to be the focus that drove conversion. So although there are still lots of lumps and bumps all the way with the tech, the need, the timing, the messaging, and the product were well-aligned, and the newsroom really supported it so that it drove success.

By the time I left, which was five years after launching the program, it was delivering more than 50% of the revenue from less than 2% of the total monthly audience. So I think that means there’s still plenty of room for growth.

Crawford: Would you mind reiterating that? More than 50% of the revenue from 2% of the readership base?

Vary: Yes. If you look at the monthly audience, [The Guardian has about 175,000] supporters now in Australia, and over a million globally. I think that’s between 1 and 2% of the monthly audience — going on Google Analytics data, by the way, not published Nielsen data.

Crawford: So there’s a core of true believers who were willing to support the mission.

Vary: The important thing was to explain to them why. But The Guardian was a mission-based organization, so it wasn’t too hard to talk about the mission and explain the need for support. I think the readers in Australia are very keen to have a diverse and healthy news ecosystem, and willing to fund that financially.

Crawford: I’m interested in that moment of realization you had that it wasn’t the perks weren’t motivating people to contribute. Or were they, but not sufficiently to justify the cost?

Vary: It isn’t a yes or no answer. I guess it’s a scale. Some people, we found, through research, are more motivated by a transactional relationship. And some people are more motivated by an emotional relationship.

By a transactional relationship, I mean, they wanted to get something for their money. And by an emotional relationship, I mean, they were just willing to give for the cause.

The research showed that the majority were interested in just giving for the cause. They wanted the impact of their money to be maximized through it going toward the journalism rather than to buying them a bag or access to an event.

Crawford: So you’ve got that 2% who are the lion’s share of the contributions. You said earlier that that indicates that there’s room to grow. How do you grow beyond loyalists? How do you get contributions out of more casual readers?

Vary: It’s very clear that engagement is a key factor in conversion, and you’d hope that more than 2% of the audience would count as engaged. So people reading the editorial newsletters, for example, we’ve seen from research around the world that you should be able to convert between 10 to 15% of your newsletter base, because they’re loyal readers.

It takes a while to get to that point where you can bring people along the journey of understanding why you need the money and then eventually getting around to contributing. But if you feel like you’ve really gotten to the point where everybody who’s going to give to you voluntarily has already — well, that’s the point when you start introducing paid products. So at The Guardian, we just worked on developing an app model where you could pay for a premium version of the app where you actually do get a hard benefit as well, which is you don’t see advertising, you get some extra benefits.

Crawford: Some businesses are better suited to this than others, aren’t they?

Vary: Yes. I have been surprised, actually. I thought originally that this would be a very niche thing — that only hardcore, cause-related, socially minded public interest journalism models would work.

But actually, since I’ve been involved with PressPatron, I’ve seen that that’s not the case. I’ve been doing lots of research and I think there are a lot of reasons why people are willing to support content.

It’s really just about understanding the reason why you create the content in the first place. Most of the time, people publish content because they see a need in the market and they want to fill that need. They’re serving the audience with something that they need in their life to do something.

And as long as you understand how to articulate that value proposition and build a relationship with the audience, where you can talk to them about your value proposition, about why you’re doing what you do, and then your product actually is built from that value proposition — there’s a huge range of publishers who are then able to convert that sort of brand loyalty into voluntary support.

I think the Membership Puzzle Project did a really broad-ranging piece of research into this that showed there are about eight different reasons why people are willing to support news organizations through voluntary models. It ranged from, you know, a sense of affiliation, of belonging, to being connected to other like-minded people or being connected to other like-minded organizations, even.

That can apply to a whole range of titles. The most important thing is really to understand your readers’ needs, build your value proposition around those needs, and be confident that your content is worth supporting.

What I’ve noticed, talking to small publishers, is a real issue with fear of asking for money. I think it’s a cultural shift: You have to work with them to explain that there’s no reason to feel bad about asking for money. It’s actually something to be proud of, that you produce content that is valuable enough that people should be willing to support it.

Crawford: Yeah, I think it can be very difficult for people to ask. They feel like they’re asking something for nothing. Have audience expectations around paying for news changed over time?

Vary: Yes, most definitely. So obviously, we used to buy newspapers. Then we all got our content for free on the internet. And we sort of got trained into that model … Then that advertising model broke, and so we had to retrain audiences to pay for news. It’s a massive challenge to get people to pay for something that they had been getting for free. But organizations like News Corp stuck to their guns with their paywall model, and I think that massively helped Australia in educating audiences that that news needed to be funded.

That’s how The Guardian’s model was able to be successful, I think, because at the same people were being educated about the crisis in news funding and the need to support it.

Some people have expressed a little bit of frustration, maybe, with The Guardian’s model, because they were saying they were offering news free and open to everybody. They felt it would be easier if we all went behind paywalls and we all started with the same model. But actually, the messaging that we were developing at The Guardian to drive the voluntary contributions model was all around the crisis in funding of journalism, the need to support journalism. It was just that the mechanism was sort of voluntary rather than paywalled.

The messaging was all reinforcing the same idea that in a democratic society, people do have to take some responsibility. If they want a healthy news industry, they’re going to have to pay some money for it.

Crawford: With The Guardian, sometimes it strikes me that they that they ask too often for contribution. What does the data say about that? What’s the optimum amount of asking that one should do?

Vary: That’s the golden question, isn’t it? The Guardian is kind of set up as a testing lab. One of my key jobs when I was in Australia was to join up all the dots, from the acquisition team through to the customer service and complaints department, as it were, and just make sure that we weren’t generating more complaints at one end that we were undermining the acquisition [at the other end]. It is a constant juggling and balancing act. There’s no final moment where you say, yes, we’ve got this perfectly right.

Crawford: One of the things that you notice when you do user testing on people, or any kind of quantitative analysis, is that what people say they do or say they want to do, and what they actually do, can be wildly different. Have you experienced that in your marketing career?

Vary: Oh, yeah. Right from the beginning in advertising, you’re taught about the difference between claimed and actual behavior, and to look out for that. In developing market research and surveys, you have to be very careful to make sure that you’re not building up a product based on something in which claimed behavior is going to turn into actual behavior.

I can think of a few examples where that’s happened. For example, carbon offsetting. [laughs] I think everybody who we spoke to at the airline said, “Oh, yes, of course, I would offset my carbon,” and then maybe 2% do. I’m not sure what the latest stats are on that.

Crawford: Tell me about what you’ve learned from charity. The charities are experts at extracting donations — not “extracting,” that’s probably an unfair word. Eliciting donations. What did you learn from studying their techniques?

Vary: From charities and the psychology of giving, [I learned about] the dopamine fix that you get when you give to a good cause, and how you can generate that positive feeling from people from giving to a good cause by talking about the impact that they’re having.

There are lots of different charities that are very sophisticated at doing this — talking about the different types of impact. From the actual “you’ve enabled us to produce this journalism” to “our journalism has then been able to have this impact on a certain sector of society.” Or it’s raised this voice that was previously unheard of. Or it’s led to policy change, etc.

So just learning that language of talking about impact, and having both qualitative and quantitative measures to prove then back to your your sort of investors, I guess, as they are your community, that their work, their contribution has had a positive impact.

Things like delivering the annual impact report, which I’ve noticed, The Sydney Morning Herald is doing now as well, but also about the psychology of wanting to be part of a movement. I studied not just charities, but also political movements, things like Bernie Sanders’ campaign that drove amazing grassroots support from getting millions of people to donate just small amounts, rather than focusing on, you know, a few big investors.

But again, bringing it back to my sort of hard-headed data mind, it’s about optimizing across the demand curve, right? You’ve got to make sure that you’ve got messaging and product that enables everybody — from your individual high-level donors right through to your small $5, $1 a month people — that you can satisfy them all and understand their needs.

Crawford: So you mentioned that you could expect 10 to 15% of your readers to contribute. Is that right?

Vary: Your newsletter base. I’d say between 0 to 5% of your Google Analytics unique monthly browsers, and then 10 to 15% of your actual newsletter base. That probably depends on how engaged your newsletter base is. If you only have 10 to 20% open rates on average, then it would be at the bottom. And if you have like 40% open rates, then you could be expecting 15%, maybe even 20%, conversion.

Crawford: On the psychology of asking people for money, you mentioned that people may be surprised who it works for. Who will it not work for?

Vary: Well, since we know that loyalty and engagement are key to conversion, it will not work for pure clickbait publishers — one-hit wonders who are just publishing content for people to consume and then move on. If there’s no loyalty, there’s no traction, there’s no there’s no way you’re going to get people to contribute voluntarily.

Also, perhaps, if you’re clearly a site that’s set up as content marketing, designed for lead generation, you know, for commercial interests behind it. I can’t see how anybody’s going to be fooled into voluntarily supporting that. But that leaves a huge range of other publishers who are doing things genuinely to serve an audience need.

Crawford: What are your thoughts about the limitations of philanthropic models for journalism?

Vary: If you’re looking at publishers who have to try to appeal to a few different philanthropists, the main drawback is the time that that takes. You have to curate their journey into your organization, educate them about what you do. There’s a lot of time invested also from the editorial side in developing the pitches, building the relationships, developing the impact reports, and the relationships are crucial. That sucks up a huge amount of time. And the one editor who is the vision or inspiration can only turn up to so many meetings.

Crawford: Do you see reader contribution as a kind of micro philanthropy?

Vary: Yeah, I guess so. Although I think readers are less demanding about seeing the impact of their investments. What is similar, though, is that readers want to be contributing to something that is successful. So you have to be careful about crisis messaging, saying, “Oh gosh, we’re going to go under if we don’t get support.” Readers really want to support something that is going to succeed. And I think that’s the same with philanthropists, you’ve sort of got to prove to them that you’ve got a plan, and you’ve got a viable model, but you need their help, and then it will grow and then develop.

Crawford: So avoid the crisis messaging.

Vary: Yeah. And that’s something I learned from charities, actually. You can only really switch the crisis on once in while.

Subscribe to Hal Crawford’s newsletter and podcast here.

Photo of coins by Steve Johnson on Unsplash.

POSTED     Nov. 4, 2021, 2:36 p.m.
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