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[on-hold music] Slow is smooth, smooth is fast. There is a tendency to be like, well, let's just A/B test two point like eight different models. Yeah. And now we're, we're totally lost in the sauce.

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There's way too many things that we're trying to A/B test and optimize in a way that isn't scalable.

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[on-hold music] Welcome to the Rebooting show. I'm Brian Morrissey.

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Today, I'm featuring a spotlight episode with Blueconic.

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Recently, the Rebooting and Blueconic partnered on a research report in which we surveyed over two hundred publishing executives in the Rebooting's audience to understand the state of their subscription programs.

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And the resulting report, which is available on the Rebooting's website, and I'll link to it in the show notes- Mm.

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Although I question whether anyone actually goes to the show notes, um, showed how subscriptions are a top strategic priority in a majority of publishers, and yet the days of fast growth are mostly over in favor of the less exciting but more critical consolidation work to turn subscriptions into what my guest, Blueconic VP of sales, Patrick Crane, calls a forever business.

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This is a theme of a private dinner the Rebooting recently held with both Blueconic and House of Kaizen.

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Patrick and I discussed the report and also some of the conversations that came out of that dinner, such as the shift to ARPU or average revenue per user, and whether we've reached peak subscriptions and the need for publishers to develop subscription products for specific subsets of their audiences versus trying to stretch their total addressable market too wide.

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I hope you enjoy this conversation and find it useful. Please email me your feedback. I'm brian@therebooting.com, and here's my conversation with Patrick.

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[on-hold music] Patrick, thanks a lot for joining me for your second-ever podcast. It's a pleasure to be here and break my duck after many years as being a, a podcast listener versus a podcast guest. Pretty...

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It's pretty similar experience as far as I know. But I barely remember the days before I was podcaster, and I was just a podcast listener.

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Anyway, I wanted to go through the report we did together and then also the dinner we held. And then the reason we do them as private dinners is to encourage people to have the candor.

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And I think from what I could tell, people were mostly [chuckles] candid about the challenges and, and opportunities, of course, that they saw. First, let's just start with the report.

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You know, we wanted to get a state of subscriptions. I sort of had an idea going in how people would respond, but it's always interesting to then see if it bears out or not. Think broadly into it.

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I was thinking people would be optimistic about subscriptions as an important part of a sustainable and resilient business model, but that the reality is just like everything in media, it's hard. Yeah.

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What was your big top-line takeaway? I, I think my, my top-line takeaway was how unsurprised I was at the vast majority of it.

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To your point, I think that- [laughs] I don't think that the media aren't happy with the results.

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[chuckles] No, I was really happy with it because I think I, I speak both for myself as the sort of media and publishing lead within our sales team, but also as a vendor with a lot of customers- Yeah...

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in the media and publishing space. We've seen day in and day out that subscriptions are a forever business right there. You don't just launch it and forget about it. You're working on it all the time.

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It's not playing Whac-A-Mole, but you're always, okay, if acquisition's good, then let's make churn better. And then if you've got both in a good state, then there's some other thing to, to work about.

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But we've also seen that for those who can and do the work and do the work in a way that makes sense for their brand and their audience and really adds value, it's a tremendous product and tremendous revenue line to build a sustainable media business.

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It's just not a magic stone where recurring revenue comes out of it just because you happen to have a paywall up. It's their strategy and work. Yeah.

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So we asked people for the overall goals of their subscription businesses, right? Mm-hmm.

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You know, I, I guess I wasn't totally surprised by some of the responses, but the number one by far was increasing revenue and diversifying revenue.

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But I think increasing really [chuckles] is it, 'cause we saw this pop up in other areas.

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For instance, when we asked what the big focus is for publishers at that moment, and let's see, biggest challenge that they're facing, you know, came to fifty-seven percent said growth, thirty-one percent said subscriber growth, not necessarily revenue growth, which I found interesting 'cause mapping it to one of the vibrant discussions at the dinner, I'll just say a large publisher was talking about the, the risk of devaluing your brand with the scramble- Mm-hmm...

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to acquire customers, often at deep discounts. And so I, I wrote a little bit about this shift to ARPU, of revenue per user.

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What are you seeing across your client base, knowing that everyone is at a different part of their subscriptions and first-party data journey? Yeah. I, I think that it is where you are in that continuum.

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I think that the more mature you get, the more that you start to recognize what a good subscriber looks like for your brand.

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And they are different because different subscription products are different and different audiences are, are different and what the product is offering them changes. Yeah.

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But I, I think in the beginning, you need subscribers and data to even make a decision on what that is. Mm. So the priority is getting folks in the door.

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And then I think over time, as you really figure out the ebbs and flows and how your subscription product is going to grow or what it's becoming or, or where it's going, you can start to identify that, hey, you know what?

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Eighty percent of the people we onboard in the dollar a month for the first year offer churn.

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And at the end of the day, it's more time servicing them, it's more impact on the churn work we're doing than makes that twenty percent who stick around make sense.

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At, at some point, the, the beauty and frustration with subscription businesses is that they areMath equations.

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It can be a little bit cold at times, but a little bit less sexy, but it's very clear with look, at the end of the day, we lose eighty percent of these folks.

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That twenty percent isn't enough money to justify the work we do in onboarding and servicing these folks. We can't run that type of offer anymore, even if we need to add new people.

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We have to find a different way to communicate the value of this offer and get folks in the door. Yeah. I would say that is the inevitable part of the maturation of these programs, right?

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Because when you first start subscriptions, you're basically harvesting existing demand. At least this is the way I think about it. Every brand has a number of people who are willing to convert.

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You might not convert them immediately, but they're basically going to convert at some point if you do the- Mm... the right things, right? But that's just part one. That's like step one [laughs]. Yeah.

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'Cause step two is you gotta lean really hard into the data, into the optimization, into the multivariate testing, into really grinding it out. Is that a fair characterization?

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I think that there are some technology investments you can make that make it less of a grind and, and help with the- [laughs] Oh, very well done... the testing, the segmentation, the optimization. Very well done.

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I'm pretty good at spinning my [laughs] fucking wheels.

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No, I would agree that is-- and that's why I come back to when I tell prospects and customers, "Look, this is like they're starting a subscription product for the first time," which is often when someone like a Blue Conic would, would get brought into the room, is this is not done in three months, right?

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It's this is now a journey and a product that is gonna change and grow. I often compare it to like newsletters. Like when you launched your ESP, like it wasn't like, "Okay, newsletters are done.

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I never have to think about these again." It's a product.

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You're probably gonna need to have someone thinking about it as such and building a roadmap and thinking about who is this for and, and what do they need out of it.

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And that comes with then a lot of testing and a lot of discipline and new forms of sort of seasonality and ritual that come with your business that you have to be prepared to both maintain and in some cases implement for the first time.

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Yeah. And I think it's similar 'cause I really like how you call it like a forever business because I feel like we're coming out of an era where publishers often, and maybe some of them looked at subscriptions this way.

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Publishers were frequently just chasing incremental revenue, right? It was- Mm-hmm...

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I joke that there's the old Candid Camera of putting like a twenty dollar bill on the ground, and then you see who leaps at it, and they pull it away and stuff. Yeah.

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Publishers have been chasing that twenty dollar bill, sometimes it's a five, on the ground for a generation for good, for good reasons. Mm-hmm. With subscriptions, you might be able to catch them.

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I'm like stretching this metaphor as much as I can.

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But the reality is to have this be a long-term part of your strategy, one, you have to accept that it's, uh, and embrace the fact that it's forever, and that you're- Mm-hmm...

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gonna have to grind out all the optimization, and it moves from, broadly speaking, from a, a PowerPoint situation to a spreadsheet situation [laughs] end of the day. [laughs] You're gonna be in the spreadsheets. Mm-hmm.

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And I think that is an important reminder because this is not-- it's not like a light switch that you flip, and you've gotta...

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Also, I think the other point that came through in our, in our survey was the need to integrate subscriptions with- within the overall business.

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I feel like in s- so many cases, publishers have been trying to do so many things, and for good reason, right? Because they've seen a, an erosion in their ad businesses, and we know all the stor- the, the, the big story.

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But that they're trying to do so many different things. Sometimes those things are almost working in opposition, and you always run into this with subscriptions in some ways. Mm-hmm.

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It's very easy, I think, for subscriptions to be on an island. Yeah. It's look, just get them launched, and we're gonna set up a paywall, and some people will convert.

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And any number over one is a really good press release for x hundred percent improvement in subscription growth- Incremental. There we go... once we launch them. Yeah.

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But I- the one of the reasons I, I call it a forever business is both to call out the fact that there is gonna be ongoing work, but also that it sets you up to play a very sustainable game, and ideally, your brand can go on then forever as long as there are people willing to pay for it.

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And I think that's important as we see publishers adopt it to get out of the rat race of chasing big tech for scraps of audience and trying to monetize them where their business is maybe more in danger of being affected by shifts in, in the market.

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I think the next then layer though is to understand, as you said, that subscriptions, okay, now you've launched them. They are not a strategy unto themselves. They're a- Yeah... part of a balanced revenue strategy.

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I, I mentioned it in the report, and I think the best revenue mix is more of them. Like it's- Yeah...

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I would never, if I'm a publisher, say no to having a monetization path and product that makes sense for your audience and doesn't affect the user experience. But yeah, we saw that pretty frequently.

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I think that then gave rise to the meter paywall, where if we just use propensity or metering, we'll still have some ad impressions, and then we'll only be targeting the wall- Yeah... to people who really want it anyway.

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I think that's a, a good step, although I would argue that's maybe a, a technical solution to a problem that is institutional.

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It works, but at the end, you have to make sure that subscriptions are not like a vestigial part of the business that just appeared one day and then eventually gets bigger, 'cause that's a tumor. That's not healthy.

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It has to be a part of- Okay... the business itself and work in concert with the other things that you maybe already have been doing or want to do.

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Our best customers view the subscription model as the single best place to get high value readers that advertisers wanna reach.And get insights about those readers that makes them more appealing to advertisers. Yeah.

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Then that's like part of the maturation because I think instituting a subscription model, I've seen it firsthand. The, the initial reaction sometimes from ad sales is, "This is terrible." [chuckles] This is...

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This-- Why do we wanna close off? We're just, we're low. We're gonna cap the size of our audience. And, and I'd be like, "Well, if you're selling forty-five percent of the impressions, are we really?"

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When you sell a hundred percent, I'll make more. That was always my thing. I'm like, "If you sell," I was like, "I'll even... We'll do it at eighty percent. When you sell eighty percent, I'll make more.

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But until you're selling eighty percent, I don't wanna, I don't [chuckles] want to have this conversation." I don't wanna hear it. Mm. Um, that's it.

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But I'll totally have that conversation when you sell eighty percent of the inventory. No, look, these things can work in concert.

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Advertising is a smaller part of The New York Times business, but hey, look at their most recent results. Their ad business is back to growth. It does not have to be an, and this is a really bad ad market.

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I think maybe a lot of publishers start into subscriptions driven by a negative, by the weakness of the ad market.

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But the reality is, and I think you s- you can see this in the market, I'm sure you guys see this with your customers, is it's not an or, it's an and in most cases. Mm. Right?

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I've never understood the people who are, like, religious about it, like all subscriptions or all ads. Like, wh- why?

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And I, again, I, I think it, it ends up depending on, like, who your audience is because I've seen plenty of posts- Yeah... where our subscribers are subscribing to get away from ads.

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I would argue that they're paying to get away from a bad experience. I don't as a consumer- Yeah, bad UX... as a consumer, I don't hate ads. I hate bad experiences. Yeah.

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I hate ads that make no sense for me or they interrupt the thing I'm trying to do. But there are plenty of newsletters that I sign up for that come with ads, which are just I-- Some of them I stop.

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I go, "That's interesting." Some of them I'm like, "I'm actually gonna click on that because that sounds interesting to me." Mm. At no point am I like, "I need to get away. I need to unsubscribe-" Yeah "...

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from this newsletter." If I was on a website and seventeen video ads all played at once, yeah, that- that's probably the last time I go [chuckles] visit that website. Yeah. Well, we talked about this at dinner.

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Ad blocking is basically a video advertising blocking. It's not-- People are not trying to get away from inline newsletter ads. God forbid, please don't get away from this.

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But just the same way newsletter ads are part of a bigger offering. And I think- Mm-hmm... tying all these things together is just part of having a mature business.

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I-- One of the big sort of boogeymen that, that is out there, and it sort of show- it showed up in the, in the data from this report, but I think you guys have data across a ton of publishers, is this idea of peak subscriptions.

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The idea that there's only so many subscriptions to go around, that like- Mm... the pizza pie is not infinite, and so somebody's slice is gonna get smaller and smaller. And churn is real, right? Mm.

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And nobody wants to get into a churn spiral because it is a bad situation. It's very painful. The Washington Post is, it found, found itself in a churn spiral. It's trying to get itself out of a churn spiral.

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It's cyber week. It might be cyber month. Yeah. No need to comment on that. That's just my observation. [chuckles] I'm not touching that one. Okay.

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[chuckles] But first of all, from what-- Because outside of a vibes-based analysis that can just say peak. I, I specialize in vibes-based analysis. They can say, "Yeah, peak subscription." We could go to data too.

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Do you see any evidence of peak subscription? Ah. I think that peak subscription is a vibes-based analysis probably.

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I, I, I think that I would argue that in order to-- the data set in order to go wide enough to see if, like, peak subscription is true, not just in media, but it's all basically the entire world is pivoted to subscription, and people are, "I can't keep paying," like recurring things.

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I think at that point it gets so general that it's not worth talking about.

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I think that what our-- what we're seeing is that when subscription products are, are well designed in that they are built to serve a very specific section of the audience things they really need and want, they're wildly successful because they're not competing for every single person engaging with the brand.

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They're competing for the right person who is trying to engage with their offering. Like, I think a perfect example of a great subscription product is at Politico. I am probably never gonna subscribe to Politico Pro.

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That's fine. I'm-- That's not who it's for. Yeah. Whereas I am, for instance, like a Puck subscriber, it is exactly for me. Yeah. I'm a news junkie. I love it.

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I-- All those things that get offered to me as part of that are critical for my day-to-day working in media. It's the gossip.

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It's where the seeing, where the puck is going, if you'll forgive that awful sort of play on words there. That makes a lot of sense for me.

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I think that there's definitely peak subscription of just the subscription is what you used to get for free, but now you pay for it if you try and use it too much.

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I, I think that newspapers were early, obviously, to subscription adoption of dynamic metering of metered paywalling. Yeah. And a lot of people then were like, "Oh, that's what subscriptions are?"

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When they- they've done that. Like, a meter might not make any sense for someone who's writing about a particular niche or servicing a particular industry.

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[upbeat music] Yeah.

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And I feel like people want a one-size-fits-all answer when it always depends. You know? Yeah. Like, it's not, is it better to have a meter? Is it better to have freemium? Is it be- It's I, I don't know. It depend.

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Everything depends.And it really depends on your business model. So the Politico approach makes all the sense in the world for Politico. Mm-hmm. It wouldn't have made sense for The New York Times to go with them.

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No, whereas The New York Times creates high-quality content at a pretty serious pace, so metering makes a lot of sense.

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It's the best way for you to reach them, and then they, again, recognize that their growth isn't gonna come from more people on the core news products that they added on offerings, and then you have ramped people into a bundle.

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And now we've got... It's what The New York Times did, and this gets back to a point that we talked about at dinner, which is I, I think subscriptions are B2B SaaS in a different sort of environment.

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If you look at any really successful B2B SaaS company, especially as they gear up to go public or do go public, what they will do is they'll make an acquisition or they'll develop a second product line because now there's an entirely separate thing to sell to their audience, and if there's value in it, we now have a whole nother thing that they get to engage with, right?

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So if you sell security, now you're gonna sell monitoring. Now you're gonna sell interface and access management. It makes sense to the core offering, and if nobody new buys it, it doesn't matter.

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If half your customer base buys it, that's a significant now uptick in revenue, and that's what you're driving against, what is the total annual recurring revenue as a SaaS company for- Yeah.

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That, that's interest- that's an interesting point 'cause, I mean, you, you talked about the ask your SaaS providers [laughs] 'cause, like, they're the ultimate subscription business. Well- Yeah...

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there's a lot of ultimate subscription businesses. The government, being a citizen is an ultimate subscription business. [laughs] Every year you're gonna, you're gonna pay. Unions are a subscription business. Yeah.

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There's a lot of subscription businesses out there, and they're really good. Mm-hmm. What are the characteristics that you met?

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'Cause I thought that was an interesting point, and I saw that, that people really gravitated towards it. Obviously, B2B SaaS is a subscription business, but what are the best practices there?

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I think it is the development of something, like it's a... Every SaaS company has, like, way too many acronyms, but one that comes up a lot is, what's your ICP, your ideal customer profile? Yeah.

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I think a lot of times subscription products are built without asking that question, and I think Politico is a great example where there was a clear ICP of folks who were working in politics on K Street, in and around the government, who cared about a directory of aides' phone numbers or specific kind of like bill trackers, where like, who is that product for?

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It's very clear to answer that. I think when you look at subscription products that haven't gone as well, it's, "Well, who is this for?" "I don't know.

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Hopefully 20% of our audience" isn't a really strong [laughs] customer profile to build a product on.

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But isn't that just because, look, if you're looking at your audience, you're gonna say, "I want the target to be as big as possible. Can we make the target bigger?" Mm-hmm.

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And so inevitably, let's say your audience has five million people in it, and you're like, "Okay, well, this segment, which has 200,000 people, this isn't our ICP. Let's build a product for them."

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But then somebody else in the meeting is, "Wait a second. Why wouldn't we wanna build a product that is a far bigger group than that?" Because we're not gonna convert every single one of them.

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5% of that is not gonna add up to all that much. That brings up another commonly used sort of SaaS metric, which is your TAM- Mm-hmm... your total addressable market. Yeah.

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How many people exist in that ICP, and if we're only to carve off a small chunk of them at X cost, d- does the math work out?

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I would argue that, and this is again something that your SaaS providers has probably talked about, is it's very, uh, compelling to be like, "Well, what if our total addressable market was everybody?"

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But everybody has different needs, and you'll start to notice that different core personas- Yeah...

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or people that you might wanna reach have at times divergent priorities, and you have to pick which lane you're gonna swim in, and that's a really hard conversation.

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And that's why, again, I think it's valuable to have conversations with your SaaS provider who probably has had these conversations about, "Hey, we're getting traction in these two markets, but if we had to pick one, or we had to prioritize something that one market wants versus another, where is the bigger opportunity?

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Who can we support?" 'Cause again, you're in a forever business. Yeah. Just because you can do something, if you can't do it sustainably, eventually you end up having to, to pay the piper, and it's, it's not very fun.

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And I think that's what you see when folks talk about, "Hey, we really needed to grow and expand this, and we ended up grabbing people who were curious.

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They didn't see the value in our journalism, but when we priced it at a dollar, they came on board. None of them stayed." You could've given it to them for free. They didn't build habits. Yeah. They didn't come back.

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Like, you have to acknowledge that, yeah, it isn't everybody.

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It's a smaller subset, and I think that comes back to what we talked about at the top, which is that pivot from growth to ARPU, where then it's about, "Okay, how do I really understand the value of what I'm offering and ensure that I am charging a fair price to the people who are willing to pay it?"

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And that is a delicate dance, right? There's a reason that Netflix has boiled the frog on pricing. Every eight, 10 months, I get an email saying my price went up a dollar. Yeah. I don't really think about it, I move on.

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And then you zoom out and you're like, "Oh my God. I have that much more money in my bank than- Yeah... when I started?" If you're using the system, you're like, "Yeah, okay.

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It's not great, but they did it slowly, so I didn't really notice. It wasn't harsh, and I, I didn't freak out about it." And now you're like, "Okay, it's fair. I'm still getting a lot of good original content.

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I've still developed the habit of working with it." Yeah. And I think The Times has become, like, the go-to example, right? Like, it, it used to be- Mm-hmm... people held up BuzzFeed.

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They, they clearly don't do that anymore. And instead it's The Times because they've been able to pull off a really remarkable business model pivot, if you will. Yeah.

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And it hasn't been flawless, but it's been executed tremendously. And I think one of the big things that they've gotten right is this bundle approach. Explain the power of the bundle.

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So I, I think that gets back to the, the point I made a few minutes ago about, like, when you look at B2B SaaS providers, when they add products, that is what The New York Times has done.

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There's a coreProduct, which is this sort of get everything. But now there's a little bit of something for everyone- Mm-hmm... whether it's a dedicated subscription to The Athletic for sports.

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So like I'm a huge Liverpool Football Club supporter, and the best way that I get reporting on Liverpool is through my Athletic subscription, and I'm all in on, on their podcasting.

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But I actually don't pay for The New York Times. I, I don't have the, the full subscription. Where I, I stop is, uh, is on The Athletic.

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Whereas my wife does not care about the athletics at all, but likes Wordle, so she pays for the subscription that gets access to all of the games.

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And now they've got different, again, these audiences with dedicated products, some they've built, some that they've acquired.

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And eventually you can make a math argument that says, "Hey, Crane household, instead of doing both, why don't you just bundle and, by the way, get access to all of our great journalism," which is the core offering.

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So it gives you these layers of loyalty that you can begin moving people down. Mm-hmm. And there's now more opportunities for them to take their first step.

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It's potentially less of a commitment than just going all in if you only offered everything under one.

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And especially from like a, from an ARPU and from like a revenue management, it makes an awful lot of sense to have multiple layers, and then you can put in automation and workflows and training with your teams to work on identifying who's ready to make the leap from zero to one and then one to one more product and then eventually full bundle.

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Yeah. It's like getting them in the ecosystem. Mm-hmm. But I would guess the challenge there that you end up facing in anything in business is you wanna provide options but you want simplicity, right? Yep.

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And any time with subscriptions, if you sit in some brainstorming session, next thing you know you come out of it and you're like, "Okay, we've got eight different pricing tiers.

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This is probably too much to put in front of people." Yeah. And some of this came up at the dinner. One publisher had five different subscription programs and, and maybe that seemed like quite a few.

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How do you solve that of having distinct products for segments but also just not confusing people?

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'Cause I, I've run into it repeatedly in my career where inside of companies people always overrate the amount of time that other people not in the company think about their company.

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It's never as much [laughs] and as, as frequent as they think. The things that I... If we were ever like unclear of something internally, I'm like, "We get paid to think about this all the time."

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I was like, "What if these poor people who have, like, real lives, they don't sit around thinking about us all the time. That's ridiculous." Gosh.

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[laughs] So I think going back to this idea of, and The Times is a great example because it's a bundle, there's then also this idea of it depends on who you are. Most people are not The Times. You don't have that scale.

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You don't have the money to acquire fully formed products with audiences- Yeah... to go into your bundle. So I would encourage people start simple and then to go for Modern Family, right? Slow is smooth, smooth is fast.

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There is a tendency to be like, "Well, let's just A/B test," you put like eight different models. Yeah. And now we're, we're totally lost in the sauce.

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There's way too many things that we're trying to A/B test and optimize in a way that isn't scalable.

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Going back to forever business, you have to do things you can commit to doing forever because that's the nature of the business we're running.

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And you can always add a tier once there's proven demands or there's a sign within the data or in, you know, what you're hearing from your customers for a something else.

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Look how long it took Netflix to add an ad-supported tier. It wasn't until there was, like, pressure to do so, and then it clearly made sense.

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I don't think that the classic breakdowns are annual versus monthly or then you have a premium sub- or you have a subscription and then you have a premium subscription.

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But if you're charging those again differently, then that quickly becomes six different things that someone could potentially pay.

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Simple is best, and for most folks what we hear all the time is, "Yeah, we're getting away from monthly. Monthly people churn at a higher rate anyway. If you wanna subscribe, you gotta do it yearly." Yeah.

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Or it'll be monthly for the first year and then we're getting rid of it. Yeah. That was a pretty common feeling at that dinner was that monthly overall was not working for a lot of businesses.

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That they were seeing eighty percent-plus churn. Again, ask your SaaS vendor how many of them are willing to take month-to-month contracts. Yes. [laughs] That's true.

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But look, there are some publishers out there that have subscription programs that I look at them and I think Web3's back enough that I can say NGMI.

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Because they're out there on Instagram with the dollar offers, not strategically, but it's pretty easy, no offense to The Gap, but it's pretty easy to become The Gap out there, and it's always fifty percent off.

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And- Mm-hmm... look, The Gap's still an okay business. But the reality is I don't think most people want their brands to be thought of that way.

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And look, with the user experience, my other podcast partner, Troy Young, calls it a, the whiff of desperation on a lot of websites. Mm-hmm.

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There can be the whiff of desperation sometimes in the scramble to acquire customers, and almost a lack of confidence in the brand itself. Yep.

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And almost does a disservice to it by being too reticent to assign real tangible value to the subscription.

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'Cause if you're just constantly just doing a dollar offer, then you're setting the market expectation to some degree.

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I don't think this is why the Washington Post is dealing with a churn spiral, but this is how churn spirals start. Yeah.

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Is when you train the audience to not value what it is they're paying for and for them to expect bare minimum, it becomes a weightless thing that they can just as easily pick up and put down. Yeah.

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And then to your point, like once that stench is on it, "Hey, look, this is a dollar product," then no matter how much work you put into it and the amount of money you're spending to try and justify it, the perception is set in the eyes of the buyer.

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Yeah. It's like Chuck E. Cheese. After like the tenth brawl at Chuck E. Cheese, you hear Chuck E. Cheese and you're like, "Oh, that's the place where they have brawls," right? Yeah.

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I figured you're from the Greater Boston area, you had some kind of- I, I grew up in Connecticut, and there was a Chuck E. Cheese in Manchester. [laughs] With a Chuck E. Cheese brawl.

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I, I personally never got in a fight at that Chuck E. Cheese. But I think if we were to go to the good employees there, they would-- they've seen some. Yeah. Okay. Yeah. I don't know.

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There was like a period where there was a lot of fights at Chuck E. Cheese. But it's a [laughs] we can cut that part out. I don't even know. No, we gotta keep it. People need to know. Chuck E. Cheese brawl.

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Be careful at Chuck E. Cheese.

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[on-hold music] So the last thing is, and this again, it, it's part of this forever business, is the internal challenges.

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They always come up. I guess a couple things we ask people.

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One of the things was rate how well you believe your organization balances your subscription business with your other advertising business and other revenue streams. And sixty percent said either okay or poor.

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I think this is to be expected to some degree in that it is hard to get the parts working together.

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What are the best practices that you end up seeing across Blueconic's customer base as far as making that connectivity happen strategically? Sure. There's an institutional and a technological aspect of it.

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From a technological aspect, normally we're brought in when there was a dedicated software stack for direct-to-consumer revenue, like a paywalling or subscription provider, and then a dedicated advertising stack like a DMP or one of the new age audience platforms.

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But they don't wanna talk to one another. They're not really built to be revenue agnostic- Yeah... and not centering data.

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So there's a technical gap where something like a customer data platform that we provide comes in very nicely to ensure that the digital exhaust that is kicked off by both of these businesses eventually condenses and is packed back into that first-party data store such that it can be used again for better targeting or guide us towards new product.

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But even if you were to make that investment and bring on a Blueconic, the immediate follow-up question we have is normally, "Hey, in this sales process, was this the first time that ad ops and subscription product were in the same room?"

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Yeah. And if the answer is yes, then it's like, cool, we have some institutional work to do, and this gets into wider conversations like more involved who owns data.

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Like, data isn't usually the, the department, like they're in the department of data, or maybe there is, but it belongs to everybody.

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So building in these sort of internal processes where all of these folks are together or each of these revenue lines has a product owner, and there is some kind of council that has conversations about revenue and the contributions of each side of the business towards that revenue, that is gonna be the biggest hurdle.

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You can throw the tech and make great copy. Yeah. And AB test buttons and colors until the cows come home.

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But if then, like, these people are not talking to the folks who are responsible for running a sustainable ad business, oh boy. Like you, you're gonna get it cutting off nose to spite face territory.

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I also think that it's been both sort of a headwind and a tailwind with this whole death of the third-party cookie.

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Things around data and third-party addressability going down definitely affect negatively advertising revenue.

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'Cause even if it hasn't happened yet, people have talked about it enough to induce doubt and okay, maybe we won't spend as much.

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And then you combine that with sort of economic headwinds, and now we've got even more reasons for advertising to go down.

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But I'm bullish on what the future of ads will look like, which is less about reach at all costs and eyeballs and more about fishing a little bit more tightly against core groups that add value. Yeah.

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And the best part of a subscription strategy is it helps you unmask those folks, learn about them and build trenches of high-value audiences that can now be perfect for an advertising. Yeah.

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It's just all about more with less. Yeah. Publishers are gonna have to create more value with less audience because the audiences that they had were kinda fake. They weren't theirs.

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They were one-and-done people from- Mm-hmm.... these social platforms. SEO has grown less reliable. A lot of the people who ended up on the website were transient at best. And yeah, revaluations are painful.

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Ask the tech companies that went through that with their valuations. Nobody likes the revaluation.

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And the reality is that publishers have to accept that year is not coming back, and that year wasn't that great to begin with [chuckles] to be honest with you, for most publishers anyway, so good riddance. I would agree.

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Yeah. Things are gonna change. We're not gonna go back to that point, but I think that is overall a good thing- Yeah... for the industry. I don't know.

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I, I don't wanna be glib about the fact like, yeah, well, there are probably gonna be some brands, some of them like really storied important brands that end up getting left behind, but capitalism tends to be a full body contact sport.

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Yeah.

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[chuckles] I think that the next sort of like wave of media companies and, and media operators that grow out of this environment will probably be stronger fundamental side tool players than those who grew up on- Yeah...

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SERP and were chasing traffic. Well, I think you see this with the crop of new publishers, and they're not trying to retrofit. And this is why new brands- Mm-hmm...

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tend to have a advantage when there is a shift in markets, is because I don't know how many times I run into people who have been in this business for decades who tell me basically a variation of the old playbooks don't work anymore.

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And that happens, so if you don't have that playbook and you don't have, importantly, an entire team and a program built around that playbook, that's a tremendous advantage.

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And you see a lot of the new entrants that I think are most promising. They're starting with high-value audience segments that they are going to have a deep understanding of and be able to, quote-unquote, "activate."

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Sometimes that's in the form of a paying subscriber, and sometimes it's not. But having a deep understanding of your audience, to me, is I see people starting these businesses, it's step one. It's foundational stuff.

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I think a lot of newer publishing companies ask themselves upfront, "Why do we exist?" Right. And I think that there are a lot of other brands who maybe when traffic was cheap, there was buzz.

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They didn't ask that question of like, "Who are we critical for? Who is this person can't live without us?" And if that person doesn't exist, and it is mostly transactional traffic one and done- Mm-hmm...

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then maybe that brand isn't gonna be around. Okay. Well, Patrick, thank you so much. Really appreciate you taking the time, a little walk down memory lane with the Chuck E. Cheese and all the rest of it. Thanks.

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I deeply appreciate it. It was an awesome experience to be a part of both the report and the dinner, and it's stuff we really believe in.

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Publishing's a, a big part of our customer base, so the, the challenges that they're feeling and facing are certainly top of mind for me, if not other people within Blueconic.

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It was great to see some of the stuff we were hearing show up in the data, but also see some hopeful trends where, you know, vast majority of the respondents think that twenty twenty-four is gonna be better than twenty twenty-three was.

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Yeah. And I agree. I think that the future is bright as long as we're setting reasonable expectations. It's not gonna double overnight.

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But if you're willing to commit to that forever business and commit to the, the work that it entails, I think it's a great path for a sustainable future for a lot of media companies. Yeah, a hundred percent. Cool.

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Thank you so much. Yeah, it was a pleasure. [on-hold music] Thanks for listening. Thank you to Jay Sparks for producing the Rebooting show.

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If you have a podcast that you're considering making, you should check out Podhelp us and what Jay can do for you. Go to podhelp.us.

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