Times Square

To free or not to free: Consumers and subscriptions

Emily Thurston

31 Jul 2018

Digital consumers are getting more savvy about what they experience online – and particularly in their relationship with advertisements and paid content. We can be impatient with paywalls, inclined to skip ads and willing to look for alternative platforms when confronted with too many of these ‘obstacles.’ This might reflect that in the digital age, ever since the Napster era, we’ve become accustomed to getting content for free by default. But it’s also a sensitive issue because digital platforms have become central to our personal lives. Ads can feel even more invasive when they flash over two inches of your smartphone or cut into your gym session through your earphones. The balance between keeping consumers happy and making money leaves publishers in something of a quandary. Do you choose ads, subscriptions or something in-between – in other words, to free or not to free?

Ads and the power of the personal

First off, it’s certainly not the case that consumers hate adverts. Usually, their objections are reserved for bad ads, especially those that keep cropping up. What’s key is quality and relevance. Think of Skittles giving up their rainbow for Pride, the Fanta Halloween experience and of course the annual event that is the John Lewis Christmas advert: all major events and talking points in themselves (#MontythePenguin, by the by, was clearly the best). https://youtu.be/RSxOjBIjyhI Content that makes you laugh, cry and even think – all of this is likely to be more acceptable to a publisher’s users. Personalised content is known to be more effective and importantly more enjoyable for viewers. Sizmek found that 49% of consumers would engage with an ad that was personalised to them, rising to 73% of millennials. This is clearly a way for platforms, and especially those with registered users, to add value for advertisers and create a tailored experience for users.

Avoiding the uncanny valley

Poorly personalised content, however, can be even more jarring – especially when it comes through a publisher that you use a lot. I, like many of my female friends, have been seeing adverts for baby food since I was at university and at this rate I’m expecting to way into my 60s. The other side of the coin is when personalised content veers towards the ‘uncanny valley’ and feels almost too targeted. I’ve had moments where I’ve talked about a product or even just thought about buying it, only to suddenly see an advert pop up. Who knows what subliminal buying signals I might have sent, but it’s definitely disconcerting and liable to even put me off a given publisher at a time when data privacy concerns are high. Publishers will perhaps inevitably be associated with the ads they display and how they display them. Striking the right note with personalisation is an important consideration if platforms use ads to keep their content free.

Breaking free(mium)

As an alternative, publications can present users with the choice to see or not to see ads with the freemium model. The success of Spotify has shown how well it can work when you offer users incentives to pay – not only for a lack of ads, but additional functionality. The freemium model offers certain advantages for publishers, as you can still attract ad revenue, grow user numbers and have a means of marketing your platform and services, to encourage users to go from free to paid membership. YouTube Premium is a new freemium service, offering subscribers not only video downloads but original content apparently targeted at the core YouTube demographic: specifically, a documentary about street cats and comedies starring YouTube stars. At a time when consumers can be reluctant to accept full subscriptions straight off the bat, freemium models can offer better flexibility for publishers and their users.

Blurred lines

But once digital consumers have paid their premiums, they are likely to be very sensitive to the content that they see: particularly if they feel that it oversteps the line into branding and even advertising. Recently Spotify users complained when the launch of the new Drake album appeared all over their personalised, premium homepages – even on the front of playlists he wasn’t on. https://twitter.com/danideahl/status/1012758948275982336 Many complained that they had never listened to Drake or similar music, so the content strayed into advertising rather than personalisation. It could just be that Spotify got its targeting slightly wrong: assuming that there would be high interest in the album and so sharing it beyond the usual audience. But if platforms blur the line with paying users, there’s a risk that they will leave. This means the subscription model crumbles and platforms must once again display ads to everyone.

What consumers want

Adverts, subscriptions and freemium – it’s still not clear which model will win out. But today what seems to matter most to consumers is transparency and choice. In the long-term, we may become more accustomed to paying for content, making subscriptions a more viable choice – in the news industry for example. But in the meantime, freemium with its many variations could be a valuable alternative. However, since digital platforms can form a large part of our personal lives, ads will remain a potentially sensitive area. Publishers depend on the trust and goodwill of their users, so must stay in tune with the digital consumer.   Image source: Pixabay