Mobile operators are the gatekeepers for the UK’s favourite device - yet year on year they report decreasing average customer value. It is time that the mobile industry harnessed the potential of operator driven mobile payments enabling merchants to reach their customer on their preferred device, offering a truly mobile payment service.
“It’s clear that the broken system is ad-driven media on the internet. It simply doesn’t serve people. In fact, it’s not designed to.” Ev Williams
It is slowly becoming clear that advertising is not the saviour of premium content: ad-blocker installs are increasingly prevalent; revenue generated by engagement is in decline; scepticism over the use of customer data is building and the market is now dominated by Google and Facebook, which now account for 99% of growth in online advertising.
In response to the anticipated demise of advertising revenues, Spotify, Netflix and Amazon have all successfully adopted the subscription model to monetise their digital content and support global distribution, proving that customers are willing to pay for premium content if there is a fair value exchange between quality and cost.
Online newspapers have, with varying success, introduced charging mechanisms, or ‘paywalls’, as they grapple with trends in customers’ consumption of unbundled content. Recently, the New York Times announced subscription revenues of $223m in 2016, with their subscriber base growing at its fastest rate since launch in 2011 – it now considers itself a ‘subscription-first’ business.
Most publishers have yet to achieve such success, partly due to the difficulty of aligning the pricing model with changing consumer behaviours. The growth of social media and prevalence of mobile devices have pushed customers to discover their content article by article, ‘snacking’ on content selected for them by data-driven personalisation tools or their personal network. This more casual approach doesn’t mean the customer is not engaged, nor that they are unwilling to pay; but they do not want to pay £9.99 a month for 12 months to read that single article. Whilst most publishers would view themselves as a ‘destination site’, a growing proportion of customers do not feel the level of loyalty or publisher primacy to buy premium content from only one publisher.
Netflix, Spotify and Amazon have introduced a micro-payments solution called ‘Direct Carrier Billing’ to evolve their pricing options to meet this shift in demand and underpin their subscription proposition. DCB uses a mobile network’s billing platform to allow a customer to securely add a charge to their mobile phone bill with no data input and just one click. Available across UK carriers, customers do not need to apply or pre-register to use DCB and it enables purchases between 1p and £20. This intuitive service increases conversion and facilitates a variety of charging mechanisms, for example; pay 49p to read an article or subscribe at £1.99 per week. The format works both within mobile internet and app stores, and with PAYG or Pay Monthly customers.
Direct Carrier Billing has the potential to change the publishing business model in a similar way. By accepting payments for as little as 1p, several new content and subscription approaches become feasible – reaching previously in accessible audiences.
Monetising the ‘long tail’: Accepting one-off micropayments for specific content allows publishers to monetise the portion of customers that have not historically paid for content. Customers that were previously willing to pay for single article, but not a subscription, had no way to consume (and pay for) specific content: item-specific DCB payments allow publishers to generate revenue from this cohort of customers.
Monetising the back catalogue – When it comes to digital publishing, there is still the culture that customers will only pay for content that is ‘hot off the press’, but many publishers have a significant archive of content that may not be current but is still highly relevant and has a market value. DCB payments allow publishers to attach a low but fair cost to this content, which otherwise would have been unlikely to generate revenue – especially as other payment types would make such a low transaction value untenable.
The subscription pathway – The temptation, when considering one-off payments versus subscription payments, is to assume that the former will in some way cannibalise the latter. Those that have introduced micropayments in publishing (most notably Blendle in the Netherlands) have seen that ‘subscribers’ and ‘payers’ are largely discreet audiences. Further, DCB offers a pathway to convert ‘payers’ into ‘subscribers’ by creating an ongoing dialogue with customers that were previously impossible to engage with.
With smartphone use surpassing desktop, it’s more vital than ever for brands to successfully monetise mobile.
Stat Counter, a research company who track internet use across more than 2.5 million websites, found that, by the end of 2016, 51.3% of web pages were loaded on mobile devices. This figure was up by a staggering 10% in just two years. However, despite huge growth, conversion rates and monetisation of the world’s largest digital channel continue to fall short of those of desktop.
The ‘snacking’ culture of mobile phone use, alongside challenges with screen size, data entry and the public spaces in which phones are often used, requires businesses to re-think their mobile strategy if they want to finally crack mobile monetisation. However, we’re not just talking about more responsive websites and larger Call-To-Action buttons (albeit both are important factors): success on mobile will only be achieved if the proposition is tailored to the small screen and is complimented with a seamless mobile payment experience.
We’ve put together some tips you should seriously consider if you’re looking to increase your mobile conversion rate and monetise your digital content.
1. Offer a Free Trial
If your product is a subscription service, why not let it sell itself by offering your customers the chance to try the service before they pay for it: if it’s the right product, they’re likely to turn into a paying customer anyway. Not only will a free trial increase the number of subscriptions, it also develops a much deeper sense of trust with your brand.
Here's a proven method to increase your chances of converting a ‘trialist’ into a paying customer:
- Capture payment details and permission to charge at the point of subscription, so payment can be taken once the free trial is complete.
- Be transparent about pricing details at the point of subscription and make it clear when the customer will be charged.
- Make it easy for customers to cancel their subscription at any time, to avoid disgruntled customers.
We’ve found that use of these best practices results in more than 80% of trialists ultimately converting to premium.
2. Develop a ‘Snackable' Proposition
Mobile is dominated by a ‘snacking’ culture.
A study conducted by Nottingham Trent University found that the average person picks up their phone around 85 times daily, in a series of short habitual bursts throughout the day where more than half lasted no longer than 30 seconds. This behaviour is completely different to other channels, such as desktop and TV, where a longer session, or even a binge, is much more prevalent. Thus, mobile content and products should be tailored to much shorter but more frequent user activity patterns: think bitesize content that can be enjoyed on the morning commute, just before bed, or even while watching TV.
Also, with the habitual revisiting behaviour of mobile users (just look at social media use for evidence of this), content must be refreshed much more frequently if you want to retain your customers.
3. Explore Micropayments
Micropayments cater for impulse purchase behaviour.
Due to increasing smartphone adoption and its ‘snacking’ behaviour, many companies are tapping into the value of deploying micropayments. A look at some of the world’s leading brands across all different sectors shows how popular this has become: Dropbox (£7.99 per month), The Telegraph (£1 per week), Spotify (£9.99 per month), Strava (£5.99 per month) are just a few examples.
While customers may be willing to pay £40 for a monthly TV subscription that allows them to binge on their favourite boxsets for hours, they simply won’t pay the same price on mobile. In fact, we’ve found that pricing up to around £12 per month works best for mobile.
However, it's not just about subscription models. There’s also an opportunity to offer one-off payments, where users pay for content as they consume it. Just look at Blendle, a digital news platform, that allows customers to-per-article and shaping the future of great journalism.
4. Deliver a Frictionless Payment Journey
Sadly, a great mobile proposition, appropriate pricing and a free trial alone are not enough to get your customers over the conversion line, if they’re made to jump through hoops to pay. So, the final part of puzzle (and one that should be your key consideration) is optimising the payment journey itself.
To maximise your chances of converting a customer, you must deliver a compelling experience that allows your customers to seamlessly discover, pay and consume your digital content from their smartphone. Direct Carrier Billing (“DCB”) enables customers to purchase digital goods from their mobile in as a little as a single click. By automatically detecting the customer’s mobile phone number, the transaction can be charged directly to their mobile phone bill with absolutely no fuss - it really is as simple as that!
DCB offers far greater convenience to the mobile user than any alternative payment mechanism and is perfect for micropayments, completely removing the need to fill out lengthy forms or enter any personal details – unlike Credit Card, Debit Card and even PayPal, which can sometimes require over 100 clicks. It’s easy to see why Direct Carrier Billing converts three times better than Credit Card!
Interested in micropayments?
If you're looking to increase your mobile revenues and you'd like to learn more about micropayments, then we'd love to speak to you.