Thought Leadership

Life: Subscribed: What brands should know about the rise of subscription

From the rise of Netflix to the resurgence of The Guardian, the subscription model is in the midst of rapid transformation with significant implications for brands.

Izzy Ashton

Assistant Editor, BITE

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“What defines a subscription?” These were the words with which The Kite Factory’s Head of Insight, Strategy & Planning, Rik Moore opened the agency’s Solving Subscriptions breakfast event last week. Held on the top floor of The Gherkin, the event saw brands and media owners examining the growing importance of the subscription model. As Moore said, “Whatever market you’re in, there’s room for subscriptions.”

Today, consumers can subscribe to almost anything: coffee, razors, books and even bacon. Once consumers find a brand and a product they trust and like, a subscription offering is a simple way to gain their loyalty, and to offer a more personalised service. What a subscription model can also gift brands is unrivalled data. This is essential when 55% of marketers feel they don’t have sufficient data and insights to drive personalisation, as Dr Sarah Faust, Insight Manager at The Kite Factory revealed.

Then there’s the question of how to create a successful subscription brand and how to get consumers to subscribe in the first plac. Nicola Kemp, BITE’s Managing Editor hosted a panel to explore just that, with speakers from Birchbox, HelloFresh, True Royalty TV and David Lloyd Leisure. Sarah Wilkinson, Marketing Director at Birchbox remarked pointedly how “consumers are time poor…I geuess we are capitalising on the tired tax.”

The conversation around sustainability and the circular economy also topped the agenda. Paul Jacobs, Managing Partner & Co-Founder at Wax/On revealed in a live recording of the agency’s Wax Lyrical podcast that one third of products get returned. What brands need to do is “move towards the circular economy,” he said. Fiona Spooner, Global Marketing Director, B2C at the Financial Times pointed to the growth of businesses like Rent the Runway as “the future of subscriptions with a more ethical view.”

In an ecosystem in which consumers are outsourcing a growing number of purcahse decisions the role of automation and algorithms also topped the agenda. Tom Ollerton, founder and CEO of Automated Creative, pointed to the example of Netflix as a prime example of a brand using machine learning to maximise subscription revenues. He explained: “I don’t think they care about making great TV they just need to make people not unsubscribe.” He noted that while there are obviously people at Netflix who care a great deal about the content they create the brand is primarily an ‘ad-tech business’ in the business of creating subscriptions which 'compete with sleep'.

Ollerton also highlighted the rise of Amazon as a key trend to watch in the subscriptions market, particularly if the brand extends its offering to ‘anticipatory shipping’. If, for example Amazon’s algorithms believed a consumer was about to run out of toothpaste, it has the shipping infrastructure to send a product on the off chance they may need it.

Concluding the morning was a conversation between Moore and Richard Furness, Managing Director of Consumer Revenues at the Guardian. Furness spoke about the shifting ways the Guardian engage with their readers, from donations to subscriptions. He examined the paper’s relationship strategy which, he said, started four years ago revealing that, “whether print or digital, a recurring relationship with readers is key.”

He shared how their subscription model is evolving, noting that environmental stories are a key driver of donations to the Guardian. “We see an incredible range of reasons why people contribute to The Guardian, but one of the biggest motivators is keeping [the platform] open for everyone else.” An insight which underlines the growth of the subscription market is as much about human empathy and consumer understanding, as it is outsoucing any given purchase decision to an algorithm. 

SOLVING SUBSCRIPTIONS

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