Should Publishers Refocus on ARPU?

Newspaper and magazine publishers (and other media owners) typically run their businesses based on segmented revenue streams such as circulation, advertising, promotions and so on. The revenue streams often report vertically, ensuring that the focus is on vertical strategies and execution first, and horizontal second. But could it be the right time for publishing businesses to refocus around a central guiding metric such as average revenue per user? Here's five reasons why that might be a good idea:

• It would mean that revenues, and therefore activities to generate revenues, are focused and structured in a customer-centric rather than a company-centric way. Customer-centricity is the hallmark of many a successful digital (and otherwise) business, and ARPU is a naturally customer-focused measure
• If your starting point is the customer, that means that strategies for growing revenues have to be more joined-up. ARPU can illustrate better from a customer perspective what is driving revenue growth and margins, and joined-up approaches (particularly with data and analytics, and the ultimate objective of a single customer view) are becoming increasingly important to companies across many different sectors (not least for improved user experience, cross-sell, up-sell, and improving the targeting of value-add services)
• If your strategies for growing revenues are more customer-focused and joined-up, it means that the development of extra services to generate revenues is easier, and can be less restricted by legacy thinking or approaches. ARPU growth can be a good measure for how successfully a company or brands are transitioning users to new services that are both attractive to customers and strategically important to the business 
• If you are less restricted by legacy thinking and practices, you can take a genuinely platform neutral approach to growing the business
• ARPU is used successfully by companies that offer subscription based services to clients (telephony, ISPs). Content is increasingly a subscription business, and most publishers are already familiar with making subscription models work. As revenue streams diversify (for example into commerce and added value services) and become increasingly digital in origin, ARPU provides a unifying metric and objective for everyone in the business to get around - not just the commercial teams

It's certainly not an easy switch to make, but with the degree of challenge most media owners are dealing with perhaps it's exactly the kind of change that's needed. Agree? Disagree?

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Comments

[Paul Squires]

Spooky - I was talking about ARPU in publishing this morning, and gave it the more industry-friendly acronym ARPC (C=customer).

It's worth making the point that much of what drives business decisions which focus on ARPU, is integrated CRM. If you can get publishers' heads around the theory of ARPU, then a CRM platform that delivers a total view of the customer is the subsequent practical step.

[Tom Darlington]

Hi Neil,
An interesting post - did you ever see this on the Atlantic last year?
Makes an interesting point on the ARPU of news media vs. digital, if you frame it in these terms the question over who is "doing better" becomes harder to answer!

http://www.theatlantic.com/business/archive/2012/05/this-graph-is-disastrous-for-print-and-great-for-facebook-or-the-opposite/257857/

Cheers,
Tom

[neilperkin]

Thanks for the comments and the link. I'll take a look at that