The Future of Subscriptions, Part Two
07 Dec 2021How subscriptions will change as ad-supported businesses embrace them.
In Part One, we discussed the growing adoption of subscription-based products by companies monetized through ads. Ad-driven social media in particular has shown itself poorly aligned with users and society as a whole. This has led to business risk, greater regulatory scrutiny, and drives the search for new ways to monetize.
Even with this shift toward subscription-based revenues, ad monetization will maintain its centrality over the long term in areas where it makes the most sense: search, social media, various interactive experiences at internet scale. Despite controversy, the ad model has proven itself. It is embedded in our digital lives. There’s no going back.
So the move to subscription commerce by ad-supported companies does not suggest eventual replacement of ad monetization. Ad revenues will not wither on the vine while subscription revenues blossom. It is much more likely that the existing dichotomy between subscription and ad business becomes less pronounced. To make sense of this idea we need to look at the difference between the two areas of commerce in one important respect - personalization. There are many different tactics involved in personalization depending on context. But what binds them together is the idea of making user or customer goal attainment easier.
Consider social media for a moment. “We use your personal data,” says Facebook’s terms “such as information about your activity and interests, to show you ads that are more relevant to you.” The company’s on and off platform tracking stands in as a kind of payment for use of the service. This arrangement solves two goals for the user: to communicate with almost anyone, anywhere (a paid service would undermine this goal) and to experience relevant content.
Subscription agreements are telling, too, starting with the fact that there is no such thing as a one-size-fits-all subscription agreement even for companies in areas like digital/print journalism or telecommunications. But what they all have in common is to stipulate access to (or usage of) one or more products in exchange for payment. Personalization means solving the goals of providing relevant products for customer or segment and doing so at a reasonable price. This looks a lot like traditional marketing practice given that it acts to induce prospects to become customers or prevent customers from terminating.
In short, advertisement and subscription monetization involve very different forms of personalization. There is ad personalization on the one hand and offer personalization on the other. That makes sense from the standpoint of these varied businesses. Facebook wants as many users as possible, and they should be active as much of the time as possible. Subscription-monetized businesses are aiming at landing a paying customer and keeping them subscribed for as long as possible.
As ad-supported businesses take up subscription models, look for increasing novelty in how subscription businesses think about personalization. Will buy-in to subscription arrangements become less effortful for consumers? Yes. Will we see more subscription offers coming through our social media feeds, and will these offers be more tailored? Yes. Will subscription commerce eventually be integrated with tracking technologies? It seems a pretty likely outcome. In other words, subscription commerce will change to embrace personalization technologies that are far more robust and modern than what it has today.