How to Calculate Your Subscribers’ Value

The goal of business, according to Peter Drucker, is to “make a customer.” I think this is accurate. However, marketers (and other company executives) oversimplify the concept of a “client.”

I contend that a single sale does not always indicate the development of a true customer. In a similar vein, I contend that companies can acquire clients who have never made a purchase.

As Drucker himself stated, it is the consumer who determines what a business is. Because only the client can turn economic resources into money and items into products by being willing to pay for a good or a service.

Excellent marketing adds value that consumers are ready to pay for and that can be profitable for the company. However, not every consumer investment results in a purchase. They may consist of resources like time, focus, recommendations, private information, and brand loyalty, all of which can be used to generate income for the company.

Media organisations are aware of this. I can’t think of another business that produces one thing but sells a different product, as one television executive said over 20 years ago in the book Audience Economics. We produce programmes and broadcast them. We are marketing to the viewers of the shows, not the programmes themselves.

What is the value of marketing?

The success of modern marketers is determined by their capacity to lead potential customers through a process that improves their value to the company as they progress toward becoming what we traditionally refer to as customers.

According to the hypothesis, a qualified lead is more valuable than a visitor, a sales opportunity is more valuable than a qualified lead, and a sale is more valuable than a chance. Marketers then calculate the value of their marketing by dividing the sum of the money (or potential revenue) generated at each stage gate by the total marketing dollars spent.

The chief financial officer, though, gives us the side-eye at this calculation. Associating a monetary value to that “future revenue” has always been the traditional issue in calculating marketing ROI.

Simply put: What true value does a qualified visitor, lead, or opportunity have? Since those potential clients never made a purchase and the revenue-to-marketing-cost ratio is the only factor that matters, the right answer is technically zero.

But wait—didn’t I just mention that content marketing offers a chance to go beyond the conventional notions of what a consumer is and how money can be generated in a company?

Indeed, I did.

We wouldn’t only count the number of attendees. We would gauge the audience’s contribution to the business’s wealth, specifically the various audience segments.

What is the valuation of the audience?

Rewind for a moment.

Have you ever heard the old joke? Three scientists are marooned on a desert island: a chemist, a physicist, and an economist. A can of food washes ashore on the beach one day. Both the physicist and the chemist come up with clever ways to open the can. The economist merely says, “OK, assuming there is a can opener,” when it is his turn to speak.

It might not be all that humorous.

Even for media firms where this is standard practice, valuing viewers is vague and difficult. What we DO with that involvement ultimately determines how much of the audience’s time, data, attention, loyalty, and engagement is worth.

Investigating audience valuation is more of a marketing exercise that aids in applying monetary value to other areas of the organization than it is primarily an accounting task. In other words, to paraphrase the media firm CEO who was before quoted, you value the audiences who consume the content rather than the content itself.

What does “audience asset” mean?

A collection of people who come together to watch or listen to performances, or who consume or enjoy content—a book, art, or other media—is the simplest definition of an audience.

It makes sense to place a larger value on the audience members who give you this investment voluntarily and consistently, if the objective is to put a monetary value on the depth and dimension of the investment the audience makes. We’ll refer to them as “subscribers.”

A subscriber is measurable if you can reach them at any time and can confirm that you have done so. Because you can’t really tell which Facebook “likes,” Twitter followers, or podcast subscribers you have reached, they become even more important.

Let’s change the way we define an audience asset to reflect that the objective is to count the number of addressable subscribers.

One thing to keep in mind is that, even if the audience hasn’t provided an email address, phone number, or physical location, technologies exist that make people on many platforms addressable.

However, subscribers are more valuable as a result of the fact that they consented to you contacting them at any time (in their inboxes, mailboxes, or mobile phones).

Let’s define an audience asset as someone who has given you personally identifiable information that enables you to send them communications whenever you choose.

Now that we know it, let’s measure.

Creating objectives for the audience’s asset investment

According to Peter Drucker, there are only two ways to increase wealth in a business: cutting costs or raising revenue. You can put together company goals that accomplish one or more of those objectives as your audience expands.

These objectives are all supported by receptive, addressable subscribers. However, these objectives’ scopes and audience desires differ from one another. Simply put: Not all subscribers are equally valuable, despite the fact that they all have value.

How to determine the asset value of a subscription

The net present value of any audience asset is a moment in time, just like it is for a media corporation.

Even though your audience may be limited today, it is active and eager to take a variety of steps in the direction of your objectives. The audience may be larger tomorrow, but they may not be interested in or willing to assist you.

The asset needs to be taken care of just like any other. The audience might be measured and divided based on activity. At CMI, for instance, we track audience disengagement as well as fans and superfans. We simulate subscribers as clients with a rising (or falling) lifetime value. Tomorrow’s disengaged subscriber is today’s engaged and active subscriber (or an unsubscriber).

Marketers can see increasing subscriber value as its loyalty, activity, depth of relationship, and willingness to take activities over time, whilst other departments may look at expanding customer value by continuing transactions over time.

Keep in mind that you can track both the audiences that assist you reach audience-related goals and the audiences that support more conventional marketing and sales objectives.

Moving further, your audience asset framework

There is pressure on content marketers to demonstrate the results of their efforts. Your programme will fail if you solely use content marketing to replace advertising.

Successful content marketing strategies cost more than traditional advertising. However, the expense might be justified because content marketing can offer numerous lines of integrated value across the firm.

The content is not where that investment is made. The subscribed audience is the content’s end outcome. The only thing that gives content worth is how well it engages, builds, or moves an audience.

This model is still in the works. With time, it will continue to get better. I’m hoping it will lay the groundwork for firms to identify their true areas of investment.