iBankCoin
Joined Dec 27, 2015
198 Blog Posts

The Rise of Subscriptions and The Fall of Advertising

Individual startups have brought about stiff competition like never before. Established companies are struggling to compete with them. For instance, Airbnb has disrupted the hotel industry. E-commerce has made this disruption possible. People prefer to shop from digital storefronts. The trend is changing slowly and settled companies that have been around for years may be taken down. Businesses are shifting their models from adverting to subscription. They have become sensitive to consumer’s demands. Companies that still use advertising will have to change their strategy of doing business.

 

1. Subscriptions are becoming popular

The media industry is shocked at the growth that is taking place in media businesses supported by subscription models. Newspaper companies such as The New York Times had been overtaken by startups that were supported by subscription models. However, these established media companies have caught up with the rest after taking up the subscription models.

 

A popular trend in e-commerce has seen consumers start by buying products in one category and eventually end up buying most of the things online. This trend has affected customers who begin by subscribing to a single media channel then finally sign up to other channels. You will end up getting everything you need from these platforms.

 

People are warming up to the subscription model. Media players have used visualization tools to come up with personalized application experiences.

 

2. Advertising has become frustrating

Interruptions caused by advertising has become frustrating. It makes it hard to concentrate on one thing and results in wastage of time. This fact has contributed to the growth of subscriptions. In the past, the interruptions were few and so were the digital media channels. You had no options to pick from, so you couldn’t avoid the advertisements. The growth of the digital media has given consumers the freedom to choose the channel they want to view. Keeping up with these channels at once is difficult, so any interruptions from advertisements become unbearable. Consumers end up subscribing to get rid of the ads as they affect their concentration span.

 

Not only will you make little money using advertising-supported business models, but you’ll also struggle to keep up with the constant changes that take place in this industry. The cost of free sites is increasing as fraud has caused publishers to pay for third-party verification systems. You will also need to spend on a sales team to keep your clients happy. At some point, it will become too much, and you’ll need to find a better way of setting up your business.

 

3. Subscription improves the product

Your products improve when you focus your attention towards keeping you paying customers excited. The people who make mobile games have discovered this secret. They shifted from showing the advertisement banners at the bottom of the mobile’s screen to requesting users to pay to get better experiences.

 

Netflix is an example of a company that has invested heavily in its programming software. This software makes personal recommendations of television shows and movies that their users are yet to see. These firms depend on information from their relationship with clients to know their preference. Companies will come up with quality content with the intention to attract and maintain their subscribers.

 

4. Predictable, recurring income entices investors

Investors are frustrated from putting in money on advertising models that have minimal returns. This frustration has caused companies to shift to subscription models which have predictable, recurring income. Companies will choose to get rid of the ad model and direct their consumers to the subscription page. Investors will seek to find out the revenue generated per user before deciding to invest in companies. This method will enable them to make data-driven decisions. Money that would have been used to create ads will be used to improve the products.

 

Conclusion

This trend won’t affect companies immediately. However, from the points above you can tell that there will come a time when firms won’t be able to reach their target audience using the traditional interruptive advertising. A smart business leader will prepare for a future where subscriptions are the way to riches.

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