KPIs are incredibly important; there’s no doubt about it. The clue is in the name: ‘Key’ because you are measuring something important to your business; ‘Performance’ because it tells you how your business is doing; and ‘Indicator’, because it will predict future outcomes. It is all too easy to be led astray however, so it’s worth remembering ‘KPIs are metrics, but not all metrics are KPIs’. Go on, repeat it to yourself. And again. The bottom line is that you will only understand how well your business is doing, and be able to improve it, if you are tracking and acting on the right data. Like most things worthwhile, it takes time and hard work to get your KPIs right; from identifying them, to measuring them, and ultimately acting to improve them. This blog in no way claims to be a silver bullet for your mobile media KPI requirements, but instead focuses on some of the most important ones that will help you on your way to measuring the right aspects of your media app.
Tailor KPIs For Your Media Business Model
Digital media is still relatively young in comparison to the long history of print media. The problems of monetization (ie getting people to pay for content and journalism) are still getting figured out, although some progress has been made in recent years. What that does mean is that fundamentally there are two main business models, and a different set of KPIs for each. So before going any further, you’ll need to figure out which one applies to you.
Subscription-Based Media Apps
If you take a look at the top grossing media apps in the App Store, the majority make their money from paid auto-renewable subscriptions. Usually these apps offer some kind of time-limited free version with the intention of converting as many users who enter that trial period into paying subscribers as possible (Netflix, for example). It’s therefore pretty obvious that KPIs based around conversion are of particular importance for this business model.
- The first vital step is tracking how many new users convert into activated users by signing up for a free trial. This will typically be a percentage, best calculated around a consistent timeframe (so for example, of new users who had an initial session start 14 days ago, what percentage have signed up to a free trial?). If this number is lower than you’d like, you need to improve your onboarding and work harder to explain the benefits of your service to new users.
- The next metric that really counts is how many users who have activated the free trial convert into paying subscribers. This step is essential, and stands to reason: you don’t make money from free trials. Again, a sophisticated conversion strategy is required to get this job done: personal, contextual in-app campaigns and messages, smart rich media push campaigns, and the A/B testing of multiple alternative approaches and interfaces. Between these first two numbers the success of most subscription-based media businesses is established (or not).
- Lastly, retention is of course a significant metric in this space: churn kills any business of this type. In this case pay very close attention to how many users are canceling their subscriptions. I suspect you do this already, but go further - it’s vital to understand why it is happening, so deliver an in-app survey to ask for the reason behind cancellation - it may not be what you expect.
Free-To-Use Media Apps
At the opposite end of the spectrum is the ‘free’ business model: apps that operate mainly by generating advertising revenue. This relies on an entirely different logic - exposing users to adverts (think YouTube, BuzzFeed and a million others). So from a KPI perspective, it’s all about engagement. Here are the KPIs to watch.
- Free-to-use apps want users to spend as much time as possible in their apps. More time spent in-app means more ads viewed, which generates more revenue for the business. It is therefore crucial to measure average session length. Longer sessions = more ads = more revenue. And of course analysis of this metric will provide insight into where and when users drop off, and you can then work on optimizing those moments: why DO readers typically get bored after 9 minutes of reading?
- Of course not all users are going to spend their days in one mammoth session - people have other things to do like work, play, or start sessions in other apps. Multiple short, sharp bursts of sessions are therefore just as important when it comes to engagement. On that basis, measuring sessions per user per day is also going to be important. You could (should) even analyse usage patterns based on what times of the day users are most likely to engage. This will enable you to send optimally timed push notifications to encourage regular users to open your app, based on their individual preferences and habits.
- Free-to-use media apps rely heavily on social sharing to spread awareness and as a result drive new users, readers and viewers. It is a vital element of the business model. On that basis measuring which type or category of posts are most frequently shared will help you promote the right content, and avoid what isn’t drawing new eyeballs in the future. It will probably also be worth keeping an eye on ‘average social shares per story’ as well.
Hybrid Media Apps
Of course every business is different, and it’s all about finding what works and what doesn’t. It’s common to see app companies develop a hybrid business model. For example Spotify allows users to stream music for free for an unlimited time, however premium users have access to features like offline listening and higher sound quality, and perhaps most crucially - no ads! The Guardian also allows free access to its service, but has made a push to encourage readers to become Guardian Supporters for a small fee per month which only adds minor premium features to its free service. In the latter case, the key metrics remain those connected to subscription, but with donation rather than purchasing being the ‘main event’. Always make sure that whatever KPIs you do choose to focus on, they make sense for your own unique business model.
Of course there is always the temptation to find something to measure that will make you look great: ‘check out these incredible click rates’, or ‘have you seen how high our DAU figures are?’ These vanity metrics are the equivalent of an almost-convincing toupee - they’ll make you feel great until someone notices something suspicious and takes a closer look. Suddenly you’ll realise that all those DAUs don’t actually deliver revenue, or clicks don’t lead to meaningful completions: you were paying far too much attention to something that didn’t really matter, and which definitely didn’t bring you success. But now I’m straying from the path - see how easy it is? .....KPIs are metrics, but not all metrics are KPIs........