Even though The Weather Channel’s advertising business remained strong during the pandemic, relying on advertising alone is risky for a media company, even one that specializes in unique data and tech.
“We’re at an inflection point. With all the changes happening in advertising with privacy, and identifiers and cookies being eliminated by the big tech companies, if all your revenue depends on advertising, that’s going to be challenging in the near future,” said Sheri Bachstein, global head of IBM Watson Advertising and The Weather Company.
Eighteen months ago, The Weather Channel app revisited a subscription business, and built an ad-free premium product with more in-depth maps, hourly forecasts, advanced radar and storm watches.
That product has since amassed 860,000 paid subscribers. Twenty seven percent of that number came during last year’s hurricane season, and a single storm, Hurricane Marco, led to a 1% bump in overall subscriptions in a single five-day stretch.
The next phase of the Weather Channel will involve multiple revenue streams, to avoid being blown around by whims like Apple removing the IDFA.
“In your personal lives, you hear about having a diverse portfolio. It’s the same thing for our business,” Bachstein said. “Either the consumers will underwrite all the free services we provide by watching ads, or they will underwrite that through a subscription.
Building a subscription product
The Weather Channel first researched what kind of experience its weather aficionados would pay for, then took a test-and-learn approach to promoting its app and discovering what features drove subscriptions.
“We are not just putting up a paywall,” Bachstein said.
Subscribers to the Weather Channel’s paid app fall into a few different camps.
One camp pays to remove ads, Bachstein said. “I think we will see that [behavior] more, with privacy legislation happening and increased awareness around privacy.” People who watch a lot of weather videos are also more likely to upgrade to a premium experience.
Another camp includes weather geeks as well as people who need detailed weather forecasts for their job or for their outside interests and hobbies.
The third camp includes people who want the most detailed information during an extreme weather event – like a storm. “I actually had an employee who resisted downloading the premium app, saying ‘I would subscribe when I had a need for it.’” During a period of severe weather, the employee upgraded to see the extra data layer on the app’s maps.
Marketing subscriptions
The Weather Channel app is selling subscriptions to its premium product with contextual ad placements that offer the option to upgrade within the normal flow of the app.
During severe weather, The Weather Channel’s app will see a 20% to 30% jump in subscriptions, as people consume high amounts of weather data and see increased value in subscribing.
Because some people are fence sitters and some are unlikely to ever subscribe, the Weather Channel’s next focus is creating propensity models using AI and data science to figure out who might want a subscription vs. those that won’t ever upgrade.
“As a consumer, the last thing you want is advertising for something you don’t care about, so we do want to target users who may have an interest in the premium and subscription product,” Bachstein said.
Customized ads have also driven results. The Weather Channel app used Watson Advertising to deliver predictive, dynamic creative, that assembles a display ad in real time, driving a 3X increase in subscriptions.
But despite The Weather Channel’s diversification, it’s still relying on Apple, which supplied (and will soon take away) the IDFA, and which takes a 30% cut of subscription revenue.
There’s value to having Apple handle transactions – including all regional taxes and fees.
“I do see a real benefit in that service,” Bachstein said. “But I think we should always have the freedom to negotiate rates on business. That’s how the economy works.”
The one bright spot for The Weather Channel’s app when it comes to fees is its retention. The app sees strong retention of its users – and Apple halves its commission after a year.
“I think the future is very bright for subscriptions,” Bachstein said. “More companies will make subscriptions a part of their business – as long as there is value for the consumer.”
