700 Jon M. Huntsman Hall, 3730 Walnut Street , University of Pennsylvania, Philadelphia, PA 19104
Research Interests: Digital Marketing, Media Consumption, Pricing, Customer Value Management
Daniela joined the Wharton Marketing Department in Spring 2020. She received her Ph.D. in quantitative marketing from the University of Mannheim, Germany.
Daniela Schmitt, How Much Content Should Be Paid? Managing Freemium Along the Customer Journey.
Abstract: A primary challenge for providers of information goods (e.g., news websites) is to convert visitors into subscribers as well as to retain these subscribers beyond the initial subscription purchase decision. Subscriptions typically grant access to paid content which is otherwise locked behind a paywall. As such, the user's valuation of the subscription is highly influenced by the share of paid compared to free content on offer. However, this share of paid content might matter differently depending on both the user's subscription status and interest in different content categories. In this paper, we assess how much the share of paid content matters for subscription purchase and churn decisions and conduct a comprehensive analysis encompassing both the pre- and post-purchase stages of the customer journey. We use a novel dataset from a major news website which captures the entire individual customer journey for more than thirty thousand visitors and subscribers in July and August 2017. Our results reveal that in the pre-purchase stage, a higher share of paid content in categories that interest the user exhibits a positive relationship with initial purchase probability, but only up to a certain turning point. Meanwhile in the post-purchase stage, more paid content in categories of interest is negatively related to churn probability. We discuss the implications of these findings for uncovering important customer segments and for targeting them effectively.
Abstract: Can price promotions help firms acquire profitable customers? Extant research from consumer packaged goods suggests that promotionally-acquired customers have little long-term value. We examine whether the same answer holds for price promotions for information goods (e.g., digital newspapers). One notable feature of companies selling such goods is that they employ a dual revenue model - customers pay to access the service and advertisers pay based on customers' consumption. In this context, a promotion may still attract customers with low willingness to pay. These customers, however, can become profitable based on their consumption. We empirically assess the tradeoff between lower subscription and higher advertising revenue using individual-level data from a digital newspaper that implemented its first ever price promotion. We find that promotionally acquired customers can be more valuable than those who join at the regular price. The main driver of our result is self-selection - promotional customers appear to have a high product valuation, but face budget and time constraints. Furthermore, customers who missed the price promotion reduce their consumption. This effect is, however, short-lived. We discuss the implications for pricing of information goods and customer management.
Daniela Schmitt and Michaela Draganska, The Role of Social Media in the Monetization of News Content.
Abstract: Customers' interactions with digital content offerings across different media platforms pose a new set of challenges for marketers aiming to convert users into paying customers. Especially the rise of social media over the last decade has tremendously influenced the way people consume news and entertainment. In a way, social media has taken over the function of a news provider for many. Additionally, advertising revenues have been continuously declining, so publishers face the issue of finding alternative ways to generate revenues, mainly through direct payments in the form of subscriptions. Our research aims to shed light on how social media facilitates - and interacts with - this monetization of news content. We have a very detailed data set combining social media posts with click-stream data on user behavior on the news website, including paid transactions. The rich data enable us to explore the influence of social media on subscriptions and to point to the type of posts that are effective in driving traffic and conversion. In addition, we investigate the usage behavior of subscribers acquired through the social media channel to determine their value to the company in the longer term.
Abstract: Not much research has been done about the impact of content types on subscriber demand and long-term revenue. Answering this question empirically is hard because editors make an endogenous decision about the content they solicit and the allocation to the paid and free sections. One type of content, however, shows promise in answering this question - suspenseful and surprising content. Suspenseful events are events for which there is high variance in the uncertainty of their outcome. For example, a close match between two soccer teams. Surprising events are those where the realized outcome is very different than the expectation prior to the event. An example would be an upset victory by an underdog soccer team. Other important contexts where suspense and surprise are common include political debates, voting and elections. Because these events have inherent uncertainty, their realized outcome allows us to use randomness for empirical identification purposes when estimating demand and consumer preferences. Our research project focuses on empirically determining how content editors should treat surprising and suspenseful events - how much coverage should they allocate to them, and whether the content should be paid or free.