How do you avoid endless days spent analysing data and trolling through dashboards packed with numbers that don’t seem relevant to your business? Well, the key question you need to ask yourself is what makes a metric matter.
Let’s take the number of video views yesterday as an example. It probably doesn’t tell you many important things about your business and it’s unlikely to show strong correlations with how it will look in 6 months’ time. Sadly, too many of the dashboards we see have similar types of data that don’t matter, and in a noisy room, it’s hard to hear the alarm bells ringing or spot the opportunities that are available. In reality, metrics that truly matter should be:
- Strategic or inform frequent actions
- Based on accurate and recent data
- Connected to the customer
Strategic metrics tell you how much daylight there is between your users and the service you provide. They are foundations for understanding how and where to steer your business. In this article, we will focus and dig deeper into three different strategic metrics.
Accurate & Recent Data
Accurate, recent data doesn’t mean 5 minutes ago, but instead ‘recent’ means yesterday or the day before. It should be recent enough to make decisions that are going to be affected and similar to your customers and the data that you have coming in. If you’re operating today, then what happened yesterday will inform your decision-making today and help you make a positive change for your business.
Data Connected to the Customer
All of your metrics should be connected to the customer. It shouldn’t be a leap to say “why is this true” or “how did this impact the customer”? As is the case with your business, your data should have viewers/customers at the heart of each story. Without understanding your customer, you’re essentially lost on what the metrics are. As previously mentioned, the number of video views in isolation doesn’t tell you a lot about a user.
What are Strategic Metrics?
The data that drives the flywheel of your business is your audience, content and revenue. Audiences are driven by content which generates revenue that lets you create more content and reach a bigger audience. Each one can impart momentum, so the metrics below are a perfect way to determine whether what you’re delivering to your users is what they want, whether they are sticking around for long enough, and whether you’re keeping out of your own way to let them generate revenue for you.
We’ll delve into the audience, content and revenue metrics with a focus on two media business angles – an ad-driven model (audience & content) and an OTT (over-the-top) subscription model (content & revenue), as each of these lenses have unique takes on what these individual metrics might mean.
Keep Your Audience Coming Back
Many metrics start with basic counting, i.e. subscriber base increases/decreases, but the real key is the number of people who don’t come back or who pay for that next month of service. This is called ‘churn’ and it is the most essential metric used to determine whether your audience is finding value in what you offer and how hard you have to work to maintain your audience community.
With a view to calculating your churn using an ad-driven model, you need to look at their WAU/MAU Ratio - unique viewers over the last 7 days divided by the unique viewers across the month, with a healthy target range of 50-60% when you have many returning users.
The following frequent actions can help you address your audience:
- Tune marketing to content matchups (first views + conversion)
- Review acquisition channels for performance vs. cost
- Directly connect users to content they might like
Match Your Library with Your Audience
Content is king and your audience must be entertained. That is the reason they are on your platform in the first place so you want to make sure that your library is being fully utilised to validate your content’s legitimacy.
In order to measure your library utilisation, both ad-driven and OTT subscription models can use % Library Views - titles in the library with at least one view in the last 30 days, and % Viewers Watching New Content - unique viewers who watched content released in the last 14 days divided by all the unique viewers in the last 30 days, to calculate whether your audience is finding the content and watching it. These metrics are your biggest bets and they strongly reflect the long-term health of streaming companies.
Note that both of the metrics can vary from business to business, but at least one of these should be close to or above 50%. In categories like news and exercise, fresh content is key and older videos may languish. Whereas in rich entertainment libraries, it’s common for library view percentages to go over 50%, while the new content % is lower and driven by seasonal releases.
The following frequent actions can help you address your content:
- More active editorial heroes
- Personalized catalogues
- Variety in ‘watch next’
Acquire the Resources Needed to Grow Faster
Revenue can unlock more content and ultimately, the growth of your service. Yet, it is last in this discussion. However, these metrics are still critical as they let you plan forward to more closely entertain and build your audience.
To track the expected value of your subscribers as an OTT subscription service, you can turn to Customer Lifetime Value - expected value of a new subscriber based on the survival rates for subscribers over the last 2 years, which highlights the value of the longevity of users needed to fit that monetization model.
When examining Customer Lifetime Value, it’s important to remember that subscription users do not churn in a straight line. Instead, that churn follows more of a survival curve with a high churn rate in the first 3 months that starts to level out and often results in 10-20% of users sticking around for more than 2 years.
The following frequent actions can help you address your revenue:
- Target engaged users after 4-5 months for an upsell to annual price plans with higher LTVs.
- Utilize audience and library insights to match right content and/or deliver your content at the right time
Getting Smart with Your Data
If you look beyond simple analytics, review industry benchmarks and glean key insights as discussed above then you’ll be in a strong position to understand the metrics that are truly important to grow your streaming business.