Subscription brand executives ditch digital ad spend for new business models

Rhea-AI Summary

A new industry study by Bango reveals a significant shift in subscription brands' marketing strategies, with 48% reporting diminishing returns from digital advertising. The study, surveying 200+ senior executives across various subscription sectors, shows 88% expect direct acquisition costs to rise in 2025, with 33% reducing paid search ads, 30% cutting display advertising, and 29% decreasing paid social ads. As traditional digital marketing becomes unsustainable, 82% of brands plan to increase investment in indirect channels, with 90% pursuing bundling strategies. Companies are increasingly turning to partnerships with telcos, banks, and platforms, with 27% joining "Super Bundling" platforms like Verizon myPlan. Consumer data supports this trend, with 62% of U.S. subscribers preferring bundled subscriptions. Bango's Digital Vending Machine platform is positioned to benefit from this shift, as it powers major bundling platforms and supports acquisition for services like Netflix, Amazon Prime, and Disney+.

Positive

• 82% of brands plan to increase investment in indirect channels this year
• 90% of subscription companies are adopting or planning to implement bundling strategies in 2025
• 72% report indirect routes bring in higher quality subscribers than direct channels
• Bango's DVM platform is well-positioned to capitalize on the industry shift towards bundling

Negative

• 48% of subscription leaders report diminishing returns from digital advertising
• 88% expect direct acquisition costs to rise in 2025, with 33% cutting paid search spending
• 53% warn that direct marketing is becoming unsustainable due to rising costs
• Companies are facing challenges from rising ad costs, algorithm changes, and data privacy limits

New data shows nearly half of subscription brands now see digital advertising as a “black hole,” and look to shift spend elsewhere

CAMBRIDGE, United Kingdom, June 10, 2025 (GLOBE NEWSWIRE) -- Subscription brands are pulling away from digital advertising. According to a new industry-wide study from Bango (AIM: BGO), 48% of subscription leaders report diminishing returns from traditional direct acquisition methods like paid search and paid social media. A further 53% warn that direct marketing is becoming “unsustainable” as customer acquisition costs spiral.

The report — Gravity Shift: Subscribers, bundles, and the acquisition black hole — captures responses from more than 200 senior executives at subscription-based businesses, spanning sectors from AI productivity apps to streaming services, retail, and finance. It reveals a stark reality: the performance marketing model that powered subscription growth over the last decade is under serious strain.

“Direct marketing used to be a reliable engine for growth. Now it’s a black hole,” said Anil Malhotra, CMO at Bango. “When nearly half your industry says ROI is vanishing, alarm bells should be ringing. It's time to rethink how subscriptions go to market.”

Key findings:

• 88% of subscription brands expect direct acquisition costs to rise in 2025, with nearly one in three forecasting increases of over 25%.
• 80% are cutting back on at least one paid channel, including:
  • Paid search ads (33%)
  • Display advertising (30%)
  • Paid social ads (29%)
• 46% of leaders describe direct marketing spend as a “black hole” for their budgets.
• 53% believe direct channels are no longer a sustainable path to growth.
  

What’s driving the pullback?

Executives cited rising ad costs, algorithm changes, data privacy limits, and subscriber fatigue as the most pressing challenges. Compounding this, many brands report hitting the ceiling on their ability to profitably scale one-to-one acquisition.

“Netflix spends nearly $3 billion a year on marketing. That’s simply not feasible for the rest of the market,” said Giles Tongue, subscription expert at Bango. “Most brands don’t have the scale to absorb that kind of spend, especially when the returns are eroding. Direct-to-consumer marketing is hitting diminishing returns, and leaders are now looking for smarter, more sustainable ways to grow.”

Where the money is going

Rather than doubling down, brands are reallocating budget toward indirect acquisition strategies, such as bundling, partnerships, and aggregator platforms. According to the report:

• 82% of brands plan to increase investment in indirect channels this year.
• 90% are already bundling — or plan to — in 2025.
• 72% say indirect routes bring in higher quality subscribers than direct channels.
  

Among the fastest-growing channels: partnerships with telcos, banks, device platforms, and social media platforms. Over a quarter of brands (27%) are joining "Super Bundling" platforms like Verizon myPlan and myHome to reach new audiences without high upfront acquisition costs.

Bango’s recent consumer data also supports the shift: 62% of U.S. subscribers would prefer to manage multiple subscriptions through a single bundle, and 44% already get at least one subscription free as part of a packaged deal. Among younger users, these numbers are even higher — 55% of 18–24-year-olds now receive a bundled subscription they previously paid for directly.

Tongue added: “We’re seeing a clear shift from the subscription economy to the bundle economy. Consumers don’t want to manage ten separate subscriptions — they want value, convenience, and flexibility. The brands that win in this next phase will be the ones that package their offerings in ways that reflect how people actually want to buy.”

Implications beyond the subscription market

The findings come at a critical time for digital advertising giants like Google, Meta, and TikTok — whose earnings rely heavily on performance ad spend. If subscription leaders are a bellwether, Bango’s findings suggest we could be entering a post-performance marketing era, where distribution partnerships replace ad impressions as the metric that matters.

Bango expects the pivot to indirect acquisition and bundling to drive a wave of commercial opportunity for its Digital Vending Machine® (DVM™) platform. Bango’s DVM currently powers many of the world’s leading Super Bundling platforms, including Verizon myPlan and myHome, and supports acquisition for major services such as Netflix, Amazon Prime, Disney+, Uber, YouTube, and Xbox. With 90% of subscription leaders now investing in bundling, the DVM is well placed to capitalize on the wider industry adoption and accelerated growth of indirect marketing through 2025 and beyond.

View the full report at Gravity Shift: Subscribers, bundles, and the acquisition black hole.

About Bango

Bango enables content providers to reach more paying customers through global partnerships. Bango revolutionized the monetization of digital content and services, by opening-up online payments to mobile phone users worldwide. Today, the Digital Vending Machine® is driving the rapid growth of the subscription economy, powering choice and control for subscribers.

The world's largest content providers, including Amazon, Google and Microsoft, trust Bango technology to reach subscribers everywhere.

Bango, where people subscribe. For more information, visit www.bango.com

Media contact

For US enquiries, contact SamsonPR: bango@samsonpr.com
For all other enquiries, contact Wildfire: bango@wildfirepr.com

FAQ

What percentage of subscription brands are reducing their digital advertising spend in 2025?

According to the study, 80% of subscription brands are cutting back on at least one paid channel, with 33% reducing paid search ads, 30% cutting display advertising, and 29% decreasing paid social ads.

How many subscription companies are planning to implement bundling strategies in 2025?

90% of subscription brands are either already bundling or plan to implement bundling strategies in 2025.

What are the main challenges driving subscription brands away from digital advertising?

The main challenges include rising ad costs, algorithm changes, data privacy limits, and subscriber fatigue, leading to unsustainable customer acquisition costs.

What percentage of U.S. subscribers prefer bundled subscriptions?

62% of U.S. subscribers would prefer to manage multiple subscriptions through a single bundle, with 44% already receiving at least one subscription free as part of a packaged deal.

How is BGOPF (Bango) positioned to benefit from this industry shift?

Bango's Digital Vending Machine platform powers major Super Bundling platforms like Verizon myPlan and supports acquisition for major services like Netflix and Disney+, positioning it well for the industry's shift toward indirect marketing and bundling.