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But that’s sort of the joy of discussing media companies, how do they become more than mere old fashioned publishers. How do they find new streams of revenue and restructure so that subscriptions work and digital actually makes some money?
One of the spots at the aforementioned conference was CEO of the Financial Times, John Ridding having a fireside chat with Ken Doctor, President of Newsonomics.
Many interesting facts, figures and opinions were teased out, so I thought I’d round them up here.
The FT is perhaps the brightest spot in Pearson’s financial results, with 1.3% increase in revenue and 17% increase in net profit over 2013.
John said that “beneath that 1.3% revenue is a huge amount of change” coming out of the FT’s five year digital transformation.
2013 was the first year in 125 when money generated from content was greater than that generated from advertising. Last year the FT had more readers than ever.
Part of digital transformation is building a new engine whilst another is slowly being retired. At this point in time the FT is moving towards a point where it has some escape velocity in terms of revenue and readership.
Confidence in content
There was some discussion of pricing, which John said newspapers have been traditionally bad at. One of the things John did when starting as CEO in 2006 was discussed upping the price of the print paper from £1 to £1.50. This caused nervousness amongst journalists particularly.
But this is the confidence that publishers have to have in their content. John argued the content was good enough to charge more for it. Being proud of the paper’s content is ultimately what backs up the business model today across online and off-.
When the price of the paper was increased, the FT received “something like 12 letters of complaint from readers”.
Stiffer competition and new formats
On new players online that compete with brands like the FT, namely Business Insider and Quartz, John said there was an opportunity to learn from these new publishers. He picked out The Verge as a website he particularly admires for picking and niche and being very confident in its offering.
On the subject of Buzzfeed, John said the point is to recognise that if the FT wants to succeed on mobile, there is room for shorter content. 2,000 word pieces aren’t that accessible on mobile.
The challenge for the FT is to maintain their core identity across these different formats.
Homepage no longer as important
John talked about the homepage no longer being the be-all and end-all, a significant change in mindset for a newspaper used to thinking long and hard about the front page. A new feature for subscribers, fastFT, gives a digest of news in a feed format and is being used by many as a de facto homepage, a place where ‘check-in’ behaviour is observed.
The FT is seeing eight to 10 minute readership time in any visit, which is relatively high.
Reader revenue and advertising
The FT is matching the New York Times for revenue generated from readers. Currently 62% is reader revenue and 38% from advertising.
With 50% of global ad revenue (65% on mobile) going to Facebook and Google, and that market share still rising, John said that advertising sales from the FT simply aren’t big enough to drive a larger share of revenue.
Interestingly, native advertising is something that the FT is wary of, in as much as John was very clear about church and state. The paper is clear that journalists will never be writing copy for advertisers as it doesn’t want to compromise its content, which it values very highly. Readers want to be clear about what they’re getting so the FT is exploring thoughtful applications of content-based advertising that are on brand and of benefit to both readers and advertisers. In John’s word, “the reader doesn’t have time to distinguish between our content and advertising”.
The FT does have its own tools to aid advertisers, though. Smart Match enables advertisers to target contextually (semantically), matching their ads to appropriate articles on the FT and its use is due to be expanded in 2014.
Digital advertising on the FT.com has shown double digit growth and part of continuing to provide a good experience for advertisers is to offer more proof, more science, more fact around ROI.
John mentioned that print advertising revenue has stabilised somewhat, too.
New subscription products
FT Weekend is now an upgraded print product, focussing more on arts, lifestyle and leisure. As a result of analysis showing there are some readers that only use the weekend product, as of two weeks ago, users can subscribe only to FT Weekend.
Other products include Newslines a tool for education that allows classrooms to share and annotate the FT’s articles.
This is changing many aspects of education, which has previously relied on case studies that tend to be fairly boring and mostly success stories, those that have been sanctioned for inclusion textbooks.
But using the FT archive, for example, there is much more scope to look at more interesting case studies, and failures, too (which are more valuable to learn from).
John also mentioned that over time the FT’s digital channels will become very useful for marketing Pearson’s management courses to new markets such as China.
Econsultancy currently has a range of services available that can help guide organisational change, business restructuring and digital transformation strategy.