Guardian Media Group is going through a time of revolution as its most prominent figures lead a three-year plan to turn around its fortunes and ensure that not only does the long loss-making company begin to break even by 2019, but that its future is sustainable as publishing models evolve faster than ever.
Chief executive David Pemsel and editor in chief Katharine Viner were not long in their respective roles when, in January 2016, former Google executive Hamish Nicklin was recruited from AOL to the newly created role of chief revenue officer.
Upon meeting Nicklin at The Guardian’s offices in Kings Cross, he is characteristically positive (with good reason) and determined that the numbers are starting to add up. In June, the Guardian announced that loses had fallen by a third to £45m and its paid-for membership had more than quadrupled from 50,000 to 230,000, helping offset a decline in digital advertising and newspaper sales revenue.
While there’s still a lot of work to be done for the seemingly perpetual loss-making entity, the turnaround scheme is showing signs of success.
A target of April 2019 to break even has been set and Nicklin refuses to entertain the notion it won't be hit.
“We all believe we have to be positive and stay single minded and if we don’t then we’ll cross that bridge but for the moment things are looking good,” he states, adding that conversations on the Group's future still covering the next four, five and six years.
It all comes down to a shift in structure for the Pulitzer-winning US side of the publishing business, which included the departure of its New York-based chief executive, Eammon Store.
Nicklin doesn’t shy away from the fact that restructure was necessary due to a change in conditions.
“We aggressively grew in America based on the belief over digital advertising revenues; that with an increase in page impressions and reach the ad money would follow. But the shift from direct bookings to programmatic has meant that that business model and plan wasn’t quite as successful as we would have hoped, so we had to retrench and think differently and like the rest of the business we had to start balancing our costs and our revenues. That’s exactly what we’ve done in the US where we have changed the size of the operation but we are still seeing excellent journalism and coverage of the key issues that we care about," he states.
As to whether there are plans to invest further during a period when interest in American news and politics, especially under the current US President, is at all time high internationally, Nicklin admits that an internal debate is had “quite often” but that the company remains “cautious” and it is unclear whether any future “heavy” investment will be made again in the States.
“Investing ahead of the revenue is not something we want to do right now ahead of time,” he offers, giving a glimpse into the current psyche that the publication needs more guarantees on a return in future.
Another impending cost-saving change will be to the Berliner format adopted by The Guardian and Sunday sister paper The Observer in 2005, which will both soon go tabloid. He refuses to criticize the adoption of the format, claiming that “it was a very different place” when introduced and that it did see an uptake in circulation and advertising performance at the time. But now, it’s time for a shake-up, using the same design formats and storytelling methods.
Throughout the year, Nicklin has been critical of the transparency issues that the digital advertising sector has created, which will see The Guardian go to court in the near future with adtech vendor Rubicon Project over claims of undisclosed fees. While Nicklin won’t talk directly about the situation, he is still positive about the progress being made by the industry despite the publisher’s own experience.
“We have instilled completely different contracts and we are asking for much more transparency from those we work with so we can have much more confidence in what we are getting from our partners and how we are working together. I see it on a daily basis and I’m having a lot more conversations with clients about this in a way that gives me more confidence that we are moving in the right direction. As ever I’m hugely impatient and I don’t believe it’s moving fast enough for me but I do believe progress is being made,” he expains.
Asked about other law suits the sector faces, including accusations again Fetch by client Uber which is also set for court, he says"without a shadow of a doubt" there is a challenge around trust.
"But what is also clear is that as an industry we recognize that and that everyone does the best they can to clean up and move to a more open environment and that can only be good for all of us.”
Returning to the topic of Google and openness, The Drum asks about his views on Google’s move to remove the ‘First Click Free’ rule at the beginning of October, allowing publishers with paywalls to decide themselves how much content audiences can receive before becoming restricted.
“It’s a good thing from Google,” he replies, explaining that it indicates that the search giant is listening to publishers, something he claims to have noticed more from them than another partner, Facebook, although he adds that it too has also begun to improve.
“We have no plans to go to a paywall,” Nicklin states. “Some people won’t pay for paywalls or content, but people are paying us money for something they will get for free anyway so there is something going on here. There is a public mood and an understanding that there has to be a value exchange over-and-above being bombarded with ads and there are people who are willing to pay. If there is enough for those paywall industries to survive – fair play. Our experience of seeing people paying us money for something they could have gotten for free shows that there is an appetite to pay for quality content.”
Conversation then turns to the failed plans by publishers to form a joint venture sales house which would have aimed to share revenue among all partners. No official end to that conversation was ever signaled and Nicklin believes that collaboration between publishers is something that advertisers still want to simplify the buying process, and it’s something he is open to, without diluting the principals of Guardian Media Group itself.
“[Advertisers] want innovation in ad formats, they want branded content at scale across platforms and they want data that is more easily accessible. It’s quite clear that the market wants a form of collaboration. Exactly what that is going to look like – we are always talking to our peers and competitors about what we can do, there’s nothing specific that I can share but because the market is clearly demanding some form of consolidation, those conversations will continue to happen.”
Another area of growth has been, as with most other media companies, around investment in branded content, and The Guardian Labs itself has developed its offering in recent times with the introduction of Imogen Fox and the creation of a features desk structure, to offer a more editorially driven product, rather than one that was overseen purely from a commercial point of view.
“It’s reactive and agile to the moment which is what our readers expect,” he says enthusiastically, adding that the first wave of client work is just beginning to drip out for Vodafone, Barclays and Spotify.
Finally, conversation returns to transparency with Nicklin explaining the improvement of the business’ relationship with Facebook to match that of Google and discussion of the claim by previous editor-in-chief Alan Rusbridger that £20m worth of digital advertising revenue went to Facebook from The Guardian's content.
“There is a genuine understanding of the value that we bring to the open web, and I’ve said this to Facebook that our relationship is better with [Google]. I’ve told Facebook that if they really do care about the new ecosystem and they want true news to prosper on Facebook, we need to build a deeper relationship. To be fair to Facebook, they are listening to that to improve it. All the noises are positive,” he says.
Asked about his views on Amazon as a partner beyond its distribution of content through Echo he says there is "always interest" to work with new ad tech partners and that "Amazon is always knocking on our door."
"They are incredibly rich in data,” he reveals. “To avoid the negative impacts of something happening within the ad tech environment, you can say it’s been ready to blow up – we just need to pull back the curtains a little bit and to be more transparent about the data aspect – not just about where the money flows – and be more fluid within legal boundaries around how we use that data. Then we’ll all prosper.”
He concludes by repeating his belief that transparency is inevitable within the sector. It's certain that the publication will depend on that being the case for revenue generation going forward.