With brands still 'blind' to premium media, The Guardian, Dennis & Tortoise diversify income
Premium publishers are diversifying their income streams to reduce their reliance on advertising revenues and even take advantage of new opportunities.
The Future of News Panel: Nicklin, Wooton, Vanneck-Smith
Speaking at Advertising Week Europe, execs from The Guardian, Dennis Publishing and slow news startup Tortoise all revealed how they are shaking up industry norms.
Coming as The Guardian announced its three-year pursuit of profitably had succeeded after turning around a deficit of £57m in 2016, the discussion explored how advertising makes up half of The Guardian's income.
It is hoping to increase this share through the Project Ozone digital advertising collaboration, however, which includes News UK, the Telegraph and Reach. This offers easier to buy audiences at scale across the titles. As an additional incentive, they are promising a "fraud-free" environment.
Hamish Nicklin, chief revenue officer of The Guardian said Ozone was formed as a "response to the market" seeing once-rivals collaborating to join up audiences at greater scale to better compete with the wider market. He said the tech will give it "a real advantage" in attracting spend.
The Guardian has just logged profit, and it will not be ceasing its efforts to drive greater income. Nicklin said the team has a responsibility to fund the foundation-run publication as best as they possibly can.
Nicklin said: "The focus of our three-year breakeven plan has made us think in a more commercial fashion [when plotting new parts of the business] we are not asking 'will this make us loads us a lot of money?' but instead asking 'is there a credible business case?'
"For example, with our daily podcast we decided there was a place in the market. The numbers we needed seemed sensible, so we backed it."
But this sensible approach is tempered with a willingness to experiment with new means of income. It is largely funded by reader donations, more than one million to date, to make up the deficit. BuzzFeed later tried to emulate this model, as a VC-backed company, the goodwill did not seem to extend as far, however.
Acknowledging an emphasis on brand safety and environment kickstarted by P&G chief marketer Mark Pritchard in 2017, and noting the many donations it has received to date, he added: "What's becoming clear is that our audiences are prepared to pay for quality."
Nicklin believes that advertisers are "way behind" in acknowledging the quality of the platform, however. "They still don't understand quality. It is just incredible. It is irrefutable. The industry's continued blindness to this is unbelievable."
Memberships rather than subscriptions?
Katie Vanneck-Smith, the co-founder of Tortoise, who was president of Dow Jones and chief marketing officer at The Times, outlined how it is leaning on a membership, rather than subscriber, model.
At launch, she described her belief that it is actually easier for titles to pursue quality reporting than mass appeal and quickly attracted private equity backers in addition to £359,282 from 1,405 backers back in October. The startup is still at the start of its journey to deliver "a different kind of journalism".
Tortoise is looking to inform its paying members with open events, national tours and a more considered publishing plan.
As an ad-free space, it is courting brand partnerships instead and this will place them in live newsroom debates in a manner that they add value. Compelling content will also accompany these sessions.
Tortoise has just signed up Santander as its first partner and it isn't difficult to see how the brand could build out financial and business discussions at the Tortoise sessions. These deals will last for three years. Co-working space, Fora, where Tortoise is based, was also announced as a partner.
Vanneck-Smith explained: "They come on and we work around where they want to be seen to be having conversations. We go into their world as much as they come into ours."
Diversification improves advertising?
Pete Wooton, chief digital officer of Dennis, admitted that the mag giant has "learned the importance of diversification", particularly, its rapidly scaling digital and ecommerce operation as the print legacy the company was built upon continues to retract.
Making up for this, Wooton excitedly pointed to the "exponential growth" of car marketplace Buyacar.
He said: "In 2014, we bought a small business with five employees and turned over £500,000. That is now £65m a year and we think it can be £250m. It is a large addressable market. You can do £250m with 60,000 car sales in a year."
8 million used cars are sold in the UK a year according to the Society of Motor Manufacturers and Traders. One year ago Dennis revealed around 7,000 of these sales came through Buyacar. although it is aiming for 1,000 a month in 2019. Finance comes into play too, Wooton said the company is making £5m a month on car loans through Buyacar.
But rather than distracting from its core ad product, he claimed that these ecommerce efforts provide data sets that can improve the advertising experience.
"These diversified ideas tend to add to your ad product and ecommerce. If we know how people purchase, we can add that to our insight and ad product – if we can show how our audience is going onto buy, it gives us more firepower with advertisers.”
After reflecting on the achievements of founder Felix Dennis, he noted how his passing four years ago caused a change in the company that saw it acquired by Immediate Media-owner Exponent in 2018.
Wooton concluded: “In his later years Dennis needed to get his affairs in order and wasn't so interested in expansion. We are run by a charity and now have a really clear mandate for growth in digital.”
Giving away power to Apple News?
The discussion moved to the impending launch of Apple News' subscriber plan which would see it offer scale for 50% of ad revenue and all of the reader data.
Nicklin expressed a fear that having another tech giant take control of the news funnel would just deepen the problems in the digital news ecosystem, especially with Apple taking a 50% cut.
He said: "It will encourage media owners to create scale and clickbait. It is the same problem with online advertising all over again. I would love people to start talking about attention and time spent with the ad. It means so much more than viewability that was created to justify direct response advertising."
Vanneck-Smith added: "We are giving away control of power and subscriptions away to Apple. It is another tech giant coming between us and the reader and setting the terms."
She said a Netflix for news will be "brilliant" for customers if all publishers sign up. She doubts they will, and is concerned that media companies will be handing over too much power to a third party.