'We are a tech company': how The South China Morning Post is rethinking the future of media

Alibaba helped enhanced SCMP’s efforts for digital transformation after the acquisition. Photo: NYT.

The South Morning China Post (SCMP) now sees itself as a product technology company that trades in truth, according to the publisher’s chief operating officer.

Elsie Cheung explains to The Drum that SCMP will continue to pursue the platforms that best allow for meaningful conversation about that truth.

“It is a remarkable time to be part of media and publishing now. It is true that the industry is undergoing significant upheaval, but it has never been more exciting to find innovative ways to reach audiences at scale through a variety of formats and content,” she says.

“The possibilities that we see in our work in spaces like data visualization, podcasting, video, social media publishing, AI-assisted journalism, to name a few, give us the confidence that we’re moving in the right direction in our business.”

That is why it is crucial for SCMP to continually leverage on tech to build the news industry, adds Cheung, pointing to how the publisher is improving its data and AI capabilities in meaningful ways to better serve its readers because it knows it has more work to do to keep its users coming back.

Getting help from Alibaba

Publishers around the world have been unable to compete with the likes of Facebook and Google on a global and local scale as advertisers turn to the ad giants for speed and scale of innovation. This has seen the digital duopoly dominate ad revenue for the longest time.

For Hong Kong and China-based publishers, they must cope with the likes of the Facebook and Google equivalent of Baidu, Alibaba, Tencent, who are collectively known as BAT and occupy more than 60% of the total digital advertising market in China.

Alibaba is currently the largest digital ad seller in China with its ad revenues set to account for more than 32% of the market in 2019. In addition, the rise of other niche companies such as ByteDance, which owns short video app Douyin (TikTok), e-commerce giant JD.com, Meituan and Xiaomi are drawing advertising revenues away from BAT and publishers.

When Alibaba decided to buy SCMP in 2015, in a move that mirrored Jeff Bezos’ acquisition of The Washington Post, there were concerns that the takeover would curb SCMP’s editorial independence. In response, Joseph C. Tsai, the co-founder and executive vice chairman of Alibaba, reassured readers that it would actively promote plurality in a letter titled "Marrying Heritage and New Technology: a Vision for the Digital Age".

According to Cheung, Alibaba helped enhanced SCMP’s efforts for digital transformation after the acquisition by quickly expanding and bolstering its product development, technology, digital, data and editorial teams with world-class talents.

This went together with the digital transformation of its operational and newsroom processes, as well as establishing efficient and collaborative cross-functional structures.

“Since day one, Alibaba has not only supported SCMP’s editorial independence but was absolutely insistent and committed to protecting it. Hence, we operate independently from the Alibaba Group such that they are not involved in our editorial newsroom in any way,” she adds.

The e-commerce giant removed SCMP’s paywall a year later, even though the subscription model has helped the publisher build a paid subscriber base of around 2.5 million.

Cheung says the decision to take down the paywall is closely aligned to SCMP’s ambitions to be a global news media and claims that since taking down the paywall in April 2016, its international traffic has grown exponentially in the last three years, well over 450%.

She adds that SCMP’s international ad revenue is also on the rise, contributing significantly to its revenue because it chose to move away from the paywall model, which allows publishers to collect data and understand audiences to improve their offerings and share it with advertisers who are keen to target audiences on their site through programmatic.

This is because she says third-party data typically has unknown provenance and quality and is typically hard to scale in the Asia Pacific.

Instead, SCMP has placed its focus on creating proprietary first-party data, insight and activation tools for its clients. Cheung says the publisher’s analytics team has built real-time dashboards for its key metrics and is seeing results such as in-depth readership trends and audience insights.

“Our mission is to lead the global conversation about China, and to be able to do so, we have to first build scale. We believe we offer a comprehensive perspective on China’s growing international influence to our international readership,” she explains. “We discuss metrics on a regular basis which enables our editorial and product teams to be completely responsive and data-driven in their work.”

“Across our broad range of titles covering topics from food to fashion and even a job’s portal giving us access to job roles and salary data. We are able to identify hundreds of users declared and observed attributes.”

She adds: “This becomes especially powerful with combined with onsite engagement data, meaning we are able to optimize on our content and advertising based on real business outcomes rather than proxies like CTR. Putting consumers first is the priority now and attracting eyeballs as a KPI is being replaced by nurturing better and lasting relationships with customers through quality news coverage.”

Creating a self-sustaining model

While declining to comment on Alibaba’s powerful grip on ad revenues, Cheung notes that platforms like Facebook and Google are directed to a mass audience, and reiterates that SCMP is trading on trust and premium journalism.

However, with Alibaba's Tsai previously saying that SCMP may not become a self-sustaining business for the foreseeable future, Cheung has been working hard to create a self-sustaining model for the publisher through creative new business models and looking at building multiple streams of revenue other than digital and print ad revenue.

One such model is an in-house agency called Morning Studio, which was created to specifically address the needs of SCMP’s clients and leverage the publisher's creative expertise for its clients.

Cheung explains Morning Studio is an evolution of a marketing solutions team that had already been in place for about a decade, a team that provided integrated and added-value solutions on top of advertising activities, such as creative content solutions, bespoke publishing print projects, and custom events.

“Morning Studio now comprises a team of innovative content creators that tell brand stories with impactful, eye-catching and effective marketing solutions with the use of video and infographic capabilities for targeted audiences,” she explains. “Moreover, we take on the role of distributing such content not only on SCMP platforms but also across social as well. Since its launch, we have seen a tremendous response from our partners throughout the region across various sectors.”

In addition to Morning Studio, SCMP has also created products like Abacus, Inkstone and Goldthread that takes a unique approach to reach their specific audience from content strategy to format and voice.

Abacus is led by Ravi Hiranand, who joined SCMP’s editorial leadership from CNN, and offers an insider’s look at the China tech revolution, highlighting the key players, emerging companies, hottest gadgets, and more through both editorial and multimedia storytelling. Inkstone is a daily digest of China-focused stories that will give readers a unique, unvarnished insight into a rising potential superpower, while Goldthread is an English-language video platform with a focus on food, travel and culture in China.

Cheung explains that expanded narrative offers a more creative range to produce customized activations for Morning Studio to create marketing solutions to engage with SCMP’s international audiences.

“We always work closely with brands to understand their objectives and target demographic before crafting a strategy and solution that meets their goals and delivers results. Morning Studio takes a consultative approach to work with our brands and advertisers, understanding their objectives before specific solutions or platforms are proposed,” she says.

“This is why Morning Studio is often described as the in-house agency for the Post, as the process of receiving briefs, providing proposals, and delivering solutions is very much akin to how creative or advertising agencies do it. With the launch of the new editorial products, that gives Morning Studio and our advertisers new creative and distribution options for targeting unique readers and conversations.”

Cheung claims SCMP has found success through its events strategy. It created The China Conference, which aims to identify major socio-political and cultural trends, as well as business and investment issues across industries to foster engagement and open conversations about China and its global impact.

“Events offer opportunities to lead bold and meaningful conversations that gain global attention, such as the China Conference which we have held successfully in Hong Kong and Malaysia,” she explains. “E-commerce, on the other hand, has incredible potential as a sustainable business model for media companies around the world. We are exploring and experimenting on how we can incorporate e-commerce as part of our monetization strategy.”

Partnerships and collaboration

Publishers in APAC have started to fight back against the digital duopoly by forming partnerships like co-ops and private marketplaces (PMP) in order to thrive in a fragmented market, while their adtech stacks are often too basic to integrate well with ad-buying platforms.

This has seen likes of the Singapore Media Exchange (SMX) run by Singapore Press Holdings (SPH) and Mediacorp, the Kiwi Premium Advertising Exchange (KPEX) in New Zealand run by Fairfax Media, TVNZ, Mediaworks, and New Zealand Media and Entertainment, the Online Premium Publisher Association Thailand (OPPA) run by 12 of Thailand’s publishers, formed in recent times.

In Malaysia, where publishers are trying to combat negative perceptions of programmatic ad buying in the country, PMPs like Malaysia Premium Publishers Marketplace (MPPM) and Asia's By-invitation Marketplace (AMP) have emerged.

Cheung praised this move, saying SCMP believes news organizations can benefit from greater collaboration, and the publisher is seeing media leaders across APAC speaking to each other and collaborating to have a common understanding of how the digital world works.

While SCMP has no intention to form or join an ad alliance, it has established content sharing and syndication collaborations with Times of India and Politico over the past year. The alliance with the former sees selected content from SCMP published on Times of India’s digital, mobile and web platforms, and Times of India becoming SCMP’s primary partner in India for content syndication.

SCMP’s partnership with Politico has a focus on the coverage of US-China relations and will see the newsrooms of the two media organizations sharing content and collaborate on reporting opportunities and events in the US and Asia.

All in all, it will be interesting to see how different models of the news business in APAC will thrive - The SCMP model backed by an all-powerful organization like Alibaba or publishers like SPH who rely on partnerships and innovation to survive in this industry.

The Drum spoke to SCMP as part of its Marketer of the Future coverage for 2019 and for its Future of Media issue, which goes to print on 10 April. You can subscribe here.

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