A fearless FT pushes ahead in the changing media environment. The FT.com’s managing director Rob Grimshaw talks to Lucy Handley about its major internal cultural shift to take on digital challenges, the trials of turning visitors into subscribers and moving into apps without Apple.
Marketing Week (MW): FT.com has 3.7 million registered users but just 230,000 subscribers. How can you convert the first group into paying customers?
Rob Grimshaw (RG): We have those 3.7 million users’ email addresses, demographic information, job titles, the sectors they work in and a great deal of behavioural information. We know when they come to the site, the type of content they read and how often they visit. All of this is a marketing gold mine. It takes some sophistication to handle the information in the right way but once you have the data management capability and the right tools, you can do some interesting things.
There are certain patterns of consumption that indicate a likelihood to subscribe. We have built automated marketing processes on the back of those insights that go out in emails. That has been transformational for us. We have gone from sending out 3.7 million emails and 90% of the audience not being interested, to sending a few tens of thousands of emails each week only to those who are most likely to want to subscribe.
Digital allows you to reach every business person in the world. There are maybe a couple of million people out there who are in the FT’s space international business decision makers. With a base of 230,000 digital subscribers at the moment, there is still a long way to go.
MW: How long did it take to get those targeting programmes in place?
RG: It has been a journey over time. I took over FT.com three years ago and our data people told me there was much more we could do to help marketing be more efficient. Since then, we have done a lot of work getting the systems working.
We will never go back to scattergun marketing. Not only does targeting reduce our costs but it gives us a better relationship with our readers and they respect us more.
MW: How do you measure online activity?
RG: We have real-time data. There are no weekly or monthly reports; there is nothing you can really do in response to retrospective reports. In a web environment, you need to be thinking: “Is there anything I can do in this minute, this hour or this day to change the business or move it along?” All around the office we have screens showing traffic and subscriptions data. I think it has made a difference to the culture it’s made us more snappy and quicker at turning things around.
There is an awful lot more that I’d like to do [with the system]. Although it is difficult to show a clear relationship between having the real-time data and the bottom line, my feeling is there is a benefit to it, perhaps a 1-2% increment in revenues that comes from making decisions faster.
MW: What is the hardest part of your job?
RG: When I took over FT.com, I thought the hardest thing to deal with would be technology and we certainly have had some challenges in that area. But what I have come to appreciate is that the hardest challenge is people and culture. To be successful online you need a culture that is entrepreneurial, collaborative and innovative and some of those values are not necessarily native to a traditional publisher.
You have to build both people and culture. If you have a group of people with the right attitude and that kind of culture, they will find a way to get round problems technological or otherwise. Getting that approach in place is a huge undertaking because changing a culture is like turning a super tanker around. It takes months and years of pushing in the right direction and then suddenly you find that people are responding in the right way.
MW: Where are you in that process of turning the culture around?
RG: Within our digital team, people are doing the right things in the right way every day. Across the rest of the organisation there is a spectrum. We still have corners of the company where there are people who feel relatively uncomfortable with a computer on their desk and then there is everything in between.
Part of what has helped us change is a focus on integration. There isn’t such a thing as an online or a print journalist other than for some specialist functions.
There is a single news publishing flow that is increasingly web-led, so we will publish on the web first and the stories evolve and ultimately appear in the paper the next day.
MW: How do you get the balance right between free and paid-for content?
RG: When we first set up the model in 2007, registered users could see 30 articles a month and subscribers had full access. Anonymous users were able to look at up to four articles a month. Since then we have brought the barriers in, bit by bit. Now, readers have to register to read any FT.com article. They can see 10 a month, beyond which they need to subscribe. It has been a process of test and learn. We’d do a bit, see what the conversion rates were and what happened to the traffic and our advertising inventory. Eventually we got the right balance where we were converting very significant numbers to registration and subscription, while growing our traffic and advertising inventory.
We can create 10 or 20 versions of the same page for the purpose of acquisition and testing, put them live on the site and see immediately what the conversion rates are. That has taken the guesswork out of a lot of our activity.
MW: Where are you seeing most success?
RG: The mixed model of selling subscriptions and advertising together seems to work. The more subscriptions we sell, the more advertising we sell, because the audience insight is very valuable to advertisers. So we are scaling the business very rapidly at the moment. Subscription revenues are 60% up year on year at the halfway point, and we have double-digit growth on advertising as well.
Our latest tool is Deep View, which is a browser-based dashboard that allows an advertiser or agency to drill down into our audience during or after a campaign. It shows the types of company the audience works for, where they are from, their socio-demographic background and the types of creative [advertising] they click on. This is something that is only possible because of the direct relationship we have with our audience.
A lot of the publishers I talk to are still wrestling with fundamental questions of strategy, how to market content and build the advertising business and they are not getting the return from digital that they want or need.
MW: Have you had conversations with advertisers about the phone-hacking allegations relating to News International?
RG: Not personally. Clearly, it is a huge news story that we have covered in depth. Ultimately it will touch us as an organisation because it looks like there will be changes to the Press Complaints Commission and other aspects of the way media are regulated in the UK.
In many ways, we are pleased to be a spectator rather than a participant. We are one of the few publications out there that can say hand on heart, we work to the very highest ethical standards of journalism. That is central to our brand and a big part of our success right now.
MW: Where are the growth markets outside the UK?
RG: We have 585,000 paying customers for print and online, so our franchise is bigger than it’s ever been. Much of our digital growth has been incremental, so rather than cannibalising our newspaper base, we’ve been adding to that.
If you look at where our digital revenue comes from, two of the top five places are Australia and Canada, where it has been very difficult for us to circulate newspapers because they are vast territories. In the US, we have grown our subscriptions year on year by 58%, but this is a vast market: there are 400,000 chief executives there before you start counting board directors or people who work in finance or banking.
MW: How are you dealing with the growth in mobile access to your products?
RG: We are seeing over 20% of our page views coming through mobile. I think mobile access could easily overtake desktop access within three years; it might well be quicker. The mobile revolution is on a similar scale to the migration from print to desktop and is happening at a faster rate. It is fundamental for publishers. It is the major channel for news consumption, if not for all types of consumption, so we have to adapt our businesses at speed.
Every week, 15% of our new digital subscriptions come through mobile. It is very important that we are not scared of the technology.
I think many publishers feel slightly freaked out by everything that is going on. Maybe that is a reflection of the fact that the publishing industry was pretty much static for 150 years now publishers find themselves in a world where technology changes every five minutes.
I think we will still be printing newspapers in 10 or 20 years time, but by that point we will be a multichannel publisher distributing content through many different channels. All these technological developments are opportunities if they are handled in the right way.
FT.com the real story
The Financial Times was founded in 1888 and is now printed in 26 separate sites around the world. It has adapted well to the challenge of becoming a global digital media brand: about two-thirds of its circulation is outside the UK. Its main focus now is enabling its professional audience to access its content wherever, whenever and on whatever device or channel they choose.
Digital subscriptions in the US were up from 45,000 to 71,000 year on year to June. Parent company Pearson reported half-year profits up 20% last month to £208m, with the FT Group’s profits up 10%, partly due to increased take-up of digital subscriptions.
Following a well-publicised argument with Apple over its 30% charge on subscriptions to apps sold through its iTunes App Store, the FT has launched its own app available outside iTunes.
FT.com real-time reader response
What has the response to your new web app been like? [The FT developed the app outside iTunes because it did not agree to Apple’s terms for keeping subscriber data and 30% of subs revenues.]
RG: We were stepping out into the unknown with the new app [launched in June] so we didn’t know what the result was going to be. We have had more than 350,000 people coming to the app, which is far above anything we have seen with any of the native [Apple] apps and there are high levels of subscriptions being sold through it.
We will roll it out to Android, BlackBerry RIM and Playbook and then probably Windows Mobile. We have a core body of code that will work across the different devices.
The motivation for us to step away from iTunes was twofold. The commission is chunky 30% of any subscription sold through iTunes goes to Apple but more importantly, we wanted to have the direct relationship with the customer. Having the data [on customers] is crucial and touches every part of our business. We use that intelligence to drive our product management and development for example. None of that is really possible unless you have a direct relationship with the subscriber or registered user.
We felt that if we agreed to Apple’s conditions at this point, we would effectively be setting a de facto standard for the relationship between publishers and platform providers. Ultimately, that would do a lot of damage to our business and those of many other publishers.
We still love the [iPhone and iPad] devices. We didn’t want to have a huge scrap with Apple just for the sake of it. It is simply that the terms it currently offers don’t work for us commercially.
If many other publishers decided to do the same thing, it would have a huge influence on how platform providers do business with the publishing industry.