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Newsbrands can't win on scale

News, 24 June 2016

LONDON: News publishers can never rival the likes of Facebook in terms of scale, so they have no option but to develop a business model that looks beyond digital advertising, according to top executives at the Financial Times.

"When I look around other sites now I am very glad that we have a subscription business – I wouldn't want to be a site that didn't," Robert Shrimsley, managing editor of FT.com, told The Drum.

"The advertising model on its own doesn't seem to me one that will sustain the kind of serious quality journalism that we are in the business of providing," he added.

His colleague Jon Slade, chief commercial officer, was more explicit about where the threat was coming from. "The vast majority of time spent [on the internet] is with social channels and they are always going to be much bigger than you are – so if you're trying to play a game of scale then you're going to lose," he said.

And the biggest social channel is Facebook, whose Instant Articles product, launched a year ago, has radically changed the environment. The Washington Post, for example, now publishes everything to Instant Articles and it has reported "some dramatically positive results" in terms of engagement, Jeremy Gilbert, the Post's director of strategic initiatives, told the Guardian Changing Media Summit earlier this year.

At the same event, Mary Hamilton, executive editor/audience at Guardian News & Media, acknowledged the need to put content where readers wanted to consume it but insisted that "We have an ecosystem too. It's nowhere near as big as Facebook's, but there is an ecosystem, there are conversations happening, there is an audience."

The Guardian has rejected the idea of a paywall and has instead sought to generate increased ad revenues and consumer spending by the smart use of data gathered from that audience.

"It's a bit like a mini-Guardian-Amazon," according to Andrew Rowe, head of data planning with MRM Meteorite, who outlined to the I-COM Global Summit how he had gone about capturing personally identifiable information with the full consent of readers.

The claim was that this would increase advertising revenue seven-fold, as brands pinpoint their spending to higher-value consumers, while revenues from the sale of consumer goods and services would rise by 35%.

Data is also central to the FT's approach, based on its 587,000 digital subscribers, while it has what it describes as an "evolving" relationship with Facebook and its Instagram subsidiary through which it is reaching new audiences.

Data sourced from The Drum; additional content by Warc staff