As part of the latest Global Ad Trends report, WARC Media spoke to Cally Baute, Politico’s Executive Vice-President, Consumer Business, and Nicolas Sennegon, Executive Vice President and Managing Director, Politico Europe, about the publisher’s monetization strategy.
How does Politico combine subscription and advertising ecosystems into a model that works for your business?
Cally Baute (CB): When Politico launched, we saw great advertising success. But we also felt, from a sheer business perspective, we were really vulnerable if we only had one pillar of revenue. So, in 2011, we launched Politico Pro, a multi-thousand-dollar-per-seat subscription for folks working in government or in the business of government. This really matters to our subscription model, because we are not at the whim of a consumer ideology.
As our business grew, one thing that we evaluated but decided never really made sense for Politico was that lower-dollar, $8.99-a-month type of traditional consumer subscription offering. Our renewal rate was consistently well above market average and that gave us a foundation to experiment with different advertising models. Now we have a first-party data loop where we’re able to pull insights from our subscriptions and allow our advertisers to reach this incredibly valuable audience.
Most importantly, I want to come back to that ideology point that I made earlier. We never strayed from a very specific audience – that of elected officials, policy professionals and folks in their concentric circles. And because we didn’t stray from being a nonpartisan publication, we don’t have to write for an ideology and risk losing subscriptions. It creates a very important stability in our business that allows for continued growth both in subscription and advertising.
Has the core Politico Pro professional subscription product helped you to weather volatility in the advertising market?
Nicolas Sennegon (NS): Coming from a more B2C subscription model (Sennegon was previously Chief Commercial Officer at The Economist Group), I discovered that the nature of the communication that we develop with our partners at Politico is not about marketing communication. It’s different, which is why we are also less exposed – to some extent – to volatility. The communication work we do with our partners is core to their business. We have different stakeholders. We’re also tapping into slightly different pockets of money.
How has Politico tapped into this influential Washington, DC audience more successfully than other media companies?
CB: We love to cover government in a way that is not only extremely useful, but is extremely entertaining. There’s so much information about the people behind politics and policymaking and that inner circle of government, and folks who work in government are desperate to understand their motivations. It’s a little similar to sports: it’s one thing to understand the box scores, but it’s another thing to understand the personalities that are driving that.
NS: You’re right, we haven’t invented this specific audience. But, with respect to other publications, they sometimes scratch the surface, but we live and breathe with this audience. The best example of this is our Paris ‘Playbook’ [newsletter], which reaches around 40,000 people. If you take the size of the policy and politics population in Paris, we’re over-targeting. We’re not just at 70% of target – we’re probably at 120 % or 130%. We’ve become essential to this group of people to the extent that they have removed other publications to focus on Politico.
How do brands fit in with this model? Is Politico focused on working with particular types of brands?
NS: About two-thirds of our business comes directly from clients, as opposed to going through media agencies. Institutions and NGOs specific to Politico aside, we work with the same usual suspects that I would have done at The Economist. It’s just that the nature of the conversation is different.
CB: Our business has two main types of advertising: one is advocacy, and the other is corporate reputation. And the brands that are doing corporate reputation are often the ones funnelling their dollars to associations to do the advocacy on their behalf. Many of the individuals working with Politico have themselves worked in government, and they understand that Politico is an important vehicle to reach the government, because they themselves read it and relied upon it.
Has the way that you work with advertisers changed at all over the years, or has the model been fairly consistent?
CB: It’s absolutely changed. When I joined 12 years ago, it was much more heavily tilted towards advocacy, which can often be very transactional. Now we have lots of brands asking us, ‘What is the best way to reach your audience?’ There is a consultative nature to the engagements with clients that has really evolved and enhanced over time.
In the context of Politico, is there a specific goal in mind in terms of revenue split between subscriptions and other sources like advertising?
NS: I don’t think there’s any specific [model] we’re going to force, like saying we want to be a 90% digital subscription business. The way for us to move forward is to be nimble and to protect our core. We need to be creative. We are developing new services for our B2B subscription. The beauty of Politico is we’re not just here to provide subscribers with information that they need, and trying to make this information as valuable in a format that they can use for their work. We’re also trying to bring people together. We have created networking opportunities. We’re also developing research analysis services. Obviously, some revenue models provide more stability, and B2B subscription is a nice model. It’s predictable, but it’s a heavy machine to maintain.
CB: We are a have-to-read, rather than being a nice-to-read. If we sit in that complete centre of the bullseye, that you need Politico to do your job better if you work in government or the business of government, that creates opportunity on the advertising side of the business. There’s no exact calculation of which one we like more than the other. What we have seen over the years is that when one grows it actually lifts the other up in ways that we had not predicted. Finding more pillars of revenue will continue to fortify the business, but we will only do them if they don’t distract from the core of what our organisation is and the solid business model that we already have.
WARC Media’s latest Global Ad Trends report, Media models in flux, is now available on WARC.