The Financial Times Ltd
In a rapidly contracting industry, with revenue declining at -5.7% over five years through 2016, the Financial Times (FT) stands out. The FT is one of the world’s leading business newspaper publications, and is one of the few to have grown both revenue and profit in 2015. Broadly, it has the same business model as its beleaguered competitors. That is to gather global news, write high quality comment and editorial, publish content, generate revenue from both subscriptions and advertising, and provide this service in an increasingly digital context. How then has the FT managed to succeed where so many have struggled?
To understand how the FT has driven success, it’s important to know the challenges plaguing the global news publication industry. Driving subscribers and advertising revenues is a virtuous and vicious cycle. Larger audiences command premium advertising prices.
This worked well for the publishing industry before the digital age, but both the consumer and advertiser have now changed. Firstly consumers now want instant, high quality, global business analysis, and given the multiple online sources, they want it for free. Secondly advertisers, with a plethora of platforms through which they can promote, want ever more data on their target consumer at ever lower cost. The FT has sought to solve both the challenges problems by investing in their operations to become a pioneer within the digital media world.
Setting up the foundations for success
In order to deliver quality, fast paced information in real time, the FT implemented critical technology innovations. Using a combination of Zuora, Salesforce and Redshift, the company can store, analyse and quickly access consumer data. This has empowered FT employees to make meaningful, real time decisions from which stories to publish to tailored subscription offers. The technology connects 600 journalists across the world with London HQ. Advertisers can access the information they crave. Understanding their consumer has also enabled the FT to choice fully invest in expanding the right platforms. It became clear that they could not simply jump into mobile, consumers were often browsing the FT at work on large desktop screens, and still needed the physical paper copy. Thus they made sure that their digital offering delivers seamless high quality over a multitude of devices.
Using digital to drive subscriptions and advertising revenue
The FT has pushed beyond data storage and analysis though. They have pioneered new ways to encourage subscription in a world in which the consumer is less willing to pay. They were the first to introduce ‘Metered Paywalls’. This model lets readers view a few articles before they are barred without subscribing. It is a type of innovation which only works if the content consumers seek is of such high quality that once they try it, they are unwilling or unable to find it elsewhere. The operating system facilitates such quality, connecting journalists and giving them real time feedback. As a result, the FT managed to increase its subscriber base, with digital subscriptions rising by 14% in 2015, and total circulation across print and online increasing by 9%. Driving subscribers has many benefits: a guaranteed source of revenue regardless of whether or not there is ‘ground-breaking’ news, a wealth of consumer data and a more attractive environment for advertisers to invest in.
So far, so simple – why aren’t other news publications turning a profit?
It seems simple – invest in real time data analytics, entice consumers with free, quality content and ask them to pay once they are hooked. Why has it proven so difficult for other media publishers? One reason is the business model of the FT itself. It is a specialist newspaper, and therefore the product is a premium good which can generate a high return from being continually refined for its target reader. Using data to generate specialist coverage which people find invaluable is a strategy that the FT can pursue, but which The Sun and the Daily Mail (both British tabloids) are less able to do. In fact, after just two years The Sun scrapped its ‘Metered Paywall’ as readers fled to other websites. In addition, while other newspaper publications are culling newsroom staff, the success of the FT enables it to seek out and retain top talent. Analysing the industry, it looks as if the FT has managed what very few news publications have – a strong alignment of business and operating model which is driving, for now, a virtuous growth cycle.
- IBISWorld UK (2015) UK Industry Reports, Newspaper Publishing
- Financial Times (2015) FT 2015 Half Year Results http://aboutus.ft.com/2015/07/24/ft-2015-half-year-results/#axzz3th3Lx1fc
- The Economist (2015) Up Against The Paywall
- Salesforce.com (2013) Financial Times Scoops Competition in the Digital Age http://www.salesforce.com/customers/stories/financial-times.jsp
- Amazon Web Services (2014) AWS Case Study: Financial Times https://aws.amazon.com/solutions/case-studies/financial-times/
- Forbes / Tech (2014) Digital Transformation in Action at the Financial http://www.forbes.com/sites/jasonbloomberg/2014/11/05/digital-transformation-in-action-at-the-financial-times/