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Jan. 21, 2016, 11:59 a.m.
Business Models
JayLauf

Quartz sees its readers’ behaviors evolving, so it’s evolving with them: It’s launching its first major app

A Q&A with Quartz publisher Jay Lauf about the business site’s forthcoming app, adblocking, Quartz’s potential sale, and more.

Since its launch in 2012, Quartz has been among the fastest-growing and most closely watched, digital news sites. With a mobile-first focus on social distribution, email newsletters, and high-quality ads, the Atlantic Media-owned site has often been ahead of media trends.

In a memo sent to staff Tuesday, Quartz publisher Jay Lauf and editor Kevin Delaney wrote that the site’s revenue grew 85 percent in 2015 and had 16.8 million unique visitors in December — up 65 percent from the same time in 2014.

Looking ahead to 2016, Lauf and Delaney wrote that Quartz has plans to launch its first major iPhone app, expand its email offerings, and add additional features to Atlas, its platform for creating and sharing charts. The Financial Times also reported last month that Atlantic Media is in talks to sell Quartz, to which an Atlantic spokeswoman responded, “Given our ambitions for Quartz, we would be remiss in not evaluating opportunities as they arise.”

Lauf and I spoke Wednesday afternoon about these trends and discussed what lies ahead for Quartz. A lightly edited and condensed version of our conversation follows. The full staff memo is also posted at the end of this story.

Joseph Lichterman: In the memo, you said that Quartz had “secured more revenue by January 19, 2016, than we booked in total for 2014.” What do you attribute that growth to?

Jay Lauf: It’s an indication that we have built a credible brand in a very short period of time. We have a brand that stands for something and that marketers want to align with.

The other very important thing is our continued strong renewal rate. One of the phrases that rolls off my tongue, and that my team is probably tired of hearing, is that our job starts when we receive the insertion order. In the first two years, I suspected, given my own experience in the industry, that there was a large cadre of marketers that would set aside a portion of budget to try the exciting shiny new thing. I would say to my team that if we couldn’t get those accounts to at least try us, than we should probably fold up our tents and go home.

I know we’re going to get some of that business, but the important thing is that when they do try us, they are satisfied enough with the investment that they come back. That is what we have seen in spades. We have a 90 percent retention rate among advertisers. There are more companies who come back to us with bigger ad buys or for longer stretches of time, so we’re retaining customers but also growing their business as we retain them.

Lichterman: 42 percent of Quartz’s ad revenue is delivered through mobile, which is really high compared to others in the industry. That’s fascinating.

Lauf: It’s very encouraging. I think the proposition for Quartz is that we’re mobile-first and that we’re global. When advertisers and marketers think about working with us, those are two starting points for them.

Lichterman: There’s been a lot of talk in the past few months about the rise of adblocking on mobile and desktop. Is that something you’re concerned about?

Lauf: I think the answer for any publisher is that you have to be paying attention to it. It would be naive to say we’re not carefully monitoring what happens with it.

We’re not concerned about it for a couple of reasons. The starting point for Quartz is to have built, starting in 2012, an ad model that was a user-first ad model. That meant not doing a lot of the commoditized or intrusive ads that led to adblocking, but rather to focus on a user experience in which you might actually welcome an ad product.

[Adblocking] hasn’t hurt our business an iota over the last year. If you went back to September and October, when iOS 9 launched and the adblockers really started to grab headlines, back then, somewhere around 11 to 15 percent of our pageviews were being blocked. One percent or less than those were on mobile. Clearly, the adblockers are more installed on desktop for us.

We have actually seen that number go down. We just looked at the numbers this last month and it was 6 percent. We’re actually seeing less impact from adblockers, not more. The thing we attribute that to is our growth in mobile. An increasing portion of our audience and an increasing number of our pageviews are viewed on mobile devices. A large portion of those are through in-app browsers in Twitter or Facebook, which so far have not supported adblocking. It really has become, at least currently, a non-issue for us.

Lichterman: One of the other things mentioned in the memo was a forthcoming app, and I was hoping you might be able to tell me what that might look like.

Lauf: What I can tell you is that you’ll see the release of our iOS app sometime in Q1 of this year. I can’t tell you details about what it is and what the interface is and all the rest of it.

Lichterman: Zach [Seward] said to AllThingsD in 2012, “Anyone can navigate directly to any of our stories. You can’t do that in the app store world.” Why an app now?

Lauf: In 2012, the very clear strategy for us was to create as little friction as possible to growth, because you start with an audience of zero. We did not want to create any barrier to either discovering or sharing our content. So whether it was a paywall or an app that you had to go download and that we hoped you would open, all of those things were barriers to introducing a brand-new media property to a new audience.

One of the hallmarks of the Quartz brand is our nimbleness and our ability to pivot when conditions require it. If you read one of Zach’s other memos about Quartz as an API, that’s a good example of this. Over the past four years, the places where people spend time reading have changed greatly. We’re trying to position ourselves to be wherever those users are.

One of the things that changes the landscape with apps is notifications. Notifications are an increasingly popular mechanism for staying abreast of news and information and staying connected with brands. Apps certainly give you the opportunity for that.

This app also allows us to experiment with different content types, and ways of executing our journalism that are more native to an app environment than they are to a web environment.

Lichterman: I’m also wondering how you want to expand on the email front. I know the Daily Brief has been a huge part of Quartz’s strategy.

Lauf: There are no really specific plans on the drawing board right now for email expansion. But the email has been very, very popular for us. You can imagine thinking about it through additional regions, the potential for verticalization of subject matter, a tech or a finance newsletter somewhere down the line.

There’s also interest in bespoke or white label elements to our newsletter. We have advertising clients who are interested in powering their own newsletters with more Quartziness, for lack of a better way of putting it, and that could be something that we offer through our creative services. You could imagine syndicating some of the content in those instances.

Lichterman: After you launched Atlas last year, there was talk of opening it up to let other outside folks post on it.

Lauf: We’re just a few weeks away from being able to talk more in detail about what the evolution of Atlas looks like.

Lichterman: Is there anything anything else we should know about what you’re thinking about or working on?

Lauf: I don’t think so, except for the other thing that was cited in the memo: Our focus on global expansion and our international markets. If you look at our ability to monetize our international efforts, and if you look at Quartz’s mission to cover the global economy for readers all over the world, you’ll see continued efforts and expansion there in the coming year. It’s a big differentiator for us and it’s something we’ve been really good at and want to continue to pursue.

Lichterman: What are you looking at for international expansion? More markets or different types of verticals?

It’s probably expansion of staff around the world, both on the journalism side and on the business side. That allows us to do deeper and broader coverage, draw more readers into the market, and call on more advertisers. We’ve established an office in London that’s 16 people and growing. We’ll continue to focus on our India and Africa efforts. We’ll continue to see some expansion of the journalism in Asia, maybe Australia, maybe even places on the Continent in Europe, Germany is an example. I don’t think we’ll launch another vertical edition this year.

Lichterman: Is there any update or discussion on Atlantic Media selling or spinning off Quartz? A few weeks ago, the FT quoted a spokeswoman saying, “Given our ambitions for Quartz, we would be remiss in not evaluating opportunities as they arise.” Have there been any developments there? Could we expect to see Quartz go out on its own.

Lauf: There’s nothing new to report there at all. As you said, the spokeswoman’s quote is the only guidance or quote I would give. There’s really no new development to talk about at this point.

Good morning (and afternoon and evening), Quartz staff!

With our fourth full year of operation now underway, we wanted to take a moment to recap 2015 and look ahead to 2016. Our morning email seemed like the perfect format for this memo.

What to watch for in 2016

It’s already been a busy year. We are getting out of the gate early on traffic, revenue, big stories, and product development. Our audience continues to grow quickly: QZ.com is on pace to set another traffic record in January. Our coverage of everything from Taiwan’s big election this weekend to Amazon cutting back on middlemen is reaching an ever-growing readership. New obsessions like “Machines with Brains” and “Science of Learning” are off to a fast start.

In addition, we have secured more than three times as much revenue for 2016 as we had by the same time last year. (And that’s on top of 85% revenue growth in 2015 and 164% growth in 2014.) Another way to look at it: We have secured more revenue by January 19, 2016, than we booked in total for 2014! That growth is enabling us to expand this year across every division and every Quartz office around the world. As always, we are focused on recruiting new colleagues we all will be happy and proud to work with—it’s what makes Quartz great.

Building on that momentum, we’re about to release a slew of new products for our readers and advertisers. Quartz’s first big iPhone app is making its way to the App Store: Those of you who’ve been testing it know how fresh and engaging an experience it is. Atlas will open up this year as a platform for chart creators worldwide. We’ll also launch new emails, special projects, and events this year. Our advertising products, already leading the industry on quality and effectiveness, will continue to get better with new offerings and enhanced services for clients.

Lastly, you have all been witness to the constant iteration of the design and code of our flagship product, QZ.com. Some of this work is obvious; much of it quietly results in a faster, more elegant, and more rewarding experience on the website. Together, it amounts to the most prominent display of our commitment to putting readers first. You can be sure our engineering and design team will be keeping Quartz on the path of innovation and improvement this year.

While you were working in 2015

As you know, we achieved very strong results last year:

QZ.com’s global traffic grew to 16.8 million unique visitors in December, up 65% from a year prior. That’s all the more impressive because it’s all organic growth and came while many of our competitors saw flat or declining traffic. Data just out from comScore show how far behind we’ve left our original competitors, the Economist and Financial Times, and have us nipping at the heels of Fortune and Wired in the US. Globally, the story may be even stronger since 43% of our traffic comes from outside the US.

We set a new revenue record and the sales team opened 60 new advertising accounts, bringing our total active accounts last year to 105.

After first forming in May, our video team quickly generated more than 100 million views across Facebook, YouTube, and our beautiful, speedy, new on-site player.

We produced six premium events on four continents and set a new event revenue record as a result. That included our biggest event yet, in November.

The Quartz Daily Brief reached 180,000 subscribers and maintains its exceptional open rate despite many new competitors. It remains the gold standard of email newsletters.

Our reach expanded with a variety of new products. Atlas served up more than 10 million charts in just six months of existence. Quartz Africa doubled its readership after launching in June. We started a podcast, Actuality, in partnership with Marketplace. And we were featured by Apple as we launched a channel on their News app.

All of that work did not go unnoticed as we won 40 awards for our journalism, advertising, and events, including general excellence from the Online News Association and the readers’ choice award for hottest digital publication from AdWeek.

Quartz grew to nearly 150 full-time staff across North America, Europe, Asia, and Africa.

Obsession interlude

Quartz is a global business news brand with global ambitions. So it’s worth celebrating that more than 40% of our readers and an ever-growing portion of our revenue come from outside the US. Last year we launched Quartz Africa, expanded Quartz India, and grew our team in London—the largest office outside New York—to 16 people. This year we’ll remain focused on our international operations as a source of growth and distinction from our competitors.

We are also obsessed with Quartz’s culture: It is the number one factor you cite when asked what you like about working here. Quartz’s values of ingenuity, transparency, intelligence, generosity, and diversity are what make this place work so well. Your participation in the recently circulated staff survey is an important guide for us in this endeavor.

Matters of debate

You may be hearing chatter in the industry that VC-fueled publishers are hitting a growth ceiling. While that may be true for some, our strategy—high-quality journalism to steadily grow a high-value audience that attracts the right advertisers at the right price—has been the foundation of our success every year since we launched. And 2016 is starting out in the same vein. It’s that relentless focus that makes Quartz stand out in a crowded field.

Our traffic continues to grow more rapidly than our competitors—and it’s growing organically. But we’re in a quality vs. quantity game. Our reader demographics continue to be at the top of the rankings against bellwether competitors. We are not a mass, general-interest brand; specialization has been part of our model from the start. Our target advertiser is interested in our combination of the right audience, high-impact ads, beautiful design, and digital savvy.

Surprising discoveries

  • 42% of our ad revenue is delivered through mobile devices. That’s a striking and impressive stat while so many other publishers struggle to make money on mobile.
  • The livestream of our Next Billion event in November was viewed in more than 100 countries, another indicator of how we’ve touched on a topic of global importance.
  • Kevin Delaney plays the accordion.
  • The “Quartz cafe” in the New York office served 283 pots of coffee last year.
  • On a lark, we put T-shirts up for sale that said, “I survived the Fed rate hike of 2015,” and about a thousand people bought one. What a great, sophisticated audience we have. (Of course, recent market movements suggest the economy may not quite have survived…)

Our best wishes for a productive and prosperous 2016. Please send any news, comments, ideas, or achievements to the #general channel in Slack.

Jay & Kevin

Photo of Jay Lauf by Jonathan Seitz for the Nieman Foundation.

POSTED     Jan. 21, 2016, 11:59 a.m.
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