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Nov. 7, 2019, 2:33 p.m.

Newsonomics: How the Financial Times is building mini-brands within the global FT

“The point is they have personality. They have character. They’re engaging, and they have really inside stuff. So, they’re more than newsletters. They are mini-brands that have events and forums around them — but the newsletter is almost the spearhead.”

John Ridding is comfortable in his new office. This year he moved the Financial Times back to its previous (1959-1989) Bracken House digs, after it had been refurbished for the needs of the modern FT.

As he approaches his 14th year as FT CEO, he’s also grown comfortable that the bet he made in 2015 — engineering a sale to Japanese business news giant Nikkei — was the right one. His new boss, Nikkei chairman Tsuneo Kita, thinks so too. (You can read an interview with him tomorrow here at Nieman Lab.)

The FT’s business is profitably enough for now, and more importantly, its key metrics are moving in the right direction. The prime driver of that is its success selling digital subscriptions — going from 517,000 four years ago to 840,000 today. That’s more digital subscribers than the FT ever had print subscribers.

As at nearly every newspaper around the world, print advertising and print subscriptions at the FT have long both been shrinking, but digital subscriptions have made up that gap and then some — leading to actual year-over-year growth. In 2012, advertising drove 50 percent of all FT revenue; now it’s at about 35 percent. (Make no mistake: Advertising remains a vital driver of substantial revenue for news companies. But for the ones who’ve gone furthest in the transition to digital, it’s become a secondary one.) “Other” revenue — mostly driven by conferences and events — now makes up nearly 10 percent of the FT’s revenue, double what it was a few years ago.

In our interview, Ridding emphasized how the FT’s ever-deepening customer knowledge drives how it builds its products and its business. He’s got an enviable audience to serve, to be sure: FT readers spend an average of $5,000 a year just on clothes and $6,500 on jewelry. Average net worth? £1.3 million. Average income? £206,000, or $266,000 at the current Brexit-depressed rate. Still, publishers still have to work hard to convince them to part with their money.

The FT’s customer understanding has driven it to focus investment on serving particular segments of its readership better than its competitors. To do that, it’s focused on engagement, as many do these days, but with its own formula.

The key is something called RFV. That stands for recency, frequency, and volume, a measure of a reader’s habit and loyalty with the FT. More specifically, it’s made up of three variables: time since last visit (recency), number of visits in the last 90 days (frequency), and amount of counted content read in the past 90 days (volume). An algorithm uses those variables to score engagement. “We’ve seen double-digit growth in engaged subscribers for the last three years,” the company says.

And what those readers want, the FT believes, is tailored content — much of it delivered by newsletter.

“Over the course of 2019, we refined our approach to newsletter strategy,” says Renée Kaplan, the FT’s head of audience and new content. “We have a more focused strategy to deliver and derive the most value possible from our newsletters as editorial products.”

Many publishers use newsletters as fishing lures, drawing readers into their pond, then hoping to convert then to subscribers. The FT uses them first and foremost to better serve current subscribers.

Kaplan sums up the FT’s strategy simply: “Number one, subscriber engagement. Number two, revenue. Much of our business’s monetization is through engagement, and the retention and LTV benefits that accrue to growing RFV and premium content consumption.”

There’s ongoing change in the newsletter portfolio. The FT has dropped or merged four newsletters and created new ones. This year, the FT has launched Tech Scroll Asia (leveraging the Nikkei connection) and the four-day-a-week Trade Secrets, responding to all the volatility in world commerce.

At this point, 26 percent of FT subscribers have signed up for a newsletter, and that number is “our primary growth target,” Kaplan says. Consequently, the company continues to work through internal dynamics to reduce friction in the signup process and increase subscriber awareness of the offerings.

In our talk, John Ridding — an FT lifer, having joined the company 32 years ago as international news desk journalist — talks about those business priorities and the broader news landscape — disrupted as much by Trump and Brexit as by Google and Facebook. He’s concerned about the widening polarization he sees and he believes that provides the FT a wider opening. And the U.S. market — already bigger than the U.K. for the FT — is his prime target.

“I think our opportunity there is to be an independent voice, a balanced voice, and a global voice at a time when a lot of media is becoming more domestically focused,” he said. “Certainly, that’s the feedback we’ve had from readers and research.” (For some, that will echo a certain uneasiness with The New York Times’ presentation of its stories in the Trump age.)

In this interview, edited for clarity, Ridding both shares some of the FT’s playbook and makes an analogy involving the movie Meet the Fockers.

Ken Doctor: Let me start with a journalistic question: What has surprised you most from the Nikkei acquisition? You pulled off the sale extremely well. If there were an award for M&A work in our field, you’d get it.

John Ridding: I will never forget the day of the deal, the final meeting of the board, which had to make the decision that day. The adrenaline — I don’t think I’ve ever had anything like it.

It’s been almost four years since the deal was concluded. I would categorize those four years as formidable and highly successful, and they’ve seen strong cooperation between us and Nikkei, and strong momentum. There’s been no editorial interference — they’ve been totally true to their word. And as you said, acquisitions are hard. I remember when I was a companies reporter in this building many moons ago and I was covering M&A — frankly, most acquisitions don’t go very well.

I think the key to that success is shared culture. Which sounds odd because when we did the deal, a lot of people in interviews or just in general said: “God, this must be really difficult, a Japanese owner on a different side of the planet.” But actually, I think the cultures in key respect are very strongly aligned.

Basically, these guys all come from a journalistic background, and they really believe in the value and importance of quality journalism, in reader revenues and transformation. So in a sense, culturally, they would do it the same way. Whenever we go out there, we obviously have board meetings, management meetings — but then generally we go out for a drink and dinner and talk about the news. That’s kind of what journalists and people in the news media like to do. So, I think that’s key.

Along with that is a long-term view, because they are a private company. By virtue of being privately owned, they can take and do take a long-term view, which in this horribly disrupted media environment is a huge asset.

Doctor: That was a huge key to what you were looking for in this deal, right? Even this year, we saw [Axel Springer CEO] Mathias Döpfner do his deal with KKR, to take a big minority stake in his company — and significantly take it private. As I’ve covered the destruction of American newspapering, that’s one of the truths: It’s nearly impossible to transition a public company, given the financial realities. It is one of the epiphanies of our time that news companies cannot be subject to quarterly reports.

Ridding: Yeah, you’re right. I’d forgotten about the Springer parallel, but I think that’s absolutely true.

And it doesn’t go away. It’s not like there’s a short phase of disruption. This is the new normal. It’s permanent.

For example, we needed a new digital platform and they were fully behind it from the get-go. We needed that kind of confidence and certainty to get on with it, because you can’t just chop and change.

Doctor: You’ve got more subscribers in the U.S. than in the U.K., and that surprises people, but it probably shouldn’t. The U.S.’s population is almost five times larger. Do you think there’s still room to grow here?

Ridding: Nikkei rightly felt that we can be bigger and should be bigger in the U.S. For our U.S. team, having an owner that wants to grow in strategic markets is practically inspiring. And it’s important because there’s an opportunity for us in the States. In the past, we’ve tried to build there, but you need a sustained, long- term view.

You can throw marketing money short-term at America, and it’ll wash out in churn quickly, but if you have a long-term commitment to building a quality audience — Kita-san’s favorite expression is “quality growth.” It’s all about sustainable, revenue-engaged growth, and they’re enabling us to do that.

Doctor: In the U.S., how would you describe your plan? How specifically is the Nikkei ownership helping you do things here in terms of that strategy that you couldn’t do before?

Ridding: There’s a number of things.

One is a confident focus on differentiation. We’re not going to plant 20 or 30 reporters outside the White House. Our view is what makes the FT different and special is that global coverage, and it’s that independent voice at a time where media is, as you know better than anyone, increasingly polarized. In the U.S., obviously, that’s been a big theme, though it’s not just the U.S.

So I think our opportunity there is to be an independent voice, a balanced voice, and a global voice at a time when a lot of media is becoming more domestically focused. Certainly, that’s the feedback we’ve had from readers and research.

Doctor: It’s interesting, because the one thing that Trump times have meant is that the Times, the Post, and the Journal — each a little differently — have become part of our polarized times. Is that an opportunity for you?

Ridding: Totally. Absolutely. I don’t comment specifically on other publications. Clearly, the media landscape in the U.S., and certainly in Britain, along with society to a certain extent is more polarized. It’s a kind of chicken and egg — I think they reinforce each other. But our view is to stay balanced.

Obviously, our editorial pages will have a clear opinion, but it doesn’t get into our news pages. I think that’s quite a significant differentiator, the balanced, independent, non-polarized, non-polarizing news and analysis.

Actually, we’ve just done an exercise where all of the senior management for the FT has interviewed subscriber. Obviously, we do lots of research and we look at the data analytics, but a deep conversation with a subscriber is a wonderful thing. It’s been a common response, on the news pages: “We get the news. It’s accurate, it’s authoritative, it’s reliable and we get to make up our minds. You don’t tell us what to think in the news pages.” And I think it’s a sad state of affairs, really, where that’s become such an important differentiator and advantage. That’s what one should expect from these media channels.

Doctor: In those conversations and research, are you hearing more of that than you used to?

Ridding: It’s coming through clearly, because I think it’s being seen as more of a differentiating factor. I think it’s always been the case, but it’s made us — it’s become more special, and people appreciate it more because it is more, sadly, rare.

Doctor: So if you’re going to do that, and you’re not going to put all your reporters at the White House, what’s that differentiation look like and how much more resource can you bring to it?

Ridding: Well, we have added some reporting resources, we’ve added marketing resources. We’ve also, to answer the other element of your question, added specific new verticals or specialist areas of coverage. We think that must-have specialist information is incredibly powerful in building loyal readers.

There’s a couple of examples. One is Moral Money, which Gillian Tett [currently chair of the editorial board and editor-at-large for the U.S.] devised and launched. It’s really about how investment is becoming more socially aware, and it’s about broader stakeholders, not just shareholders, is a big theme. You probably saw that the Business Roundtable recently changed their motif. It’s not just about the shareholders — it’s more broadly about stakeholders.

So Moral Money is a newsletter around that. We have events and conferences based in the U.S., and that’s growing very rapidly. In terms of what we do with Nikkei, another good example is something called Tech Scroll Asia, which is a co-branded FT/Nikkei publication — we’ll have events and conferences around it. And it’s pretty exciting, because what it’s doing is basically bringing the story of Asia technology, which is pretty dynamic, to the world and particularly to the U.S. I think the world has got used to thinking that all tech and all innovation comes from the Valley. It doesn’t. I think it’s a really interesting new service.

We have really good tech reporting resources in Asia. Nikkei has wonderful coverage on technology. So to have a co-branded product with content from both, which then has events and forums, I think is a very real expression of our capabilities and strategy. So that was launched this year, so was Moral Money. We’ve got plans for more of these ventures and services.

Doctor: So the playbook is high-quality content, differentiated content, a very clear sense of the audience, the events/conferences component — all, really, a reader-revenue-plus model.

What do you call these vertical products?

Ridding: What we call them is a good question, because technically, they’re known as newsletters, but actually they’re much more than that: mini-brands and mini-franchises, with premium exclusive information. Another great example is Due Diligence, which was in some respects the one that got us really excited about this. Due Diligence is about M&A, but it’s much more than M&A, and it’s got all the support services around it.

The point is they have personality. They have character. They’re engaging, and they have really inside stuff. So, they’re more than newsletters. They are mini-brands that have events and forums around them — but the newsletter is almost the spearhead. And there’s a very nice system that develops with the newspaper and online. Sitting above these is the global FT. You have readers who then want to drill deeper into specialist areas and become very loyal followers of these.

I think what’s interesting in the U.S. is that we’re finding that people are coming to these newsletters and then moving up into the broader world of FT.

Doctor: How many newsletters do you have?

Ridding: I suppose all together we’ve got a couple of dozen of them, but in a sense, the new wave of these really strategically significant drivers, I guess there’s half a dozen to 10 that we have already got planned. We’ve already got plans to add two new ones, one from the U.S. again next year and one global. They are all global.

Doctor: I understand one of them’s around trade, right? [That newsletter, Trade Secrets, has launched since our conversation.]

Ridding: All of the old certainties around trade and the old institutions are up in the air.

There’s one other point I wanted just to make in terms of this cooperation with Nikkei. We knew they were long-term, and we knew they believed in quality journalism. What we hadn’t really experienced because we hadn’t — before the acquisition happened — was just frankly how quickly and decisively they can move.

And that was one of my very beginning questions when I talked to Kita-san, because obviously there’s this, I think unfair, stereotype or perception that Japanese business moves slowly on the basis of consensus. But our experience actually has been that Nikkei can and does move quickly — also on the basis of consensus, because there’s consensus around the goals and trust.

The way I explain this and think about this is: One of my favorite movies is Meet the Fockers. Robert de Niro’s character has this wonderful concept of the circle of trust. If you’re inside that circle of trust and you share the same strategy and vision, you can make decisions pretty quickly.

And I’ve seen this with the new headquarters that I’m standing in now. I saw it in the acquisition itself. They knew very quickly to make that commitment. We’ve seen it in M&A. We’ve made a series of deals — they haven’t been mega deals, they’ve been smart, focused deals. Longitude, the research business; Alpha Grid, the content marketing business; The Next Web. And frankly, we’ve had a rigorous process — obviously, you do your homework and due diligence — but ultimately Nikkei was pretty clear and pretty decisive. And frankly, given the world we’re in and the need for speed, that’s a huge advantage.

Doctor: The trust idea is really what underlies success or not in the longer term. In the short term, you can get away with a lot of stuff, but…

Ridding: Exactly.

Doctor: I’ve long cited the FT for its groundbreaking paywall, for its emphasis on reader revenue, and for being way ahead of the curve in the application of technology. What are the most important metrics you are looking at now?

Ridding: We got through the million-subscribers milestone a year ahead of schedule in March. And the number of engaged readers, which is key, has also grown very strongly.

Obviously, advertising has its ups and downs. It’s a fickle friend. But the core reader revenue engine has just — it’s grown double digits in revenue terms and reader terms every year since the acquisition. And profits have more than doubled since the acquisition, because I think both Nikkei and the FT feel that the industry is so volatile and precarious, you have to have that financial strength to deliver the mission.

Doctor: That’s the whole thing about the digital business, right? Digital businesses become much more profitable once you get to a certain point — and, arguably, you’ve gotten there first. I can see The New York Times is definitely getting there. It’s got a different strategy, focused more on bundling — parenting and cooking and crosswords. With [New York Times CEO] Mark Thompson’s plan, the Times could have six or seven verticals by 2025, though he’ll be retired. As the engine works better and better, you become more profitable.

Ridding: And you also can build a virtuous circle to engage readers. The more you understand them, the better a job you do of product development. Good journalism is always going to be more than a science. It has to have heart and emotion and, frankly, editorial judgment and instinct. But boy, that science and the data really helps frame things and guide you in the right direction.

Doctor: Tom Betts, the FT’s data guru, has made a huge difference. I see his picture now third or fourth in your management lineup. It’s not an accident.

Ridding: Data analytics have transformed the place in a really enjoyable way. Data can be dry — or it can bring product and journalism and everything to life. And it’s the latter with us, and it’s been fantastic.

Photo of John Ridding at the FT Summer Party June 30, 2016 by the Financial Times used under a Creative Commons license.

POSTED     Nov. 7, 2019, 2:33 p.m.
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