In the fast moving digital world, everyone is experimenting and few claim to have got it right. But, by general consensus, one publisher that has got it more right than most is the Financial Times. Meg Carter talks to FT.com managing director, Rob Grimshaw, about their evolving digital strategy.
Maverick is not a term you might instantly associate with the Financial Times. Yet its multi-channel publishing strategy, which has evolved over the decade since the paper became the UK's first major publisher to charge for digital content, has been trail-blazing and still is – as its recent launch of a new multi-platform, web-based mobile app goes to show.
The FT Web App - a high speed, automatically updating app launched in June not through an 'established' online outlet like Apple App Store but via a web browser at app.ft.com - was motivated by two aims, FT.com managing director Rob Grimshaw explains.
The first was to find a way of simplifying mobile app development. Publishers feel obliged to create different apps for the different mobile platforms provided by Apple, Google, RIM, Nokia and Microsoft, he says. FT Web App, however, uses HTML5, the latest iteration of the basic language of every website, which means it is compatible with all.
The second motivation was "to lay down a marker" – not just for the FT but all publishers. “It was becoming clear that in the future, app stores will come with strings attached,” Grimshaw explains. Apple, for one, now charges 30% of revenue from third party-produced apps it sells and retains control over the bulk of data generated.
“We felt if we conceded to terms like this then we could quickly find the whole marketplace looked like that. We felt we had to do something decisive – that it wasn’t good enough simply to negotiate or complain. We felt a responsibility to demonstrate a different way to reach our market. Though early days, we're hopeful the nature of future conversations between publishers and technology providers will now change.”
A desire not just to seize the initiative but set the agenda has typified Grimshaw's tenure as MD of FT.com, a role he's held since 2008. The website is ground-breaking not just because it was one of the first monetised publisher sites but because of its hybrid commercial model. This is simple yet effective: to access the site, users must register – which is free; once registered, users get access to ten articles a month at which point they must pay to subscribe.
2007: a turning point
Introduction of this model in 2007 marked “an inflection point” for the business, he explains: “It was the first time we really started to have a model that was in keeping with the channel and took advantage of the things you can do on the web you can’t do anywhere else.
"We introduced a measure of flexibility - it’s a stepped model where you have a number of different levels of engagement. Anonymous users can still come to FT.com, but the registration is so simple 20,000 people a week are currently registering on the site. Whereas in the traditional print context, it’s black or white – either you’ve paid or you haven’t – with online, it’s a phased approach that lets people come into the shop to browse before they buy.”
As a result, the FT has moved from a newspaper circulating 450,000 copies a day at its peak to being a multi-platform publisher with 605,402 paying customers across print and online - 224,000 of which pay for digital. Digital revenues – online and mobile, combined – accounted for 24% of the FT’s revenues in 2010 (a year-on-year 60% increase), a figure Grimshaw expects to have risen to at least 30% by the end of 2012. It’s a multi-platform rather than a digital business, he insists, stressing his faith in the on-going role and value of print.
“The digital business is proving very profitable with good margins,” Grimshaw adds. “What we've achieved so far has already been enough to keep us robust in recent years when others have struggled to keep their heads above water. We want to move rapidly to a point where maybe half the revenues for the business come from digital. This isn’t about achieving financial targets - it’s about securing the future of the FT brand.”
Data driven strategies
While important, revenue isn’t the only benefit of the FT’s digital activities, however.
“Registered users have been far more valuable than we previously imagined,” he adds. “They’re not paying, but they are a self-selecting marketing audience – 3.8m people who have stuck up their hand and said ‘We’re interested in the FT’. That’s a huge benefit, and we now have insight into how they relate to content, the kinds of articles they choose, how often they come to the site - all of which now drives our marketing which has tremendously improved efficiency.”
All too often, publishers baulk at the volume of data digital generates, he believes. Yet it’s more critical than ever to get to grips with data and use it to commercial advantage.
“One of the fundamental realisations I had a few years back was that our business had changed – that it had become a direct internet retail operation – which is obvious, really, when you think that what we do is sell subscriptions, direct. But it hadn’t dawned on us before because of our (print) heritage.” This epiphany marked a turning point: “Only once you realise your business has changed do you properly question whether you have the range of skills you need.”
New skill sets and tools acquired as a result enabled a greater emphasis to be placed on product research and market testing. ‘Multivariate’ testing, for examples, enables the publisher to trial different versions of a page with each effectively competing against the others to determine which designs are most effective. Data-driven marketing inspired by tactics now commonplace amongst other online retailers, meanwhile, marked another important strategic shift.
Last year, the FT also launched its own readership and circulation measures – something Grimshaw believes other publishers should now do.
“We firmly believe the world is being driven by the needs of the consumer rather than the preferences of the publisher – readers will choose how they want to consume the FT and this will reflect what is most convenient for them at any particular time, be it mobile, desktop or print. Which is how it should be, and how we must be able to operate,” he says.
“But that does not fit many of the ways the industry has traditionally chosen to measure audience. So we decided we needed to be bold and step ahead of the industry and develop a tool tailored to how publishing will work in the future.”
The mobile revolution
Another important focus – and one set to grow in prominence moving forward - is mobile, the strategic importance of which lies in the rapid rise in mobile internet use, he explains: "The take-up of our mobile apps particularly surprised us. When we released the iPad app in May 2010, my expectation was perhaps we’d get 20,000 downloads in the first year. We got 20,000 in the first weekend - without any marketing.
"So far, our Apple apps have had well over 1m downloads and we’re now working to develop apps for other platforms as well as building on the launch success of our own web browser. We now believe mobile will be the key distribution channel for news in the future - we think 50%+ of our paid users are going to come through mobile within the next three years. So we have to move with that migrating audience and, if possible, stay ahead of it.”
Grimshaw cites mobile and personalisation as the big challenges now facing publishers at a time when many remain in "existential crisis" about the transition from print to desktop.
The mobile challenge is about the speed with which users are adapting to mobile content consumption, and the economics of producing the right mobile content cost-effectively. “One of the things I think we’ve done extremely well is develop an incredibly flexible approach to publishing where we are not reinventing the wheel each time," he says.
"Our mobile apps are powered by feeds from the main website which means though they look sophisticated, they are relatively simple to update when an editor changes content on the main website. This means we can deliver a live, curated product across many channels. And we’ve created quality, award-winning content with relatively little additional investment – though a lot has gone into building a robust publishing platform behind the scenes over the past few years.”
He adds: “Over time I'm convinced people will expect mobile to behave as the web does with constant updates, and on-going information flow and interaction. Yet a lot of publishers simply end up treating it as another edition of their newspaper or magazine and duplicate a lot of processes to create it – laying out pages, agonising over headlines and so on - creating an overhead that is so great it’s hard to see how they'll ever make a profit.”
Personalisation, meanwhile, is FT.com's other current development investment focus with work now well underway to lay the foundations for offering users tailored content in more flexible ways.
“Moving forward, our website will morph depending on who is reading it and what they are interested in,” Grimshaw explains. “FT.com currently has 3,000 odd pages and sections. Though we’ve done a lot to improve our navigation, we know users still have a sense there’s more content they would be interested in if only they could find it - this will be the next step in our journey.”
Lessons for other publishers?
Over the past decade, many have claimed people would never pay for digital content in sufficient numbers to make it commercially viable. Then, as FT.com proved this wrong, others insisted it was the exception thanks to its specialist product and niche audience. Grimshaw, however, dismisses both viewpoints. “While I find very flattering the idea we are the only publisher in the world able to produce (digital) content worth paying for, I don’t think that’s true at all,” he insists. “What we have seen is people value content online the same way they value content in print: it’s not about channel or format but substance. Produce high quality editorial that’s unique, original and offers real value and readers will pay.”