Nieman Foundation at Harvard
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.
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.
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.
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.
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.
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.
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.
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.
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.
What do you call these vertical products?
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.
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.
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.
