Two months ago, the Guardian achieved what many in the industry thought would be impossible: they recorded a small operating profit, following 20 years of multi-million pound losses. This was aided by record online traffic, reduced costs, and financial contributions from readers, putting the business in a sustainable position.
Now that seemingly impossible goal has been reached, the challenge for the publisher is keeping the focus and momentum going to propel them forward to their next goal: 2 million supporters by 2022.
The Media Voices Podcast sat down with the Guardian’s Chief Revenue Officer Hamish Nicklin this week to talk through the newspaper’s journey to profit, and how it plans to keep the momentum going in its plans for the next three years.
Overcoming internal doubts
When the Guardian first set out its plans for a dramatic turnaround three years ago, there was a lot of scepticism from industry professionals who couldn’t see how the newspaper could reduce its losses that quickly, particularly given the challenges other publishers were also facing around increasing revenues and profitability.
Nicklin, who joined the Guardian in 2016 from AOL, wasn’t alone in sharing concerns about the plans at the time, especially some of the targets that were being brought in.
“On the whole, there were pockets who entirely believed that it was possible, and there were others who genuinely had some concerns and doubts, because some of the numbers that we were putting against things like our reader revenues were pretty hefty,” he said.
“And the reality was, over three years, we didn’t necessarily have a detailed financial plan, but we did have a framework, and that framework was made up of some assumptions in the outer years around what we’d be getting from some of these numbers.
“I remember looking at the ones in the advertising world thinking, how on earth are we going to go from where we are now to that?”
Nicklin credits this framework with pushing people to do things differently, and says that it focused people’s minds in the business. “When you’re driven by that belief of having to make the changes, it forces you to get creative, which is exactly what we did across both reader revenues and advertising,” he explained.
“So whilst there might have been some cynicism and doubt in some quarters, there was an absolute belief that we had to do it.”
A deep and unique reader relationship
Back at the start of the Guardian’s three-year drive to break even, there was an emphasis on the importance of reader revenue, but there wasn’t a great deal of understanding about how growing it was going to be achieved. “Back then, it was all around membership,” Nicklin said. “But there was a belief that it was a genuinely deliverable pillar on the basis that we have such a unique and close relationship with our readers.”
The publisher’s reimagining of its membership proposition is well-documented, having changed to be more about contributions and supporting, rather than purely joining something. They now have 655,000 regular monthly supporters across print and digital, with a further 300,000 people making one-off contributions in the last year alone.
“It’s now over half of our revenues come from readers, as opposed to advertising,” Nicklin highlighted. “Only a very small proportion of it is now based on print…so we’re definitely more of a digital business, and more of a reader-focused business.”
The video pivot that’s paying off
When it comes to video, many publishers are now extremely cautious, given the number who got burned following the great ‘pivot to video’ a couple of years ago. The Guardian had also ‘invested reasonably’ in the format, and initially it looked like they were also going to fall short of being able to make sustainable revenue.
But Nicklin says that the early investment – and early shortfall – is actually setting them up to do very well in the long term.
“When I first arrived, I remember looking at the number that we put against video, scratching my head going, ‘How the hell are we going to make that?’” he admitted. “We didn’t hit that number. We got close to it, but not in the way we expected.”
Their mistake was in the initial approach, according to Nicklin. The team started off by asking how they were going to invest in video, rather than what the outcome would be. As a result, they created a lot of video content, but didn’t get as many views as they wanted, and as a result, they couldn’t monetise it to the extent they wanted to.
But now, the Guardian has put the focus on optimising the reader experience in order to get people to view videos. “We’re now getting a lot more views on our video, both on our platform, and off our platform with YouTube,” Nicklin explained. “So now it’s a case of saying, ‘‘We’ve got the eyeballs, now we can monetise this thing.’”
“And again our video, both within outstream and preroll is growing pretty handsomely as advertisers are beginning to realise that premium video environments are quite hard to come by.”
Banging the drum for a premium environment
Reinforcing the value of those quality and premium publishing environments is another key pillar of the Guardian’s strategy, and has played a part in turning around the fortunes of the publisher over the past three years.
The Guardian faced the same challenges as many other publishers a few years ago, with ad revenues dropping by almost 20% back in 2015/16 as advertisers started chasing audiences at scale across the internet. But Nicklin points out that the tide has started to turn strongly, as “the perils and dangers with that sort of buying have become apparent,” from brand safety fears to ad fraud.
“All of these things just seemed to put the handbrake on the drive towards audience buying at scale…obviously it still grew, but not at the same rate, and not at the same detrimental impact on us,” he explained. “But at the same time, we did a whole lot of things to try and say…how are we going to adapt?”
The focus in 2016 therefore turned towards creating a new proposition and narrative about what the Guardian could offer. “We took out to market the notion that the Guardian was a platform for action,” Nicklin said. “Based on the deep relationship we had with our readers, the level of trust that we had, and the quality environment that we advertised in, we could get our readers to do things.”
“We used to just spend the first twelve months going, what do you want our readers to do? And that was the way that we got briefs in from people, and it was a really interesting approach because it just encapsulated in one space why premium quality environments were so important, and the relationships that that engendered.”
But the Guardian also accepted that the wider trend of advertisers wanting to buy audiences cheaply across the internet wasn’t going away, and so they focused on optimising their ad tech stack, as well as being the first publisher in the UK to offer a programmatic guaranteed offering.
“When you put all of these things together, it culminated in quite a lot of success for us. Last year we grew our advertising revenues by 3 percent,” Nicklin said.
And when it comes to the future, Nicklin is optimistic about the brand’s ad revenues. “Whilst we’ve had a lot of success over the last couple of years with our ad business, the data tells me there’s still so much more to go after, which is why we’re excited about it.”
2 million supporters by 2022
The next three years are set to be just as exciting for the Guardian, if plans for their next milestone are realised. The goal by 2022 is to have two million supporters, up from just over a million at present.
For Nicklin, this will be achieved by building on the successes which got the newspaper this far, and “putting the reader at the heart of everything we do.”
“To do that, you have to continue to get to know them very well, and continue to create the world-class journalism that we do every single day,” he outlined.
“From an advertising perspective, it is absolutely to carry on going where we’re going, and banging the drum for quality and for premium, and for just helping people understand why that makes sense.”
Whether the rapid increase in the number of publishers putting up paywalls will dent the Guardian’s contributor model remains to be seen, but it’s heartening to hear such optimism and faith in the newspaper’s foundations from the man in charge of the money.
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