In the continually evolving landscape of digital media, the perceived tension between subscription-based and advertising revenue models remains a hot topic for news executives. The Financial Times has worked hard in recent years to achieve alignment between these two sources of income, illustrating that media organisations can successfully diversify their revenue streams and achieve strategic balance between them. In a revealing webinar featuring Lucy Marchington, Media Director at the FT, and George Montagu, Head of Insights at FT Strategies, participants were given an insider’s look into how the FT doubled its digital advertising revenue while surpassing the milestone of one million digital subscribers. In this article, we summarise the key takeaways from this webinar.
The Evolution of the FT’s Business Model
The past decade has seen a decisive change in the FT’s business from a print-centric model to a digital powerhouse in news media. The journey from print to digital extended far beyond simply transferring content online; it also necessitated a profound re-evaluation of how digital advertising could function effectively alongside the corporate focus on the FT’s subscription model. With the FT’s CEO John Ridding clearly signalling the priority of growing reader revenue the FT’s advertising team had to ask themselves some searching questions, not least: how can advertising fit into and work alongside a subscription strategy?
The Shift to Reader-First Advertising
Pre-Covid, the groundwork was laid with an audit of digital platforms that highlighted an overemphasis on advertiser needs at the reader’s expense. The FT’s advertising team chose to switch gears, placing reader experience at the fore. This fundamental move was not just about showcasing the quality of the FT’s journalism but also about an overall enhancement of the user experience, in the belief that this would ultimately yield benefits in advertising revenue terms.
“We looked more at how our readers behaving and how we could find ads that fit into their journey and the way that they were using our platforms”
Lucy Marchington
Privacy as a Pillar of Success
With the looming deprecation of third-party cookies and the introduction of privacy regulations like GDPR, the FT’s sales team elected to go with the grain of these pro-privacy developments. The FT decided to completely pull out of the programmatic open exchange – even though that was where the majority of advertising spend in the industry was going – and voluntarily adopted EU legislation in all aspects of its global advertising business.
Lucy Marchington highlighted that this pivot to a reader-centric model extended beyond mere regulatory compliance; it was about building industry trust and ensuring readers feel secure in their digital interactions.
From Open Exchange to Quality Partnerships
Lucy Marchington underscored the bold decision to turn off the open exchange in programmatic advertising, a move contrary to industry conventional wisdom at the time. By focusing on direct relationships and branded content, the FT crafted a more sustainable advertising ecosystem that valued user consent and doubled down on privacy. With the FT’s acquisition of AlphaGrid and Longitude – a creative content studio and a strategic marketing consultancy respectively – it is now able to provide a full end-to-end branded content service. As Marchington described, the FT has become “more of a holistic marketing platform”, shifting from purely transactional dealings to nurturing sustained partnerships.
Thriving Advertisement with Less Investment
With a North Star goal focused on digital subscriptions rather than advertising, investment followed suit. Marchington explained the need to make tough choices about how to grow the ads business despite the relative lack of corporate focus, forging an eventual alignment with the subscription business. A cornerstone of this strategy was leveraging first-party data to get a more detailed picture of FT readers. This data was instrumental in the ‘anonymous to known’ journey, driving both targeted advertising capabilities and supporting the registration and subscription base simultaneously.
Clients often tell us they are reluctant to launch a subscription offer because they are concerned about the impact on advertising sales, which remain the revenue mainstay for the majority of publishers globally. We understand this concern but believe it is ultimately misplaced. Choosing to diversify your revenue base does not need to come at the expense of existing revenue sources, but the transition needs to be managed carefully in both strategic and cultural terms. Lucy Marchington and her advertising sales colleagues do not pretend their experience was straightforward and some difficult change was needed. But by aligning with the rest of the business - commercial and editorial teams alike - and adopting the primary focus on the reader experience, significant growth in digital advertising revenue has been achieved since the start of the decade.
If you have any questions or would like to find out how FT Strategies could support your journey to a sustainable advertising strategy, please contact us here.
