Interviewer: Chris Sutcliffe
Chris: You’ve effectively been in your position for as long as this three year transition to primarily a membership-oriented business has been going on. So what has been your experience of watching this company go from loss-making to one that is now not only sustainable, but is marketing that sustainability to its members?
Hamish: Well my experience, let’s put it this way, when I joined I had a full head of dark brown hair! So it’s been an interesting, challenging, fun, very very difficult experience in many ways.
But when I look back at what we’ve achieved as an organisation, it’s been entirely worth it, because we’ve done so much. I often talk about this, in fact my first week was the week that the UK voted to leave the European Union.
Chris: OK fantastic, so you joined at a quiet time!
Hamish: I joined at a quiet time, and if ever I wanted to see what it was like to go from working for tech companies to a news organisation, what a perfect time to join. One that was not affected by the news at all in the old days, to suddenly coming here and saying, ‘Oh wow, this place is mad!’ and thinking that was normal.
The reality is the news agenda hasn’t gone quiet, so it’s pretty much like that all the time. But yes, an awful lot has changed.
Chris: That sounds like the definition of deep end there. So what was the sentiment in the business, was there a belief that over the course of three years, it could be made not only sustainable, but profitable?
Hamish: It’s a really good question. I think 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.
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, which at the time you looked at, and 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?
But the point is, that was why it was so important to have that framework, because we said, ‘Okay, well we’ve got to make some numbers, and we’ve got to do things differently,’ and so it focused our minds.
So whilst there might have been some cynicism and doubt in some quarters, there was an absolute belief that we had to do it. And of course 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.
The plan that we had, so we had four pillars to our break even plan, the second of which was to encourage our readers to contribute towards the Guardian. And there is a belief that that was a real pillar, and really a genuinely deliverable pillar on the basis that we have such a unique and close relationship with our readers. There wasn’t a great deal of understanding of how we were going to do that at the time, I mean back then it was all around membership.
And of course that’s changed somewhat to be more about contributions and supporting, as opposed to purely about members and joining something. Remember at the time, there was a lease on the Midlands Goods Shed, which was going to become a massive events space, and it was very early on in the three year plan that the decision was taken by ExCo not to do that, and to not invest in that space, and that meant changing what membership, or really contributions would look like.
So it was founded on this belief that we had a deep and unique relationship with our readers, and that we could if we tapped into that, turn them into contributions.
Chris: And so three years down the line then – it was only a couple of months ago effectively that everyone was really celebrating the fact that the Guardian had broken even – what does the revenue look like in terms of different strands, and where is that money coming from?
Hamish: Well I think we’ve been pretty open that it’s now over half of our revenues come from readers as opposed to advertising. And only a very small proportion of it now is based on print, or less than half of it is based on print. So we’re definitely more of a digital business and more of a reader-focused business.
Chris: So over those last three years then, what wider trends have you seen in the industry?
Hamish: Let’s go back. 2015/16 was a pretty disastrous year for the advertising revenues at the Guardian UK. They basically fell off a cliff. We dropped our revenues by probably just shy of 20 percent, our ad revenues that year, which was painful. And what was driving that was – it’s no surprise to anyone right – it was the fact that the industry completely fell out of love with premium quality environments, and fell in love with chasing audiences as cheaply as possible across the Internet at scale, without any context. And you [care for] context.
And so our revenues took a hit across our branded content, our Labs business, our print business, and our direct more premium digital lines. So that hurt. And so we countered that, right, and I’ll talk about what we did in a minute, but what was really interesting was to see that very soon after that, probably within 12 to 18 months, the perils and the dangers inherent with that sort of buying became apparent, whether that was through all the [scams] that we saw around brand safety – a term that frankly up until 2016/2017 I’d never heard of.
We’d never needed the notion of brand safety, because you’d only ever advertised in trusted brand safe environments. So of course the minute you start advertising across the long tail of the web, this thing rears its head. So we saw those and there were lots of them in 2017.
And then we saw our own investigations into his supply chain where we found that from time to time only 30 pence in the pound were actually reaching a publisher, which highlighted some of the nefarious aspects of the tech tax in the open marketplace, and more and more people started doing their own investigations and asking more and more questions. And then finally there was the constant drumbeat in the press around and fraud.
And all of these things just seemed to put the handbrake on the drive towards audience buying at scale regardless of context. Obviously it still grew, but not at the same rate, and not at the same detrimental impact on us.
And so that was a really interesting set of trends that we saw. As I say it didn’t stop the rush towards an open marketplace, it slowed it down and it put the handbrake on it.
Now at the same time, we did a whole lot of things to try and say, okay, this is the world we’re in, how are we going to deal with it? How are we going to adapt?
And I think the first thing we did was 2016, so soon after I arrived, the team had already been working on it for a while. It was a new proposition and narrative about what the Guardian could offer. And that was when we took out to market the notion that the Guardian was a platform for action, that 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.
And so 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. And so we really invigorated the sales team to go after that.
We also developed a lot of new digital products. So we reinvigorated our PMPs, we were the first publisher as I understand it in the UK to offer a programmatic guaranteed offering, which really allowed us to own the publisher programmatic space. And then in the same time we looked at it and said, ‘Well look, if people are determined to buy our audience cheaply across the internet, let’s make sure that we optimise our ad tech stack as best we possibly can to improve our yields.’ On that side of things, we also then completely reinvigorated our Labs products, we started again, we ripped it up and started from scratch.
And 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. And I think that is something that – and that was a time, and I always have to have this extra bit of awesomeness into it, is at a time when we changed our print format from Berliner to tabloid, so of course you naturally generate less revenue from print, because it’s a smaller format. We still grew our media revenues, our advertising revenues by 3 percent.
So I think all of those things worked really nicely together: the external market environment of what was going on, plus the changes that we made to our proposition and the way we worked in the offering, led us to grow our ad revenues, which was a wonderful thing.
Chris: There’s so much to unpack there. It sounds like you were very proactive in recognising those trends and deciding that you were going to position yourself to take advantage of them, whereas across the industry it seems like a lot of people still long for those halcyon days where publishers could command that premium ad space just because there was nobody else who was doing it. So what does premium look like now at The Guardian? Is it those PMPs? Is it the lab stuff? What does premium mean when you approach advertisers?
Hamish: It’s all of that. And I think one of the biggest things it means, it’s to do with the quality of the environment, although it starts of course with the quality of the journalism on the page, because that’s what keeps the reader engaged. That’s what gives the focus.
There’s also, about the amount of time that our design team thinks about what the page should look like, and how many ads we should have on it. So one of the projects we worked on over the last 12 to 18 months was very carefully figuring out how we optimised our real estate to get the most out of our advertising products, whilst keeping the reader experience number one, front of mind, because we could do what a lot of sites do and just put four, five, six, ads on the page in view at any one time. In fact four, five, six, is probably being quite generous. It’s probably significantly more than that.
We care about viewability, right. But visibility is just a metric that the industry uses, because it is one that they can measure. The reality is, is having something in view is fundamentally important, but even more important than that is whether somebody sees it, whether they actually view it. So just because something’s in view doesn’t mean it’s viewed. Yet the industry is obsessed by having high viewability.
It’s actually quite easy to have high viewability rates if what you do is you plaster the page with loads of ads, then you’ve got loads of ads with 100% viewability. Well done. How many of those however are actually going to be looked at, genuinely focused on, and engaged with, and given attention to. Probably not many. And if they are, it’s through the lens of, ‘Get out of my way, I’m trying to find the journalism,’ right.
And so I think that’s the thing that we really focus on is, number one, making sure that our viewability is up amongst the highest that it is in the industry.
But then, being respectful to the reader and the advertiser to make sure that it’s not competing with loads of space such that that ad actually gets viewed, and viewed favourably, but not through a lens of being annoying because it’s interrupting the experience. And that’s what we care about.
Chris: So how likely is it then do you think that the industry is going to wean itself off that short termism, and actually look at metrics beyond just viewability, and actually look at things like being associated with a premium brand who has that very loyal audience?
Hamish: Well we’re betting on it happening. And the reality is, I think that the history that we’ve seen over the last two or three years, and certainly last year, proves that there are enough progressive advertisers, enough modern advertisers out there who are prepared to eschew those sorts of buying behaviours and come back, because otherwise there’s no way our revenues would have grown like they did last year. There’s just no way.
Chris: How about in terms of the other advertising propositions you have, say Labs, in fact, let’s talk about Labs for a second.
Hamish: Well back in 15/16, Labs, no let’s go further back. When we created Labs, I think was what, 2013. It was definitely market leading, because what it did was it formalised the old sponsorships and partnerships team, and created something quite unique. It was a special team focused on partnerships.
And what we did was again something quite special, was we hired a bunch of people from ad agencies, so we hired a creative director, we structured labs as if it was a small creative agency within the Guardian, and it was great when it launched. It was great. We were doing things that no other publisher was doing, and winning lots of awards. It was growing huge amounts of revenue, but then everyone caught up.
And I think it’s safe to say we lost our way a bit. Some of the content that we created, we got a bit too carried away with doing new, niche, interesting things that would get advertisers excited, and we took our eyes somewhat off the ball of what readers actually wanted, and so we got into this trap of creating “award winning work” the readers just didn’t want to look at, because it’s not why you came to the Guardian. You didn’t come to the Guardian to play with an interactive gadget necessarily. You came to be informed, to be entertained, to learn something, and that’s often through text or through video, or something like that.
And so we went back to basics, and we said, ‘You know what. Let’s look at what really works in the Guardian and say, how do we copy that.’
So I hired Imogen Fox who was our head of fashion within our editorial team to become the first Exec Editor of Labs, and partnered her with Adam Foley who was then the Strategy Director of Labs, and you got the best of both worlds, you got the best of editorial and the best of advertising, because she is fantastic at editorial and understanding the Guardian and coming up with ideas that work for the Guardian, and he is brilliant strategy and advertising. So you put the two together, you can suddenly take a brief from a client and apply the best of advertising and editorial to solve that problem.
The model they created is one that we call a commercial features desk, so it essentially models our features team, but it’s done within the commercial lens. And that was the big change that we made, and that took probably six to 12 months. And again, now it’s just yielding amazing work.
We were just talking about earlier on is, what’s so special about Labs? And we think, what’s so special about Labs is the word Guardian that comes in front of it.
And the point of differentiation is that it’s our brand. It’s what does it mean to create something that is good enough to sit on the Guardian. Well it’s everything the Guardian stands for. It is quality, it is entertaining, it is interesting, it’s told in our tone of voice that our readers will love. And if you set yourself up as a one man band, or one woman band, you can create your own content, great. But you can’t guarantee that it’s going to have the word Guardian in front of it.
And I think that’s why people come to us, that’s why that team is always busy, because they’re always working on so many briefs, because of the fact that when people come to the Guardian Labs now, they know they’re going to get the Guardian, whereas before they thought I’m going to get the Guardian, or some sort of strange advertising agency digital ad agency thing that I don’t know what’s going to be. Whereas now they know they’re getting the Guardian.
Chris: Yeah I spoke to Robyn Vinter from The Overtake, she said there’s huge commercial pressure on her to take branded content gigs that don’t necessarily align with their values, just because they have to pay their journalists. That presumably isn’t something you particularly have to worry about.
Hamish: Oh no we do. It’s something that we get faced with all the time, especially with the whole sort of notion of purpose washing. People come to us all the time and go, ‘You’re a purposeful brand. Surely you can help us do the following thing.’
We’re like, ‘No!’ We take that in, we take a brief in and we sit down as a group, in fact, Mel sits on that group. We call it our sponsorship governance group and it’s made up of editorial, it’s made up of commercial, made up of people from Labs, the comms team, and we look at it and go, ‘Is this something that we want to do?’
And very often we say no, because it’s just not right for the Guardian values.
Chris: Talking about being proactive and reactive then. The wider industry trends around the move to mobile video advertising. To what extent can the Guardian take advantage of that? And to what extent are you still wedded to the existing traditional ad formats in digital?
Hamish: We’re always trend watching, and I think where we get to with video is, we’ve invested reasonably, and with some of our partnerships. So we now have a very good outstream offering, we work with Teads on that. And in terms of our preroll offering, that is growing really quite healthily.
Whenever I read read something about publishers and video, the story usually goes something like this: “Three or four years ago, video was the saviour for all things publisher and advertising related. However publishers realised they couldn’t make money out of it, and so moved away, the pivot to video that didn’t pay off.”
Well what we’re finding is that actually that was the case. If I go back to that three year financial framework, I remember looking at the number when I first arrived that we put against video, scratching my head going, ‘How the hell are we going to make that?’
And that turned out to be too big. We didn’t hit that number. But we got close to it. But not the way we expected, because we started off saying, ‘How are we going to invest in video?’ We created a load of video content. We didn’t get as many views as we wanted on our platforms so we couldn’t monetise it as much. What we’ve seen over time is that that’s changed.
We’re now getting a lot more views on our video on our platform, and off our platform with YouTube, because we’ve understood how to optimise the reader experience a lot more to get people to view it.
And 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.
Chris: Yeah absolutely. So then as the penultimate question, Guardian 2019 going forward. What is its new narrative then? Is it one of sustainability, is it one of re-establishing that premium advertising space? How does the Guardian see itself in the wider media landscape and set itself apart?
Hamish: The next three year plan, so you talk about 2019, the way we’re looking at now is 2022. And so the goal is by 2022 to to have two million supporters of the Guardian. That’s a big plan, because we are putting the reader at the heart of everything we do there.
And of course 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. So that has to be the thing that we want to get known for and, well not to get known for, hopefully we are known for this already! And to maintain that position.
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. To continue to demonstrate the value of it, and to work very hard in persuading people to come out of the open marketplace and back to print.
It’s carrying on going, because whilst we’ve had a lot of success over the last couple of years with our our ad business, as I said, the data tells me there’s still so much more to go after, which is why we’re excited about it, and why we’re backing on people coming back to print.
Chris: That’s nice. It’s nice to finally hear some optimism actually from a publisher about advertising!
Hamish: Well I look back over the last twelve months and I see advertising growth, it’s like, what’s not to love about that!
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