The FT Doubles Its Branded Content Initiative
As the Financial Times faces the same assault on its old business model as its peers (POLITICO: “We are facing daunting conditions”), the doughty British institution is now focused on branded content as its prime advertising route forward.
Earlier this month, the FT bought most of Alpha Grid, an award-winning, London-based content marketing company.
FT CEO John Ridding recently told me the buy was “a small acquisition that will really up our skills and game in the area.”
First published at POLITICO Media
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The acquisition immediately brings in-house a group of eight practitioners of the branded content trade. It’s a trade that the FT, the New York Times and the big magazine companies increasingly see as an escape route from ever-harsher, Google/Facebook dominated landscape of programmatic digital advertising.
“The FT’s investment in Alpha Grid rapidly accelerates our branded content capabilities, and via a business that understands how to communicate with our very specific audience,” says Jon Slade, the FT’s chief commercial director. “The demand is growing substantially. So it makes sense to have more staff and less outsource. That also helps clients as we have the intelligence as part of the machine, not outsourcing it.”
The FT says that its “Paid Posts” branded content revenue has grown 30% since its introduction last fall; it’s the FT’s fastest-growing digital ad type. Further, it says it has doubled the number of ad bookings in the category. One of every 10 digital ad pounds, dollars and euros now is driven by branded content. Importantly, rates parallel those of lucrative print advertising.
That’s today. Into 2017, branded content fires the imagination with new potential revenue. While Slade makes the good point that nobody yet can claim a great counting regimen for branded content, “my experience, and that of colleagues from other publications, would put a growth rate at 70% or more.”
The FT – long a gold standard (Newsonomics: “The FT, A News Company of the Future”) in digital business transformation among the publishing trades – now weaves together a new advertising fabric. To do that, it knits together its big investment in data analytics and in increasingly consultative selling. Like the New York Times with its T Brand Studio focus, the FT sees advertisers appreciate its storytelling chops and culture. Alpha Grid, then, fits as a centerpiece of the FT2. The company announced FT2 in September, and one month ago, it named Ravi Mattu as FT2 editorial director. Mattu, a 16-year FT veteran, moves to the critical position from a post as FT’s tech, media and telecom news editor.
Taken together, all the moves suggest a maturation in leading publishers’ business models. Both the FT and The New York Times can claim “crossover”. Both depend more greatly on reader revenues than ad income, both now in the neighborhood of 60%.
“It’s very interesting time to talk because just in the past quarter, we’ve reached and passed a number of tipping points about the business model,” FT CEO John Ridding told me in a lengthy interview recently [Newsonomics: “The FT’s John Ridding on ‘Trialing’, The Platform Age and Living in Luxury”).
“In April, digital revenues matched print revenues, which is a big deal. Content revenue is now quite significantly bigger than the ad revenues. Three quarters of our subscriptions are now digital.”
Yet despite the good growth in reader revenue – digital subscriptions have recently grown 12% to 566,000 and total print and digital circulation to 793,000 – reader revenue alone doesn’t pay for the large newsrooms of global-reaching publishers. Advertising – long the industry’s number one revenue stream – has become number two, but it’s importance to building a new sustainable business has never been greater.
“We are going through another of those moments with advertising,” Ridding says. By moments, he means that increasing Google/Facebook domination and a deepening print swoon that has cracked the back of the UK press, and added more insult in the U.S. Certainly, the surprise of the Brexit vote only further handicaps a struggling press.
“A tough market just got a lot tougher – especially for news organisations heavily dependent on advertising,” Ridding told me by email over the weekend. “Uncertainty is rife and that always hurts marketing.
To this battle for new ad money, Roslyn Shaw brings in the reinforcements for FT2’s upgrade.
A native New Zealander, Ros Shaw brings that tweener sensibility that is making branded content work for those can execute it at a high level. In 2002, Shaw made “the switch from a current affairs journalist” into a content marketer. Working for TVNZ, she saw how higher-quality sponsored video – “not schlock” – was wanted by advertisers. Now with a core of “four passionate journalists” and four other full-timers, Alpha Grid will work wholly for the FT. Four-year-old Alpha Grid, now “a Financial Times company” joins a group of six FT2 staffers, who have focused on branded content sales, project management and design.
“We’re the executors,” says Shaw, and Slade agrees: “The Alpha Grid key benefit is staff production/creation people. Shaw retains a minority interest in the company.
“I watch the data ruthlessly,” says Shaw, figuring out the best time to reach execs with mobile video, for instance. Prior to her Alpha Grid founding, she built an in-house Creative Solutions team for CNBC International in London for six years. More recently, the FT has outsourced work to Alpha Grid as it tested branded content. Those tests led to the acquisition.
Check out Alpha Grid’s work serving clients from Russian Grids to the Red Cross, and you see a variety of video, animation and white paper techniques brought to corporate communication.
Such work also points the way to how branded content techniques can translate to the other side of the aisle, old-fashioned editorial journalism. Take the FT’s pub quiz, “What has the EU done for Britain video”, for instance, as a good example of how “relevant and entertaining,” in Shaw’s words, can be done.
John Ridding describes the squishiness of “branded content” as a category.
“There is a spectrum obviously of branded content from the sort of sponsored content to the much more thoughtful quality stuff that we want to do,” he says. Indeed, the Interactive Advertising Bureau has found “branded content” in as many as six of its categories. Hearst Magazines Chief Revenue Officer Todd Haskell has told me that “branded content” could be found in as much as 90% of Hearst’s digital ad packages. Increasingly, it’s a part of the mix would-be sophisticated publishers can offer would-be sophisticated marketers.
Two themes drive the new ad art form, says Ridding. One is data, an area in which the FT has excelled for almost a decade.
“We have very, very good deep data about users….It’s just an extension of the detail and degree of engagement with a particular cohort and audience. You can effectively be an intermediary for an exchange or dialogue between the brand and the audience.” In another words, translate the mass intermediary role of print to the niche intermediary role of digital.
Interactivity is a core goal as FT2 gets built out. “We can do surveys within the ad,” says Ridding.
Can FT personalize branded content delivery, as The Washington Post now says it is doing? “Not yet,” he says.
Then, there’s the video component,” and that’s a key part of the puzzle that Alpha Grid helps solve.
“As you evolve a new business model, you have to be quite honest about what we are really good at and what we know. Though we’ve got some pretty smart people who’ve come up and done a very good job, we’re not a video house. There are skills very unique specific skill sets that we need to bring in.”
Branded content appears more durable to the FT and its peers, amid brutal digital competition.
Downward pressures on pricing continues unabated, and is likely to persist, agrees Ridding.
“I think that’s only going to go one way because though we are premium in terms of general advertising, there are general market pressures out and about. Whereas, I think if we are sufficiently distinctive in branded content — which we have been so far and we’ll continue to be — I think we’ll be able to keep those yields pretty good.”
It’s no surprise that New York and London have led the branded content advance. Ridding, though, believes marketers from Asia to the continent will embrace the new form.
“With the compression of good ideas, it doesn’t take very long. Definitely Europe is commonly is getting on the action.”