Month: May 2019

In total, it has received 1 million payments, a mix of one-off donations or recurring membership payments and print sales, in the last three years. Digital revenue, comprising advertising and reader payments, now accounts for 55% of all revenue.

The Guardian has now shaken off the tunnel vision needed to reverse its former operating deficit of £80 million ($105 million) deficit, and revealed a new target. Its business strategy for the next three years is two-pronged: reach 2 million paying members and contributors by 2022, and remain vigilant on ensuring cash requirements remain in line with the expected long-term annual returns of its owner the Scott Trust Endowment fund of £25-$30 million ($33-$39 million).

Speaking to Digiday, Guardian News and Media CEO David Pemsel and editor-in-chief Katherine Viner were pleased by the success but aware of the current threats to media models. “If anything, the threats are the same, if not worse,” said Pemsel. “There is a lot of analysis around Amazon, and the fact they haven’t even started yet in terms of their ad strategy. Within that context, it is as challenging as it’s ever been.”

However, he referenced the emergence of more positive trends also: The success of their membership model is evidence of reader appetite for quality and trust in media brands that stick to the principles of what they stand for. Plus, advertiser attitude toward the big digital platforms is also gradually changing in a way that should benefit publishers.

“About three and a half years ago, everyone was all in on the digital platforms; they felt they had to spend as much as possible on those players. But from an advertising perspective, clients are now much more about spreading their marketing strategies outside of those same players,” he said.

Viner agreed that the threats to quality journalism have worsened in the last three years: “The social news feed still encourages bad information to spread, and there are many bad actors out there that exploit that.”

Reader-revenue targets
In a way, the timing of the Guardian’s membership plan was fortuitous. The shock that unpredictable political outcomes such as the European Union Referendum in the U.K. and the 2016 U.S. presidential elections, along with the proliferation of fake news across social platforms like Facebook, prompted a U-turn in many people’s willingness to pay for quality journalism. What later became known as the Brexit and Trump bumps, became a tonic for the subscriptions rates of all quality publishers including the Financial Times and the New York Times.

While the Guardian has always cited a more broad range of investigative topics that have helped drive memberships, that change in attitude among a large proportion of people can’t have hurt. Viner cited the exposure of the Windrush scandal in the U.K., the Cambridge Analytica scandal in Silicon Valley, and its coverage of the long-term environmental damage taking place globally, as core investigative highlights.

For publishers with hard paywalls, the kind of article that drives a person to subscribe is completely different from the kind that is aimed at attracting mass, typically fly-by audiences who come across the article from a range of different platforms but won’t likely return. Paywalled articles are typically investigative, analytical, and most importantly — not found anywhere else on the web. For the Guardian, with its open access, it’s less cut and dried.

However, Viner said that there is a higher propensity of readers willing to donate off the back of deep investigations. “We will be investing in a lot more investigations going forward,” she said.

Naturally, once a publisher reaches a certain scale in subscribers, retention of existing subscribers becomes as important as acquiring new ones. Although Pemsel wouldn’t discuss specifics on how it plans to hit its membership goal, he said that the publisher is primed to make investments and allocate resources to the right places, for instance, to retention.

“We will need to make sure we allocate resources and get the right people and systems to ensure we have a robust reader journey and that we understand more fully what it takes to retain a [membership] base of that size.”

The publisher has begun exploring new ways to reduce churn and increase regulatory of payments.

Vital U.S. course correction
One of the Guardian’s self-professed darkest moments over the last three years was the realization that its U.S. operation wasn’t financially viable in its former state. While the U.S. editorial team won accolades, including the Pulitzer Prize, for their articles on NSA surveillance in 2014, the advertising-reliant commercial model lagged. The publisher realized to remain afloat it would need to make some drastic changes.

The move into the black was helped by cutting its U.S. staff from 140 to around 80 people last year, and the introduction of its donations campaign. The result: International revenues have doubled since 2015/16 and continue to grow at double-digit levels per year, according to the publisher.

“We had to make some drastic steps in the U.S.,” said Pemsel. “The U.S. is an incredibly tough market. At the time, we didn’t have the diverse business model needed. If we hadn’t course-corrected there fast, I don’t think we’d be talking about achieving this financial sustainability now.”

Advertising revenue critical 
Despite the renewed focus on reader revenue, the Guardian remains committed to its ad business, which grew 3% in 2018. Print ad revenue now represents less than 8% of all revenue. Revenue from its branded content division Labs grew 66% in the first half of 2018, after a major overhaul to its strategy and processes. Meanwhile, certain hard lines taken in the digital advertising space, such as winning its longstanding court case against Rubicon Project, were likely a welcome addition to the bottom line. The publisher will continue to push its private marketplace offer, over its open-marketplace one, and remains hopeful the Ozone alliance in which it has invested along with News UK, Reach and The Telegraph, will win a larger slice of advertiser budgets fearful of brand-safety scandals that are riskier on the open marketplace.

The post The Guardian looks to its future as it makes first operating profit in 20 years appeared first on Digiday.

Formed after agency vet and entrepreneur Gary Vaynerchuk acquired women’s lifestyle publication PureWow in January 2017, Gallery Media Group says it has been profitable since 2011 when it was only PureWow. The company has stayed in the black following the acquisition. And after generating $20 million in revenue in the year before the acquisition, its revenue has grown by 35% year over year for each of the past two years to reach about $36.5 million in revenue for 2018. The company expects revenue for 2019 to be in the mid-eight figures, according to Ryan Harwood, CEO of Gallery Media Group. Gallery Media Group has 140 employees.

“Gallery Media Group, as a standalone [company], is a very stable business, and it always has been. And if venture capital dried up or the market took a turn for the worse, I truly feel we’d be able to weather that storm,” said Harwood.

Gallery Media Group’s prospects may be helped by the fact that, as much as it has many of the hallmarks of a media company, it also has the markings of a creative agency. While that’s yet another industry under siege — and a designation that does not sit well with other agencies — Gallery Media Group’s financial performance suggests it has been able to strike a balance between the two. A hybrid between a publisher and a creative agency, “that’s really what we always were. We just accelerated that even faster because of the resources at our fingertips being part of the VaynerX organization,” said Harwood, referring to Vaynerchuk’s holding company that is also home to agency VaynerMedia.

Gallery Media Group’s close corporate ties to VaynerMedia may raise conflict-of-interest concerns that the agency could put a finger on the scale and allocate a disproportionate amount of its clients’ ad dollars to the media company. However, that does not appear to have been an issue to date. VaynerMedia has not spent any money with Gallery Media Group, and the agency does not buy publishers’ inventory directly, according to Harwood. “Eventually we may start selling to them as other publishers try to do and see if there are opportunities, but for now this has not been an area of focus,” he said.

Since the acquisition, Gallery Media Group has expanded beyond PureWow, which attracted 9.5 million unique visitors in the U.S. in March 2019, up from 8.1 million unique visitors in March 2018, according to Comscore. In June 2018, the company launched men’s lifestyle publication One37pm, which attracted 536,000 unique visitors in the U.S. in March 2019, the first month that the site met Comscore’s measurement threshold.

Gallery Media Group also produces a series of podcasts under the Gallery Podcast Company umbrella, including “The CMO Podcast with Jim Stengel” that will debut on May 1. Additionally, it manages 20 Instagram accounts, several of which are Instagram-only entities such as @blinkbeauty and @shows. And then it operates two influencer networks that are connected to its two publications.

On top of these existing businesses, Gallery Media Group is starting to dip a toe into the traditional entertainment market. The company is developing what Harwood described as a “long-form video series” that it hopes to sell to a TV network or streaming video service.

Such diversification is almost a prerequisite for any media company to survive, let alone thrive, in today’s climate. However, there can be a fine line between diversifying into new markets and chasing after shiny objects. As such, Gallery Media Group has concentrated its expansion on areas, such as podcasts and influencer marketing, where it can extend its branded content business, which accounts for the majority of the company’s revenue, according to Harwood.

Gallery Media Group does still operate a display advertising business. However, that’s more of a passive revenue stream, as evidenced by the company’s move in mid-April to start selling banners on PureWow’s site programmatically through private marketplaces. The company is not pivoting to programmatic or hiring a programmatic sales team, said Harwood. “We’re not primarily selling media and display and banner ads, but we still have the impressions of course,” said Harwood, who added that the company is not staffing up around that programmatic advertising business.

Editors at PureWow are expected to not only write articles for the site but also to produce posts for Facebook, stories for Instagram, contribute to its email newsletter “and also you should definitely be looking at TikTok at the same time,” said Mary Kate McGrath, chief content officer at Gallery Media Group. Additionally, the company’s five-person audio team is charged with managing all aspects of its podcasts, from scheduling talent, producing the episodes and handling distribution, she said.

Gallery Media Group also takes advantage of being part of VaynerX by recruiting VaynerMedia’s employees to freelance for the media company in their off-hours. “It’s like an Etsy for talent,” McGrath said.

That ability to enlist actual agency employees to work on branded content campaigns can be a competitive advantage in a difficult market where seemingly every media company operates an in-house creative agency, or “content studio.” To further distinguish itself from the competition, Gallery Media Group offers generous usage rights to advertisers, Harwood said. He cited the series of videos that the company produced for Olay last year that were distributed on YouTube. The beauty marketer decided that it wanted to also run the videos as commercials during last year’s MTV Video Music Awards. Often a publisher may accede to such a request but ask for extra compensation since the TV distribution would fall outside of the original agreement. “We didn’t charge them a dime,” said Harwood.

However, Gallery Media Group is not only competing with other publishers’ in-house agencies but also actual agencies. That dynamic is not uncommon for any publisher that operates a branded content studio. But in Gallery Media Group’s case, the competitive concern is amplified by Gallery Media Group’s proximity to VaynerMedia.

“Ultimately when you blur that agency-to-publisher line, sometimes agencies can be a little wary of working with you,” said Noah Mallin, head of experience, content and sponsorships at Wavemaker, which has done some branded content work with PureWow in the past. Other agency execs contacted for this article declined to be interviewed because they see Gallery Media Group as a competitor, if only because it is owned by an agency exec.

“I think everyone is a competitor. Literally, everyone, including VaynerMedia, by the way,” said Harwood.

The post ‘Everyone is a competitor’: Gary Vaynerchuk’s Gallery Media Group straddles the line between publisher and agency appeared first on Digiday.

So even if some agencies do have employees of color, they aren’t often leadership positions?
Agencies can say, “yeah, we’re pretty diverse,” but then [it changes] when you try to get them to break down percentages of people of color, percentage of black people, this percentage of Latino people, Asian American. If we’re talking about women, how many women of color? How many of them are in major decision-making roles? You saying, “Oh well, you know the office is about 55% women.” That’s great. But how many of them are actually calling the shots?

Is that where you think there’s a real lack of transparency, in sharing specific numbers?
There’s a huge lack of transparency. Those percentages that I just told you about? No agency gives those out for public consumption. That’s why the advertising industry is losing so many people to the technology industry. The technology industry, Apple, Twitter, Facebook, Google, even smaller tech companies, they are so transparent to their diversity dilemma that they put their numbers out there for the world to see. I personally respect that because at least they’re like, look, this is how bad it is and we’re going to work on this.

What do you think the agency world should be doing about it?
Transparency is just the start. You put all this information out there. Now come the action and the execution. Agencies are so good at the lip service, at pointing out the problem, but when it comes to actual action to fixing the problem? It’s very slow if it’s happening at all. Agencies need to be dissecting exit interviews. They need to look at why people are leaving. Let’s figure why they are leaving so the next person that we bring in won’t have those reasons to leave.

Many agencies have added chief diversity officer positions. Is that helping?
You would think with as many great programs and initiatives that are out there that the needle would have moved. The needle hasn’t moved. The number of young people of color who want to be in this industry has never been higher. They all want to be in advertising, even despite the fact that they don’t see anyone that looks like them in the upper echelons of leadership, they still want to do it. When they get in, then it’s this huge culture shock because they have no one who can empathize with their journey, no one who can sympathize with their journey.

Why is transparency so important to drive change?
It’s that hard sometimes to get people to understand the importance of all of this. This is not a matter of “oh, we want white men or white women out the way.” No, no, no. We just want to share the space. We’re just saying there’s enough sunshine for all of us to feel it on our faces.

The post Confessions of an agency diversity exec: ‘The needle hasn’t moved’ appeared first on Digiday.