The Financial Times is selling its subscription-building prowess to publishers and other companies. These efforts have turned into a multimillion-dollar business after its first year.
Called FT Strategies, the separate business division has autonomy from the Financial Times. Still, it has access to decades-worth of expertise in building reader-revenue, drawing on the experts who figure out the publisher’s propensity models that predict consumer behavior.
The consultancy has grown from three to 13 people, many from firms like Goldman Sachs, Boston Consulting Group and Accenture. But that talent base also includes former media and data specialists.
In its first year, FT Strategies has worked with 90 clients, 85 of which are Europen news publishers, including The Independent, El Mundo and Bonnier News. It has also partnered with organizations like the Google News Initiative and International News Media Association.
Thanks to companies’ demand to drive recurring audience revenue, FT Strategies has doubled its revenue target and quadrupled its profit target, although it wouldn’t share specific numbers.
“We can quickly move from theory to reality, we don’t just leave clients with a 100-page document,” said Tara Lajumoke, managing director at FT Strategies and former partner at McKinsey & Company. “Instead, we work with them to test and learn, form experiments, build experiences, methodology and improve capabilities.” This can be over a three-month period or a two-week intensive program that focuses on a specific question, like improving conversions with female readers, a problem the FT started tackling in 2017.
For several years, publishers have been getting into the consultancy business, mostly through creating content. Edging up the marketing food chain means getting closer to an ad client’s overall communications strategy rather than launching a single branded content campaign. Few have gone to the lengths of the FT and built a consultancy unit based on driving subscriptions.
Much has been shared about the FT’s north star strategy, where the entire company aligns with a metric that drives business growth. In most news publisher cases, this is a proxy for engagement. For the FT, this is a combination of recency and frequency of visits, and volume of articles read. If a reader’s metric drops below a certain level, their propensity to churn increases, so the publisher deploys different levers—like promotions or products—to save them.
For The Independent—current CEO Zach Leonard was former FT managing director until 2004—this metric combines the number of days in the past 30 the reader has been active, consumption of premium content and volume. Identifying the correlation between this metric and subscribing discovered the threshold that leads to a propensity to subscribe or churn.
News readership via digital platforms in the U.K. has increased by 20% year-on-year, according to Publishers Audience Measurement Company. That translated to subscriptions, tech company Zuora found digital news and media subscriptions grew by 110% during the first three months of the pandemic. As with most publishers, the FT has experienced a pandemic-induced subscription windfall. In the first six months of 2020, digital subscriptions increased by 12% compared with the same period the year prior. Reader engagement, measured through metrics like recency, frequency and volume, has grown by 27% during the same period.
While Covid-19 cohorts have led to peaks in most subs businesses, those able to tailor their products to each person can keep them when the busy news cycle wanes. The FT wouldn’t say what its churn rate is.
“The pandemic has focused news brands on the need to offset the inevitable drop in sales of print copies with an increase in the digital audience,” said Sarah Johnson, publishing business director at Havas Media Group. “The outbreak has delivered a captive audience, but even before it all started, indications were pointing in the right direction for subscription growth. I would anticipate this trend to continue into 2021.” However, she points to the fall in the FT’s print circulation by 35% and print subscriptions by 25%, countered by growth in digital editions by 75%, albeit from a low base, according to the Audit Bureau of Circulations.