Guardian Open Platform Revenue Realities

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App Store, Dan Sabbagh, Field of Dreams, Mail Online, Online advertising, Patrick Smith, The Guardian, The New York Times, TheMediaBriefing Experts' Blog, Guardian Media Group, Advertising, Digital Media, Newspapers

If the Guardian is the canary being sent down the free, ad-supported news mine, is it still singing?

Guardian News & Media yesterday announced a £44.2 million loss for 2011 - worse than the £31.1 million loss in 2010. The losses look worse thanks to investments and writedowns across the business.

In an admission that its costbase is still too big, the 650 editorial workforce will be reduced by 70 to 100, saving £7 million (The Guardian itself has the best summary). What does this mean for ad-funded content and are things as bad as they look?

Open journalism success - but does the revenue follow?

GNM has invested so much in the idea of Open Journalism and few would question 2011 was a good year for Guardian digital journalism, what with phone hacking and so on. But does the revenue model match the editorial quality? Here's the lowdown:

-- In May 2012 Guardian.co.uk attracted 60.8 million unique browsers to the site (note: that's not necessarily individual people). Only Mail Online surpasses it with 92 million.

-- Including print, The Guardian claims to reach 5.8 million people in the UK each week, more than the Times papers.

-- The result? Guardian digital revenue in 2011 was £45.7 million, a 16.3 percent improvement. That gives a very crude annual average revenue per digital user of £1.30.



-- Digital advertising was up 26 percent to £14.7 million. As I mused on Twitter:

(n.b The Guardian's Dan Sabbagh quite reasonably responded that a fairer comparison would be against average audience during a financial year)


New ad targeting opportunities

Like many digital publishers, Guardian.co.uk is looking to combat a stagnation in CPM rates by being more targeted and attempting to corner the market in journalism for and by liberal-minded "progressives" both in the UK and US.

Stephen Folwell, director of business development and brand extensions, told the Newsrewired conference in London last week that GNM was getting more sophisticated in targeting users and delivering what they want.

The "old model," he says, "was guessing what people wanted, creating it, building an audience, and selling adverts." But now he says GNM wants to be at the heart of communities, giving commercial partners get access to conversations, and The Guardian can sell products to them (@Adders as usual has a full roundup of that session).

Yesterday GNM said it had signed a partnership with Quantcast, the ad targeting company, and it already has commercial staff working on optimising ad inventory through the Rubicon Project demand-side platform and other tools.

There is a huge opportunity to capitalise on Guardian.co.uk's US audience, something that's alluded the business so far. But not all are convinced:

Mobile problems and a strategy of hope

The Guardian needs that ad growth to keep coming as the mobile business model isn't panning out too well. As part of the announcements yesterday, GNM says it has 17,000 current active iPad app subscribers following its October 2011 launch.

Though they follow different models, The Times had 100,000 paying subscribers one year after launched its paywall and mobile/tablet apps, while the porous-paywalled New York Times had 450,000 digital customers 12 months after starting to charge.

Users are no doubt concluding that browsing Guardian.co.uk on an iPad for free is good enough. I pointed this out at the launch but was told the business was "relaxed" about people not paying, as long as they are fans of the brand. £1,700,000 in revenue later, was the iPad project even worth doing?


It's hard to see how GNM's digital income can match its print income without more direct end-user revenue, from more sources. It can be done: the move into one-off classes and seminars is a thoughtful - and entirely new - income stream for GNM.

It's clear that the pace at which the Guardian's audience is growing online is not matched by the business's ability to monetise it. So much of this is tied up in hope. It's the Field of Dreams strategy: if we build it they will come.

There's a fast-growing online ad market out there. But we're a long way from online revenue supporting a business of the Guardian's size, even after its latest cuts, even with an unrivalled audience of "progressives".

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