Transcript: The state of the global publishing market webinar

Mike Holland: All right. Well, I think we’ve got everything spun up. So I’d like to welcome everyone to the webinar about the state of the global publishing market. My name is Mike Holland. I’m the Vice President of Product at Arc. Thanks to everybody for joining us. I’m very excited to be introducing Jonny Kaldor, who’s the CEO of Pugpig, who’s a leading provider of mobile solutions for publishers, and we’re going to be talking to you for a while today. A couple of housekeeping items. This webinar has a Q&A function on the bottom, so if you have questions you want to ask Jonny as you’re listening to his presentation, please drop your questions in the question area, I’ll be looking at them and threading them into questions to Jonny that are live. So we are listening, so please feel free to put in your questions. Couple of other housekeeping items are that the recording from this presentation will be sent to everybody who registered, so you don’t have to feel like you want to be grabbing screenshots, or not paying attention, or things like that.

As part of the webinar, we’re sending this off to the people that are registered for the conference. Okay. So with no more ado, today’s topics that we’re going to be going through are how readers are consuming content on mobile and how publishers are focusing on their needs. Again, this conversation is going to be very focused on the mobile industry. We’re going to talk a little bit about how you can think about improving your audience and developing them, driving them into new revenue strategies, acquisition and retention, things like that, and how you can think about mobile in terms of your innovation roadmap. All right. Great. Well, with no more ado, I’d like to welcome Jonny Kaldor to the stage.

Jonny Kaldor: Brilliant. Thanks, Mike. Okay, I’m going to wait... I think I need to wait until you’ve unshared your screen and then I can share mine. There we go. Thank you. Okay, give me one second and hopefully... Right. Please tell me you can see my... You got it. Great. Okay. Thank you. Yeah. Well, first of all, thanks everyone for joining. As Mike said, I’m going to spend probably, I’m guessing, about 30, 35 minutes taking you through at a very high level, very fast overview of a report that we published, which is a mix of data and interviews, and as Mike said, give some insights into, first of all, the strategic priorities for a number of publishers who both we work with and who we talk to on a regular basis. We’re going to talk about reader engagement, and I’m going to talk about some innovations.

Apologies if I go a little bit fast because there’s quite a lot to get through, but we will be sending you a copy of the full report at the end of this. And of course, if you’ve got any follow up questions beyond what we can cover in this session, I’m here always to answer those questions. So before we dig into the report itself, just a tiny little plug for our company. So we are Pugpig. We are a mobile publishing platform, as Mike said. We have around 350 brands on the platform, about 170 publishers that cross news media, consumer magazines, and B2B media. And we have a lot of customers in common with Arc, which is why we work together so closely. So that’s all I’m going to say about that. So just quickly about the reports, we’ve been doing this report now for a few years and we approach it, as I said, in a few different ways.

First of all, we have a lot of data because we have a 350 brands on the platform, we have quite a large aggregated data set. So we can see all sorts of interesting insight around user engagement across platforms and across different subscriber cohorts. So there’s a little bit of that. There’s also third party data that we bring into the report. And then alongside that, we interview somewhere around 70 senior media execs who either we work with or we work alongside, again, across a broad spectrum of news media companies in the USA, in the UK, and beyond, as well as consumer magazine companies, and also a few industry analysts. And we bring all of that together and we create this report, which is, like I said, I’m going to share at probably fairly high speed with you. So I’m going to start really with just a few slides that give a little bit of context for the rest of the presentation.

So I suspect you’ve all seen various versions of this chart. This one in particular comes from eMarketer, and it really maps the continual growth of time spent on mobile. So this is average hours per day spent on mobile. This is particularly based on the US. And you can see two trends really, one is this inexorable growth and it keeps rising of hours spent per day, but also, I think maybe less well known the fact that while mobile accounts for 81% of all minutes spent online, which you can’t see in this chart because this just focuses on mobile minutes, but actually, if we added desktop minutes, that would be the other 19% of total time spent online, apps make up about 80% of all time spent on mobile, and the rest is people following social media, and going into the Chrome browser or Safari browser.

So if you are engaging with audiences, I think it’s pretty much a given now, you have to be on mobile. If you are on mobile, you really should think about, for a certain cohort of your audience, engaging with them not just through mobile web, but also through mobile apps. Again, a chart that I think various versions of this gets shared quite often, but I think it’s just a really interesting context, et cetera, as well, which is... the question being asked here is what is the first place you go to in order to get your first hit of news as you wake in the morning? And you can see as we go from print to radio, TV, and smartphone, various different markets are performing in various ways, and in particular, Northern Europe doing incredibly well as far as mobile being the first place that people engage with news content in the morning. USA, France, and Netherlands catching up, and the rest of the world somewhat behind that.

This is some of our own data. I’ll spend a little bit more time on this because I think there’s a few interesting things to talk about here. So first of all, as we think about engagement, really, we think about two very specific metrics, duration and frequency. And then if you take those two metrics, duration and frequency, you effectively get time spent per month on average. So as we think about duration and frequency, we think about average session duration per user. So how long an average does the average user spend in a given session, in this case, for these numbers, these are on apps, news, newspaper apps, consumer magazine apps and B2B apps. And on the right, we’re looking at how many times on average do people come back every month to the app. So I’ll start on the left because I think both of these warrants just a couple of minutes.

So on the left, what we’re doing is we’re comparing B2B apps that trade titles with consumer magazines. So here, we’re talking about people like Condé Nast, and Hurst, and Future PLC and then news media, so daily newspapers, weekly news journals, and so on. And I guess the first thing to say, which you can’t miss, is that news media are absolutely miles ahead of the rest of the market in terms of the level of engagement, in terms of how long people are spending with the brands on average. And so you can see, again, on average, 10 minutes session durations. But then if you take the top 10 percentile, which is what we’re showing down here, you’re getting almost close to 19 minutes of average session duration. And actually, if you take the real top performers, you’re getting closer to 24, 25 minutes per session.

So real engagement, the same engagement that people would’ve had with print newspapers in the past. We really see with the top performers that they’re getting that same degree of engagement. And then if you look over to the right, then the other metric, which is around average sessions per user per month. And again, you can see news media way out ahead in front, and I think you could argue that’s partly because with news media, they tend to be publishing far more regularly, and therefore, being far more successful at creating that daily habit. And just to put this into context, so we’re looking across all of our news media titles, somewhere just over 10 sessions per month per user. Someone like the Wall Street Journal is probably hitting about 11 and a half, or 12, that sort of number, and then with the really successful ones, again, this is the top 10 percentile, you’re getting closer to 30.

So almost every day you’re getting people engaging with the brand, which is, that’s when it really starts to get interesting. And actually, our top performer, which I’m going to talk about in a little while, gets closer to 48 sessions per month. So mobile and apps can be an extremely sticky way to engage users. So then the next thing we did was we dug into the different cohorts, the different user groups, who are engaging with these apps. And I’ll just take you around this just to explain the different groups. So we have, in the purple here, what we call None, these are people who have no subscriber status. So they’re basically have never been subscribers. We’ve then got Existing subscribers. What we mean by this is, people who have bought a subscription off platform as part of either an online membership, or a print and digital bundle.

And then we’ve got these small slivers here, which are the publishers who’ve bought a subscription through Google or through iTunes, so in-app purchases of subscriptions. And then this last cohort here of this yellow cohort is the Inactive subscribers, so subscriptions that have lapsed effectively. And I think what’s interesting here, and I’m going to show you how each of these engage in a minute, but what’s interesting I guess is that the green, and the blue, and the red, these are audiences that are already... they fulfilled their potential, they already have a subscription relationship with you, and that makes up what, 40... yeah, 46, 47%? Then you’ve got this inactive and non-subscriber status, but crucially, they’re engaging, you know who these people are, they’re engaging with the brand, and yet there isn’t a transactional or subscription relationship with you, and therefore, they’re an enormous potential. So there are really interesting audience. And the nice thing is, again, if you’ve got these people on mobile, you have the ability to reach out to these people and talk to them, and nurture your relationship with them.

Now, in the olden days, and forgive me if you know this, but I think it is interesting that both Apple and Google in the good old days, or essentially the bad old days, however you look at it, would only offer you two ways of having subscribers existing on your platform. Either, they already exist as a customer and they authenticate themselves as an existing user, i.e., you sold a subscription off platform and they’re coming to the app as an existing subscriber, or if they’re not an existing subscriber, the only way that you could then sell a subscription was through an in-app purchase. There was no journey which allowed you to say, “Hey, become a customer, click here, sign up,” unless it went through the app store.

And as... sorry, excuse me, but as Fortnite and various other people sued Apple because that behavior was anticompetitive, now, Apple had to open up that experience. And I’ll talk a little bit about what that looks like and what the ramifications are for that. Mike, I just want to check that you are still hearing me okay, because I’m totally focused on these slides. Is everything coming through okay?

Mike Holland: Yeah, you’re coming through fine, Jonny.

Jonny Kaldor: Great. Thank you. Okay. Good. So this next slide is a bit of just a real quick sneak preview, actually funny enough, into another report that we’re going to publish in July, which is a retention report, and we’re really focusing on retention. And I won’t really spend too much time on this, apart from, I just thought it would be fun to show you just another way that we’re looking at different cohorts of users. So in this slide, we’re talking about what subscriber status is, but we’re really not digging into engagement.

In this world, on this model, we’re really starting to try and break down our customer groups, our cohorts, into both the level of value that they currently offer, and that’s on the vertical axis, and then the potential to deliver future value, which is on the horizontal axis. And you get this quadrant with four very distinct types of user. So the bottom left, which is low value, low potential, this is your vast... mainly, but not entirely off platform audience. So these are people who are either consuming your content off platform or they’re coming in through SEO and social and they’re bouncing straight out again. So you have very little data on them. You have no way really of communicating with them. Potentially, not necessarily great value, but there is affiliate revenue to have from them. And certainly, there are cohort that you need to understand and be able to work with, let’s say.

Then as we go to the right, you have your Friends. These are the people who are low value, high potential, and these go back to a number of the cohorts on the previous slide. These are people who either are using your apps, they’re hitting a website, they’re reading your newsletter, they’re listening to your podcast, but they haven’t yet subscribed. You might have their details, you might be able to communicate with them. And so what you’re trying to do there is nurture them, keep hold of them, and also promote them up into this other quadrant, where we go to the top right, which is your Lovers. So your Lovers are high value, high potential. So they’re already high value, they’re subscribers, but there’s potential to sell more. So you might think about the Wall Street Journal strategy more for more, less for less, where if you are already a lover of the brand, what else can we sell you? How can we eke out more value from our relationship with you?

And then over to the right, we have the Zombies. The Zombies, I guess, a fairly well-worn phrase here, which is the group of users who are high value, they’re subscribers but they’re completely disengaged. And so effectively, they’re your risk group. They’re the ones who you just need to be very careful how you handle them because, obviously, if you over communicate, there’s a potential of lost revenue there, but also you have to do the right thing. So we’re going to be talking about that in our next report, but I thought I’d throw it in there because I just think it’s another interesting way of breaking up your audience into four different cohorts. So going back to that, the two slides ago, and you look across these different groups from the None, i.e., the non-subscribers, or the people who’ve never subscribed, inactive, which are the lapsed subscribers, Existing, who are the people who already signed up off platform, maybe to a print and digital bundle, for example, and then the Google Play and the iTunes subscribers.

And again, if we apply then that same metric, which is session duration, and then the other metric which is sessions per month, you start to see something quite interesting. And I think two things in particular strike me as I look at these two charts. The first is that both the people who’ve never subscribed and the people who have lapsed subscriptions, while they’re less engaged, they’re still engaged, they’re still spending three days a month with the brand, they’re still spending, on average, somewhere between four and five minutes per session on the brand.

So again, it goes back to what I was, I guess, touching on before, that they might not be subscribers or they might be lapse subscribers, but they’re still engaged, and therefore, there’s still a close relationship that you have with those readers, and therefore, there’s real potential to bring them back into the fold and to promote them back up to subscribers again. And then I think the other thing to point out is the fact that existing subscribers, i.e., people who are coming in downloading the app and logging in as an existing subscriber, are less engaged than those subscribers who are buying through an in-app purchase through the platforms.

And again, I suspect there’s a good reason for that, which is, if you download the app and you choose at that point to subscribe, that might suggest that the app is your primary use case or your primary channel for engaging with the brand, and therefore, maybe that’s why you are spending more time, as opposed to someone who maybe bought a print and digital bundle, and they download the app, and they have a look and maybe they’re not quite as engaged, but I think interesting nonetheless.

So I wanted to just quickly talk, and again, it’s a little bit of a side, about this external link entitlement because I think it’s an interesting move from Apple, and Google have done the same, and they’ve both done it slightly differently, but this idea of taking a step back and saying, “Okay, as a publisher...” And they do limit it actually to publishers and a few very special cases, they will now allow you, in your app, to use the app as an acquisition channel and say to customers, “Hey, if you are already a subscriber, log in here,” as they’ve always allowed, or, “If you’d like to sign up and buy a subscription, click here.” And instead of taking you on a journey through the app store, they’ll take you straight to your own subscriber page on your website, which means you bypass... Well, in Apple terms, it means you then bypass their either 30 or 15% tax, whatever it is you have negotiated with them based on your business.

With Google, they’re far less generous, they still basically make you pay, if you like, the Google tax, but at least you’re getting people direct onto your platform. However, this is what it looks like, it’s awful. And I’m not sure to what extent you can see that screen, but basically, there’s a two-step process. So you can have a screen on your phone... sorry, on your app, which basically says, as you can see here with the FT, “Hey, this is a subscriber article, you can either sign in or you can log in via this URL.”

You can’t put a button there, it has to be URL, it has to be that size, and it has to be that color. So already, it makes it quite a difficult journey. And then the second thing is, you get this enormous message up here, basically with warning bells and all sorts of things, saying you’re leaving the beautiful, safe, happy environment. So pros and cons. I guess, and we’ll talk about the numbers in a second. We asked customers or we asked publishers, “Is this an interesting model for you?” And certainly, a number of our customers are now trying that. So specifically now, as we dig into the interviews, or this is the first of them, we asked specifically, “Given that workflow, given that user experience, is this something that you’re going to be trialing in the next 12 months?”

And as you can see, a really good portion are either definitely trying this or they’re considering it. I should qualify that, is that we do work with a lot of reader revenue heavy businesses, and I think because apps are very good at that top tier of your readers, the most engaged, most loyal, they do tend to be subscriber types of users, either subscribers or members. So this probably skews quite high compared to the industry as a whole. But nonetheless, I think it’s an interesting model. And so for example, The Baltimore Banner has employed this, praying The Spectator and a few others are all in the works of doing this. Okay. Just a few more data points. So again, this is our own data, looking at all of the users across all of the brands, we wanted to just get a sense of phone versus tablet and then portrait versus landscape.

Now, this seems like a bit of a weird detail, but actually, when you think about product, it’s really important. So when we launched in 2011, and I suspect it’s the same for most people on this call back 12 years ago, everything we were doing was for the tablet because the tablet was seen to be the device that was going to be the future of publishing. Fast-forward to about three years ago, it was all about the phone and really not much of a care about tablets. But now, I think, as mobile apps become more strategic and more important as this central hub for engaging your most loyal audience, people are taking more care and giving it more thought.

And so for example, we, now, as you think about product rather than a single user experience, which is mobile phones in portrait, actually, as you can see, 30% of our users across the board are using tablets. And then when you look at the tablet numbers over to the right, almost 30% of those tablet users use the tablet in landscape. So when you think about mobile product, you have to think about mobile product in three different screen sizes and orientations. And that’s important because you want to make sure that you are providing a really perfect user experience across all of those devices. So for us, that’s a relatively recent thing, but it’s a really important thing to think about, again, from a product development perspective. Okay. I realize I’m talking far too slowly and we’re halfway through this thing, so I’m going to scoot along a little bit faster.

But we’re just going to dig into some of the interviews. And again, you’ll get this full report. These are just a handful of slides from the report. So these next slides are all about these interviews that we conducted with about 60 or 70 execs about what they’re thinking about right now, what’s at top of mind, and what is driving their strategy over the coming couple of years. So the first question we always ask is, “How optimistic are you?” And on the left, we have the results around how optimistic are people about their business. On the right, how optimistic are people about the industry in general. And what you see, I wonder if this is a little bit like the old 80% of drivers think they’re better than average drivers, I don’t know, but as you can see, almost everybody is more optimistic about their own business as they are about the industry. But still, large degrees of optimism about the future.

So then we asked, “Well, what is it that you’re optimistic about?” And some really interesting tidbits came out, again, far more that I can go through right now, but I think one of the really interesting ones was this top left, which is, the fact that the industry is undergoing a little bit of hardship right now, that that creates opportunity as we become leaner, we’re forced to become more innovative, we get permission to be more innovative, and therefore, we’re allowed to pursue all sorts of different ways of running and operating the business. Also, a lot of people talking about the continuing value of quality content, and the quality publications will be the ones that will be most successful over the coming years. And also new business models. So we’re seeing a lot around affiliate marketing, content driven e-commerce, and then finally, personalization. A lot of emphasis on personalization, and that’s certainly something that we’re spending a lot of time doing as well.

Then we asked about, “Okay, what are the most important things that you are tackling right now and you are going to be thinking about over the next 12 months?” And I suspect there’s not a huge amount of surprise here. So growing subscriptions is the number one challenge, increasing retention, which I’d say, when we ran this report a couple of years ago, that was much lower because I think actually the subscription growth has been so good over the last few years, that now retention starts to become a really important challenge to tackle. So retention very close to growing subs. And then this revenue diversification, so in things like affiliate marketing, e-commerce, and podcasts, and newsletters and so on. We then asked about other challenges. I’m not going to go on and on about AI because I think we’ve all listened to too many people talking about AI over the last six months, but clearly, that was a big one that came out quite strongly.

The other, I guess, is that this relationship with Google, who are both a friend and a foe in equal measure, and this idea that the more Google are developing their product, the more that they’re keeping people on their own pages and how can we deal with that challenge. So I think Google really is the thing alongside AI that’s on most people’s minds right now. How prepared do you feel in order to meet these challenges? And again, we’ve had a number of years now of shrinkage of the industry and we’ve got our acts together, and we’ve got the right people now and we’re really ready to now tackle these challenges, both from a technology perspective of people and a product perspective. So again, lots of optimism there, which is great.

Okay. Just wanted to jump into a case study. And this case study is specifically allied with the chart I showed some time ago around engagement. And this is our most highly engaging brand that we work with. And I’ll just quickly give a bit of overview because I think it’s a really interesting story. And this is about the power of niche publishing and the power of creating a product for an ultra loyal reader base. This is a very small product. The readership is something like 10,000. The cost to develop this product was $10,000 over the course of a few months. And it is what used to be a newspaper from a local publisher. So it wasn’t so much a fanzine as a local publisher who created a newspaper specifically for the fans of the premiership soccer team. And they basically took the content from this print product and from their website and they created this small membership proposition.

It costs $3 a month. It has news content which is available freely on the website. It then has subscriber exclusive content, it has interviews, video, match statistics, and a podcast. And all of that was existing content that was pulled together from various different sources, there was no additional editorial overhead. And this was launched last summer. And as you can see, 82% trial-to-paid subscription conversion, very, very high retention rates, and from a very, very simple product. And now, the publisher is basically taking this product and they’re replicating it across five different markets and five different soccer teams. And so I think, in and of itself, it’s a small example, it’s not going to change the world, but I think, number one, it’s an incredibly scalable concept. And once you scale it up, it can become a really interesting moneymaker. But number two, I think it’s a really good example of, if you get the right content and you match it up with the right audience, you can create incredible levels of engagement.

And actually, so this app currently enjoys an average of 48 sessions per month per user, and an average of six minutes per session. So more engagement than any other app that we publish by a very long way. So I just think it’s a really nice story of how you can make a success however small. So the other thing we’ve been digging into a lot is the opportunity with audio. We’ve been working with audio for some years now. The Economist, for those of you familiar with the title, started delivering audio versions of their articles in-app probably five years ago now. And it’s always been a popular service, actually probably even longer, a popular service for readers. And we took that work that we did with The Economist and we rolled it out as a standard part of our product. And now we see, honestly, almost every publisher that we’re working with now are doing one or two things with audio.

So you’ve got a couple of different models. On the one hand, we’ve got audio versions of articles, which can either be considered as a kind of accessibility feature, or just simply a way to consume the content with your hands free, and that somewhat depends on the approach. So for example, we have a newspaper who uses Amazon Polly to auto generate the content, and that’s also generated AI voice. It’s okay. It’s certainly good enough for consuming the content, it’s not quite there yet as an enjoyable way of sitting back and listening. We then have other publishers, for example, the New Scientist, who have voice actors reading out all of the articles of a digital edition, so that you can download the digital edition and just hit play and you can listen to the whole publication, start to finish, which I think is a really nice implementation.

And then all the way to the other side, which of course is integrating podcasts so that you have not just your written content, but you have also your podcast content in a single place where your audience can consume it. And the numbers back this up. So we’re seeing now spoken word massively on the rise in terms of the numbers of listeners. We’re also seeing, from a young audience perspective, if you compare 2014 to 2022, this is the portion of audio that young people are listening to between music and spoken word. And you can see again this huge degree of growth as podcasts and similar audio articles start to take hold. And then again, so if we jump to... this again, is one of our publishers. This slide is from six months ago actually, and you can see it at the time, audio listening was taking up a quarter of all of the time spent in the app.

Then you have 42% reading articles, and then the rest is browsing. And I think that’s the other interesting thing that we should consider here, is that browsing content is as much an activity that we need to be supportive of from a user experience standpoint as actually consuming the articles themselves. Because obviously, browsing in a digital self... excuse me, digital sense is exactly like reading through the pages of the print newspaper in a physical sense. Now, this publisher in particular, less than a week ago, actually switched their app to be a mix of audio and written content to be completely exclusively audio content. So we’re seeing some really interesting examples now of news media organizations basically doing a complete switch to audio only journalism. So I think this is going to be a really interesting one to watch. They’re called Tortoise Media, if you’re interested in checking them out.

So then we asked about, “Looking forward, what’s on your mind for the future?” And don’t worry, Mike, we’re getting close now. So we asked about expected growth over the next 12 months. I suspect there’s no real surprise here that everybody expects significant decline in print, although that’s not... sorry, everybody, that’s not fair, but a good proportion of people seeing a decline in print. And newsletters, and app revenue, and audio revenue being the leaders at the moment. Website, further back, not because it’s an important channel, but the question here was specifically around growth as opposed to just pure absolute revenue.

So then we talk about revenue growth, again, in terms of a different cut between subscriptions, advertising, price increases, new products, and e-commerce. And again, probably little surprise here that subscriptions and memberships are at the forefront of revenue growth for most of the publishers we work with, with advertising, and sponsorship, and then price increases following behind. And then this was an interesting question actually, we wanted to get our head around not just the relative scale of audiences between these different channels, website, newsletters, social, print, apps, audio, video, but also at the unit economics level. So on the left, you’ve got the macro picture. So what is the total size of audience across these different channels? And then on the right, you’ve got the unit economics. So for a single given user, what provides the highest level in engagement?

So if we look on the left, you can see, again, unsurprisingly, is that websites clearly have a considerably larger audience than everything else, followed by newsletters, social, and then print, app, audio, video. However, when you then ask about levels of engagement, you’ve got app and newsletters at the top, followed then by websites, and actually, interestingly enough, print, because obviously, print still gets high engagement. So I think where this is interesting is you really do have to think about these different channels in a different way. You are always going to get orders of magnitude, more audience on these platforms, like websites and newsletters, but you’re going to get tens of times more engagement on these much smaller platforms. And it’s just a case of getting the mix effectively.

Okay. The other question, and we alluded to it earlier on, the whole external link entitlement question is, “What’s the purpose of apps?” Because I think if you think about the last five years, apps, I think, ostensibly, have been seen as retention tools. So again, they’re the reserve of the most engaged existing audience. It’s almost like a subscriber benefit, “Hey, you also get an app, download the app, create some habit and use that as a retention tool.” Now, with things like the external link entitlement, but also with more sophisticated paywall strategies, whether that’s registration walls, meters, next best offer, tiered subscriptions, all of which you can employ in these environments. We are now starting to see more and more of our publishers thinking on apps just as much of an acquisition channel, excuse me, as they are a retention tool.

Mike Holland: Jonny, can I jump into that one for one quick question?

Jonny Kaldor: Of course. Yeah.

Mike Holland: You had shown this slide back in the conversation that we had down in Costa Rica at Arc Connect and I’ve had this debate with a couple of our customers and people within the ARC team. And I guess my question is, is your intuition or does some of the data bear out the fact that, is it because brand discovery is different for mobile apps? You know what I mean? We fight in the web world over SEO placement within different news, property, content presentation, whereas in the mobile world, there’s the app store marketing, there’s sponsorship, there’s regional advertising opportunities within the Apple and the Google environments, is it really just because there’s a different discovery process for mobile that you can sell into for acquisition, or do you think it’s a more fundamental difference?

Jonny Kaldor: Well, I think there’s two things going on. When we think about acquisition, I think there’s acquisition, acquiring someone who never heard of your brand before, that’s a completely new person to your world, versus acquisition in terms of subscriber acquisition, in other words, converting an already engaged reader to a subscriber. So I guess, I’m thinking at it from converting to subscriber as opposed to the grand acquisition pursuit. But you’re right, it is also a very different thing. Clearly, SEO does not work for apps, but what you can do... I mean, first of all, app store optimization, now that you can pay for ads, I think there is much more people can do through ASO. And it’s something that very few brands I think do as well as they could.

And so also, you think in particular about the Apple app store, its search engine is appalling, you get a letter wrong on a search for an app and you won’t find the app. So using the app store as a means of discovery of a news brand I think is always going to be extremely challenging. So I think what you do is you use all of your traditional acquisition tools in terms of getting people to the brand, so SEO, social, and so on. And then when they’re consuming your content on mobile, you are using things like smart banners in order to then nudge them towards downloading an app, which is very easy to do. And then once they’re in the app, then you are using the app as a subscriber acquisition tool. So if I think about someone like the Independent, I think they use quite a complex but very interesting model.

So what they do is when you open... and the Baltimore Banner do a part of this as well. So with Baltimore Banner, when I open the app for the first time, I immediately get a registration wall. I can’t do anything at all without at least just giving a username... sorry, an email address. Then it’ll let me in, and then it’ll start giving me access to content. So it’s teasing me, it’s helping me understand what the proposition is, hopefully, it is creating some sort of daily habit in order to bring me into the fold, and then it’s popping up a paywall in order to then convert me to a subscriber. So I think, yeah, it’s acquisition in those two different senses.

Mike Holland: Great. Thanks.

Jonny Kaldor: So yeah, we’re nearly there, I promise. So this is a little bit of an add-on, and I think this is just more for our own purpose. We care about how product and technology teams work. And so we tack on a few questions about that. So first of all, we ask you, what’s on your mind? What are you thinking about right now? And this is, again, largely on a product level but not entirely. And so you can see quite a mix of, again, competing with Google, trying to do more with less with this kind of downward pressure on editorial team sizes, downward pressure on technology budgets. And also, this one I like, this idea of adopting data and advanced analytics and automation as a way to properly understand the audience and properly deliver the right content. So there’s a lot of more advanced thinking going on, also retention, that you can see in the middle.

So just around technology and product decisions. This is an interesting one and it changes every year. Again, the question is, is it better to license core technology or to buy them? And this is probably interesting to you guys at ARC as well. And this is often down to the personality of a CTO actually, certainly, that we find in our experience. But you can see, by and large, there is a skew towards renting or outsourcing commodity technology like Arc XP, like Pugpig... I mean commodity in a good way, I don’t mean that in a pejorative way, which I think is the right thing. We also asked about where does product and technology sit in the organization. If I think about when I used to be at News UK many years ago, 15 years ago, and even before that, it was always a fight to have technology, have a seat at the table, a seat at the exec.

And what we’re seeing now, which I think is really encouraging, is almost three quarters of publishers now have their most senior technology person sitting on their exec, which is fantastic. And hopefully, that’s only going to get bigger. Products is lagging, but again, I think it’s really important. Obviously, we see this new role, the CPTO, the chief product and technology officer, often having a seat at the exec, which I think again is a really good step. But oftentimes, we’re seeing the product role not quite having a seat at the table, and it’s so important in news media organizations. And then we ask, how do you drive your product development? Are you using analytics, user testing, user feedback? Is it the editor? Again, I’m sure a lot of people on this call will have experienced the days gone by, where basically, the editor is the product owner, and it’s basically what they think goes, basically, it’s what you have to do. We’re seeing that’s far less now, we’re seeing far more data driven decision making in product development, which I think again is really encouraging.

And so the last question we asked is, if you could snap your fingers and change the world or change one thing of the world by magic, what would you do? And these are the things that we’re hearing, that users’ reliance on social media is minimized, that there’s more capacity for small publishers, something around quality, so focus on quality publishing rather than low quality publishing, and in particular, regulate. So regulate big tech so that the publishers have a chance in this market. So that’s pretty much it. So really, as a summary, what we’re looking at here is time spent on mobile continues to grow and it’s going to keep growing. Apps have the line share of that time spent, 80%, and they’re sticky, and they’re engaging. And while bundled subscribers probably will always make up the majority of your users, it’s the in-app subscribers who tend to be more engaged.

Newsletters, apps, and audio are a really good part of how you focus on high engagement formats in order to grow revenue. Personalization, which I didn’t really touch on much, but it’s in the deck, is a key focus. Certainly, we’re working a lot on different personalization features and so on, a lot of our publishers are as well, whether that’s delivering, allowing readers to specify what topics they’re interested in, or whether it’s tracking what they’re reading and suggesting topics for them, all of that is people are spending a lot of time on now. These specialist need subscription products, I think, are doing really well right now because they over serve loyal audiences and you get incredible loyalty, and you get incredible engagement. And then audio, as I said, every publisher we’re working with now is sticking audio into their user experience and having actually really good results. So that’s it. I went a little bit over, but hopefully, that was useful.

Mike Holland: Well, thanks a lot Jonny. I think what I was going to ask the audience is, I want to remind you that if you’d like to ask questions, you can drop them in the Q&A area on the bottom. I’ve seen a couple come in and some that we’ve talked about already. So I’ll start with a couple of questions, but if people in the audience want to drop questions into the WebEx chat, they can, or the WebEx Q&A area, they can. One of the ones that I’ve heard Jonny asked a couple of times is, obviously, Arc focuses on the web experience and we let our customers spin up new sites fairly easily. We’ve seen a lot of interest in the last year or two, people spinning up additional lifestyle sites, Spanish language sites, other geographic areas, where people are spinning up new applications.

You were talking about, with PinkUp, the idea of targeting micro segments of users. Obviously, people test that with newsletters and other areas. How do you see the best practice for that evolution? Are brands testing with a newsletter then expanding it to a website, then expanding it to an app? Or are there other sequences that you’ve seen that are more successful?

Jonny Kaldor: Yeah, that’s a good question. I certainly see in our experience the newsletter being the... Well, newsletter with some light website at least to maintain the presence and to give somewhere for people to go as the starting point because it’s such low touch, it’s such a great audience building tool, and it doesn’t require anyone to do anything at all. I think that step from there to an app is a big step. It’s not a big step in terms of cost and efforts, or even editorial effort, it’s just a big step in growing an audience because it’s a different animal. I think you can grow a newsletter audience and you can grow a web audience if you’re looking at the ghost part of your cohort relatively quickly because people can bounce in and out with almost zero friction.

The only way you’re going to build an app audience is, and I know I’ve been banging on about it for an hour now, but is with this habit creation, this loyalty, this frequency, this giving people a reason to engage on a very regular basis. And as soon as you lose that... I mean, when I look across our customers, and I don’t mean to pick out a bad example, but you look at daily news media and even weekly news media, they do really well because the brands have loyal followings, and they have a product or they have content that people want on a daily or a weekly basis. The consumer magazines find that really hard. To create a habit with magazine content on a small mobile device, that’s a real challenge. And actually, what we’re seeing that works really well there is when you start to bring in utility, then you are able to create these more meaningful relationships.

So just a quick flash example, men’s health in the UK has gone from... in app form, it’s a digital edition, and it changes once a month. That’s clearly a terrible proposition for a mobile app. What we’re turning it into is training plans, and workouts, and exercises, and voicemails from the editor, and direct messaging a personal trainer. And you start to build these layers of utility on top of the content. And the beauty of that is as a magazine publisher, they’re never going to compete with NikePlus in terms of features and capability, but my goodness, they’ve got amazing content to back up all of that utility so that it creates a destination. So yes, sorry, I morphed into answering a completely different question, but yes, I think newsletters definitely are the place where you start, newsletters and social, and then you build from there.

Mike Holland: All right. Well, we had a question from the audience. Jane Bingler asked about, “Although your results show that publishers are keen to explore off platform linking, what is holding them back from jumping in both feet?” [inaudible 00:50:15] the business, is it the numbers? What’s challenging?

Jonny Kaldor: Yeah, it’s a fair question. I think part of it, interestingly, is that awful user experience, which Apple forced you to undertake. What you saw there wasn’t the FT doing a bad job of UX, it was Apple mandating a whole customer journey. And the other thing, I can’t remember if I mentioned this, but it’s also really key, if you choose that route, you cannot also have in-app purchases enabled, you have to choose one or the other. So they’re, again, forcing you down the dark alley with no other option for your readers. And so I guess, it is a bit of a risk, where you’ve got the status quo, which is identify yourself as an existing subscriber, or, hey, one click... It’s not Apple Pay, but one click purchase through the app store, and boom, it’s just done. It’s totally friction free.

And Apple is saying, “Well, look, if you want to send someone down a subscriber journey on your website,” which we know has a number of steps, “As you’re going to fill out all your details because we don’t have those details, and you have to do all that credit card stuff, I guess you could support Apple Pay, so you might be able to bypass some of that.” But it is quite an involved journey, and they don’t allow you to offer both of those. So I think that’s really the reticence right now is, are we actually going to harm ourselves by saving the Apple tax, but actually creating a more friction in that subscription journey.

Mike Holland: Right. And the UX... It’s interesting, it’s almost like the early days of PayPal, where the biggest challenge to a lot of the credit card transactions were actually the UX, not necessarily the user experience, it was that transition. Interesting. Okay. I think one of the questions you didn’t touch on, and I apologize for bringing up a new subject for you, Jonny, but I know one of the mobile features that we’ve seen a couple of our customers ask about are, I’m going to call it PDF, or replica views. What have you been seeing about that? It appears now and then, we know that with aging populations of technology in America and in other places, that they still like seeing a print replica... or a digital replica of the print version. Are you seeing the same thing? Is that trending up or down?

Jonny Kaldor: Yeah. It’s a really interesting one. It’s quite market specific, I’d say. It’s also very product specific. For example, the weekly journal format, so whether that’s Newsweek, or The Economist, or The Spectator, something like that, I don’t think PDF makes sense at all. I think the page layout, typographical elements on a page, are much simpler than on a large format newspaper. And actually, our first ever app was something called The Week, and we did an awful lot of consumer experience and they had an old... skewing old audience and so there was some risk around that. And the UX team basically said, “Look, we’re going to do something native mobile, it’s going to have all of the brand elements, but it’s not going to be PDF. And it worked really well. That said, I agree, I think with a traditional... well, not traditional, but with a newspaper where the PDF is part of the UX, that can be important.

I think you can do mobile versions of that really well, but actually, we all have a bit of a fallback, which is in our apps and all of our competitors apps, you have this idea of enhanced PDF, where you can deliver a PDF, but you can just tap a button and you get the HTML view. So I think for me, the journey is keep the PDF where it makes sense, but make sure there’s a native mobile version as well. And again, there’s a trend here, I think I see a lot, particularly in the US, two apps, like a so-called mobile app and then a replica app. I think bringing those into a single experience is very easy to do, and it means you’ve got one place where you’re engaging with users, and I think that can work really well. So we’re doing that with quite a few publishers right now.

Mike Holland: All right. Great. So one of the questions from the audience, we had this conversation obviously when we were down talking with Upside about what do you do first? So assuming you’ve got your content, it’s high quality, you’re generating enough volume, in your view, what is the first thing to focus on for your mobile apps? Is it adding UX? Is it your push strategy and notification timing? Is it adding video or audio? Obviously, you’re talking about the growth and audio, but is that more important than tuning up your push strategy? What’s the first thing you would have people focus on?

Jonny Kaldor: Yeah. And of course I’m going to say this, and I say this on behalf of all platforms, I think I’d pick a really good platform, whereby the lowest common denominator is just get everything that you are already doing, and obviously, in a thoughtful way, trying to create a great experience with that. So in other words, you can create a great product without having to necessarily create new versions of content or grow the editorial team. And so I think the lowest common denominator really should be great content from the web, some form of digital edition, if you are an edition based publication. Any podcast that you are delivering through other platforms, bring those in. We can actually games the question above. I think puzzles are an incredible way of engaging. So we use a third party called Puzzler Media, and they are so sticky. So again, there’s a lot you can do with very little effort.

UX, I think, again, if you are working with a platform, UX should just fall out of just the process of thinking through how you want to deliver the app, because there are a few tried and tested ways of delivering navigation and content and so on. And then yes, push notification is extremely important as once the things up and running to create that engagement. But for me, the way we normally engage is, let’s start with the content architecture. So what are all of the elements of content you’ve got? What channel, what format, to whom? And you lay it all out, and this is what we’ve got as a universal content. Now, how can we deploy that through a mobile app? What makes sense to deploy, what doesn’t? And then if you are creating a value add product, like a membership product, then what extra stuff can we put in there as well? But that would be my starting point, is what’s the content architecture and then go from there.

Mike Holland: So content, then experience, make sure it’s good and clean, and then start one differentiator at a time?

Jonny Kaldor: Yeah, I think so. And I think the experience comes as part of that content architecture exercise. We lead with the content and then the UX finds its way once you know what that content architecture is.

Mike Holland: Great. Well, everybody, we set this thing up to run until 12 o’clock Eastern in the US, so we’re at that time. Thanks to everyone for your questions. As I said, we’ll be sending out the recording of this and the information on the research that Jonny and his team have done. Thank you very much for your time. And definitely drop in extra questions, or ping either Jonny or the team at Arc, and we’ll get back to you with anything that you’ve got. So terrific. Thanks everyone for your time and have a great day.

Jonny Kaldor: Thanks, Mike. Thanks everybody.