Guardian Australia MD points to brand partnerships and events as path to profitability

Ian McClelland

Ian McClelland

The managing director of the Guardian Australia says it has exceeded revenues by 300 per cent in it first year, but conceded the road to profitability for the offshoot of the UK newspaper does not lie in display advertising.

Ian McClelland told Mumbrella whilst the site is performing above expectations in revenue terms, the publisher is looking to establish a brand partnerships team and run more “masterclass” events, leveraging the “economies of scale” from one of the UK’s leading news providers to turn a profit.

The strategy is similar to that being pursued by Fairfax Media as it looks to transition its business into a digital age by expanding its events offerings whilst growing its content marketing arm considerably.

Speaking to Mumbrella as the news site marks one year of being open McClelland said: “We have been welcomed with open arms and the phrase that keeps coming up is a breath of fresh air. Revenues have grown significantly over the course of the year and we are some 300 per cent above where we thought we would be.”

McClelland said the strong revenues meant they were accelerating their expansion plans and their internal numbers showed Guardian Australia page views year-on-year up 83 per cent while visits year-on-year up 86 per cent. 

“That has meant that halfway through the year I got approval to speed up our investment and so we launched the office in Melbourne,” said McClelland.

“In terms of traffic growth we’ve gone from 2.5m unique browsers to 5.1m unique browsers and I suspect we’ll beat that this month (on the back of budget coverage).”

Source: Nielsen. Note there are trend breaks in May 2013 and March 2014

Source: Nielsen. Note there are trend breaks in May 2013 and March 2014

While the Guardian Australia’s internal numbers have shown a significant rise the industry approved metric Nielsen has shown more mixed results.

Australian traffic across the Guardian’s websites has hovered around the 1m to 1.3m mark, leading the publisher to complain about the inconsistencies in the Nielsen numbers and their internal traffic measurement, until March of this year when the audience measurement company announced a major change in methodology which expanded the online universe by some two million users.

In the wake of these changes the audience rose to a record 1.765m with the Guardian Australia now consistently appearing in the top 10 on the news rankings.

McClelland said despite the improvement in Nielsen numbers they remained disappointed in what they see as the under-reporting of their audience due to Nielsen data and panels not counting mobile traffic.

“Mobile is about 50 per cent of our traffic. It is a little bit frustrating that they essentially halved it,” said McClelland.

“We’ve now come to terms with the fact that Nielsen is the de-facto metric in the Australian market. I think everyone understands that its a desktop only panel and so it doesn’t reflect what is happening on mobile and we see it as a significant portion of our audience.”

McClelland concedes that traditional display advertising alone is not probably going be enough to chart a course to profitability but reveals that their business plan sees them leverage global economies of scale and push some of their costs overseas.

“We are not going to survive on display alone, which is why we are developing and refining our display, especially in programmatic, but then focussing on the brand partnerships team internally that basically solves problems for brands,” he said

“You start to see, because of all these massive economies of scale, that we actually run the Australian business very very efficiently.”

The Australian MD signalled that part of the pathway to profitability would see them diversify revenues while leveraging the global brand and technology from London.

“We have got a classic digital start up business plan and our goal is profitability within a fairly short timeframe. I would say in a couple of things we are unique in that we benefit from these massive economies of scale,” he said.

“This is the key to sustainability within any one particular market. There are 250 odd designers, developers and engineers creating these leading end digital products and I don’t have to pay for any of that. I just get the technology and all the websites, the apps etc for free and that this just wipes off $20-$25m a year from my P&L. That’s a huge benefit.

“The second thing is that you’ve got this global network of journalists. Something like 1,200 around the globe and that is massively beneficial in terms of covering world events. Again I get all of that content essentially for free where if I was an Australian digital news start up it would be an additional $15-20m on my P&L.

“We will then improve on our display advertising business, we will build a brand partnerships business and then the Guardian has a fairly well diversifed business.”

Among the possible digital revenue streams are e-commerce, masterclass and other non-display revenue sources.

He added: “We have already experimented with masterclasses and we have done three — two in Sydney and one in Melbourne and they sold out within 48 hours and only using our own media to advertise.”

“This combination of massive economies of scale, a mixed revenue model of advertising, brand partnerships and then products and services. Profitability is definitely achievable.”

McClelland remained coy when asked if there was a thee to five year timeframe to achieve that saying: “Around that time frame I don’t want to specify exactly when our break-even point is scheduled, but it within a normal range of a business plan.”

Katharine Viner, the outgoing editor-in-chief of The Guardian Australia, said she was pleased with how the digital operation was growing and that it would continue to be focused on growing revenues and engagement.

“The investment from (Wotif founder) Graeme Wood meant that we were able to launch in Australia, and from then on the model has operated and will operate in the same as in the UK and US, based around straightforward revenue targets,” said Viner.

As for the exact nature of future growth Viner is clear that they have not finished growing the Australian operation but was coy on the details of further expansion.

“The plan is to build. That’s all I can say. The plan is definitely to build,” she said.

See the full feature ‘A Crazy Act of Will’: The Guardian Australia turns one here.

Nic Christensen 


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