Jon Slade is global online and strategic advertising sales director at FT.com, the digital arm of the Financial Times.
Jon Slade of the Financial Times describes the 123-year-old business publication’s advanced approach to its online ad sales.
Interview conducted by Alan Morrison, Bo Parker, and Bud Mathaisel
PwC: What is your role at the FT [Financial Times], and how did you get into it?
JS: I’m the global advertising sales director for all our digital products. I’ve been in advertising sales and in publishing for about 15 years and at the FT for about 7 years. And about three and a half years ago I took this role—after a quick diversion into landscape gardening, which really gave me the idea that digging holes for a living was not what I wanted to do.
PwC: The media business has changed during that period of time. How has the business model at FT.com evolved over the years?
JS: From the user’s perspective, FT.com is like a funnel, really, where you have free access at the outer edge of the funnel, free access for registration in the middle, and then the subscriber at the innermost part. The funnel is based on the volume of consumption.
From an ad sales perspective, targeting the most relevant person is essential. So the types of clients that we’re talking about—companies like PwC, Rolex, or Audi—are not interested in a scatter graph approach to advertising. The advertising business thrives on targeting advertising very, very specifically.
On the one hand, we have an ad model that requires very precise, targeted information. And on the other hand, we have a metered model of access, which means we have lots of opportunity to collect information about our users.
PwC: How does a company like the FT sell digital advertising space?
JS: Every time you view a web page, you’ll see an advert appear at the top or the side, and that one appearance of the ad is what we call an ad impression. We usually sell those in groups of 1,000 ad impressions.
Over a 12-month period, our total user base, including our 250,000 paying subscribers, generates about 6 billion advertising impressions across FT.com. That’s the currency that is bought and sold around advertising in the online world.
In essence, my job is to look at those ad impressions and work out which one of those ad impressions is worth the most for any one particular client. And we have about 2,000 advertising campaigns a year that run across FT.com.
Impressions generated have different values to different advertisers. So we need to separate all the strands out of those 6 billion ad impressions and get as close a picture as we possibly can to generate the most revenue from those ad impressions.
PwC: It sounds like you have a lot of complexity on both the supply and the demand side. Is the supply side changing a lot?
JS: Sure. Mobile is changing things pretty dramatically, actually. About 20 percent of our page views on digital channels are now generated by a mobile device or by someone who’s using a mobile device, which is up from maybe 1 percent or 2 percent just three years ago. So that’s a radically changing picture that we now need to understand as well.
What are the consumption patterns around mobile? How many pages are people consuming? What type of content are they consuming? What content is more relevant to a chief executive versus a finance director versus somebody in Japan versus somebody in Dubai?
Mobile is a very substantial platform that we now must look at in much more detail and with much greater care than we ever did before.
PwC: Yes, and regarding the mobile picture, have you seen any successes in terms of trying to address that channel in a new and different way?
JS: Well, just with the FT, we have what we call the web app with FT.com. We’re not available through the iTunes Store anymore. We use the technology called HTML5, which essentially allows us to have the same kind of touch screen interaction as an app would, but we serve it through a web page.
So a user points the browser on their iPad or other device to FT.com, and it takes you straight through to the app. There’s no downloading of the app; there’s no content update required. We can update the infrastructure of the app very, very easily. We don’t need to push it out through any third party such as Apple. We can retain a direct relationship with our customer.
One or two other publishers are starting to understand that this is a pretty good way to push content to mobile devices, and it’s an approach that we’ve been very successful with. We’ve had more than 1.4 million users of our new web app since we launched it in June 2011.
It’s a very fast-growing opportunity for us. We see both subscription and advertising revenue opportunities. And with FT.com we try to balance both of those, both subscription revenue and advertising revenue.
PwC: You chose the web app after having offered a native app, correct?
JS: That’s right, yes.
PwC: Could you compare and contrast the two and what the pros and cons are?
JS: If we want to change how we display content in the web app, it’s a lot easier for us not to need to go to a new version of the app and push that through into the native app via an approval process with a third party. We can just make any changes at our end straight away. And as users go to the web app, those implemented changes are there for them.
On the back end, it gives us a lot more agility to develop advertising opportunities. We can move faster to take advantage of a growing market, plus provide far better web-standard analytics around campaigns—something that native app providers struggle with.
One other benefit we’ve seen is that a far greater number of people use the web app than ever used the native app. So an advertiser is starting to get a bit more scale from the process, I guess. But it’s just a quicker way to make changes to the application with the web app.
PwC: How about the demand side? How are things changing? You mentioned 6 billion annual impressions—or opportunities, we might phrase it.
JS: Advertising online falls into two distinct areas. There is the scatter graph type of advertising where size matters. There are networks that can give you billions and billions of ad impressions, and as an advertiser, you throw as many messages into that mix as you possibly can. And then you try and work out over time which ones stuck the best, and then you try and optimize to that. That is how a lot of mainstream or major networks run their businesses.
On the other side, there are very, very targeted websites that provide advertisers with real efficiency to reach only the type of demographic that they’re interested in reaching, and that’s very much the side that we fit into.
Over the last two years, there’s been a shift to the extreme on both sides. We’ve seen advertisers go much more toward a very scattered environment, and equally other advertisers head much more toward investing more of their money into a very niche environment. And then some advertisers seem to try and play a little bit in the middle.
With the readers and users of FT.com, particularly in the last three years as the economic crisis has driven like a whirlwind around the globe, we’ve seen what we call a flight to quality. Users are aware—as are advertisers—that they could go to a thousand different places to get their news, but they don’t really have the time to do that. They’re going to fewer places and spending more time within them, and that’s certainly the experience that we’ve had with the Financial Times.
PwC: To make a more targeted environment for advertising, you need to really learn more about the users themselves, yes?
JS: Yes. Most of the opt-in really occurs at the point of registration and subscription. This is when the user declares demographic information: this is who I am, this is the industry that I work for, and here’s the ZIP code that I work from. Users who subscribe provide a little bit more.
Most of the work that we do around understanding our users better occurs at the back end. We examine user actions, and we note that people who demonstrate this type of behavior tend to go on and do this type of thing later in the month or the week or the session or whatever it might be.
Our back-end analytics allows us to extract certain groups who exhibit those behaviors. That’s probably most of the work that we’re focused on at the moment. And that applies not just to the advertising picture but to our content development and our site development, too.
If we know, for example, that people type A-1-7 tend to read companies’ pages between 8 a.m. and 10 a.m. and they go on to personal finance at lunchtime, then we can start to examine those groups and drive the right type of content toward them more specifically. It’s an ongoing piece of the content and advertising optimization.
PwC: Is this a test to tune and adjust the kind of environment that you’ve been able to create?
JS: Absolutely, both in terms of how our advertising campaigns display and also the type of content that we display. If you and I both looked at FT.com right now, we’d probably see the home page, and 90 percent of what you would see would be the same as what I would see. But about 10 percent of it would not be.
PwC: How does Metamarkets fit into this big picture? Could you shine some light on what you’re doing with them and what the initial successes have been?
JS: Sure. We’ve been working with Metamarkets in earnest for more than a year. The real challenge that Metamarkets relieves for us is to understand those 6 billion ad impressions—who’s generating them, how many I’m likely to have tomorrow of any given sort, and how much I should charge for them.
It gives me that single view in a single place in near real time what my exact supply and my exact demand are. And that is really critical information. I increasingly feel a little bit like I’m on a flight deck with the number of screens around me to understand. When I got into advertising straight after my landscape gardening days, I didn’t even have a screen. I didn’t have a computer when I started.
Previously, the way that data was held—the demographics data, the behavior data, the pricing, the available inventory—was across lots of different databases and spreadsheets. We needed an almost witchcraft-like algorithm to provide answers to “How many impressions do I have?” and “How much should I charge?” It was an extremely labor-intensive process.
And that approach just didn’t really fit the need for the industry in which we work. Media advertising is purchased in real time now. The impression appears, and this process goes between three or four interested parties—one bid wins out, and the advert is served in the time it takes to open a web page.
Now if advertising has been purchased in real time, we really need to understand what we have on our supermarket shelves in real time, too. That’s what Metamarkets does for us—help us visualize in one place our supply and demand.
PwC: In general, it seems like Metamarkets is doing a whole piece of your workflow rather than you doing it. Is that a fair characterization?
JS: Yes. I’ll give you an example. I was talking to our sales manager in Paris the other day. I said to him, “If you wanted to know how many adverts of a certain size that you have available to you in Paris next Tuesday that will be created by chief executives in France, how would you go about getting that answer?”
Before, the sales team would send an e-mail to ad operations in London for an inventory forecast, and it could take the ad operations team up to eight working hours to get back to them. It could even take as long as two business days to get an answer in times of high volume. Now, we’ve reduced that turnaround to about eight seconds of self-service, allowing our ad operations team time to focus on more strategic output. That’s the sort of magnitude of workflow change that this creates for us—a two-day turnaround down to about eight seconds.
PwC: When you were looking to resolve this problem, were there a lot of different services that did this sort of thing?
JS: Not that we came across. I have to say our conversations with the Metamarkets team actually started about something not entirely different, but certainly not the product that we’ve come up with now. Originally we had a slightly different concept under discussion that didn’t look at this part at all.
As a company, Metamarkets was really prepared to say, “We don’t have something on the shelves. We have some great minds and some really good technology, so why don’t we try to figure out with you what your problem is, and then we’ll come up with an answer.”
To be honest, we looked around a little bit at what else is out there, but I don’t want to buy anything off the shelf.
I want to work with a company that can understand what I’m after, go away, and come back with the answer to that plus, plus, plus. And that seems to be the way Metamarkets has developed.
Other vendors clearly do something similar or close, but most of what I’ve seen comes off the shelf. And we are—we’re quite annoying to work with, I would say. We’re not really a cookie-cutter business. You can slice and dice those 6 billion ad impressions in thousands and thousands of ways, and you can’t always predict how a client or a customer or a colleague is going to want to split up that data.
So rather than just say, “The only way you can do it is this way, and here’s the off-the-shelf solution,” we really wanted something that put the power in the hands of the user. And that seems to be what we’ve created here. The credit is entirely with Metamarkets, I have to say. We just said, “Help, we have a problem,” and they said, “OK, here’s a good answer.” So the credit for all the clever stuff behind this should go with them.
PwC: So there continues to be a lot of back and forth between FT and Metamarkets as your needs change and the demand changes?
JS: Yes. We have at least a weekly call. The Metamarkets team visits us in London about once a month, or we meet in New York if I’m there. And there’s a lot of back and forth. What seems to happen is that every time we give it to one of the ultimate end users—one of the sales managers around the world—you can see the lights on in their head about the potential for it.
And without fail they’ll say, “That’s brilliant, but how about this and this?” Or, “Could we use it for this?” Or, “How about this for an intervention?” It’s great. It’s really encouraging to see a product being taken up by internal customers with the enthusiasm that it is.
We very much see this as an iterative project. We don’t see it as necessarily having a specific end in sight. We think there’s always more that we can add into this. It’s pretty close to a partnership really, a straight vendor and supplier relationship. It is a genuine partnership, I think.
PwC: How is this actually translated into the bottom line—yield and advertising dollars?
JS: It would be probably a little hard for me to share with you any percentages or specifics, but I can say that it is driving up the yields we achieve. It is double-digit growth on yield as a result of being able to understand our supply and demand better.
The degree of accuracy of supply that it provides for us is upward of 15 percent better than what we’ve seen before. I can’t quantify the difference that it’s made to workflows, but it’s significant. To go to a two-day turnaround on a simple request to eight seconds is significant.
PwC: Given our research focus, we have lots of friends in the publishing business, and many of them talked to us about the decline in return from impression advertising. It’s interesting. Your story seems to be pushing in the different direction.
JS: Yes. I’ve noticed that entirely. Whenever I talk to a buying customer, they always say, “Everybody else is getting cheaper, so how come you’re getting more expensive?”
I completely hear that. What I would say is we are getting better at understanding the attribution model. Ultimately, what these impressions create for a client or a customer is not just how many visits will readers make to your website, but how much money will they spend when they get there.
Now that piece is still pretty much embryonic, but we’re certainly making the right moves in that direction. We’ve found that putting a price up is accepted. Essentially what an increase in yield implies is that you put your price up.
It’s been accepted because we’ve been able to offer a much tighter specific segmentation of that audience. Whereas, when people are buying on a spray basis across large networks, deservedly there is significant price pressure on that.
Equally, if we understand our supply and demand picture in a much more granular sense, we know when it’s a good time to walk away from a deal or whether we’re being too bullish in the deal. That pricing piece is critical, and we’re looking to get to a real-time dynamic pricing model in 2012. And Metamarkets is certainly along the right lines to help us with that.
PwC: A lot of our clients are very conservative organizations, and they might be reluctant to subscribe to a cloud service like Metamarkets, offered by a company that has not been around for a long time. I’m assuming that the FT had to make the decision to go on this different route and that there was quite a bit of consideration of these factors.
JS: Endless legal diligence would be one way to put it—back and forth a lot. We have 2,000 employees worldwide, so we still have a fairly entrepreneurial attitude toward suppliers. Of course we do the legal diligence, and of course we do the contractual diligence, and of course we look around to see what else is available. But if you have a good instinct about working with somebody, then we’re the size of organization where that instinct can still count for something.
And I think that was the case with Metamarkets. We felt that we were talking on the same page here. We almost could put words in one another’s mouths and the sentence would still kind of form. So it felt very good from the beginning.
If we look at what’s happening in the digital publishing world, some of the most exciting things are happening with very small startup businesses and all of the big web powers now were startups 8 or 10 years ago, such as Facebook and Amazon.
We believe in that mentality. We believe in a personality in business. Metamarkets represented that to us very well. And yes, there’s a little bit of a risk, but it has paid off. So we’re happy.