President and CEO
The New York Times Co.
Mark Thompson became president and CEO of The New York Times Co. in November 2012. Prior to that, he had been director-general of the BBC since 2004. He spoke with eMarketer’s Ellen Oppenheim about the challenge of remaking The Times for the digital age.
eMarketer: What percentage of The Times revenues comes from circulation vs. advertising, and how do you expect that percentage to be different three years from now?
Mark Thompson: In the first nine months of 2013, we’re looking at roughly 54% from circulation and 46% from advertising. I think that historical shift from decades where advertising was a very large part of revenues to a balanced portfolio with more revenues coming from circulation will continue. But we’ve got plenty of plans for digital advertising, and I’m hoping to have very healthy advertising revenues, as well.
eMarketer: What are your plans for digital advertising?
Thompson: We’ve seen digital advertising decline slightly, around 3% year over year. Our new executive vice president of advertising, Meredith Kopit Levien, and I are determined to get digital advertising back to growth. The important part is working hard on premium custom advertising. In addition, we’re very focused on building video advertising and on taking a more proactive view of programmatic.
eMarketer: How do you define premium custom advertising?
Thompson: Premium custom advertising is solutions for marketers that have some unique or distinctive element to them. Typically this involves innovation. It may mean, in our case, taking some of the innovations we’ve already used in our editorial and using versions of that to help advertisers get their message across.
“Premium custom advertising is solutions for marketers that have some unique or distinctive element to them.”
eMarketer: Any innovations you’re particularly proud of in the past year?
Thompson: In April 2013, Prudential took over the NYTimes.com homepage with a custom API-powered unit that instantly pulled a century of The New York Times front covers (from 1863 to 2002)—approximately 55,000 covers. Users could enter their birth date and see the front cover of The Times from that day. It included a social component that enabled readers to share their “front-page news” on Twitter and LinkedIn.
In addition, in February 2013, Wisk executed a campaign that allowed users to interact with a brand message by “wiping away” an initial image to reveal another one underneath it. The ad, which touted the slogan, “The Dirty Truth About Your Clean Laundry,” featured an initial image of a T-shirt that was seemingly clean and free of visible stains. When the user scrolled over the ad, a black light image appeared, unveiling the invisible stains.
eMarketer: Although your growth in circulation revenues shows that your paywall strategies have had some success, you recently announced that you’re going to develop a lower-priced product for readers. Tell us about the new product.
Thompson: We’re looking at the whole portfolio of paid products and have plans to launch some enhanced tiers, where we will offer subscriptions that [are at a variety of price points].
The lower-priced product will launch in the first half of 2014. It’s like a compressed version of The New York Times, particularly aimed at mobile, especially smartphones—and there will be a web version as well—with access to some of the key stories you need to keep up and to other stories from The New York Times. It’s aimed at people who want to absorb these quickly, to know what’s going on in the world.
We’re also working on an opinion-based product, which will be app-based but will also have a significant presence on the web, a dining enterprise and so on. And we’re also looking at a digital magazine idea—whether there is a digital way of bringing some of the best long-form enterprise journalism and feature writing together in an attractive package for people who are particularly looking for a magazinelike experience of reading long-form journalism.
Clearly, if we find that we have a lifestyle vertical with food that works very well, that would provoke a question on whether we’d look at other lifestyle verticals.
eMarketer: If these are less expensive products, what would be a more expensive one?
Thompson: We’re looking at additional services, additional content. Several subscribers have told us that for the right product features and opportunities, they would pay more than the current highest digital subscription. It could be physical access or webcasting to TimesTalks and other live events. We’re looking at a range of options.
“Currently, there’s more demand for video impressions than The Times can supply.”
eMarketer: The press has reported that The Times is increasing video advertising because video offers higher CPMs. Are you concerned about a glut of video advertising that would drive down video CPMs, similar to what has happened with banner ads?
Thompson: Currently, there’s more demand for video impressions than The Times can supply. Once supply grows, so that we can more evenly meet demand, you would expect CPMs to moderate. But we expect the volume of video consumption to increase very considerably in the coming years. So even if CPMs fall somewhat, because more people are watching videos, supply goes up, and we think the yields can still be considerable.
eMarketer: What’s your strategy to increase app downloads and to boost the usage frequency across smartphones and tablets?
Thompson: The issue is not downloads. We have more than 27 million downloads of The Times app onto smartphones and over 9 million onto tablets. We’re interested in how we can prompt ever-deeper engagement of our users. We—like everyone else—are interested in the use of data to help us engage readers more, but the most important thing The Times does is very old-fashioned—to try and deliver a compelling news report to encourage people to read it and use it.
eMarketer: How is data enabling you to develop more compelling news reports?
Thompson: As you look at lists of the most emailed and most shared stories, they often are not the same as the stories we’re leading with on our homepage or on our app. We think users come to The New York Times not to be given purely algorithmic stories—those that have been most shared, most popular—but the stories that, in the judgment of the editors of The New York Times, are the most significant.
But we’re also interested in understanding how people use our digital products—how they move from one part to another. We have for some time offered recommendations to users based on their past usage of The Times. So there are elements, in terms of engaging readers, of using what we’ve learned from their past behavior.
eMarketer: When do you see ad revenues increasing, and what platforms do you think will drive a turnaround?
Thompson: We’ve seen a striking deceleration in the rate of ad decline this year from Q1—companywide of about 11%—to Q3, 2%. That year-on-year third-quarter decline was the smallest decline we’ve reported in three years.
“We have for some time offered recommendations to users based on their past usage of The Times.”
Custom premium has been growing this year in digital, and we certainly would expect to see that continue to grow. But I believe that, if we deploy effectively in programmatic, it could be a more effective way of monetizing our impressions than the current remnants exploitation. And I also think if we come up with effective branded content solutions for advertisers, it would also be a source of revenue growth for us.
eMarketer: What are you thinking about within programmatic?
Thompson: We believe that if used in the right way, programmatic can be not just an addition, but really an effective way of selling significant parts of our ad inventory. We’ve begun to experiment in some key verticals like finance, retail and travel. We want to build our capability, experiment and explore a number of options.
eMarketer: What about branded content?
Thompson: There’s no difficulty with the idea of branding content in digital or in print, as long as the content is appropriate, as well as clearly labeled and clearly distinguishable from the journalism of The New York Times. The challenge is striking the right balance, offering advertisers opportunities of getting their messages in front of readers in a way that is attractive and in which readers want to absorb those messages—but not running the risk that they would confuse those messages with the journalism of The Times.
It comes down to the practicality of how you actually place these ads and how people see them. In the coming months, we will begin to develop and roll out and sell some branded units based on new designs.
eMarketer: Digital subscriptions are growing at a faster rate than print subscriptions. Do you see a day when you think it will be too expensive to print newspapers because the audience isn’t big enough to support the cost?
Thompson: The audience for the physical version of The New York Times is pretty robust. We’ve seen some attrition in newsstand, and there’s a small decline in seven-days-a-week subscriptions over the past year. But Sunday print subscriptions are growing slightly. And most people who subscribe to the physical newspaper actually end up using the digital service as well.
“There’s some evidence that the average age of subscribers is coming down slightly.”
I think we’re going to live in a hybrid world with printed products and digital products and desktop and laptop, web-based products and mobile products and apps for many years to come. We have to have regard for all of our costs, particularly because the loss of print advertising, which has a very high margin, affects profitability, and that’s a concern. Rather than constantly worrying about whether we’re moving from one platform to the other, we should think of ourselves as having multiple platforms, and the print platform is just one of the platforms.
eMarketer: Any thoughts as you look at engaging younger vs. older audiences?
Thompson: Our demographics are not getting older. There’s some evidence that the average age of subscribers is coming down slightly. There’s conjecture that print appeals to a certain generation, but that generation is going to get older and die off, and younger people only want our digital products. I think life is more complicated than that.
Having said that, cracking the code on mobile is going to be important in making sure we engage younger generations and that they find The Times, use The Times, value it and become subscribers.