How did Mail Online become a profitable newspaper site?
Media Week’s revelation that the Daily Mail is now making a profit from its non-paywalled website, Mail Online, provides further food for thought for an industry already gorging on information overload, but how has it been achieved?
The success of Mail Online’s lean digital operation, based primarily in the UK and US, could yet prove to be an industry inflection point.
Many observers were starting to reach the conclusion that publishers can’t rely on advertising alone to fund their online activities. This view was only bolstered by last week’s news of record losses and looming redundancies at The Guardian and The Observer’s digital-first operation.
Before delving into how the Mail Online has achieved this milestone, a couple of caveats should be acknowledged. The first is that the site’s profitability has yet to be publicly confirmed by parent DMGT, although I’m confident in my sources.
The second is that reported operating profit (revenue minus costs) for any company can be a moveable feast, especially for an operation sitting within a publishing behemoth like DMGT and looking to make a statement.
I understand Mail Online turned its first profit in June, and is expected to continue to be so on a “run rate basis”, as opposed to year to date scenario, resulting in revenue of between £25m and £30m by the end of the year.
But exactly what associated costs have been set against this revenue to edge the digital operation into the black for the first time remains unknown. As one industry wag asked me in an email this week, “do they [Mail Online] pick up Guy Zitter’s expenses?” The answer, as far as the affable and sociable group managing director is concerned, if I had to guess, is likely to be ‘no’.
Similarly, the Mail Online undoubtedly benefits from the Daily Mail’s client team of more than 30 best in class specialists, where contacts have been nurtured over 116 years of publishing. The likelihood their costs have been shared on the balance sheets of the young upstart Mail Online is again small.
Yet, once the requisite pinch of salt has been taken, and whether profitability has truly been reached or almost reached, the Mail Online’s commercial success cannot be denied.
From zero to hero in less than a decade
It’s easy to forget the Mail Online’s story only began in 2004, it was one of the last major newspapers to join the digital fray. In July that year it recorded just 31,356 unique users. The site was dwarfed by a multiple of 16 times by market leader and undisputed sector innovator, Guardian.co.uk, which was already attracting around 500,000 uniques.
Elsewhere, News International’s site for The Sun was pushing 300,000 uniques, another trailblazer FT.com had around 220,000, sites for The Times and Daily Telegraph were achieving around 190,000, and even the regional site for the Evening Standard, This is London, had 112,000 monthly unique ‘users’ – as browsers were referred to back then.
Like those around it, Mail Online enjoyed annual double-digit growth that year, but the foundations of the world beating news site we know today can really be attributed back to two very different individuals at DMGT.
Two catalysts to success
The first, and most unlikely figure behind the Mail Online’s success is none other than DMGT chairman Lord Rothermere. The 45 year old formerly known as Jonathan Harmsworth is credited with “flicking on the digital switch” at the publishing group, and in being instrumental in the decision to significantly invest in its future from 2007.
Fortunately for Rothermere, he already had the right man at the tiller, the second biggest influence on the site’s success, Martin Clarke. The 47 year old editor turned publisher joined the Mail Online in 2006 having originally joined the Daily Mail as journalist in 1987.
During his tenure, Clarke had launched the Scottish Daily Mail and been editor of the Scotsman, the Daily Record and Sunday Mail. When he rejoined the Mail group in 2001 he had the benefit of the respect among the editorial teams, knowledge of DMGT’s group machinations, and the stomach for high-stake launches; all would stand him in good stead.
Following a major redesign in May 2008, the Mail Online leapfrogged both Telegraph.co.uk and Guardian.co.uk to become the UK’s most popular national newspaper website, with 18.7 million unique users. By the summer of 2009, the site had secured its position as market leader after unique visitors had rocketed by a third.
The content of the site had begun to be racier, looser and more celebrity focused than its mid-market Daily Mail and Mail on Sunday print counterparts. It had also been quick to master the deft skills of SEO, and the ability to boost page impressions through picture galleries, and extended stories.
Knowing what the reader wanted and providing a forum for their views to be aired are also traits honed by Mail Online during this period. It began experimenting with creating tailored channels of content – like beauty, food and entertainment – much in the vein of consumer magazines, enabling its ad sales teams to better target specific audiences.
Digital ad team of the year
In acknowledging the site’s success today, credit must also go to Mail Online’s commercial team, named as AOP’s Digital Ad Sales Team of 2012 only last week, for “a team at the head of its game, who really took the bull by the horns”.
In the UK, it has 32 people in its commercial team, up from 22 a year ago, including an ad sales team of 16, and then ad ops, producers, project managers and creative solutions teams. Globally, the Mail Online has another three people optimising and trading in LA, four in New York, two people in Ireland, one in Canada and one in Australia.
Commercial success can be attributed to customer insights and a deep understanding of how users engage with the Mail Online. By using a mix of Omniture and bespoke proprietary analytics, custom solutions have driven Mail Online’s non core growth and are now responsible for up to 70% of total revenues.
Mobile is another significant growth area for Mail Online, believed to have moved from contributing no discernable revenue to generating around 10% of revenue today, and growing.
Editorially, Mail Online has been actively recruiting over the past year, making actual numbers hard to ascertain, but it has in the region of 70 staff around the world, fairly evenly split between the UK and the US. It also has a partnership with staff working on India Today in New Delhi, who siphon off content deemed suitable for the brand.
Propelled by Clarke’s commercial and editorial nous, both departments have unusually strong relationships with each other. Sales and journos live and breath the same analytics and share insights about what’s really making their users tick, another factor attributed to the site’s success.
International expansion to continue
Going forward, further geographical expansion is rumoured to be on the cards, led by an indefatigable Clarke, with offices in Toronto, Delhi and Sydney mooted.
The lions share (around 66%) of Mail Online’s revenue currently comes from within the UK. Within the next three years, this is hoped to better reflect the site’s international audience through growth to become a site primarily driven by non UK revenues. Mail Online’s US operation is said to be contributing “meaningful revenue” for the first time.
It all makes for interesting reading for those convinced an open digital web is not sustainable for the future of newspaper sites. Speaking at a DMGT investor day back April, Clarke noted: “Two years ago we asked you as investors and the market in general to back what some people may have considered to be just a massive hunch…
“At the time, many in the newspaper business believed paywalls were the only viable digital future for newspapers. We didn’t think that then and we certainly don’t think it now.”
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