November 17, 2010 at 16:17
i will be a model for the newspaper industry
The managing director of i - The Independent’s new spin-off title - tells MaryLou Costa that the paid-for daily newspaper will satisfy an untapped appetite for bite-size quality content while returning a profit.
It is the day after i hit the nation’s newsstands and Andrew Mullins – the man in charge of The Independent spin-off – is in bullish mood, despite the new daily paper being described as an “upmarket Metro” by Guardian media columnist Roy Greenslade.
It is the third title Mullins has taken charge of since being appointed managing director of The Evening Standard in 2007. The Independent was added to his workload in March this year, and he now oversees i.
The former Unilever and Diageo marketer has been a major player in the newspaper business for almost a decade, having been part of the senior management at News International from 2001 to 2007. In the last 24 hours, he has completed a succession of media interviews during which he has stated his case for why, in the digital age, he thinks launching a newspaper is a good business model.
Although media commentators such as Greenslade and Marketing Week columnist Mark Ritson have expressed their doubts as to whether this new print title will succeed, Mullins argues there is a real need for a new style of quality newspaper despite the rise of digital media and the fragile economic environment that all businesses must survive in.
He has a food-based analogy at the ready. “Quality newspapers have been in decline for quite a while, and it’s coming down to a core bunch of readers who read a very large paper every day. It’s like a three-course meal: how often do you want to eat a three-course meal? That’s fine if you’re at home seven days a week, but commuters on the move prefer to snack. And i is a snacking news product,” he states.
The bite-size i is a healthy alternative to the peanuts and crisps the paper’s target audience is currently gorging on, Mullins adds. But if peanuts and crisps are what readers have grown accustomed to, surely it is a mammoth task to force them into healthier habits?
Mullins believes that i is strong enough to change readers’ behaviour. He says: “Some are asking us whether people are going to queue and pay for i. If the quality’s right, they will. We think people will get back into the habit of buying a quality daily. And we think that i and The Independent are interchangeable depending on whether our audience is looking for a shorter read or for something longer.”
Doubts have been raised about i’s revenue model, and there has been talk that the newspaper will eventually follow in the footsteps of sister title The Evening Standard, which went from 50p to free in October last year.
But Mullins argues that i’s 20p price point is not designed to be phased down to free. In fact, he says the paper’s price could increase if other newspapers follow the trend of The Sunday Times’ 10% price hike to £2.20 in September.
The profit model for i is also built on plans to bring in as much advertising as The Independent with the additional benefit of having relatively low overheads – the paper uses the same office space and staff as The Indy, except for the appointment of former thelondonpaper editor Stefano Hatfield this month as i’s executive editor.
“We intend for i to be a paid-for newspaper, and we believe in a portfolio strategy where The Independent survives,” Mullins states. “It’s quite possible that the bigger qualities will follow the lead of The Sunday Times and go up in price. If The Independent goes up in price, then i’s price will follow. That’s the way to make money; we will lose money if we take off the cover price.”
He stresses that i will not become “the other Metro” because the titles are two distinct propositions. “Metro does a fantastic job of being free because it has certain distribution contracts that the business has spent a lot of money on which makes it easy to be distributed in urban centres,” says Mullins. “We want to be distributed nationally and you need wholesalers, price and margins.
“Metro is always going to have completely different content. We are not a paper that is going to be relying on celebrity as front page material,” he adds. “We are building an iconic quality brand that people want to be seen carrying, like a badge. We have a unique design and upmarket content.”
The new title will no doubt benefit from being an extension of The Independent, which has readership figures of 182,412 (a decline of 0.2% from the same period as last year, according to October’s ABC figures). But Mullins is confident that i will not take full paying readers away from its big brother.
And although he does not say this in as many words, he seems comfortable with the idea that i could be used as an introductory, migratory tool to the more expensive Independent. For the record, he adds that sales of The Independent on the day i launched on 26 October were nothing but normal.
The redesigned Independent was launched on the same day as its baby brother to highlight the distinction between both brands. “Did you notice the difference between The Independent on Monday and that on Tuesday?” Mullins asks. “There is a lot more black and white, it is
more sober in feel and it looks much more premium. We think that for the readers who are going to stay in the premium end of the category, they like to feel proud about what they are reading and they will make that positive choice to stay with the three-course meal as opposed to having snacks.”
The marketing strategy put in place for i has an old-fashioned, traditional feel. The masthead sails past potential new readers on the sides of London buses, and it greets people as they come out of Tube stations. Mullins says broadcast media has been used sparingly and the bulk of the company’s marketing efforts will be around sampling in order to get the product into people’s hands and build a new habit.
Mullins is quick to deny it is a big marketing investment and takes a critical tone: “Do you think it’s a huge push? It’s a well targeted, cost-effective drive. There is a short awareness building campaign and the majority of our investment will be sampling and point of sale material, getting people into stores to buy it. We have a pot of money – of which I won’t tell you the amount – that we will use as and when we need to.”
Thousands of free copies were given away in i’s first two weeks as part of a voucher initiative through The Evening Standard, and The Guardian reported last week that daily numbers were looking to be about 125,000.
Mullins will not be drawn on numbers yet, despite giving an estimated target of about 200,000 copies a day to Press Gazette magazine. He said in the press last week that he would not be revealing concrete figures until at least December. “[Press Gazette] kind of pushed us to say that,” he says. “We aren’t giving out specific sales data in the short term. We know how big it could be but we don’t want to put out milestones that people will judge us by.”
The day after i’s launch, the title’s owner conducted a social media analysis that showed 74% of Twitter comments were positive, as was 71% of all web feedback. A week later, Mullins confirmed that the Twitter hashtag ipaper is still running high with largely positive comments.
It’s valuable data to have, especially if Mullins and his team intend on using it to analyse the 26% of Twitter comments that take a more negative or neutral tone.
However, Mullins admits: “Online moves so quickly we don’t have the resources and intelligence to know where it’s going. We spend very little on it. Instead, we watch everyone else try and make money from it, so we can try not to lose money.”
He calls News International’s paywall venture a “smart, brave idea”, although he is yet to decide whether this is the future of newspapers.
“The great thing about Rupert Murdoch, News Corp and News International is that they put big bets down for the future,” Mullins reflects. “We are a small, private business and we have to invest in how the business works today. The fact they want to pioneer it on the basis that others could then make money from their content is bloody good for the industry really.”
He adds: “We don’t have other businesses that we could use to subsidise such an investment. We have a certain amount of money that we use to bring our papers into profitability – you have to farm the fields in front of you, you can’t speculate on crops that you don’t have already. That’s why we went free with The Evening Standard and extended The Independent into i. Our revenues come largely from advertising, not from streams that don’t yet exist.”
For the most part, a paywall does make sense to Mullins. If you consider that online page impressions will continue to increase, then advertising in the form of banners and buttons will become a commodity that will increase in supply, so relying purely on this strategy will become unsustainable, he says.
“If the advertising doesn’t actually get bigger in volume then the price of what you are supplying goes down. Advertisers aren’t loyal to one site – you can buy an audience of 25- to 44-year-old ABC1 adults from any site you want. So if you are trying to build your future on page impressions you can only expect deflation,” he predicts.
Instead, he believes that his former employer is giving advertisers added value by reducing their audience but having a deeper understanding of who its readers are. He says: “What The Times has done is say ‘we are going to give you a range of very upmarket people, we know their names and addresses and we have a payment relationship with them’.”
It’s clear that there’s an insatiable demand for content and the simple business model is attracting advertising around effective content distribution. That could be digital, says Mullins, but there is no reason why innovation can’t happen in print, and the business hopes the launch of i will prove this.
While being a digital pioneer is a risk the business is unwilling to take, Mullins has put his money on the product he knows best. “If you start with the consumer, which is where you should always start, there has probably never been a better time for time-saving, value for money, convenient products,” he says. “That’s what we are providing. If we build an audience that wants to buy us daily, the money will come. That is the simple economics of newspapers.”
Current role: Managing director of The Evening Standard, The Independent and i.
2007–May 2010: Managing director of The Evening Standard.
2001–2007: Marketing director and general manager at News International.
1995–2001: Various roles at Diageo, including managing director of UDV Amsterdam.
1986–1995: Marketing manager for UK detergents at Unilever.
Timeline of events
January 2009: Russian businessman Alexander Lebedev buys a majority share in The Evening Standard newspaper from parent company the Daily Mail and General Trust (Associated Newspapers division, the parent company of freesheet Metro).
October 2009: The Evening Standard drops its 50p cover price and relaunches under a new free distribution model, doubling its circulation to attract sufficient advertising revenue. This is less than two months after the closure of thelondonpaper and London Lite freesheets, owned by News International and Associated Newspapers respectively.
March 2010: Lebedev buys The Independent and Independent on Sunday newspapers from parent company Independent News & Media.
October 2010: New title i launches as a brand extension of The Independent, designed as a condensed quality read for busy people, priced at 20p.
My last 24 hours
We launched i yesterday, so I spent a lot of that day doing media interviews. Typically though, I spend my time running the business from the inside. My two heads of advertising, Jon O’Donnell and Melanie Danks, do all the hard work getting the money in from media agencies and clients.
I talk regularly to the editorial and commercial teams, making sure the strategy is being developed, setting the right KPIs and measurements and making sure we are delivering against them.
If we’re on target it’s about making people know they are doing a bloody good job, and if not, it’s about how can we rectify the situation. I also have weekly meetings with our chairman, Evgeny Lebedev [who is the son of owner Alexander Lebedev].
Marketing Week (MW): You head up both The Independent and The Evening Standard so how do you manage both businesses?
Andrew Mullins (AM): I have operations, digital, advertising sales, sales and marketing and finance directors who all report to me, and we run the two businesses together. The editors of our titles report directly to the owners, although we work in tandem with them.
I report to Evgeny Lebedev, the chairman of The Evening Standard and The Independent. His father Alexander Lebedev is the owner but the son runs the businesses. If the ship’s going in the right direction they let us get on with it, but if it’s going slightly off they like to know what’s going on. They don’t tend to be heavy handed; they trust us to run the business.
MW: What has it been like working with the Lebedevs since they bought The Independent this year and The Evening Standard last year?
AM: Alexander and Evgeny have other businesses to run and this is a very small part of their portfolio but they are very passionate and committed. They 100% expect their management team to know what’s happening. Through board presentations and meetings we talk about strategic options and their financial implications. If it’s a bad idea they redirect us, then we make a decision and move forward.
MW: Do you foresee i having any political allegiance?
AM: The Independent has no political allegiances, and therefore i definitely won’t. Just because newspapers back parties in elections doesn’t mean they have political allegiances – it means that ultimately, on the day of the election, they make a call based on the evidence. Coming out on the day of the election and saying: “Given everything that we know, this is who we think will win” is taking an opinion, a stance. The Evening Standard did that this year [backing The Conservatives]. Others come out and back a particular party early on, and we wouldn’t do that.
MW: Has moving The Evening Standard from 50p per issue to a free model been a successful strategy?
AM: It’s doing amazingly well. Most people thought that we were finished and dead and the one thing they didn’t expect us to do was go free and keep the quality of the paper.
Now 700,000 copies are distributed every night and Londoners see The Evening Standard as an essential part of their daily commute home.
Past negativities are dropping away and people are seeing it as celebrating London.
We initially began distributing 600,000 copies because you don’t want lots of copies lying around at the end of the night. But they were going faster and faster every night so we added another 100,000. Hopefully advertisers will continue to support that because it’s a good audience and people are reading. We are still confident in the model.
MW: How has your marketing background at Unilever and Diageo helped shape how you do business today?
AM: When you come as a marketing person into a newspaper, people expect you to be a promotions manager. The key thing is for you to find a way to get yourself involved in the strategic agenda. If you can, you can then talk long-term about consumers, whether you are meeting needs, and how people want to read news and what they want from it – and you can influence that agenda.
In most businesses, you talk about how you can get marketers on the board to make companies more consumer focused. In newspapers it’s slightly different because the real, unofficial marketing directors are the editors. They are the people who have a feel for who the audience is and they craft the product on a daily basis.
The editors and I work hand-in-hand as a partnership to build our businesses, and they don’t think that they have the sole knowledge in their area, as I don’t on the commercial side.
MW: What led you to move from consumer goods into media?
AM: The journey was shaped by personal circumstances. When I was at Diageo I developed pancreatitis, and I’m not allowed to drink alcohol ever again. I was working in Europe at the time and it was likely that my next move was going to be the Far East, and that didn’t make sense for me personally.
So I went back to the UK to look at different options. The options that were available to me at the time were in telecoms or media. I chose media, so it was more that I fell into this than any strategic journey.
Marketer 2 marketer
Andrew Mullins (AM): We are not underestimating the challenge of asking someone who might not feel inclined to buy a newspaper to stop and buy i, but then that’s why it’s 20p.Reid Holland, marketing director of Hachette Filipacchi UK, asks: What’s the thinking around the price point for i and how will this translate to your digital plans for the new title?
The 20p charge delivers a much higher trial rate than higher price points. This product will 100% depend on getting maximum trial at the beginning and then turning those people into repeat purchasers. There is also no reason why the price wouldn’t go higher in the future.
In terms of digital, a paid-for iPad app is currently going through the approval stage.
AM: Everyone assumes that there is a huge amount of people out there buying newspapers and you have to steal share. But 91% of UK adults don’t read a quality newspaper, and just under 7% of UK adults read Metro. So thinking that because a paper is free everyone reads it is not what it’s about.Justine Southall, publisher of Cosmopolitan magazine, asks: Choice about something to read in transit is now a split-second decision. What is the one key distinguishing feature, editorial or otherwise, that will clearly differentiate i? Do you think that i can be a paper of choice alongside the paid-for pack rather than an upgrade on the free set?
Newspapers should evolve more to create more snacking type products during the week. Metro is a snacking product but is it enough for people who aspire to be quality readers? Our assertion is that it’s not. It’s about putting deli sandwiches in front of people instead of peanuts and crisps. You could take a jar of instant coffee from home into work and not have to queue at Starbucks for a cappuccino but people still do. Just because there are easier ways to do things doesn’t mean that’s always what people want and are going to go for.