Chris Stibbs, the new CEO of The Economist, on staying competitive in the fast-changing world of publishing, native advertising, new sources of competition and more.
Few publications have the kind of loyal readership that The Economist enjoys. Despite being more than 170 years old (it was first published in 1843), the magazine has continued to stay relevant—and grow its readership—especially in a time when print media is in decline. The Economist has succeeded where several publications have failed: in adopting a multi-platform approach to content.
Chris Stibbs took over as CEO of The Economist in mid-2013 when his predecessor Andrew Rashbass left to join Reuters as CEO. Stibbs, who was the group’s Finance Director and the Managing Director of the forecasting and advisory service Economist Intelligence Unit prior to becoming CEO, seems well poised to continue to grow the brand. In this interview, he talks about his priorities for the group, the continued push into digital and the rise of content-led marketing.
Q. You took over as the CEO of The Economist last year. How will you define your priorities for the company?
A. The priorities of the company will be similar to what they have been for a while. But we just need to accelerate in a number of areas. We need to accelerate our digital mobile offering; in our ability to deliver content-led marketing solutions; in much of the work Economist Intelligence Unit does for the industry; and geographically we need to accelerate more of this West to East shift, especially with a focus on China.
Q. Your predecessor Andrew Rashbass had this rather nice philosophy about what The Economist needs to do, which he termed as Lean Back 2.0. To what extent will you be following that, or maybe tweaking it?
[Note: Rashbass divided reading into ‘lean back’ and ‘lean-forward’ experiences. A ‘lean-back’ experience is one wherein you physically lean back and immerse yourself in what you are reading. This is common in print. Reading on the web is a much more ‘lean forward’ experience: it is akin to ‘snacking’ and people are much more interactive. According to Rashbass, reading on digital devices also gave a similar ‘ritual immersive pleasure’ people found in print and termed it Lean Back 2.0.]
A. Lean Back 2.0 is really a philosophy about how you read The Economist. So the whole idea that once a week, you get this ritual pleasure from sitting back, and reading in-depth about interesting and relevant things that happen around the world, as opposed to this internet experience where you ‘snack’ on a regular basis. That will always be at the heart of the experience of reading The Economist. In the world of increasing digital connectivity, proliferation of platforms and digital devices, we need to ensure that that the weekly experience remains relevant in the daily lives of our readers.
To do that, we need to explore around this Lean Back 2.0 experience, around frequency– more frequent delivery of that kind of content, and different platforms continue to proliferate, and the digital platforms, and the media that we use.
Q. It’s interesting that you mention platforms, because The Economist as a company is multi-platform itself, not just in terms of media—be it print, digital or online—but also in terms of your research unit and other affiliated businesses such as your conference division. How do all the seemingly unrelated pieces fit in, and how does your revenue mix across these platforms differ?
A. At its heart, The Economist [the company], whether it be the Economist Intelligence Unit or The Economist, is about helping people to understand the world. Through the pages of The Economist, be it an app, be it a website, be it The Economist magazine in print, what we’re really trying to do is help intellectually curious people understand the world better, feel smarter about the world when they’ve had that lean back ritual reading experience. The Economist Intelligence Unit is about helping businesses operate beyond their domestic boundaries. So this analysis of 204 countries of the world, bespoke analysis [is] to help people understand the risks and opportunities in markets beyond their boundaries. [This] again, has at its heart a desire, a need to understand the rest of the world beyond your own boundaries. Just about every other platform builds on that in some way, shape and form.
Q. So how does the revenue contribution vary across these platforms?
A. To date, the biggest revenue stream by far is our circulation of The Economist, and the second biggest are our marketing/advertising solutions, and then we have The Economist Intelligence Unit. The Economist Intelligence Unit is very, very profitable.
Q. How has this revenue mix changed over time?
A. We have seen large shifts in recent times, and we continue to see large shifts. With the structural decline of print advertising, we are seeing pure advertising decline quite significantly in our revenue stream. What we are seeing growing quite rapidly are the investments we are making behind our circulation, our circulation revenue.
More and more of our revenue is being generated directly from content as opposed to advertising.
Q. And how about print versus digital? How are they both growing for you?
A. Well, because we adopt this multi-platform approach, we don’t think about substitution of print to digital. What we think about is we will be on every platform that a reader wants to consume us in. Therefore, we tend to offer all these multi-platform packages because that’s what our readers tell us they want. On a Saturday or Sunday morning a reader may pick up the print magazine and read an article. On their commute to work, [they] may read an article on their smartphone. In their office or in a coffee shop on a workday, they may read it on the tablet. To define them as a print or digital reader is irrelevant, to be honest. It’s about this multi-platform.
So, the shift in readership between print and digital is almost irrelevant in our minds. It’s about making sure that you give the reader the platform they want, embrace every platform and make it available on as many platforms as you can. Because of that approach we’re not seeing a significant decline in print readership. What we are seeing is a significant increase in the proportion of people who also read us digitally.
So you’re seeing the digital component increasing rapidly, but you’re not seeing the print component decline, although probably spending slightly less time on print because of this multi-platform approach. [We] don’t see a substitution, in our eyes, of print for digital revenues.
Q. And in what way is this multi-platform world impacting advertising for you?
A. That’s an interesting question because if you think about our multi-platform world, we have seven million odd users who come to our website very month. We have a million and a half subscribers to The Economist. You take into account that it’s passed on [and read] by 4-5 million people and you have some half million or a million users of tablets or smartphones. So you have a bigger audience, which is now coming to you in all sorts of different ways, but it’s a bigger audience. And so there’s a bigger audience to monetize. However, you have to monetize it in a different way. Monetizing a digital customer doesn’t carry the same yield as monetizing a print customer does combined. So it’s very different. But more and more we talk about our entire audience, and about how we can give our clients the opportunity to reach those audiences in all the different parts of their lives.
(Watch the video below)
Q. You were one of the first big media groups to get into native advertising, and ever since others like The Wall Street Journal and The Washington Post have followed suit. What prompted the move and how is it paying off?
A. I think that’s an interesting question, because you might debate whether we are doing native advertising or not. It depends on how you define native advertising. Certainly what we do not do is native advertising as it has become known, which is content produced by clients and embedded into your editorial. All of our content is produced by The Economist editorial staff. What we do is we create content for our clients, on their behalf, but we keep complete editorial control. And all of our clients know that our editorial control means that if we create content for them, we do it with complete independence.
It’s the same independence we would have when we created an article for The Economist or the Economist Intelligence Unit. So we don’t do native advertising where we allow clients to produce our own content. We don’t create content, which is influenced in tone by the client. But we do create content and when we do, we don’t embed it in the editorial in quite the same way as some others do. We make that distinction much clearer, and we tend to do it as part of a bigger integrated package. So we’re creating portals, we’re creating, maybe, whole blogs which are sponsored. But we put up quite strong Chinese walls between the commercial side and the editorial side, to ensure the independence of the editorial side.
Q. How is this impacting your ad revenues? Is it becoming a major revenue stream?
A. It’s still relatively nascent. What is becoming quite a revenue stream for some publishers is native advertising, as I described it earlier, but we’re not doing that. So we’re not capturing that revenue stream, as our editorial guidelines don’t allow us to do that.
But the slightly more sophisticated version of it, which I just described, is becoming a growth revenue stream. But as of yet, it’s not a major revenue stream, but it is becoming a major advertising stream. I think there’s a lot of money headed that way and in 2-3 years it will be a very significant revenue stream.
Q. Some publications like the Financial Times are consciously staying away from native advertising because they feel it might confuse readers by blurring the lines between editorial and paid content. Can you take one example of something you’ve done with regard to content-led marketing, and also explain how you maintain the ‘Chinese walls’ that you described earlier?
A. The best example I can think of is our flagship work with GE for the ‘Look Ahead’ program. In the industry of content-led marketing it’s quite a flagship program. GE, as a brand, wanted to be known for innovation, industrial innovation and they wanted that industrial innovation to stand for something that’s good for the world.
[They wanted] to make the point that in some ways in the modern world, innovation is not just about software—industrial innovation is good for the world. The Economist is quite well known for its ability to write about the impact of technology on the world. So we were an ideal partner to develop content for GE. We create the separate editorial content, just for the GE contract, mainly based in our New York office.
And we created a portal, hosted by GE, but we create all of the content and control the content that goes onto the portal. We integrate that into a marketing advertising package. We then also create a blog on our own website, created by The Economist editorial team, which GE sponsors, but this is created by The Economist’s journalists, the team that creates the portal is separate, and is kept separate. We then push it out to social media a lot and to our audience. It’s an integrated solution, it’s not just about native advertising.
Q. It also seems that you’re pushing for advertising based more on psychographics rather than demographics.
A. Yes and no. We always characterize our audience as being ideas people, as being influential. We always said our audience is characterized by their psychographic rather than their demographic. They are the intellectually curious. They are influencers.
So, we characterize our audience by their psychographic. That’s how we promote our audience to clients, as a psychographic. So rather than saying our audience does this job, or makes this amount of money, it’s about the fact that we have a disproportionate number of influencers in the world.
Q. You recently inducted Google CEO Eric Schmidt to your board as a non-executive director. What does that mean for what The Economist wants to do going forward?
A. We want to accelerate the whole digital era around digital connectivity: this idea that digital connectivity is driven by ease of access. We need to keep The Economist relevant in the daily lives of our consumers who have built their lives around their weekly laidback experience. What Eric does for us [is] he brings a good challenge to the board. But you know the thing about is The Economist, it was found in 1843, and we have a rich heritage, and the challenge for The Economist is to combine the heritage and everything we stand for with the modern world. Eric brings a wonderful knowledge of the modern world: he built Google, and he also is an avid reader of The Economist, and he understands that legacy. What Eric does is he challenges us.
It is still up to me and the rest of the board and the rest of the executive management, to find what that strategy is. I think we will accelerate this idea that we need to be more relevant in daily lives, but we will still lean back on that weekly package.
Q. Talking about competition, traditionally publications have viewed other publications as competition. But now we also have content aggregation apps like Flipboard. And your predecessor said he viewed them as a “head on competitor”. What is your view on such apps that are becoming increasingly popular? Do they take away your audience? Are you wary of them?
A. I think we both embrace them, and we’re wary of them at the same time. In the modern world, you have to embrace the technologies, the places your readers want to read you. You can’t dictate in the modern world to the consumer how they should consume you. As a philosophy, we want to embrace as many ways of consuming as possible. Within that, of course, we have to be commercially realistic, and so what that really means is embracing all of those mediums, those ways of reaching consumers, but at the same time [place] restrictions on the content we allow to leak out, because as you heard earlier content is our biggest revenue stream. It is very important to us, but still it’s a big world out there and we still want people to sample it, use it, but we have to restrict that to an extent that we still monetize it effectively.
Q. The Economist has already successfully transitioned to a print-only publication to the digital world. What’s next for the growth of the brand?
A. I would say it’s a transition from this weekly experience to the multiplatform experience, not substitution. We need to accelerate the frequency in a way that is both meeting the demands of the modern world but still a rich Economist-like experience. We need to look at platforms, we need to look at the media, always ensuring what you get is an Economist-like experience. We need to go beyond that weekly package of a multi-platform experience.