CMO interview: What Mark Reinke is doing to build News Corp's consumer business
- 17 October, 2019 06:05
It’s one of the big lessons Mark Reinke took away from his 12 years in marketing at Suncorp: Focus on your customers and the long-term value for them, not what you’ll get from them.
“If you focus purely on getting value from customers, your chances of getting such value are very low. Whereas if you focus on value for customers, and that value over time, you can build a sustainable business,” he says. “Otherwise you’re not building on strong foundations.”
This is the mantra Reinke is bringing to his role as managing director of consumer at News Corp, a newly created position his assumed in January. The remit is to drive audience growth and engagement as well as build the media giant’s subscriber base, and was one of a number of leadership-level changes corresponding with the amalgamation of News’ online and print assets.
It’s also a role reflecting ongoing disruption of the media commercial model. News Corp for 100 years was predominantly an advertising funded, B2B business. Yet such a model has increasingly proved unsustainable.
“The real challenge is to build a consumer-funded business, where the experience, content and whole proposition is strong enough for people to pay for directly,” Reinke tells CMO.
Historically, News ran a federated business, building its might brand by brand, state by state. This included a siloed consumer business across each state it operated in. A decision was made that in order to truly grow, things have to be in one place.
“The premise is simple: We need to grow a consumer business. Another way of putting it is we want to grow our digital recurrent revenue. We want to be a business with recurring revenue streams,” Reinke explains. “To do that, you have to get your arms around what that is.
“Moving from marketing to a consumer business unit was central to that. If we want to grow this, we have to bring all insights relating to consumer behaviour, preference and value together. Because if you don’t really understand consumers, it’s going to be very hard to innovate and deliver.”
Alongside this, Reinke has been looking to identify a small number of things that can make the biggest impact. One of his first tasks was working out how News was going to scale its consumer approach.
“There are great things going on in different parts of this business, but they’re rarely scaled across the network,” he comments. “There’s also a focus on where to invest from a Capex perspective – new brands, business models, adjacencies.
“What attracted me to the role is firstly, it’s a really important part of the future of News Corp, because consumer is so important. It’s also an opportunity to run a business and be accountable for the revenue, EBITDA and make investment decisions. It’s fascinating in that it’s the quintessential transformation too.”
As Reinke puts it, consumer was predominantly a retail business, with every newspaper sold via retailers such as Coles, Woolworths and local newsagents. The key is to transition from that retail approach to recurrent revenue streams.
“So you have to hold those traditional revenue streams as long as you can while you innovate and reinvest to grow faster in the digital business,” he says.
Nevertheless, Reinke sees print remaining an important part of the consumer strategy, and notes the credibility and trust print provides to a media company’s digital properties.
“Trust and truth really matter in a world of fake news,” he adds. “The ability to build that trust but transform through convenience and personalisation enabled through digital, while retaining trust with the offline component, is really interesting.”
Scalable brand growth
At first glance, MD of consumer at a media company looks like a very different job to the one Reinke held at Suncorp. While at Suncorp, he rose from group marketing director to CMO then chief customer experience officer, spearheading the financial services and insurance company’s marketplace transformation plans.
But Reinke sees surprising similarities on three levels. The first is the multi-brand scenario. “We had a portfolio of brands at Suncorp playing different roles; similarly, we have multiple brands at News,” he says.
“Some have deep local connections, then there are brands like The Australian, which have a deep national connection, and brands like Vogue and GQ with deep segment connection. I really enjoy that notion of how to build differentiated brands, but how increasingly to share the infrastructure sitting at the back of them. That was the challenge at Suncorp – build a portfolio of brands but with a cost structure that is affordable.”
The second similarity is the importance of creating centres of excellence. “Our competitors are increasingly global, and incredibly sophisticated at testing and learning and scaling, so we need to be able to do that,” Reinke continues.
“Our competitors are big tech platforms and ultimately any organisation that any household in Australia is investing a subscription dollar in, such as Netflix of Spotify.
“I’ve moved us from what has been quite a state-based, brand-based structure to a centre of excellence structure. We made those changes very quickly because we weren’t scaling our ideas. We’d have fantastic thinking in one brand or market but it wasn’t scaled. That ability to scale, test and learn required a centre of excellence approach agnostic to location.”
There are 16 centres of excellence at News. Some are new, such as customer experience and insights, while others are consolidated teams, such as field sales.
“We also have customer engagement, which is about our ability to engage via platforms; an off-platform centre of excellence, which is our ability to find new audiences and bring them in; and a big focus on data,” Reinke says.
“What I learned at Suncorp is you have to focus on the power of your brands, but you also need centres of excellence so you can scale learning and the economics so you don’t end up with a lot of trapped value.”
But truly at the heart of sustainable audience growth is content innovation. To fuel this, Reinke has been building in-house data capabilities to empower journalists in every newsroom and bring them closer to audiences. This sees real-time insights now in the hands of every journalist via their mobile phone.
Each news room also has control centre showcasing insights designed to help editorial teams understand not just traffic, but preference, behaviour and propensity to pay.
“It’s an enormous shift. The data has always been there but we’re not surfacing that data in a way that’s different,” Reinke says. “This is about understanding what audiences are valuing now and how they’re prepared to pay for that content.”
In addition, Reinke invested in content insights managers for each newsroom who take the data and work alongside editors to highlight audience trends.
“We didn’t just want to give editors a lot of data, we give them real insight,” he says. “Every journalist has been trained on how to improve the value of their own content. This has to be a bottom-up, editorial-led process. But data isn’t natural for everyone, so these insights roles will help do that.
“Every journalist wants to create content people are engaged in. But in the past it hasn’t been easy to tell whether someone is reading or engaging in what I’ve got.”
Building very sophisticated tools for understanding customer behaviour then leads to where News places its bets in terms of content. “Increasingly, we’re thinking like a broadcaster, which is to say content can be created in multiple ways,” Reinke explains.
“For example, we create atomised content every day – pieces of content right for now, that are newsworthy and connect deeply to local markets. But equally, there are big pieces of content with national value my team is focused on and I’m increasingly diverting dollars to.”
Supporting this is a ‘pitching ideas’ process. Reinke is working with news rooms to provide seed capital for the top five ideas, investing in production and pre-promotion. News then builds content marketing programs around them.
The first debuted in September and is an episodic approach to schools reporting called ‘Schools Hub’. Reinke hints a second such content program is in the works. Reinke is also striving to encourage innovations in content, particularly multimedia, across print, digital audio and video.
“All of this is a different way to create content, using data at the heart and greenlighting big programs that build audience, which then gives us an opportunity to monetise those audiences,” he says. “That’s not my day job, however: My job is to help drive content being created, which over time will be monetised because the content is that good, someone will cross a paywall to pay for it.
“If I can create episodic approaches to content, you won’t just pay for it, you’ll stay for it. We are very focused on how to ensure those customers stay, which means we have to keep delivering value.”
Reinke says he’s been impressed by how passionate editorial teams are for their audiences.
“They know them well. Their passion for amazing content but preparedness to really understand what audiences are engaged in and deliver content in news ways is genuinely impressive,” he says.
Up next: Figuring out customer lifetime value, plus the ongoing challenges for media
Customer lifetime value
News Corp currently has 500,000 digital subscribers, and Reinke says he’s tasked with growing that by double digits. Importantly, it’s not just about acquiring customers; it’s about keeping them.
“If we can create the right content and experience, and personalise at scale – and we are making significant tech and data investments to do that – and we can move in any 30 days your engagement by one day, then we reduce churn by 1 per cent,” he says. “We have relatively good churn, but we want to continue to lower that and deliver incredibly strong content experiences. Engagement and personalisation is key – helping understand the content you want to find and make sure it finds you.”
One way News is building tailored approaches is through curated newsletters for different audiences. While most is still done by humans, artificial intelligence and machine learning are being employed to supplement an editor’s intuition.
Another is through more experience-led subscriptions. A good example is Vogue VIP, News’ first foray into combined digital and offline subscriptions for its magazine titles. The membership program is designed to recognise and enhance the loyalty and status of subscribers through exclusive experiences and events, special content and premium third-party brand partnerships.
“We have to go into new spaces and a big part of that is partnerships as well,” Reinke says, noting partnerships in more traditional parts of the business, such as its $1 million giveaway with TripAdeal, and exclusive Coles Little Shop items.
Another fresh partnership puts News mastheads into Apple News+ locally and globally, opening it up to new users, particularly in younger and female demographics.
“There is an element of us reaching out with our brands directly, but the other way for us to grow is by taking our content and brands through with new partnerships, particularly big tech partners we think we can reach new audiences through,” Reinke says.
Digital platforms inquiry
Partnering with one of the tech giants could be considered an interesting move. The wider News Corp business is among a throng of local media and industry organisations supporting the ACCC’s Digital Platforms Inquiry into the detrimental impact platforms such as Facebook and Google have had on Australia’s media landscape and competition.
News has a view on this, which is provenance over prominence. “The people who create the content should be prominent, and that’s not always the case today - the algorithms don’t recognise that often,” Reinke says.
“We don’t think it’s equitable for those creating the content not to be paid for the content. It’s unquestionably still being monetised by those platforms today.”
Reinke suggests News’ Apple+ partnership is one step towards the platforms paying for content and working closely with content creators to “create experiences that are the next generation of the way consumers access and interact with news, sport, lifestyle and other content they care about”.
For Reinke, it’s both an exciting time to be a content maker. This is despite being well aware of the ongoing challenge traditional media players face differentiating editorial products in a world where every Instagrammer is a content producer building a social following.
“We understand the value we have [in our content products] and we want to continue to improve them, as well as continue building trust, but we need to change the recipe to bring together the content, tech, personalisation, format and take it to new audiences,” he says. “If we get that right, we can grow this quite quickly.
“Yes, there is an enormous amount of content available and arguably content has been commoditised. However, journalism is a service to society and communities. There is so much content but how much is truly trustworthy? There’s a lot of data telling us there are increasing concerns about how much of that content you can and can’t trust.
“That’s a real opportunity and challenge for us to position journalism differently. It’s content that is fact-checked, often contentious, but has a role beyond just the fact it’s content.”
One area Reinke sees budding with latent potential is local content, one of the most challenged parts of traditional news media businesses.
“It’s a really difficult business model because the ad model has fallen out the bottom of it. But if you said to me where is the most valuable content, I’d say it’s the local content because it’s the most scarce content. You’re not going to find it easily anywhere else,” Reinke says.
In the last four months, News has launched seven new local titles, and plans to launch at least another 20 this financial year. These include fresh digital titles in Newcastle, St George and Canberra, supported by targeted newsletters.
“That local content is incredibly valuable. But while also creating those through journalism, we’re supplementing with robotic and automated journalism such as things people care about locally but doesn’t really require a journalist to create like traffic, weather and court lists,” Reinke says. “Where we want to get to is being able to deliver local news to every postcode based on what matters in those areas.”
At the other end of the spectrum, Reinke spies opportunities to better utilise News’ global footprint. He’s actively working teams across brands such as The Times UK and The Wall Street Journal in the US to find fresh ways of packaging and delivering content.
Whatever lies ahead, the focus has to be on delivering value for consumers. “That means the way we think about economics has to be customer lifetime value. The economics don’t work if you acquire but don’t retain,” Reinke says.
“Subscriptions businesses need momentum but they can’t be built on quick wins.
“The fastest way to growth is to retain our way to growth. And the fastest way to that is engagement. The path to engagement is through great content, delivered when and how I want it. All the data and technology we’re investing in tells us how to do that.
“It’s an exciting new world where the ingredients are known but recipe isn’t. We have to constantly test and learn and scale. That’s exactly what we’re doing.”
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