10 lessons on leadership from working with @ClarkGilbert at @deseretdigital the past five years. I like #11 the best http://solutions.deseretdigital.com/innovationwire/chris_lee_10_lessons_on_leadership_from_clark_gilbert.html …
“To be trusted voices of light and truth reaching hundreds of millions of people worldwide.” – Deseret mission statement
That is an ambitious mission statement for any business, much less one that is essentially a local media company based in the state of Utah (USA), which has a population of fewer than 3 million people.
But Deseret is no ordinary local media company. In fact, in addition to owning the daily newspaper Deseret News, Deseret Digital Media, KSL Television & Radio and Deseret Book, the company, formally known as Deseret Management Corporation, oversees life insurance and hospitality businesses as well. And what makes Deseret truly unique is its owner: the Mormon Church. Deseret is the for-profit arm of The Church of Jesus Christ of Latter-day Saints.
The why of Deseret
“The first part of this statement is about our content, and the second is about our reach,” says Lee (photo below). “Both parts are clearly aspirational, giving all of us motivation as underdogs in a digital media landscape dominated by more secular, less family-oriented offerings. Our research and experience over the past five years suggests large segments of Americans feel underserved by media that does not appreciate or even understand the family and faith orientation at their core. Clark [Gilbert, former CEO of DDM and Deseret News] expressed it this way: ‘We want to be for family what The Washington Post is for politics and The Wall Street Journal is for finance.’ From our headquarters in Utah, one of the youngest and fastest growing economies in the country – but nobody’s idea yet of a global media hub – we are fulfilling this mission a little more every day.”
Lee, who spoke at our Congress in Washington, D.C., about DDM’s “mobile-ready” revenue, shared much of the company’s plans in a wide-ranging interview shortly after event. Lee’s Publisher Services team at DDM is scheduled to hold a Boot Camp, in partnership with the Local Media Association, for news media executives during World Publishing Expo in Hamburg, Germany (7 and 8 October).
Deseret’s connection to the Mormon Church is sometimes cited as an “oh, by the way” reason for its oft-mentioned successful transformation during the past five years. That’s a fact not lost on Gilbert, who in 2009 joined Deseret to put his academic acumen and, specifically, his disruptive innovation transformation theories from his days as a Harvard Business School professor into practice. And today he gets most of the credit for transforming this once ailing traditional and practically obscure media business into a lighthouse for diversification and disruption inspiration the world over, but he is quick to credit his leadership team.
“Deseret Digital Media launched five years ago this January. Over those years I have seen many observers dismiss the transformation at Deseret Digital Media with claims that we are ‘different.’ The comments range from ‘They must be subsidized’ to ‘Their religious orientation somehow compels their markets to buy their products or subscribe to their websites.’ If only either of these misperceptions were true! The reality is, we operate in competitive markets and are very much a for-profit entity. And while we are different, it is not on the dimensions many imagine. As Harvard scholar Michael Porter has described: ‘Strategy is about making choices, tradeoffs; it’s about deliberately choosing to be different.’“
A new era dawns
In April, Gilbert left Deseret to become president of Brigham Young University-Idaho, where he had worked for a number of years before joining Deseret. He remains on the DDM board.
Before and since leaving he has openly lauded the remaining leadership and talent that has been cultivated at Deseret. For Deseret Digital Media, most of that leadership will continue to fall on Lee, also a Harvard graduate. In an “exit” interview with netnewscheck.com in March, Gilbert was asked if he had stayed on longer with DDM, what business development steps he might have taken.
After giving huge compliments to Lee and other remaining DDM leaders, Gilbert said, “Going forward, one of our challenges will be that we’re starting to drive real profitability now, but we’re also needing to launch and invest in new initiatives. Those are always tensions in an organisation. Do you harvest what you’ve built, or do you keep investing? We’ve got to now do both. I was a builder, but Chris is someone who has to harvest things that have worked while he keeps investing in the future.”
Lee on this assessment: “I share Clark’s characterisation of that challenge. The good news is that DDM has a mix of revenue streams and businesses at different stages of development. Some businesses are still in their infancy and in investment mode, while others are well-established and very profitable. The challenge as I see it is to get the mix right between investing and harvesting. Solving that puzzle is actually a lot of fun.”
The list of revenue streams below provides a good picture of how diversified DDM is, but the fact that DDM revenues are now about the same size as Deseret TV and more than half of newspaper revenue gives a strong indication of how digital transformation is working for the company. DDM launched in 2010 with 30 staff. Today it has grown to more than 200. “In the last five years we have hired twice as many people at DDM than the number of people who were laid off at the newspaper back in 2010. That’s something I’m proud of,” said Lee.
WAN-IFRA: What has Clark Gilbert meant to DDM and to you personally? What is your interaction with him now, work-wise?
Lee: As the founder of DDM, Clark was instrumental in setting up a new organisation, separate from our related print and broadcast companies, to pursue the vast opportunities of the Internet. That one organisational decision put DDM on the path to sizeable digital audience growth, five years of 30-percent-plus annual revenue growth and strong profitability. Clark continues to be involved with DDM as a board member now that he serves as President of BYU-Idaho. For me personally, Clark continues to be an incredible collaborator and a friend.
One of the keys to Deseret’s success was the decision to institute a dual transformation strategy (a dual focus on legacy businesses and completely new businesses). DDM was borne out of this idea to be set up as a separate business, but within that model, there are several separate businesses or models in place addressing specific markets and targets. How do you go about determining when to create separate businesses/models/products?
Every business we start passes through multiple stages and gates. At each gate, the business is evaluated on its key performance metrics to determine the level of investment it will receive for the next stage. The initial phases of concept, prototype, and user testing have generally been accomplished with shared resources and variable costs wherever possible, to limit the level of investment required. After achieving some initial success with that model, we look to dedicate resources specifically to those businesses, where we can really put our foot on the gas. We’ve found that if we don’t dedicate resources at that point, we don’t fully take advantage of the opportunity we’ve identified.
Our dedicated digital sales organisation is an example of this process. We began DDM with a hybrid sales model, combining a few dedicated digital sellers with a larger number of broadcast sellers offering digital bundled with television or radio buys. While our digital business did grow, including among our hybrid sellers, we also observed two years into the business that a large number of our broadcast clients still did not buy any digital advertising at all. We addressed this deficiency by fully separating our sales teams, and invested in the full cost of hiring, managing, and training a dedicated digital sales team. The investment has paid off dramatically, as we have substantially grown both the number of clients and the average size of these client relationships for our digital properties. Importantly, our dedication on the broadcast side has also yielded benefits, as their focus on selling TV and radio exclusively has provided a lift in revenues. Of course, the investment in dedicated digital sales only made sense after it was clear that our products would sell, and that the market size of digital advertising would be sufficient to justify a dedicated sales team.
You outlined DDM’s six priorities for 2015 in an Innovation Wire post, naming mobile-ready revenue expansion as the No. 1 priority. We will get to that in a minute, but you touched on DDM’s “learning culture” in that post… how does DDM cultivate and maintain that type of culture?
Culture is a combination of a thousand small things. We hire talented people who want to fulfil our mission and give their best. Our management team strives to set the right example. We conduct regular all-staff meetings to reinforce the mission and get to know the employees. We support a portfolio of products across the lifecycle spectrum so the team experiences at different times the joy of launching something new, the challenge of resilience after setbacks, the satisfaction of achieving some success, and the discipline of discontinuing a project that doesn’t pan out. We have in our office a poster with the words “Life is a Beta” and run our businesses with that paradigm.
As the percentage of Deseret’s audience interacting on mobile has grown immensely in recent years, this evolution has clearly changed the dynamics of revenues derived from display advertising, Lee says. Here is how he described the situation in his 2015 priorities post:
“In simplified numbers: If every desktop page view holds 4 ad impressions, and if every desktop impression generates an average of US$ 5.00 CPM, 100 million page views produce $ 2 million in display revenue ((100M/1000) * 4 * $ 5.00)). Those same page views, when accessed on a mobile device, generate less display revenue. How much less? Assume 1 ad impression per page and $ 2.00 average CPM rate, which turns those 100 million page views into just $200,000 in display revenue ((100M/1000) * 1 * $ 2.00)). As you can see, it’s potentially an order-of-magnitude-sized problem.”
Lee said DDM is diversifying its business model away from display revenue to other sources of digital revenue not dependent on desktop page views. This “Mobile Ready Revenue” includes listings and automated feeds, native advertising, deals and coupons, travel bookings, and other consumer paid transactions.
Switching gears… How much of your revenue is mobile-ready?
Fifty-eight percent of our revenue we estimate to be “mobile-ready.” This simply means that this revenue is platform-agnostic. In other words, we will realise this revenue whether a user visits us on a desktop or a mobile device. It’s a measure of our readiness to address the threat to our digital business as users migrate to mobile from desktop, replacing desktop viewership with mobile.
Let’s run down each of the types of mobile-ready revenue and how they are doing, but first tell me about your thoughts on mobile display and formats… I think you mentioned in Torino last year (at World News Media Congress) that you were working on possible new formats?
We have been been aggressive about testing various formats of mobile display to improve viewability and increase click thru rate and recall. We have even begun to use eye tracking analysis to better understand what users see – and don’t see – in our products. We are currently testing new designs for our local sites, KSL.com and DeseretNews.com. In our testing so far, these responsive sites measurably improve the experience for both users and advertisers, particularly for mobile.
Back to the different types, can you describe how each one is doing, their potential and/or challenges, starting with:
We have seen near triple-digit growth in video revenues, from a combination of increased viewership and higher pricing, reflecting the sold-out status of our video pre- and post-roll. We have a lot more to do here as video increasingly becomes the expected format for digital consumers.
Classifieds (how much sales are involved digitally these days? Which segments are really working and why?)
As president of Deseret Digital, I don’t think about print classifieds. That model, as I understand it, is finished. Free online classifieds, on the other hand, is the strongest audience driver for our local sites. We have some of the highest engagement rates as measured by page views per visitor of any site I’ve ever encountered. Although we don’t charge users to post their pianos for sale, we charge piano dealers to reach those of the audience who are searching for a piano. This is our model across all of classifieds. It hinges on data. We know something about our users’ purchase intent, and we can target those users throughout their experience across our digital properties. We have also built vertical products inside of classifieds with KSL Jobs, KSL Cars, and KSL Homes. We charge employers to post and market jobs and now have more active job listings in our market than our national competitors combined. We charge car dealers to feed their lot inventory into our system, so we have the largest inventory of new cars, used cars from dealers, and used cars from private parties in the region. We charge real estate brokers to post and market their listings with us. For many advertisers, we combine these listing services with display advertising, retargeting, audience extension, email, and deals.
Local directory … what exactly is this?
KSL Local is our services directory, featuring paid listings of rated service providers – everything from accountants to plumbers, electricians, landscapers, and dog groomers. Like with all of the other “mobile ready” categories, listings in KSL Local are just as valuable when displayed on a mobile device as they are when displayed on a desktop.
This is an area still in development for DDM. While we offer a standard Deals program for clients to introduce products and clear inventory to our large email database, we don’t see sales on mobile as much as we’d like. The shift to mobile hasn’t been as good to us here yet as in other categories.
Syndicaton & licensing (I assume there is someone responsible for sales on this, separate from other sales teams?)
We offer several products and services to other publishers and media companies. We have content syndication relationships with approximately 400 digital and print publishers. We have more than a dozen who use our BrandForge service as a variable-cost option for local publishers to execute effective native advertising campaigns. We also offer digital training programs for publishers in our “DDM Bootcamp,” which we have hosted in Salt Lake City, Chicago, Washington, DC, El Salvador, and this fall in Hamburg, Germany (during WAN-IFRA’s World Publishing Expo).
Premium services (what is this exactly?)
Premium services is simply intended to mean “consumer paid” models. Content subscriptions or memberships are the most common of these, monetizing users across both desktop and mobile. Because of our success in engaging large audiences and monetizing with advertisers, we have not yet deployed a paid content model, but are actively considering an approach to paid membership that might fit our audience.
Where does Deseret stand on paid content strategies?
We’ve been looking at it, surveying our audience, and watching what others are doing, but have chosen to focus on audience growth and engagement, monetized with advertising. Our classifieds business in particular depends on low friction and high engagement. Because of that, we have elected to make our products as easily accessible as possible, without the roadblocks or speed bumps inherent in a paywall. But we continue to watch and evaluate. If we do choose to test paid content, it would likely be a leaky, metered gate.
You mentioned in Washington that native advertising is really taking off. When did you decide to ramp this up and why?
The disruptive nature of mobile, the challenge of ad blockers, and the interest from advertisers in creating more integrated experiences all drove us to build native advertising products for all of our sites.
Overall revenue from native advertising will exceed US$ 1 million this year, a meaningful but still small part of our overall business.
What have been the keys to success?
Getting the organisation right – setting it up as fully separate from our editorial, building transparency around sponsored content so that the audience is clear about what they are reading, and training our sales organisation, who immediately saw the opportunity and began to sell it. These are all keys. But most important for us has been our commitment to producing high-quality content. “Publish awesome” is our mantra for native advertising. We have to keep the trust of our audience by avoiding publishing garbage “advertorials” – frankly, like the kind we’ve seen historically in newspapers.
How is your sales team structured, in terms of sales for desktop, mobile, display, native, … do all staff sell everything? Does BrandForge, DDM’s native advertising segment, have its own sales team?
We have two primary sales teams based on client size: our Enterprise team serves large clients, and our Inside Sales team serves SMB’s (small and medium sized businesses). The Enterprise team has expertise selling display, mobile, video, and native. The Inside team has expertise on products more geared to SMB’s, including Local Directory and Deals. In addition, we have built specialty sales teams focused on the Cars and Jobs verticals. We also have two national sellers and a Publisher Solutions seller for BrandForge.
How are you selling “mobile-ready” revenue, in terms of bundles with desktop, etc.?
Most of our sales now include mobile display as part of any digital display buy, but our “mobile-ready” revenue doesn’t come from display. It’s platform-independent, sold as auto listings on KSL Cars, and as promoted jobs on KSL Jobs.
Going back to the formation of BrandForge, what were some of the key decisions in creating content, sales and production teams, and I assume keeping them (content) separate from the editorial team? Can you give me an idea of how large these teams (staffing) are?
We knew right from the start that we would keep our client and editorial teams completely separated. That separation has served journalism well for many years and we don’t want to violate it. Our Brand Forge client content team shares technology platforms, copy editing, and analytics tools with our editorial teams, but is managed by the sales side rather than the content side. Brand Forge was launched using shared resources within our Publisher Solutions team. As Brand Forge has grown, we have added a dedicated account manager, two content managers, and we will be hiring others.
Increasing audience insights was another priority. What are some of the ways that DDM has optimised use of its data in the past year or so? And what does your “data” team look like?
One of our 2015 goals at DDM is to radically improve audience insights – for greater engagement both with our content and with our advertisers. We have focused our efforts particularly on doing this within certain verticals, like automotive. We identify auto-intenders based on their classified searches and retarget across our properties and extend that retargeting across the web.
For several years, we have had data and analytics roles within our content teams, but over the past year we have added dedicated data and analytics staff to our ad products and ad performance teams.
Perhaps more importantly, what has that team done to make life easier for editorial, sales, marketing, distribution, etc.?
The sales performance team has been a big win for us. We cannot be viewed as the digital experts in our market without having the best data analysts helping clients optimize their ad spend and performance with us. This new performance team has freed up our sales account executives to focus more on prospecting and closing, with less time spent on data gathering and analysis.
Can you share some of the tools you are using?
What role has programmatic played in your advertising strategy?
Like any premium publisher, our preference is to clear as much of our inventory via direct sales as possible. Maximising direct sales leads to the highest CPMs, quality and performance. When we can’t clear inventory via direct sales, we use programmatic sales channels. Open auction and private marketplaces with our supply-side platform partners are responsible for the highest volume of sales, but one channel that’s been doing very well for us and which we’re expanding significantly is the Local Media Consortium Exchange. We’re members of the LMC, and among the first member companies to openly embrace the LMCX and include our inventory. We see anywhere from 50-60 percent lift in CPMs vis-a-vis normal open auction exchange partners, and much better overall quality.
Our goal is to sell 100 percent of our inventory direct, but with the volumes we have that’s really not feasible. Until then, we’ll move our indirect inventory through the channels that maximise our overall revenue, with the important caveat that all advertisers and campaigns – including indirect – have to meet our stringent advertising policies. We’ve dumped certain indirect partners and significant revenue opportunities when those partners can’t maintain our ad standards.
And can you share your basic programmatic offers to clients (RTB, premium, guaranteed, direct)?
As mentioned above, the lowest CPM but highest volume is cleared via open auction. We then see higher CPMs and lower volumes with the LMC Exchange. Higher CPMs and still lower volumes have been achieved with selected PMPs (private marketplaces). Although we’re very open to programmatic direct (or guaranteed), and have implemented with iSocket, AdSlot and others over 18 months ago, we still see very little transaction volume in that channel, so are watching it closely but aren’t relying much upon it at this time.
For a mid-sized media company, DDM is quite well-known globally, within the industry, but increasingly from an audience standpoint. How do you balance the DNA of the company as a hyperlocal “media company” vs. that of a global provider of valuable content and services?
Building the strongest local digital business in the country has been and continues to be the focus of most of our team. We have dedicated staff for our local content and marketplace products, as well as the best-trained local digital sales force in the country.
We have also begun to generate audience more nationally and globally. Our DeseretNews National product has only been launched for a year, and our FamilyShare Network of sites (FamilyShare.com, Familias.com, and Familia.com.br) reach more than 20 million monthly unique visitors. These products are led by their own managers and dedicated content and sales people. We are frugal and disciplined about these properties, recognizing the need to be patient and have enough runway for testing of revenue models, while growing profitability of DDM as a whole. One thing we do know from our audience growth and research: there’s a market opportunity for content and services that address topics of practical interest to families. Our mission is to be voices of light and truth reaching hundreds of millions of people worldwide and families of all kinds are at the center of that effort.
Much of this article was first published in the July/August edition of World News Publishing Focus, WAN-IFRA’s bi-monthly magazine.