For French newspaper publisher Groupe Figaro, the best way to make money in the media remains in many ways.
Being this open-minded has become a lifelong state of mind for many publishing executives these days. There is too much uncertainty surrounding media affairs to be sure of anything. Questions remain about whether third-party depreciation of addressability will help or hinder publishers, and in turn whether they will ever be able to exert more control over where advertising dollars go.
It’s no surprise, then, that so many media groups are dusting off their long-term plans to diversify their revenue.
Le Figaro is no different. In fact, its own long-haul plans date back to 2017. Back then, it made the decision to build its business on four business pillars: advertising, subscriptions, commerce and licensing.
It took a minute, but the plan is starting to come together. And it couldn’t have happened at a more pivotal time. Groupe Figaro’s business has taken a hit during the pandemic – so much so that the owner of Le Figaro newspaper, which has 1,850 employees in 47 other France-based titles like Le Figaro Magazine and Le Figro Voyage, had a deficit of 7 million euros ($7.6 million) in 2020. Fast forward a year to 2021 and the same company achieved a record cash flow of almost 50 million euros ( $54.3 million) EBITDA.
Not that it should be a surprise. Media conglomerates have been talking about diversification for as long as tech companies insisted they weren’t media conglomerates. The much-vaunted subscription pivot to 2017 is proof of that. The challenge for publishers, however, goes beyond charging people to read content to make money. Few of them could do it. That doesn’t mean it’s not possible. It just takes a lot of trial and error, said Bertrand Gié, head of digital at Groupe Figaro. As with any bet, however, it remains a bet. Gié discussed the earnings to date.
Pragmatic about advertising
Gié is loath to get too excited about the publicity, even if the outlook seems positive for a change. The 500 million euros ($460 million) Groupe Figaro raked in last year was driven by a surge in advertising revenue, up 15% from the previous year. Dig deeper and there’s even more reason to be joyful: Much of 2021’s rebound came from digital advertising, which grew 14% over the period – encouraging signs for any media executive , is not it ? Well, not quite: more than half (55%) of these digital sales come from programmatic, the future of which is shrouded in uncertainty.
“We’ve been trying to build our understanding of how programmatic bidding works over the past few years because it’s not something we’ve always been good at,” Gie said.
Unsurprisingly, he is cautious. He won’t even say whether he thinks the loss of third-party cookies will help or hinder publishers. He is clear on one thing though: the industry is moving towards a world where identity will not be tied to a single tool like a cookie, but spread across multiple factors.
For its part, the Figaro Group is testing different ways to share its data easily and securely with advertisers looking for alternatives to third-party cookies. This could be through a private marketplace, a direct data sharing relationship, or a merger of the two. If they do not arouse the interest of advertisers, the media group is also studying contextual solutions.
None of this guarantees much. Ultimately, it’s advertisers who decide if their money is better off with media owners like Groupe Figaro or Google et al. The truth is that most advertisers agree with the biggest platforms. Yes, they grade their own homework, but they do so with so much precision, one would think, rightly or wrongly.
“Advertisers always say newspaper brands are really important, but there’s a disconnect between what they say about supporting our business and what they actually do with their money,” Gie said. “Maybe we’re not good enough at explaining our value. Or maybe it’s the way the industry is set up to spend the money a certain way. I don’t know if all that changes when the third-party cookies disappear.
Subscriptions. grinding on
To say that Gie is satisfied with Le Figaro’s number of subscribers would be an understatement. It now has 400,000 subscribers, including 250,000 digital only. It’s not a massive haul – The New York Times added 375,000 digital subscribers in the last three months of 2021 alone – but it’s a big improvement from where the company was in 2016, when it had about 60,000. Not least because building large followings is tedious work — a consistent cultural struggle to keep leaders focused on the goal, Gie said.
“Ideally, we’d like to have between 250,000 and 400,000 digital subscribers, but the number we have now is just the start,” he continued. “That’s a number that’s 100% margin — it’s a fixed cost business. It can help us take big steps in terms of turnover and profit.
It’s no surprise that subscription growth is so attritional; Le Figaro’s own account of this in 2019 made this clear. Still, it might be natural to assume that the publishing industry has devised tried-and-true shortcuts. This assumption belies the harsh truth about subscriptions: publishers can’t carve out a path to sustainable growth. Take Le Figaro, for example. Its subscription success is less about discounts and promotions and more about how it curbed churn.
“Keeping a subscriber is just as important as getting them in the first place,” Gie said. Finding the right balance is tricky at the best times, but especially when the type of content that convinces someone to sign up for a subscription isn’t necessarily the same as what convinces them to keep it. Lifestyle articles are one of the main reasons people subscribe, for example, but it’s not always the reason they keep paying. All those little details matter, Gie said.
“Even the platform someone started a subscription on can reveal a lot,” he continues. “So on our app, people tend to subscribe for a month and then unsubscribe. This is something we watch closely because 50% of our subscribers go through the app. Eight out of 10 people do it through an iPhone.
Chasing the e-commerce dream
Every media company says they’re a business these days. Saying it and doing it are, however, two very different things, as the leaders of the Figaro Group can attest.
The pandemic has made sure of that. Prior to 2020, the media group was well on its way to building a healthy e-commerce business around online travel and lifestyle. Revenue from theater ticket sales was €120 million ($130.4 million). Then the pandemic came and everything went wrong. Even now, the business has not fully recovered. March 2022 was the best month for ticket sales in two years, Gie said. This is still 20% less than what the group sold in March 2019.
No wonder Gie seems more excited about his budding — albeit daunting — attempts to sell wine. In a word, he wants to create a parallel activity in the recommendation of wines. People would come to the dedicated Le Figaro Vin site to inquire and possibly buy bottles of wine. As encouraging as the site’s potential is, it’s far from ready to be a lifeline for the media conglomerate. Ongoing investments hope to change that. He has already hired a wine journalist to produce more content for the site and has tested selling wine tasting events. Eventually, he wants to create a wine club that people would pay to join.
“I’m not sure our e-commerce bet will work, but we’ll try given that we have the audience,” Gie said.
In some cases, that means innovating and moving spaces, like licensing that many publishers were previously uncomfortable with.
Licence. Yes, there are platforms that actually pay publishers
Like broadcasters, Le Figaro leases the right to publish articles and images to several publishers.
It’s a small but steady business for the publisher – around 4 million euros ($4.4 million) to be precise. As small as these numbers are, they represent something much bigger: the idea that major online platforms will pay publishers for the right to display their content. In February, Google reached an agreement with French publishers including Le Figaro. A similar agreement was reached with Facebook last October. It’s essentially a new revenue stream for Le Figaro, Gie said. Call it a Pyrrhic victory.
“We’ve been fighting for this arrangement for a decade,” Gie continued. “We had to go through the European Parliament as well as through French justice to have this situation accepted by the platforms.