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Reach PLC shares 3 pillars of digital transformation

By Shelley Seale

INMA

Austin, Texas, USA

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Reach PLC has enjoyed tremendous digital growth, which now accounts for one-quarter of the company’s revenue — and is five times what it was just a few years ago.

The task before Reach now is scaling that digital success even bigger.

“It’s a long strategy that’s pivoted over time,” Chief Revenue Officer Piers North told INMA members in a live Webinar on Wednesday. “It’s moved into a kind of depth of first-party data.”

The media company wasn’t present in digital five or six years ago, but it knew it needed to get into the game fast.

“The best way to get into the game was to scale up,” North said. “That’s been through organic growth of our digital audience, and it’s also been through inorganic acquisition. But now we’re in a different phase. We have the scale, we have the volume. Our job now is to drive the RPM, the pageview, that we’re getting from that audience, to take us to the point where digital can provide a sustainable business model for the company.”

North clarified that Reach’s revenue is primarily advertising based, and at present they are not pursuing an aggressive subscription strategy.

Reach’s revenue and profitability

Reach is a profitable company, even during COVID-19 when the UK advertising market had its biggest contraction in history, North said.

“[2020] was a very tough time, and we lost about £100 million in revenue year-over-year, which clearly had a very significant impact on our business. But what we’ve been doing is making sure we haven’t lost our core strategy — that remains unchanged. Through radical transformation and a digital focus, we have a relatively strong operating profit of £134 million. So despite our top-line revenue declining by £100 million, we did well to retain our profit.”

He believes profitability speaks to Reach’s future in digital.

“Really what COVID did was accelerate everything we were planning to do in three years, we kind of had to do in three or four months.”

While the digital business hit a slump going into Q2 of 2020 due to the pandemic lockdown, it bounced back quickly and Reach ended the year on a very strong, aggressive pace.

The digital story of 2021 at Reach.
The digital story of 2021 at Reach.

In 2020 the digital advertising business overtook that of print for the first time, and in Q1 of 2021, that trend continues to accelerate.

“Because digital continues to grow very fast, what you’re seeing is that we’re increasingly becoming a digital ad business over a print business,” North said, adding that circulation revenue is still the company’s biggest revenue stream.

Digital transformation at Reach

North shared the journey over the past five years as Reach moved into the digital space.

  • 2015: Digital was 5% of overall revenue.
  • 2016: Digital was 8% of overall revenue.
  • 2017: Digital was 11% of overall revenue.
  • 2018: Digital was 13% of overall revenue.
  • 2019: Digital was 15% of overall revenue.
  • 2020: Digital was 20% of overall revenue.

While the overall company revenue remained relatively the same (€687 million in 2015 and €695 million in 2020), the portion of that revenue that was digital is now four times greater.

“It’s been a really important part of maintaining that profit margin and driving us ahead,” North said. “We’re in a position now where we’re really in a good place to jump off and accelerate that even further over the next couple of years.”

Print is still a significant part of Reach’s business, though it was much more affected by COVID. The mix of print revenue between circulation and advertising has been changing over the last few years, with circulation revenue growing and ad revenue declining.

The print revenue mix at Reach has shifted from advertising towards circulation.
The print revenue mix at Reach has shifted from advertising towards circulation.

Three pillars to Reach’s transformation

The company had three important pillars to support this transformation and to get them through the pandemic, North said.

The customer value strategy at Reach is one of its three pillars of transformation.
The customer value strategy at Reach is one of its three pillars of transformation.

  1. Customer value strategy: Increased customer engagement, improved customer experience, a unified view of the customer across the company, innovation to grow and diversify the revenue base through audience segmentation, and a customer-centric culture underpinned by data.
  2. Campaigns: Quality relationships with advertising clients and using customer data to drive results for advertisers.
  3. Culture: Being laser-focused on the company’s people. Digital success will not happen without that.

“It is the thing that stands apart from many of our competitors, our culture and the way we look after people,” North said. “The mental well-being of our staff has been really critical,” he added, particularly during COVID and the almost-overnight change to remote work.

Future goals

Overall, the goal of Reach is to double digital revenue over the medium-term.

Reach plans to double its digital revenue as a medium-term goal.
Reach plans to double its digital revenue as a medium-term goal.

“With the data and the scale that we have, and we’re off to a good start in 2021, we feel that’s eminently possible.”

About Shelley Seale

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