Making progress in reducing our reliance on ad revenue: The Hindu's Pradeep Gairola

With around 5% of articles placed behind the paywall, The Hindu Group’s digital arm aims to reduce reliance on ad revenue, which currently contributes less than 50% of the overall digital revenue, said Pradeep Gairola, VP and Business Head - Digital at The Hindu Group.

Gairola asserted, “Relying solely on advertising has proven insufficient to cover the costs of providing quality content to readers, prompting us to actively seek additional revenue streams. While it remains uncertain when the masses will be ready to pay for news, it is undeniable that without a sustainable business model, India, like America and European countries, could experience the demise of numerous news organisations - a development detrimental to the health of Indian democracy.”

He believes that addressing this concern requires a collaborative effort from the government, publishers, tech giants and civic society to devise solutions ensuring the vitality of the fifth pillar of democracy is preserved.

Excerpts:

How has 2023 been for The Hindu and how much did the digital contribute to the overall growth?

The year 2023 could have been better. While we find a silver lining in our double-digit growth, a notable achievement considering the negative growth witnessed by many industry peers, I can't help but wish for a more substantial growth trajectory given our digital ambitions.

That being said, beyond revenue, there are additional reasons to feel positive about 2023. For example, we've experienced significant audience growth, and all our brands have outperformed 2022 in terms of traffic. The team's efforts in adopting a customer-first approach, enhancing user experience, and incorporating personalisation strategies appear to be paying off. This year, we've also made substantial progress in establishing the data foundation for the company and conducted exciting experiments with AI. Overall, 2023 has been a good year, but I would have been even happier with higher growth rates.

What impact did The Hindu’s recent digital transformative initiative have on the organisation?

As an organisation, we have communicated that our business must revolve around our readers. The primary goal of this project was to instil an audience-first mindset. Given our status as a large, geographically dispersed newsroom spanning the country, we chose to commence the first phase in our Chennai, Hyderabad, and Bengaluru bureaus, with plans to extend to other locations subsequently.

What made this cross-functional project exceptional was its contribution to our understanding of how well-aligned we are as an organisation in serving our readers and generating distinctive, world-class content. This initiative compelled us to embrace a mindset shift and venture beyond our comfort zones, sparking dialogue and prompting us to reevaluate how we cater to our readers on a daily basis. Additionally, it played a crucial role in elevating the core digital skills within our team.

This initiative is a long-term project, and we plan to implement it in a phased manner across our bureaus nationwide. Already, we are witnessing increased collaboration among teams to address user needs. For example, in November, The Hindu produced around 45 Live stories, necessitating cross-functional conversations and interactions between different teams. Our teams are now engaging more with users, resulting in heightened interaction, a greater openness to experimentation, and a more data-centric approach to decision-making.

What metrics does The Hindu Group primarily rely on and quote in sales pitches when it comes to measuring user engagement, subscribers and overall readership?

At The Hindu Group, our tailored sales pitches revolve around key metrics that underscore our dedication to delivering valuable content and fostering engaging experiences for our audience. Unlike some of our peers, our focus isn't on entertainment and celebrities. We proudly adhere to a policy of not delving into the personal lives of celebrities, maintaining a premium positioning that resonates with both our readers and advertisers. This premium positioning allows us to command premium rates from advertisers who appreciate the quality and exclusivity of our platform.

We highlight the following key aspects in our sales pitches:

Targeted advertising opportunities: Advertisers can leverage our platform for precise targeting, reaching affluent Indian audiences effectively. Our website's capabilities allow advertisers to tailor their messages for specific categories, ensuring a more impactful and relevant reach.

Transparency in sponsored content: All promoted content is transparently marked as 'sponsored,' aligning with our commitment to clear communication and ethical advertising practices. We maintain a clear distinction between promotional content and editorial content, assuring advertisers of a trustworthy environment.

Global audience appeal: With a strong connection to Persons of Indian Origin (PIOs) and Non-Resident Indians (NRIs), we attract ads targeted at these demographics. While we recognise the potential in this international audience, we acknowledge the need to explore strategies that unlock greater value, especially when compared to top-tier international publications like The New York Times and The Washington Post.

Our ongoing commitment to quality journalism, ethical advertising practices, and audience engagement positions us as a reliable platform for advertisers seeking to connect with discerning readers. As we explore opportunities to enhance our value for international audiences, we remain dedicated to delivering impactful and transparent advertising solutions.

Was going behind the paywall the primary reason for a massive drop in engagement which needed this initiative?

In our experience, implementing a paywall has proven to enhance engagement significantly. Our subscribers consistently consume 10x more content compared to non-subscribers. Surprisingly, even non-subscribers exhibit heightened engagement, possibly appreciating the value of accessible free articles before encountering the paywall.

Excluding the peak of the Covid pandemic, characterised by heightened reader concerns and increased engagement, there hasn't been any noticeable drop in engagement since the introduction of the paywall on The Hindu in February 2019. On the contrary, we've observed an upward trend. Limited access has seemingly led our readers to better appreciate the quality of content we produce. The scarcity principle inherent in human nature appears to be working in our favour.

Regarding this initiative, we aim to foster a paradigm shift in mindset. We've witnessed different phases in news organisations—print-focused, digital-focused, mobile-focused, SEO-focused, social media-focused, and more. However, we've come to the realisation that adopting an audience-first mindset allows us to better serve our readers.

How do direct advertisers react to the paywall? They must be wary of their ad’s visibility.

Currently, we refrain from displaying ads to our subscribers. It's important to note that we don't explicitly guarantee an ad-free experience at the time of sale, allowing us the flexibility to introduce ads to our subscriber base if necessary. Presently, subscribers constitute less than 5% of our user base, and while they represent a highly coveted segment for advertisers, we have not yet achieved the critical mass required to effectively market them to advertisers.

Regarding ad visibility, the introduction of a metered paywall has no impact on advertisers. In this model, all content remains visible to readers, and the paywall only becomes apparent after users have consumed a predetermined number of articles. The proportion of articles placed behind the premium paywall is currently less than 5%, alleviating concerns for advertisers at this stage.

⁠We have been hearing the noise around the need to move to the subscription-led business model. A few business houses including The Hindu put their foot forward. However, they are struggling to meet the estimated numbers. Can you tell us how long will it take for Indian readers to pay for it?

The primary challenge for news publishers is to establish a sustainable business model. Relying solely on advertising has proven insufficient to cover the costs of providing quality content to readers, prompting us to actively seek additional revenue streams.

Observing the success of digital subscriptions for news companies globally, Indian publishers have decided to invest in this model. While it remains uncertain when the masses will be ready to pay for news, it is undeniable that without a sustainable business model, India, like America and European countries, could experience the demise of numerous news organisations—a development detrimental to the health of Indian democracy.

Addressing this concern requires a collaborative effort from the government, publishers, tech giants and civic society to devise solutions to ensure the vitality of the fifth pillar of democracy is preserved. We are particularly alarmed by the rapid decline of local news sources and emphasise that a democracy as vast as India necessitates a multitude of independent news outlets.

At The Hindu, we are committed to sharing our experiences with the wider news industry to collaboratively find sustainable solutions. While our digital subscription numbers are substantial, they fall short of our ambitions. Nonetheless, we are making progress in reducing our reliance on ad revenue, which currently contributes less than 50% of our overall digital revenue. Although there is still much ground to cover, it appears we are on the right path.

How is Google News handling the subscription-led articles? How do they earn and how do you get paid?

Google streamlines the subscription process through the Play Store, where we acquire a significant number of subscribers. Internationally, Google offers the 'Subscribe with Google' program, allowing readers to purchase subscriptions across various sites. However, this program is yet to be launched in India. The introduction of this program has the potential to be a game-changer, particularly in terms of simplifying the subscription process for users.

Google has played a pivotal role in supporting publishers in adopting subscriptions as a revenue source. The company has organised various programs aimed at facilitating subscriptions within the news industry. Our active participation in two GNI Reader Revenue Labs has proven immensely beneficial, providing us with valuable insights and opportunities for growth.

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