S4 Capital: all things to all people
Dominic Mills unpicks the ambitions laid out in Sir Martin Sorrell's new stockmarket prospectus. Plus: Why publishers should begin benchmarking average revenue per user
It’s not entirely surprising, given his track record of taking a substantial paycheck from his employer, that much of the media comment surrounding the publication last week of Derriston Capital’s stockmarket prospectus focused on the relative parsimony of Sir Martin Sorrell’s £100,000 salary, albeit balanced by a substantial upside should the shares perform well.
Me, I was more taken by what you might call S4’s mission statement as explained on the front cover, accompanied by what we can say is a ‘ground zero’ style illustration of Burning Man. The intended message, I suppose, is obvious: this is new, unlike anything that has gone before. If you want to extend the visual analogy, the statement is that everyone else, including the company he spent 30 years building, is operating off a burning platform.
But the words don’t deliver. They say: “To create a new era, new media solution embracing data, content and technology in an always on environment for multinational, regional and local clients and for millennial-driven digital brands.”
Phew. A bit of a mouthful, really. I’m not sure how exactly a prospectus should start, but it feels as though whoever wrote that went online and searched for ‘recent boilerplate prospectus front cover wordings’ - and came up with that. It could equally work for a B2B insurance proposition or some kind of distribution platform.
All bases are covered. ‘Multinational, regional and local clients and millennial-driven brands’...well that could be any type of client. As for the stuff at the start... 'new era, new media solution embracing data, content and technology'... I don’t think there is any part of any of the big holding companies, or the independents for that matter, that wouldn’t aspire to offer that kind of stuff, and many already do exactly that, although perhaps not universally or for every client.
As for another claim, it is equally long on boilerplate ambition: ‘to provide digital creative services that are agile, efficient and of premium creative quality, in other words faster, better cheaper.’ Who doesn’t aim for that?
I find it helpful in trying to discern value in such statements by reversing them. ‘Slower, worse, more expensive’. Yeah, right. No-one would say that.
Perhaps I am reading too much into it. A prospectus is, after all, a sales document, or to take a contemporary parallel, an online dating profile. If you’re new to the game - say coming out of a long-term relationship - and desperate to get started, you don’t want to rule any prospective dates in, or any out...overseas, regional, local, OAPs or millennials.
Telegraph discovers the joy of ARPU
Although it didn’t put it into these words, news last week that the Telegraph had discovered that a registered user is worth five times an unregistered one, is all about average revenue per user, aka ARPU.
ARPU, for want of a better description, is a way of finding out whether you’re fishing in a depleted pond for sprats and plankton, or oceans teeming with fat tuna and lobster.
It’s no surprise that, compared with the sprat of an unregistered user, a registered one is like a lobster...well, maybe a scallop or a baby crab. A multiplier of five sounds good, but we don’t know against what: it could be diddly squat.
Even though we don’t have the absolute value of a registered Telegraph reader, ARPUs are a useful benchmark. Spotify’s average ARPU globally is €4.89 (although I’m not clear whether this covers both premium subscribers and those who take the ad-funded model, and I also guess that it would be higher in more developed markets); Twitter’s ARPU is between $7-$8; and Facebook’s ranges from $5.50 globally to $23 in North America and $8 in Europe.
Of course ARPU all depends both on the business (Sky, Vodafone, Netflix would all be higher) as well as the model. I can’t find the Mail Online’s (and my maths is failing me in an attempt to work it out) but I’d guess it was a fraction of Facebook’s given its open-all-doors policy. The FT’s by contrast, given the cost of an online sub, would be much higher.
According to this piece here, the New York Times has an advertising ARPU of $3, and a digital subscription one of $140.
I bet the Telegraph’s ARPU is also a fraction of Facebook’s, but at least it is now getting a sense of where the value of its audience lies.
So it makes sense that newsbrands in particular should focus on ARPU and, given the nature of the competition, start benchmarking themselves against both platforms, subscription and mixed models. They may say they do, but I’ve never heard a newsbrand executive mention the acronym.
So the Telegraph’s public statement about the value of a registered reader suggests they are beginning to think this way, as well to indicate a move towards a more structured and, dare I say it, sustainable online model - which probably means cutting out blanket distribution of content via their platform rivals.
About time too. If you think about it, the biggest single mistake made by publishers collectively was the pursuit of online scale via commoditisation of audience and content. An ARPU focus, if it is not too late, could reverse that.
Consumer trust vs advertiser trust
One section in Lynne Robinson’s excellent introduction to the latest set of Touchpoints caught my eye. This is the part that focuses on trust in the wider picture of the increasing complexity of the media planner’s job.
Looking at all adults, she compares trust in various channels against trust in social media. Radio comes out top (+63%), followed by TV (+61%), local newsbrands (+57%) and mail (+56%).
Amongst 15-34s, the detail is different but the overall picture the same. Social media remains the least trusted, while TV (+11%), radio (+9%) and mail (+8%) are the most trusted.
Even allowing for age differences of typical clients and planners versus the population as a whole and life in the London media bubble, that is some disconnect