Jacqui Park is a senior fellow at the Centre for Media Transition at the University of Technology, Sydney, and editor and publisher of The Story, a fortnightly newsletter on new media in the Asia Pacific. Christopher Warren is a writer, journalist and media commentator for Crikey Daily.
Consider this start-up conundrum: knowing the internet is about scale, what do you do if you are in a mid-sized society or market, but want to grow through the constraints that a cap on audience and revenues forces on you?
It is a challenge whether the (potential) audience cap comes from the size of the nation, the reach of the region or the scope - and income - of the segment you are targeting. Not all markets offer the scale of, say, a US, China or India.
Taiwan-based digital news start-up The News Lens provides pointers on how to scale in a market capped by population and to use that scale to innovate and deliver a continuing viable product.
News Lens is trying to build across the approximately 50 million people in what it considers the digital generation in greater China including Taiwan, Hong Kong and south-east Asia, with four targeted editions, including an English-language international edition. At about 50 million people, it is bigger than one island but still smaller than the US.
Its growth since its 2013 launch has seen it rise to the dominant news digital site in its market with 16 million monthly unique viewers (MUVs) in total. Its ranking on Comscore in Taiwan puts it not far behind Facebook.
This has been achieved both organically through its grasp of the market gap for independent news and information on its home island. Last September, it bought a market research company, and has recently finalised a deal for one of Taiwan’s largest mobile ad-tech service companies - a clever move considering 80 per cent of its traffic is mobile.
That has set them up to look at innovative offerings for advertisers by using the first person data their news products deliver, both about the demographics of their readers and the sort of information they are interested in. This provides a value they can upsell to advertisers to assist them in developing targeted campaigns.
The company also intends to use this shift to shake up its revenue mix. Currently about 80 per cent comes from the news products. It aims for a 50–50 model, where half comes from the advertising linked to its journalism and half from media/tech related services.
News Lens is not the only media company attempting to exploit its first party data. About 14 months ago, News Corp launched News IQ to consolidate the first party data it holds on about 140 million people in the US.
Using venture capital to dominate the market
None of this would have been possible without the right investors on board to support the product and to power the company’s growth.
The co-founders boot-strapped their project with enough cash to give themselves an 18-month runway to build a proven product that would attract suitable investment. At first they were too small to attract investors and any local investors were either the same rich people who already own media or undervalued the company, looking to assets and revenue instead of potential.
In the first half of the life cycle, you have to find a proxy for sales. In US digital start-ups, that proxy is usually a multiple of user numbers — MUVs — which illustrate both scale and growth potential.
"We were trying to get to the size of the local TV networks online [then about 300,000 MUVs]. We hit 1.3 MUVs by the end of month three. Once we hit that, the wheel turned a bit. Then some companies wanted to look at us. They could see something and we could start negotiations," explained co-founder Joey Chung.
In about month six, global venture capitalist group North Base Media (NBM) came looking for their first investment in greater China. It supported the initial seed and the subsequent A round of funding of between $1m to $2m. It returned in 2017 with other investors to inject between $2 to $3 million in B round.
It quickly put the money to use by acquiring two Taiwanese content producers. One of its first mergers, Inside, dominated the market for tech and finance news, as the Tech Crunch of the island, but was butting up against the hard ceiling of population. Similarly, News Lens absorbed a successful sports news outlet, Sports Vision, that covered sports of specific interest to the island.
This both strengthened the news content within The News Lens by providing leading content verticals and provided different departments of support to the acquired entities that scale makes possible such as IT, marketing, sales and events
In 2018, News Lens secured between $3m to $4m in its C round to continue its international growth through acquisition. News Lens is now looking ahead to either a final D round or pre-IPO (pre- initial public offering) to finalise planned acquisitions and to prepare for going public.
Like any digital start-up, The News Lens does not offer a step-by-step 'how to' guide. But it provides some important insights into smart thinking about journalism, scale and product.
To launch you need to identify the gap in the market, in the product offering, and for digital news media, in the journalism itself.
Success on the internet demands scale if you are to survive. Here are four takeaways from The News Lens:
- Get the journalism right: understand the gap you are filling with deep thinking about your audience needs and wants. Define your audience as broadly as you can (e.g. greater China, not just Taiwan).
- Get the team right from the start with a diverse skill set that includes both journalism and business skills.
- Ask: what does the local start-up ecosystem bring? What does the global scene offer? How do you cherry-pick the best of both?
- Understanding scale is a skill. Apply that skill to mergers and acquisitions strategically by bringing together start-ups that cannot scale on their own. This delivers benefits in back office, audience size and data.
First person data has deep value. Aggregate it. Understand it. Leverage it.
And one last takeaway from Chung: "We have seen quite a few media and news start ups before us and after us. A lot of founding teams had a very skewed background. Maybe three of them were all editors and out of idealism they wanted to start a company.
"But who worries about making money? My co-founder and I have totally different backgrounds. He’s the media person. I’m the business person. There needs to be someone doing that, there has to be that 50-50 balance there."
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