Sunday 25 February 2018

The odd couple: Axel Springer and Business Insider

Axel Springer's CEO Mathias Dopfner
Axel Springer's CEO Mathias Dopfner
Steve Dempsey

Steve Dempsey

Earlier this week the German media giant Axel Springer SE spent a reported $343m on a new bauble. The shiny new acquisition is the six-year-old business news website, Business Insider.

The deal makes Business Insider the latest online upstart to hit the big time. Vice Media now has a market value of more than $2.5bn, following investments from A+E Networks and Technology Crossover Ventures.

BuzzFeed, another newcomer, is now valued at more than $1.5bn, on the back of NBC Universal's investment of $200m. And Vox Media, which has a stable of online brands like The Verge, Polygon, and Re/code, is valued at around $1bn thanks to another investment from NBC Universal.

This isn't the first time Springer has tried to buy itself an online business platform. It was outbid by Nikkei for the Financial Times in July, and tried to get its paws on Forbes in 2014. But now it has its own new media kid on the block. About time too, as the legacy business is suffering from dwindling circulation and falling advertising revenues.

But while Springer hasn't been shy about acquiring new properties to speed along its digital transformation, it has failed to splurge on something with real star power. Until now.

"It really is a pivotal point in the changing of the media landscape," said CEO Mathias Döpfner on Tuesday. "New digital media companies are being built and we definitely want to be a player. With Business Insider we have laid the foundation to achieve that."

So what makes Business Insider so special?

Well, the site claims that 20pc of their users have a household income of $100,000 or more. And while its cost-per-thousand advertising rates fall well short of those at the Financial Times and the Wall Street Journal, they're still higher than at a typical news site.

BI also has more modern footprint in terms of where its audience comes from and the devices they use; 39pc of its traffic comes from social networks, while 60pc is on mobile devices.

So it's no surprise that Business Insider also boasts a younger readership of digital natives. 51pc of the site's readers are between 18 and 34, offering Springer real longevity in the business space.

And aside from a readership with a long life ahead of them, BI also has the added benefit of international allure. It will boast nine international sites by the end of 2015, with English-language sites in Australia, India and Indonesia. A Chinese version will be launched in tandem with Tencent.

This is music to Springer's ears. The German giant has been on a mission to expand outside its German hinterland for some time. Almost half of Springer's revenue now comes from outside Germany,

But it's the promise of growth that makes Business Insider look like a sound bet. This growth has been most pronounced in the American market.

According to Comscore, Business Insider is now the second biggest website in the business/finance digital sector in terms of unique visitors. It grew a staggering 54pc in the last year, leapfrogging both Forbes and Dow Jones, which includes the Wall Street Journal, and is second only to Yahoo Finance.

So where now for Business Insider now that it's part of the Axel Springer stable?

It occupies a very interesting niche in the world of business websites. The Wall Street Journal and the Financial Times compete for the top end of the business readership. has recently rebranded itself as a cutting-edge content provider.

Its new, modish, modular web design now houses all Bloomberg's media properties. And while some people have found it too much of a jump, it's a dynamic point of difference.

But Business Insider is pitched at the mass-media business audience. You won't just find dry financial reporting; there's more colourful content too. Some of last week's more unexpected headlines include 'Here's a ranking of celebrities based on the price of their Apple Watches' and 'One of Britain's most successful businesswomen said having an affair helped her career'. (My personal favourite was 'The artist who turned his dead cat into a drone is now building a helicopter out of a cow'.)

It's a heady combination of business news and click-bait that's indicative of Business Insider's appeal to a younger, mobile-first readers who crave distraction as much as intelligence.

But even though the knot has just been tied between Springer and Business Insider, there may be trouble ahead. The German company has been clear that it expects advertising revenue to be augmented by other sources, and one other source in particular: the audience.

Here's what Döpfner said was the Springer strategy in relation to non-advertising revenues: "Monetisation will definitely not be only advertising. In the end, the reader is going to pay."

And here's the rub. Business Insider's audience isn't used to paying. The site makes almost all of its money from advertising. Its catchy headlines, self-help stories, and frothy business editorial means it is has built a business on collecting and monetising an audience that expects content for free.

At some stage, Springer may push the button and introduce subscription, membership or some sort of premium/freemium model. But whether Business Insider's digitally native audience will put their hands in their pockets - now or in the future - remains to be seen.

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