It became clear in the mid-to-late 1990s that the Daily Mail and General Trust (DMGT) no longer wanted to rely on revenue from print publishing, so in 2011 it turned to 50-year-old finance director Stephen Daintith FCA who was tasked with joint-piloting the digital navigation journey to the new media world.
In the last five years DMGT has weaned itself off high-margin print advertising revenues, down from a total of 40% to 20%. Formulas for monetising content (or rather attention) are pored and picked over. The Mail is a past master of selling print ad space. “But,” Daintith says frankly, “selling digital advertising to a digital audience requires skills and an understanding of technology that, with respect to my print colleagues, are very different.” Not to mention figuring out what will be big in 2030 and beyond.
Selling digital advertising to a digital audience requires skills and an understanding of technology that, with respect to my print colleagues, are very different
Still, the massive international success of MailOnline – 166 million unique visitors a month – is a big achievement. But is it making cash? “We’re experimenting a lot with different advertising packages and with ecommerce,” says Daintith. One example is MailOnline photographs; some carry a small icon that a reader can click on, taking them direct to a retailer for whatever’s caught their eye – a dress, suit or bag for example.
DMGT then takes a slice of the revenues for each transaction, somewhere between 5% and 12%. “These are the sort of ideas that I expect to see a lot more of in the future: how can we turn an engaged, interested audience into meaningful revenues for the company?” It’s the holy grail, of course, for modern media companies. Revenues are growing more than 50% a year and this year total revenues from MailOnline are expected to exceed £60m.
Currently 43% of DMGT’s revenues and 64% of its profits come from outside the UK, an internationalism “that surprises most people who assume we’re all about the Daily Mail and little else”.
DMGT is about investing in early stage businesses says Daintith, giving it the experience and readiness to take the long view, helped by the fact that it remains a family-controlled business. “We don’t chase short-term quarterly numbers; we understand that to create long-term sustainable business at times you need to be investing for the future rather than quickly getting to profit.”
Daintith’s professional beginnings are rooted in the mid-1980s at Price Waterhouse (now PwC) – pre-digital times when a hand-written memo would be typed overnight and sent on. Since then he’s done stints at the UK Civil Aviation Authority, been general manager of British American Tobacco (BAT) Bangladesh and Switzerland – he joined BAT in 1996 as an audit controller – and served as the CFO at Dow Jones & Company.
His early 30s were a turning point when he was made finance director at BAT South Africa. He was 32 and it was his first proper finance role – he had not been a financial controller before. “The finance director of a public company in Johannesburg was a big jump. I remember at one of the first AGMs a shareholder saying: ‘You’ve got a healthy cash balance on your balance sheet, what are you going to do with it?’ I answered something along the lines of ‘we’re going to place it on deposit and get a nice healthy return’. The shareholder retorted quick as a flash: ‘If that’s all you’re going to do, I can do a much better job and I think you should pay a special dividend’. It was a good learning experience in highlighting the stewardship role for optimising shareholder returns.”
BAT South Africa snapped up Rothmans during this time, thanks to a roster of premium brands and less exposure to an increasingly litigious US market. “It was a terrific experience,” Daintith recalls. But the BAT Bangladesh sojourn, following two years in Pakistan, edged it. The vibrancy and colour of Dhaka, the Bangladeshi capital, amazed him. Daintith and his family lived in the prime minister’s house – rented to the tobacco giant. “We were the country’s largest taxpayer, paying around 7% of government revenues. Every chief exec before and after me had that house in the middle of Dhaka – a lovely house with mango and avocado trees.”
Early on he wandered around the Dhaka factory, noticing the tatty clothes of many of the workers. “Bangladesh was the centre of the garment industry. I thought, how can this be? So we bought each of our garment workers three sets of uniforms with their names on them and they loved it.”
But the Dhaka stay brought a career low point when the Bangladeshi government rejected an excise tax structure, hitting short-term numbers. “I was the CEO and it meant a lot to me when our ideas were rejected by government policy and strategy, but you learn to live with that and move on.”
It is all a long way from his current challenges: the digital business and investing in B2B firms, largely US-based. “We’re a portfolio business, a collection of a lot of different businesses all at different stages of evolution and business models, geographies and customers. It’s about delivering that potential.”
Compared to the Murdoch empire, which targets big consumer media names, it’s a much more low-profile approach. One example is RMS – a risk modelling player generating revenues of $300m with a 30% operating margin – which has developed a software platform for the insurance industry, a new area for DMGT. The parent company also has a majority stake in Rightmove competitor Zoopla, an IPO hopeful for later this year.
And yet, the biggest adventure is the future. MailOnline’s ad revenues climbed close to 50% at £14m in the last three months of 2013, helping see off a £1m print ad fall. Daintith claims the group is ahead of its target to hit £60m in revenues for this year. “The really exciting thing is developing new ways to make money out of that engagement,” he says. And that is a very big – and possibly lengthy – journey.