Since making landfall with the launch of its US edition on 9 September 1997, the Financial Times has had to adjust to market realities very different from those it knew - and take on the Wall Street Journal. It's been tough, but the British interloper is there to stay, says Richard Lambert.
The Economist had shown the way. With a combination of marketing flair and editorial elan, it had quintupled its North American US circulation to about 275,000 copies a week since the early '80s. Funny spelling and a London HQ did not, it seemed, spell death to a publisher in the American market.
In the summer of 1996, a small group of Financial Times managers led by the then chief executive Stephen Hill, looked at these Economist numbers jealously. The FT's international sales were doing well, especially in continental Europe, but the UK was sluggish. If the newspaper wanted to grow really rapidly, there was only one place to go.
By the end of the year, we had a plan. Then luck intervened. Marjorie Scardino, who had led the Economist's explosive growth in the US, was the surprise appointment as new chief executive of Pearson, the FT's owner. She was looking for big ideas, and ours was ready to go.
This is an account of the lessons we learnt - some of them expensively - in the following years. Most of them apply beyond the publishing business, and all of them relate to the single most important ingredient of success: a clear idea of what your brand is, and what it stands for.
To win in the US, the FT - like other businesses - had to get three things right. It had to make the product relevant, which meant adapting the editorial content for American readers. Then it had to crack the marketing issues, and finally it had to provide a first-class service to its customers. This last turned out to be the most difficult and underestimated challenge.
On all three counts, our job seemed harder than the Economist's. Delivering a time-sensitive product to your customers across a huge country six days a week is like being in the baking business: if you can't do it first thing every morning, rain or shine, you might as well not bother. A weekly publication with a longer shelf life is tough enough; you have to be very brave, or foolhardy, to roll out a daily. A daily paper has to play a functional role in the lives of its busy readers: they need to feel they have to make time to read it. A weekly magazine is about ideas and entertainment.
It's something you can look at by the swimming pool, rather than on a crowded commuter train.
The Economist had flourished by exploiting a gap in the market. The big US weeklies, Time and Newsweek, had both moved down into the mid-market, and the Economist - with its tone of accessible braininess - had jumped into the empty space. The FT, by contrast, was up against an 800-pound gorilla. The mighty Wall Street Journal, with US sales of around 1.8 million a day, could in theory have rolled over and squashed the little FT, with its US sales then running at around a mere 30,000 a day.
In reality, though, the Journal's sheer size was the FT's opportunity.
After the cold war ended, most Americans simply stopped caring about what was going on in the rest of the world. US broadcasters and publishers closed down their foreign editorial bureaux in great numbers. Local rather than national news made the headlines, and many readers didn't care all that much about what was going on in Washington, let alone in Brussels, Tokyo or Sao Paolo.
But at the same time, American business and American investors were beginning to take a much more active interest in the global marketplace. They became the FT's targets. If you want to know about US business, we would say, buy the Wall Street Journal. It's a wonderful newspaper. But if you want to know how that business might be affected by what's going on elsewhere in the world, give us a try. Our bet was that the Journal could not match the spread of our international coverage without boring the bulk of its readers to death. First, we had to tweak the content.
Up to that point, we had been printing the European edition at our two US print sites. Lots of international news, for sure, but it turned out that Americans were not too excited by splash headlines such as 'European Commission in fish quota sensation'.
The front page was the showcase. We wanted a strong US story every day - ideally not one that was on the CNN headlines - and we wanted international stories that might catch a US audience: less common agricultural policy, more high-tech breakthroughs in Taiwan. Inside, we gave more space to international stories that mattered to American business but were not well covered by the competition. Latin America was an obvious example: US papers tend to limit coverage to illegal immigrants and drugs. And we had to strengthen our US coverage. Of course, this was not our main selling point, but we couldn't afford to look eccentric or stupid on the story that our US readers understood best.
We also wanted to offer a slightly different take on US issues. Pinching another idea from the Economist, we decided that we needed to be outsiders with insider information.
Finally, we had to create a buzz: to get ourselves talked about. We had an intellectual edge - columnists like Martin Wolf already had remarkable access in academia and in Washington. But that was not enough. Could we break the kind of news stories that would get us into the bar-room gossip of Wall Street? I rather doubted it: the Journal's news-gathering machine seemed so very powerful. But the autumn of 1998 was the era of mega merger deals. By a combination of chutzpah and sheer determination, a group of reporters led by Will Lewis - now the FT's news editor - started to land some big corporate stories. After we broke the news of Exxon's merger with Mobil, no-one in the game could afford to ignore us.
Meanwhile, we were also learning lessons on the marketing side. The FT had to present itself as a serious global newspaper, not a funny-coloured relic of the empire. The Journal always referred to us as 'the London Financial Times': so we tore down references to the London HQ from all our offices in the US.
The cover price was dollars 1.50, well within the reach of our very affluent readers. But even rich Americans instinctively thought that was the wrong price for a normal newspaper. The Journal cost half as much. If we wanted to come out of the back of the store and stop being treated like Le Monde, we had to cut the price.
There was another reason. If you wanted to buy a copy from the boxes that were already scattered across Manhattan, you had to find six coins in your pocket to do the deal. Almost no-one did.
Our mission was to get the circulation up to six figures as quickly as possible, at which point the potential revenues from new advertisers would far outstrip the lost cover price. Down we came to dollars 1. Our marketing approach had been much too gentlemanly. I remember our feisty new direct marketing boss pouncing on one of our mail shots. 'Where does it say you've got to pay?' she roared. 'From now on, it's pay or die!'
We also had problems with our advertising message. We tried the familiar 'No FT, no comment', but the problem was that no-one had heard of the FT. We tried scaring them - if you don't read this paper, you risk being humiliated by your competitors. The trouble was that Americans felt they'd somehow coped rather well without us for the past couple of hundred years, thank you very much.
The tone of the advertising for a global product needs to be consistent around the world. But the message must depend on where the product stands in each region. The FT's global strengths became the central theme. Apart from focus groups, we did not do much in the way of market research. We probably should have done more. In particular, if we had probed our existing readership base we would have understood more about our biggest single problem - our poor customer service record.
Back in London, few of us had any idea of the difficulties of newspaper distribution. British publishers have little direct communications with their readers. The papers are distributed by independent wholesalers, and it's mainly their problem if readers don't get a consistent service.
In the US it was our problem. We had relied heavily on the US postal service, which was deteriorating. And we weren't just messing people around in Milwaukee. We had big problems too in key areas like midtown Washington.
Lots of people who liked the paper had cancelled their subscriptions in frustration. When they phoned up to complain, we had no solutions.
Part of the answer was to print in more centres: technology and spare capacity in lots of established plants made this relatively cheap and simple. Soon we were printing in five new cities and we were able to piggyback on the distribution network of some big regional newspapers, such as the Tribune in Chicago.
But it takes time to build the right relationships. A distributor in Denver airport won't care whether a little bundle of pink newsprint clears the system on a tight deadline: he has bigger things on his mind. Someone has to buy him a coffee occasionally and talk about his favourite football team.
The FT has still not completely cracked the problem. But it has come a long way from the spring of 1998, when my personal e-mail address was sent by mistake to all our US subscribers. I spent most of the next two weeks replying to the many hundreds of infuriated customers.
Has it all paid off? Sales are well ahead of the original targets, running at around 141,000 copies a day. The FT has suffered along with everyone else as US advertising volumes have been squeezed over the past year or so. The past few months have proved especially tough for Lionel Barber, the new editor, who took over after Rupert Murdoch poached Robert Thomson to edit the London Times. But the business has benefited substantially. Last year, Business Week and Interbrand named the FT as one of the world's 100 most valuable brands - which would never have happened without a US presence.
The Journal has reacted by increasing international coverage in its US edition and adding a weekend section to its Friday paper. But as we hoped, it has not felt able to match the breadth of the FT's international coverage. For instance, it had some good articles on the financial crisis in Argentina, but if you really wanted to know what was going on every day, you had to read the FT. As a result, the FT is now a serious player in the US market, with an established platform for further growth.
The Journal people know that the FT will never get near their circulation figures. But what keeps them awake at night is this: if, when the upturn comes, the FT could get near to 300,000 copies a day, that would almost by definition represent the cream of America's business readership. At that point, the FT's advertising proposition would be terrifyingly competitive.
HOW TO WORK WITH AMERICANS
- Don't be late, and never miss a deadline. In the home of capitalism, wasting time is the only thing worse than wasting money.
Be patient. The natural US reaction to an alternative way of working is 'We don't do that, it must be wrong'. But if you explain why, you can win the day.
- Don't confuse informality with friendship. American bosses rarely use surnames, but that doesn't mean they aren't in charge. Former GE CEO Jack Welch was plain Jack to all his employees, even those he fired.
- Temper your scepticism. If the 'anything is possible' attitude of US business culture sounds naive, remember that in a country where a B-movie actor can be president, it really is.
- Put it in writing. Americans love memos and statistics - they'll formalise every meeting and conversation and expect you to do so.
- Don't make assumptions. America is big - three times bigger than the EU - and culturally and ethnically diverse. Forget the Gordon Gecko act, it's not like it is in the movies.
LESSONS FROM THE US MARKETPLACE
- Be absolutely clear about your brand, and what it stands for.
- Be clear too about the competition's strengths and weaknesses. Identify your own competitive advantages, and exploit them vigorously.
- Be prepared to adjust your product to suit the needs of the local marketplace, but only at the margin. If you have to do a complete redesign for the US marketplace, you may have the wrong product.
- Make the tone of your advertising and marketing consistent. FT.com wasted money on a TV commercial featuring Dan Aykroyd: stout American comics turned out not to be relevant to the brand.
- Marketing must be aggressive. Adjust the content of the advertising if few people are familiar with what you are selling.
- Understand the complexities of distributing a product across a market as large as the US. Americans don't accept poor service.
- But don't let all this put you off. If your product has quality and a competitive edge, the potential rewards are great.