Less than half of The Independent’s revenue came from advertising in 2022

The U.K.-based digital news publication, The Independent, has achieved what many media companies have been striving for over the past several years: diversifying their revenue streams to the point where advertising is less than half of the overall pie. 

As of its 2022 full year earnings, which ended on Sept. 30 — the company just reported its earnings last week — The Independent’s non-advertising revenue overtook advertising revenue 57:43, a significant shift from fiscal year 2021 where advertising represented 60% of the company’s overall revenue. Nearly nine months into the following fiscal year, The Independent’s chairman John Paton said the company is on track to maintain this reduced dependency on ad revenue, keeping it under that 50% threshold again in 2023.

That shift occurred as a result of significant investment into new products, teams and regions as well as an internal reorganization that originally marked 52 roles in the U.K. as redundant in late 2022, but ultimately resulted in layoffs of approximately two-thirds of those positions, or about 10% of its staff, per a Bloomberg article. A company spokesperson declined to share exactly how many roles were cut during that round of layoffs, only that about one-third of the jobs labeled redundant were saved. It was not a result of was the publisher pulling out of the ad market, however. Rather, The Independent is leaning in more than ever with its investment in the United States.

“We see ourselves as a £100 million revenue company within the next four years [and] we’ve got a plan to do that,” Paton told Digiday.  

By the numbers: 

  • The Independent earned £46.3 million (about $59.4 million at the time of publication) in 2022, up 12% from 2021. 
  • This marks the sixth consecutive year of profitable growth since the publication went digital-only in 2016. 
  • Advertising now makes up less than half (43%) of The Independent’s total annual revenue, down from the 60% advertising represented in 2021. 
  • The company’s profits decreased by 65% year over year from $7.1 million (£5.5 million) in 2021 to $2.4 million (£1.9 million) in 2022. 
  • Licensing and syndication revenues grew by 17% year over year, representing close to one-third of the company’s total revenue. 
  • Meanwhile, reader revenue was about 5% of the company’s total revenue, according to Paton.  

The future of advertising 

All this is a result of a three-year strategy to more intentionally diversify its revenue – but advertising still represents the lion’s share (43%) of the company’s total revenue breakdown, Paton said. Licensing and syndication follows shortly behind, with about one-third of the company’s total revenue coming from that business, he added. 

“The price of not diversifying [has] been paid by BuzzFeed News, has been paid by Vice. And you can’t just rely on a one trick pony like events. You really have to build the products that people will pay for,” Paton said. 

While Paton continued that the plan is to keep advertising revenue less than half of the company’s total revenue in the coming years, the company is not shying away from selling ads – particularly in the United States. In fact, he expects advertising revenue to grow, ultimately helping to make the overall revenue earned in the U.S. equal to the overall revenue earned in the U.K. within the next four years. This year, 37% of the company’s revenue (about $22 million) came from outside of the U.K., including the U.S. The remaining $37.4 million was earned in the U.K.

“It’s the world’s largest advertising market … and so we started to invest heavily in the United States,” said Paton. “We have to expect that our advertising will mature in the U.K. market and have slower growth but … advertising will continue to grow dramatically in the United States … but I also want to make sure we’re not overly dependent on it.”  

While dramatic growth in ad revenue may seem unexpectedly optimistic to hear from a media leader in this current economic climate, Justin Eisenband, senior managing director of the Telecom, Media & Technology industry group at FTI Consulting, said that the U.S. digital ad market has been “a bit more resilient than that of the U.K.” 

The divisions within advertising that Paton is most bullish about are video advertising within its Independent TV brand, its custom and branded content studio Independent Ignite and direct programmatic deals conducted both in the private marketplace and through programmatic guaranteed. 

As for the open programmatic marketplace, the company isn’t pulling out of that revenue stream, but Paton expects that this will be a challenging business for most news media companies given the ongoing race to the bottom for CPMs and the brand safety concerns that often lead to advertisers blocking news content from their media buys. 

Strategic investment 

“We’ve not been afraid to decrease profit – we always say profitable, that’s important – but we decreased profit by 65% in 2022 over 2021 because of investments in revenue [diversification],” said Paton.

Those investments went to growing four distinct areas: international expansion, TV, reader revenue and commerce. 

The Independent grew its U.S. editorial staff by 50%, bringing the total newsroom to 45 people. It also started producing long-form documentaries for Independent TV and in 2022, that division contributed 10% of the company’s total revenue. Registered readers increased to 5 million in 2022, creating a pipeline of people who have a higher propensity to subscribe to the publication. 

“If you want to have a superior journalistic product, then you’re going to have to invest heavily in editorial – particularly in people. If you want to understand what’s going on in Ukraine … it’s really expensive to keep people in the country. But it’s the biggest war in Europe since the Second World War. If you’re going to be a credible news source, you’ve just got to do that.”

AI will allow for further investment into journalism 

Looking ahead, Paton said the team under chief technology officer Chris Corderoy has been tasked with building AI language models that can be used to help journalists surface facts, trends and timelines from the catalog of The Independent’s journalism to help free up research time in the reporting process. In the future, Paton is hoping that generative AI tools can be used to surface possible angles within stories that the journalists might not have thought about during the writing process. 

“The only way for us to earn trust is to have the best journalism that we can afford. We have doubled the editorial spend in those three years. We now have twice as big of a budget for editorial [and] almost twice as many journalists,” said Paton, who added the goal is that using AI to free up journalists’ time will ultimately allow them to invest more time into pursuing original journalism.

And in turn, that journalist trust is how The Independent is hoping to grow reader revenue globally, as well as create a foundation for investigative journalism within the company. The idea is that in the near future (he declined to share an exact timeline) the media company will start bringing in donated funds through organizations like the Ford Foundation, similar to the Guardian’s philanthropic arm, TheGuardian.org, where Paton previously served as a founding chairman.

This story has been updated to reflect that while The Independent originally identified 52 roles in its U.K. office that were at risk of redundancy last November, only about two-thirds of those staffers ended up being impacted by layoffs, according to a company spokesperson.


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