Responsible advertising Advertising policy The Guardian, Observer and Guardian Unlimited raise a substantial proportion of their income from advertising. Percentage of readers who Every effort is made to ensure the adverts we carry adhere to the rulings of the think we have a responsibility to refuse to carry the following types Advertising Standards Authority (ASA). Any advert that has had a complaint of advertising? upheld by the ASA will not run in our newspapers. commercial Music with offensive lyrics 54% Before the advertising department takes any advert, it always checks (eg. homophobic or 44 the copy to ensure it doesn’t jar with our values — that it is legal, decent and racist material) 43 truthful. If it feels the copy is unsuitable, it asks for it to be amended. 39 That we received complaints about only 32 adverts, out of a total of more Gambling 36 than 15,000, shows that our system is working effectively. No single advert realities 36 received more than 10 complaints. Readers usually focus their attention on adverts that offend a strongly 36 held but often not a widely shared belief. A recent example was an advert Religious 35 Priorities: to increase profitability by the following: 40 we carried for formula milk, which received two complaints. This subject is fraught with controversy and is also tightly regulated, and in this instance the 42 ad conformed to all the guidelines. In a case like this, we write to the reader 1) Continue to publish innovative and distinctive Advertising using sexual imagery 34 concerned and explain why we made the decision to carry the ad, and also why 34 we disagree with them, while respecting their right to a differing opinion. content both in print and online 13 Sometimes the volume of reader complaints we receive, or the validity Political 14 of the points they raise makes us reconsider our initial decision to carry an 25 advert. Examples in the past year have been a car company and mobile phone 2) Build deeper relationships with the communities manufacturer who are both among our largest advertisers, but whose copy I would not object 22 Guardian drew relatively large numbers of complaints. In both instances we decided the to any of these 31 Observer we attract through this forms of advertising 30 Guardian Unlimited readers had got it right and asked the advertising agencies involved to provide SOURCE: GUARDIAN, OBSERVER AND GUARDIAN UNLIMITED READER SURVEYS 2006 alternative copy. In the coming year, we will be tightening up the process for logging ad 3) Test new commercial models that reflect our Advertising revenue for all quality national press complaints, to enable closer monitoring and ease of analysis (see 2006 £ million Classified target 1 ≥). We surveyed our readers and web users this year to see what they

387 Display thought about our advertising. Around a quarter took the libertarian view that changing world 335 we should not censor advertising, and would not object to ads using sexual 335 338 290 imagery, promoting gambling, religion, politics or music with offensive lyrics. 820 282 288 253 701 However, far greater numbers feel we should reject adverts in those 685 630 4) Ensure we have the right structures, skills and 598 574 569 574 categories. Approximately half objected to ads promoting music with offensive lyrics, with slightly less objecting those promoting gambling, religion and capabilities to deliver our goals politics as well as those incorporating sexual imagery (see graphic ). 1998 1999 2000 2001 2002 2003 2004 2005

SOURCE: ADVERTISING ASSOCIATION

has seen its market share increase from 16.4% to 17.8%. a whole — makes us an obvious target for scores of digital competitors. Newspapers Equally, if not more, important to newspaper publishers from an Digital Our strategy here has been sustained investment and innovation, economic perspective is our performance in advertising revenue terms. from our very first jobs site, Recruitnet, built more than a decade ago, What does success look like for a newspaper publisher in 2006? A key concern through format change was the impact that a change in Over the last 12 months, a new word has entered the debate about to the latest version of Guardian Jobs (www.guardian.co.uk/jobs), we Should we continue to measure ourselves against our immediate size might have on our advertising revenues and this is an area where newspapers and the internet. Bleak talk about “death” or “survival” has aim to offer the best possible service to both job seekers and recruiters. competitors in the quality newspaper sector or has the game moved on? we invested a lot of time and research effort in the run up to the been replaced by pragmatic discussion about “transformation”. Likewise, in online display advertising and sponsorship we no longer Is a 0.3% fluctuation in market share still relevant or is this simply Berliner launch. All the evidence shows that we have a vital role to play in this new compete simply against other newspaper sites, but also against massive missing the point? What represents a good return on investment these By measuring our own ad revenue data against the combined converged world, both to readers and to advertisers. Our challenge, in global portals (Yahoo, MSN, AOL) and the dramatic growth in search days and where should we place our bets? revenue figure for all national newspapers reported to the Advertising common with pretty much every other newspaper business in the advertising (the text ads on the side of Google search results). Between These are not just academic questions for the management team at Association, we know the Guardian and Observer’s share of all national developed world, is to define that role and make sure we deliver on it. them, these new (US based) competitors take around 80% of the total Guardian News & Media. While our ambition for digital is high and our press advertising, including recruitment, increased in first three months That is the long and potentially painful process of transformation. online advertising market. Again, we need to continue to offer expectations for growth are significant, the majority of our revenues of 2006 to 7.1% from 6.9% in the same period the previous year. Some newspapers are doing remarkably well. Some are struggling. innovative solutions around our sites to ensure that advertisers want still come from traditional newspaper publishing, and we expect this While this increase in advertising share is clearly welcome, it must be A few are still in denial. In truth it will be years, if not decades, before their brands to appear alongside our content. to be the case for at least the next three years. So our newspapers still set against the context of the decline of absolute money being spent we really know who is going to come out ahead. At the same time, the new horizons offered by our digital experience matter to us greatly from both a reputational and a profit and loss within the national press (see graphic). But not all newspapers are equally equipped to deal with it. All have are bringing us new commercial opportunities. We now sell advertising perspective and there remains real value in our strong and clearly Total quality press advertising revenues in 2005 fell by 3% to reach different strengths and weaknesses that can both help and hinder. targeted at our US audience, and our podcasts have received significant differentiated brands. their lowest level in eight years, while classified fell by 12% year on year This is where our ownership plays a vital role. We are spared the need levels of sponsorship in the past year. One year on from the launch of the Berliner format, and three years to its lowest level in over a decade. to impress the City on a quarterly basis: a process that all too often leads This growth means the use of our site remains predominately free. It on from the launch of the tabloid Times and Independent, it is now As this important revenue stream erodes, the cost of competition to dangerous short-termism, where reckless expenditure is followed by is by far our preferred route, both from a commercial perspective and possible to assess the longer-run impact of format change on the quality continues to rise, and publishers are not only having to invest in their dramatic cost-cutting. also because one of our core aims is to extend our reach and influence. press market. core businesses but also in their emergent digital operations. It is not Our strategy has been to invest steadily throughout the last decade, In our recent survey, 98% said it was important to them that Guardian In the first six months of 2006, the combined sales of the four quality surprising therefore that profitability remains under intense pressure, matching the sustained growth in online usage and advertising, rather Unlimited’s stories were freely available to the public following dailies — Daily Telegraph, Times, Independent and the Guardian — with the five quality papers estimated to be losing in excess of £70m, than chase the roller coaster of City sentiment. The result is that publication. But as for the future: again, no one knows. stood at 2,205,000 copies, compared to 2,202,000 for the same period with only the Telegraph assumed to remain in profit. Guardian Unlimited is now a globally renowned and profitable market None of this is simple or easy. The process of change is the most in 2003. Format change may not have grown the size of the sector GNM made losses of £19.3m, but the cost of installing new presses leader. Over the last decade, many of our rivals have spent much more profound that our industry has seen. Radio and television challenged significantly but it has stemmed the long-term decline and shown that pushed the total losses for the financial year ending March 2006 to and achieved much less. newspapers, but unlike the internet, they never offered a direct there remains a market in the UK prepared to pay for innovative, £49.9m. That said, in the coming years we have to acknowledge that there alternative to the two pillars of the newspaper business: the written well‑presented newspapers. The main reason GNM can sustain such losses and maintain its may be competitors with deeper pockets who spend big, and spend word and classified advertising. Taking the equivalent three-year view of the quality Sunday market, investment programme, is due to the financial support of our highly well. As a result, our digital success to date is hugely encouraging, but sales of the four titles have declined by 1.8% from 2,784,000 in 2003 to profitable parent company Guardian Media Group, which has been built we have little ground for complacency. There is too much at stake. 2006/07 target 2,733,000 in 2006. The Observer and Independent on Sunday, the two up over the past three decades to secure the future of the Guardian. Being able to focus on making the right decisions for the long term 1. Track advertising complaints using a central database out of the four Sunday titles to change format in this period, have both GMG consists of a regional media group, which publishes the does not make those decisions any easier. The last three years have seen gained the most in terms of sale and market share. Manchester Evening News, a host of other regional and local papers, dramatic growth in our online advertising revenues — hence Guardian Richard Evans, auditor, says: Against all conventional measures of success, it has been a successful the Manchester-based Channel M television station, and Manchester Unlimited’s move into profit. But fundamental questions remain, such The report acknowledges that in the dramatically changing past year for both our newspapers. Online; a radio division, which operates under the Real Radio, and as where our revenues will come from in the future, the number of environment for news and advertising media it is impossible to predict The Guardian averaged circulation of 382,000 in the first half of 2006, smooth fm brands; and Trader Media Group, which owns the Auto people who will buy our papers and at what price, and whether digital what the commercial realities will look like in a few years time. It would be a 3.7% increase on the previous, pre-Berliner year, and our market share Trader stable of magazines and websites. growth will be able to compensate for potential losses in print. These easier to fill this account with hopeful rhetoric so I welcome the level of also grew from 16.6% to 17.3% over this same period. Group turnover in the year ending March 2006 was stable questions never go away and, in truth, no one knows the answers. disclosure of recent performance and the frank acknowledgement of the The Observer, meanwhile, averaged circulation of 487,000 in at £700.3m, and pre-tax profits rose to £66.4m from £53.7m the Our strength in classified advertising — a position built up over difficulties that lie ahead. the same period, a 9.5% increase year on year and, like the Guardian, previous year. quarter of a century, and a critical source of revenue to the business as

622 The Commercial Scott Trust 723 The Commercial Scott Trust