Reach plc (RCH) Earnings Call Transcript & Summary

Good morning, and thank you for joining us for the 2020 Reach plc annual results. Before I hand over to Simon to talk us through the numbers, I want to provide the highlights of what has been a tumultuous but progressive year. I will then update you on the progress we've made against our strategy, following the data-led approach we announced last year. And Lloyd Embley, our Group Editor-in-Chief, will then join us to talk about how the editorial team are embracing our new ways of working. Then after my summary, we'll then take some Q&A. Now I wanted to start by reviewing the key highlights of 2020. This has been a year like no other and one in which trusted news providers were relied upon for news and information like never before. It was also a year of unparalleled change for Reach and one in which we have made significant progress in our Customer Value Strategy. Our first strategic target was to grow registrations to over 2 million, and we have exceeded that and gone on to break the 5 million barrier. The bulk of these registrations have signed up through our newsletters and through InYourArea. Once a customer registers with us, we are able to drive engagements and we are now seeing growth in paid views per user of around 30%. The ReachID was launched in December. This unlocks the insights that are so key to the future strategy and digital growth. It enables us to offer commercial products that deliver increased returns to advertisers. These products will be a key focus for us this year, and I'll be coming back to this area later in the presentation. We continue to grow our live network of news sites and to deliver the first-class content that has secured our place as the #1 news publisher in the U.K. in terms of monthly audience, and importantly, the U.K.'s #1 sports publisher. Yes, COVID-19 impacted us, particularly in the second quarter, but we responded by radically transforming our business, giving us a stable platform to thrive over the long term. The transformative actions that we took, coupled with the resilience of our circulation, puts us in a strong position in terms of our operating margin and cash delivery. And this has enabled us to restore the dividend and will continue to support our investment plans as well as our pension obligations. Throughout this period of change, the business has continued to focus on our strategic objectives, with registrations, loyalty and engagement all improving. This contributed to a record performance in Q4 when we saw digital revenue growth of 26%. Now there's still a great deal of work to be done, but we are ahead of where we expected to be, and the early results are giving us confidence in our approach. We have now established a clear pathway to future growth that will enable us to continue to deliver to stakeholders over the long term. The pandemic has highlighted the importance of our core purpose as prominent champions, campaigners and change makers. We touch lives, we shape conversations and we stir emotions, and our trusted brands connect people to the world every minute of every day. Our people have performed exceptionally in continuing to live up to this vision during a period of intense change. They have worked harder than ever this year and have delivered outstanding journalism alongside the business performance to be proud of, and I want to thank every single one of them for their contribution. The pressures of working under lockdown restrictions have provided a challenging backdrop. So we have prioritized well-being in our business and have invested to expand the packages available as part of our well-being hub. The pandemic has created an invisible burden of anxiety, and we are doing all we can to provide the support to our colleagues during these unsettling times. We have also stepped up to the plate on diversity and inclusion, a key issue in our industry and one that we are determined will make a difference on. We acted on a recommendation from our colleagues to establish a new role to drive change and we have appointed the company's first Head of Diversity and Inclusion. Our aim is to ensure that everyone at Reach can connect with each other, respect each other and thrive in an inclusive environment, and we'll update on progress in this in the months ahead. As I mentioned earlier, we delivered the transformation, creating a more efficient organization with an improved operating margin. It has accelerated the plans, and we are now moving into the next phase of our strategy. We will continue to leverage our scale, but the focus is increasingly on engagement and loyalty as we become a data and insight-led business. The company's culture is also undergoing significant change, with a real focus on embracing the strategy throughout the business. We are investing more to add to the skills in the business as well as technology with the aim of further accelerating our progress. And once Simon has taken you through the numbers, I will detail our core priorities and ambitions for Reach this year and beyond as we take our strategy forward. Simon.

Thank you, Jim, and good morning, everyone. Today exactly marks my second anniversary with Reach. And as Jim has just said, whilst 2020 was an extremely demanding year for the business, and we're evidently not alone in this, it was also a year of acceleration for Reach. As I'll run through my financial update, the business has proactively responded to the changed environment and is now well placed to realize the full benefits of its focused strategy and efficient and scalable operating model. We've described our overall financial performance as robust. Arguably, however, this does not do full justice to the solid profitability of the group, with operating profit of GBP 133.8 million, down by GBP 19.6 million or 12.8%, which is a lower percentage decline than COVID-impacted group revenue. Put this another way, the drop in revenue was more than 80% offset through strong cost management and just over 1 quarter's worth of the savings from our transformation program. Overall, this led to an improved operating margin of 22.3%, up 50 basis points. Alongside this, we call out the consistently strong cash generation of Reach with an operating cash flow of GBP 121.8 million, enabling a doubling of our net cash to GBP 42 million. Given this performance, the Board is recommending a final dividend of 4.26p per share. This return to paying cash dividend is underpinned by our confidence in the future growth trajectory of the Reach business. On this slide, we provide a reconciliation of operating profit adjusted to statutory. As you'll see from the labeling, the substantial one-off costs in the year, principally related to our transformation, about 2/3 of the charges, and managing historical matters, about 1/3 of the charges. Across these one-off costs, GBP 62 million were noncash, GBP 43 million were cash impacting within the year and the remainder will flow into 2021 and beyond. We expect a material reduction in the quantum of future adjustments, having completed the significant changes in 2020. This slide reminds us of the step downturn in total revenue in Q2 due to COVID, which impacted circulation frequency, print advertising demand, external printing volumes and also digital yields. However, this chart also demonstrates, Q3 and Q4 saw significant revenue progression, which led to management increasing expectations in each of September, November and January, particularly driven by Q4 digital revenue and a very strong December within this, but more on this shortly. Whilst print revenue was hardest hit by the pandemic, this was particularly true in advertising. In fact, even though, at the start of the year, print advertising was less than half of the size of circulation, it had the biggest absolute pound million drop. Circulation, which is still over GBP 850,000 per day, was more resilient and now accounts for over 2/3 of total print revenue. This sustained performance was supported by availability investment, that is extra copies being sent out into the network of around 50,000 outlets; positive promotions, for example, to encourage weekday-only readers into the weekends; and the expansion of home delivery with tens of thousands of new subscribers added. The long-term average circulation revenue decline is less than half that of print advertising. So the future print revenue drag will be lower due to this evolving mix. This next slide shows the quarterly evolution of like-for-like print revenue, and we note that a significant proportion of the Q1 to Q2 additional decline has been recovered by Q4. As can be seen from both this slide's waterfall chart and the embedded line chart, which splits out circulation and advertising trends, Q2 and Q3 were the quarters hardest hit by COVID, Q2 in particular. In fact, in total, 2/3 of the full year decline in print revenue happened across quarters 2 and 3. Now before I go into the detail of our in-year digital metrics, I wanted to step back and survey a longer 6-year horizon. Between 2015 and 2019, digital mix increased at an average of 2.5 percentage points per annum. In 2020, however, this doubled to a 5% mix improvement as we moved to 1/5 of our business digital compared to 1/20 in 2015. Put another way, in 5 years, our digital mix has quadrupled, and this is on a very similar overall group revenue in absolute pound millions. Jim will shortly demonstrate our progress across a number of other digital metrics, including registrations and engagement. However, as this slide shows, measures such as overall revenue, page views and unique users have all shown very good progress, too. Our digital audience has almost trebled since 2014, supported by our national estate as well as a comprehensive stable of live regional sites, whose coverage will further expand in 2021. In fact, 9 out of 10 of the top regional news sites in the U.K. are owned and operated by Reach. These important metrics underpin our achievement of GBP 118 million of digital revenue in 2020. Now market forces and specifically digital advertising demand had a sizable role to play in 2020. At the toughest point in the year, April, our daily open market auction revenues indexed sharply downwards. However, by September, yields and daily run rates recovered to the start of year levels. And by December, they were considerably stronger than pre-COVID. In fact, they were 40% up. This acceleration and a record-breaking Q4 was fueled by the Customer Value Strategy. For example, increasing audience engagement through newsletters and commenting. And at the exit point of the year, 1/4 of our business was now digital. The business is rightly proud of its track record of proactive cost control. To reduce the total cost base of the business by almost 15% in the year, however, as this slide shows, was a remarkable demonstration of this core competency. Consequently, operating margins moved up again by around 50 basis points, supported by both transformation and importantly, also the operating leverage benefits of increased digital mix. This ratcheting effect is a critical feature of the forward narrative as future digital mix further increases. In July, with our comprehensive business model transformation, we announced an at least GBP 35 million saving from a cost of change of GBP 20 million. Today, we are pleased to confirm that this transformation will deliver GBP 46 million of savings at a cost of GBP 33 million, providing additional firepower for our Customer Value Strategy. The best-in-class operating efficiency of the Reach business builds confidence in our capacity to invest for future growth. The Reach story, to be clear, is a progressive one. It's about content, customer engagement and value creation, made possible through a lean and effective operation. To achieve this value creation, the internal Reach Investment Committee, which I chair, has signed off over 20 cases worth over GBP 5 million in the 2020 year. A large focus of our investment has been building internal capability with proofs of concept, trials and experimentation, each evidencing a test-and-learn mindset. At the heart of this has been ReachID, which launched in December and is central to us having a single view of a customer. Jim will share more on this shortly. My final section in this financial update reminds us of the resilience of Reach's standout cash generation. The 2020 operating cash flow of GBP 122 million was over 90% of what was achieved in pre-COVID 2019. And this not only meant that there was a cash to enable strategic investment but net cash broadly doubled as we focused on protecting the business and maintaining its liquidity. In fact, the cash conversion percentage using adjusted EBITDA has been consistently strong over a 5-year horizon and was held constant year-on-year at 76%. This performance not only enabled the organic investment we just mentioned but also ensured we are able to fully meet our commitment to our pension schemes as part of our agreed recovery plan and also fund our group-wide transformation program. On this next slide, we reiterate our capital allocation focus made possible by our balance sheet strength. In the medium term, we have the opportunity to increase leverage for expansion, but the near-term focus is on organic investment and potentially smaller bolt-ons, where both our geographical reach and audience can be broadened and our Customer Value Strategy platform increased. We remain committed to meeting our pension obligations with the current triennial review still in progress. Lastly, on this slide, we're also pleased to announce the resumption of cash dividends with a final 4.26p per share on an expanded share base, following on from our half year bonus issue. The Board recognizes the importance of growing dividends to shareholders, and this restoration demonstrates our confidence in sustainability of future cash flows. Whilst Lockdown 3 at the start of January was a difficult message for most U.K. businesses, the steps taken by Reach in 2020 and a continued focus on content and customer has resulted in a broadly stable start-of-year trading for us. Digital growth, in particular, remains over 20% and almost double the full prior year rate. Our confidence remains, albeit tempered by macro uncertainties. And this year, we expect margins to progress, investments to increase, cash dividends to continue and opportunities to be realized. My clear message then is that 2020 was a year of significant progress despite the challenging context and provides exactly the right base for 2021 and beyond. Let me now hand back over to Jim.

Thank you, Simon. Our digital advertising revenues exceeded print advertising for the first time in the final quarter of 2020. In fact, we exited last year with digital revenues reaching 1/4 of our total revenue for the very first time. Strategic momentum is building, and there is much more to come in terms of improving our offer, both to our readers and advertisers. Now this provides us with confidence in our ability to secure continued digital growth over the coming years, and our goal is to double our digital revenue over the medium term. By doing this, we will ensure that Reach will continue to deliver to all of our stakeholders well into the future. Now let me remind you of the 4 pillars of our Customer Value Strategy. We first took you through these in February last year and a lot has happened since then, so we thought it worth to have a quick reminder. Of course, these aren't sequential. We continue to make progress on all of these, and they are interdependent. They summarize our overall approach, and I'll now take you through the key areas of focus for us in the coming year. In a moment, I'll talk you through the progress we have made in building engagements and how we plan to diversify our digital revenues. I'll then touch on our business transformation program before handing over to Lloyd, who will give you some color on how our editorial teams are embracing the strategy. I'll then wrap up before we take your questions. Firstly, we are seeing strong growth in overall traffic to our content. During 2020, we had almost 15 billion page views in the U.K. across our network on web, mobile and app. This increase of around 40% was helped by our deepening engagement with over 5 million registered customers. One way we are achieving this is by driving more traffic directly to our sites. Our hyperlocal app, InYourArea, was the third most downloaded news app in the U.K. last year. This site aggregates news content and tailors it to the postcode of the reader. It delivered an additional 92 million page views to our network and around 60% of the customers that click on these stories are registered to us. Newsletters are also driving increased page visits. We are now distributing around 35 million every week across 280 individual topics. These range from subjects like the Liverpool FC newsletter to the Express politics newsletter. Together these 2 examples alone are now reaching over 0.25 million reads a week. This additional activity is helping increase engagement and loyalty, and newsletter readers typically visit our website around 30% more than a standard visitor. To help us track our progress, we are using an engagement index. This illustrates the increased page views resulting from registered customers' activity when compared with a nonregistered one. The index has already grown during 2020 and early '21, and while it will settle over time, as we expand our audience, it is a useful tool to monitor performance, whether by title or across the group. We continue to see strong growth in average page views per visitor, up 29% year-on-year, with average minutes per visitor up 32%. As you can see from the graph on the top right hand side, our most loyal and engaged customers, such as those logging on to comment, are consuming more than 7x more pages than an average customer. And the number of loyal customers is growing both in our leading national titles like the Mirror and across our Live network, and it's growing faster than the overall customer base. Data and insight is key to the Customer Value Strategy. With our scale audience and national, regional and local presence, we have a unique window on a customer's media activity. Using the ReachID, we are now able to segment our audience based on interests and content consumption, and this will enable us to tailor our content to be more relevant and engaging. For example, we will use it to identify new subject areas for newsletters in order to target specific cohorts. Now this will be an ongoing process. The deeper and richer insights that we build, the better our ability to segment content becomes, and this enables an increasingly personalized experience for readers and advertisers. We have made considerable progress in this area, but there is still some way to go before we develop our customer relationship management to its full potential. We'll be investing further to improve our whole approach, both in terms of people and technology. And moving forward, we want to be best-in-class when it comes to our data to ensure that we are operating at maximum effectiveness. Now this may involve working with third-party experts if it accelerates our progress, and we are currently engaged in discussions with potential partners. On the commercial front, we've already made good progress in using data to offer more targeted campaigns. We carried out a number of successful trials in December, and we are seeing a lot of interest in these products from advertising. These products will be key to how we grow digital revenues this year. The campaign products offer higher rates of returns to clients and will, therefore, attract higher yields than a traditional open marketplace advertising. While it is still relatively early days, we are encouraged to have booked over GBP 0.5 million in revenue from these products during Q1. I'll now take you through each of the products starting with Audience+. The first campaign example is from a commercial trial that took place in Q4 with a major fashion retailer. In this case, we've produced a list of relevant campaign targets based on our customers' declared interests and behaviors. This data set selected customers who had read several fashion articles in recent weeks and had registered for a fashion newsletter from OK! Magazine. The campaign was run across Reach titles and used our brand safety tool, Mantis, which ensures digital advertising appears alongside relevant content. Customer response rates for using Audience+ on a number of campaigns were much higher than standard IP-led campaigns by up to 40%. Improved returns for advertisers means we can attract incremental advertising rates, thus increasing the value of our existing inventory. We are in active discussions with brands in the automotive, travel, fast food and financial services sector about future campaigns and we're hopeful of further pickup, particularly from H2 onwards. Turning to Customer+ product. We are now actively matching our data with the clients' own customer information. We have now done this matching exercise with a number of brands, from gaming to retail, including a national grocery chain, using information from their loyalty card data. This is enabling the client to develop a more targeted approach with discrete messages for its loyalty-only card holders. Our match rate was the highest they have achieved with any publisher and campaigns could equally seek to target new customers with an offer and exclude existing customers. We're encouraged by their level of interest in this product from our brands and their agencies and are likely to see further campaigns underway during Q2. Our Geo+ product uses postcode data from customers registered in InYourArea and enables brands and businesses to direct campaigns to customers within specific locations. We are talking to multiple brands about potential campaigns in the coming weeks, and this is adding new advertising revenue streams to the InYourArea platform, supplementing the benefit that we're already seeing from the app in terms of registrations and direct traffic. We are also developing niche content areas that offer new advertising and sponsorship opportunities to brands. The first example of this is our TeamDogs website, which is set to go live shortly, offering a social network for dog owners to share tips and advice. With pet care being one of the largest FMCG verticals and our titles reaching 2/3 of the U.K. pet-owning households, TeamDogs brings obvious commercial opportunities. We've already signed a sponsorship content deal with a leading pet food brand. Other potential partnerships we are exploring include energy switching and price comparison services, and we hope to sign our first deals in H2. We will also build upon the successful pilot we ran in December with quality brewer, Innis and Gunn, to explore a craft beer club opportunity with a range of regional companies. Now there will be an element of test and learn in these partnerships and where we are not seeing strong customer engagement, we'll move on to areas with greater potential and focus only on those that deliver the best results and commercial returns. The progress made in 2020 has been accelerated following the transformation. We have created a highly efficient operation with all parts of the business aligned to our customer-centered goals. I mentioned earlier that we're becoming a data-centric business with an increasingly growth-focused agenda. This extends to our editorial teams who continually look at analytics to ensure they're informed of the stories that are gaining the biggest customer response. Our editorial operation underwent radical change with the creation of the Reach Wire, becoming one team and removing all remaining silos. This change meant we can now operate at much greater efficiency and protects our cherished news titles, where we continue to implement our strategy. Without the editorial focus, our strategy simply could not succeed. And with that in mind, I'd like to hand you over to Lloyd who will explain how this is being embraced. Lloyd.

Thank you, Jim. Good morning, and many thanks to you all for joining us today. I'd like to spend a few minutes talking to you about what ultimately sits at the heart of this company, namely our content, our journalism. As you've already seen and heard, our strategy of building deeper, closer relationships with our users and readers requires multidivisional alignment, collaboration and delivery. That holds firm, of course, whether we are talking about data, analytics, insight, commercialization. But at its core, it requires our journalists, our photographers and videographers, our social media experts, our headline writers, our columnists and our experts to create truly engaging content. So how is it going? Well, you don't need to have spent your life in journalism to know what the big story of 2020 was. Aside from the devastating death toll, COVID has impacted every one of us and every aspect of working and domestic life. Like many companies, we have to react and transform. We fast-tracked the evolutionary journey we've been on. We created a single editorial division, powered by our trusted, award-winning national and local brands and underpinned by a new internal wire service. Every day, the wire distributes hundreds of stories around our network. And crucially, this is done on a time line which allows sites to tailor stories to their particular audience. I'll give you an example. Daily Mirror Defense Editor, Chris Hughes, and photographer, Rowan Griffiths, traveled to Syria where they tracked down a Cardiff man who had been working as an ISIS recruiter for 7 years. The story ran across a string of our titles in print and online, including The Mirror, The Daily Star, South Wales Echo, Western Mail and WalesOnline. All digital versions were published within minutes of one another, ensuring we weren't just first with the news, but second, third, fourth and fifth too. The wire works because it isn't just about sharing stories. It's about fostering a culture of collaboration across our single editorial division. As part of our transformational restructure, we created group-wide verticals in some content areas, too, including sport, showbiz, fashion, beauty and travel. Travel: well, we can all dream. These changes required significant structural and cultural change, and it's been a credit to all our editorial staff that such a major transformation has been embraced so readily and so quickly. And in line with our strategy, we have built customer value metrics and KPIs into the businesses' usual flow of all our newsrooms. As Jim mentioned, we've rolled out a huge expansion of our newsletters program, with more than 3 million people now registered. Our virtual newsrooms are now sending out almost 1,800 different newsletters every week on subjects ranging from politics to parenting, COVID to commentary. That's way more than double the number we sent a year ago, which was sitting at 700. And the latest stats show that 9 million of them are being read every week. These newsletter subscribers are so valuable because they are already around 30% more engaged than nonregistered visitors. And as we roll out ReachID, as Jim explained earlier, we will be able to supercharge our ability to monetize them. In addition, our hyper local InYourArea site has driven a further 2 million registrations to date with its compelling mix of local news, information and services. Our titles also managed to win multiple awards and accolades in 2020. There are far too many for me to list, but I'd like to give you a few highlights. The Daily Mirror picked up Scoop of the Year jointly with The Guardian for breaking the now infamous story of Dominic Cummings' trip to Barnard Castle. The Daily Express won Campaign of the Year, twice in fact, after winning approval for life-saving and life-changing treatment for cystic fibrosis sufferers. And our regional titles once again dominated the Regional Press Awards, virtually sweeping the board in all digital categories, including Website of the Year for Hull Live. Special mention also for the Birmingham Mail, which won Regional Campaign of the Year after fighting tirelessly for justice for the victims of the Birmingham pub bombings. And if there were an award for the paper with the most retweeted front pages in 2020, then surely The Daily Star would romp it. And of course, throughout 2020, our journalists held those in power to account nationally and locally and provided their audiences with trusted information, notably in relation to COVID. Crucially, restructuring to ensure we are in the best possible place to capitalize on the opportunities ahead hasn't prevented us from investing either. In print, we have significantly increased our availability rate and introduced a comprehensive rolling program of cross-title promotional activity. Despite the enormous challenges of COVID, the sales of our national and regional papers have been astonishingly resilient. It is hard to think of a sterner test of the loyalty of newspaper readers than multiple COVID lockdowns. And some observers predicted devastation, warning we would see sales losses of 50%. In fact, by the end of 2020, we had retained around 95% of our budgeted print sales. And we have continued to invest in digital journalism, too. We are in the process of finalizing recruitment for our expanded London website, where we have more than doubled our editorial team. Over the past year, we have launched a string of new regional Live sites, including Yorkshire, Bedfordshire, Buckinghamshire, Northamptonshire and Sussex. And in the past few months alone, we have created more than 60 new roles across our national and regional editorial teams. But what does all this mean to today's audience? Well, even before our transformational restructure, we were the biggest and, I would argue, comfortably the most efficiently organized commercial publisher in the U.K. I truly believe that this new structure, with the Wire sitting underneath the entire editorial operation and our expanded range of strategic newsroom KPIs, ensures that we are better placed than any competitor to not only create but to seamlessly leverage engaging, enticing original content. Bring on 2021. Thank you very much for your time. Now back to Jim.

Thank you, Lloyd. So here are the key areas of focus for this year as we implement the next phase of our Customer Value Strategy. Registrations will continue to be a priority, and we are already making good progress towards a target of 10 million registered customers by the end of 2022. However, we are now increasingly focused on driving loyalty and engagement to continue to grow our share of advertising spend. We are leveraging the ReachID and the targeted advertising it enables so that we continue to grow average revenue per user. We will progress commercial partnerships and following a number of pilots we expect to sign our first deals during H2. We will also continue to invest in our Live network with more sites to be launched and the expansion of existing ones as we build on their success. So to conclude, we will step up our investment in people and technology to accelerate the Customer Value Strategy. The business transformation is supporting a far more efficient organization and is enabling a stronger operating margin. This has enabled us to return to offering a cash dividend, demonstrating the confidence we have in the strength of our cash flow and the strategy is gaining momentum which will enable us to double digital revenue over the medium term. So thank you for listening, and we'll now take your questions.

[Operator Instructions] Your first question comes from the line of Nick Dempsey of Barclays.

I've got 3 questions, please. So first of all, you're still seeing really good growth in digital in January and February, but that's coming at the same time as weaker than usual growth in print advertising, which, of course, isn't surprising. But to what extent is some of that digital growth coming from advertisers choosing digital when they might normally choose print? And I guess what I'm saying is, are you confident that once we hit a set of normal advertising months, won't be tomorrow, but the total advertising, print and digital combined will be growing better than it was pre COVID-19? Second question. Just looking at the doubling of digital revenue over the medium term. Of course, we can't be precise on that. But if print continues at the kind of rate of decline seen in '18 and '19, I think that, that doubling would still mean group organic declines for the next few years. So with a modestly declining group top line but that mix difference on operational gearing, et cetera, could you grow group operating profit without doing continual big annual restructuring processes? And the third question, do you have any sense of what proportion of customers who previously bought the print product have shifted to digital during lockdown and are likely to stay there?

Thanks, Nick. Thanks for your question. I've just -- I've written them down. Just -- I'll kick off on the first 2 and then ask Simon to add some comments as well. Just on the digital growth versus print, yes, you're right. There has been a move from advertisers to digital clients because there's been more people in lockdown -- in the last 3 lockdowns that we've had, which we have benefited from. So you're absolutely right. There has been a move from print into digital, but there are still traditional strong print advertisers which are there. So food retail, for instance, which is -- we have seen some improvement. Bear in mind, print advertising was down close to 45% in Q2, and that's improved to a 17% decline rate. So those print advertisers are coming back, and we expect, when the high streets open and people have the confidence to get back out on to the high streets, then we'll see that advertising start to improve even further. Just one important point, just about the digital point you make, is that the value of our digital advertisers is higher with regard to yield, exactly because we can target the customers better. So it's not just a binary conversation of moving from print to digital but it's also moving from print to digital and print to a higher-yielding digital advertising essentially because we understand the data behind that. Simon, do you want to add anything to that?

Yes. Just on the piece around the market view of the next few years around total revenue. Certainly, the market view is a stabilization, Nick, of revenue. And our long-term ambition, as you know, is to get to being a growth company in terms of top line growth. So certainly, the market view is a stabilization with a bigger digital mix now. As I said in the presentation, and Jim also commented on, we exited 2020 with 25% digital mix. And therefore, when you factor in a decent growth percentage on a 25% mix, that's much more able to offset the print declines than when we had only a 5% digital mix 5 years ago. So that is going to be a really important part of the narrative going forward. And certainly, we see a ratcheting now benefit of a bigger digital business with a bigger growth percentage being able to offset the decline in our print portfolio.

Thanks, Simon. And then, Nick, just on your last 2 questions on obviously print and the continuation of overall group revenue. If I can just bring them both together, I think that one of the advantages of growing your data and insight is that it's not now about increasing the amount of customers that we have, because we will reach -- I mean we're reaching 42 million of the U.K. population. What it really is about is increasing frequency. So even though, as Simon says, there's an expectation that print will return and you've seen a movement -- a positive movement in that position from Q2 to Q4 of 2020, we are also seeing an increasing frequency which is delivering higher yields, which the aim, as has obviously been, to get us to growing to pre-COVID levels and a growing top line revenue number. Simon, do you want to add to that as well, please?

Yes. I mean, certainly, when we look at the movement of our digital business and our print business, they do tend to move at slightly different rates. We certainly saw a quicker recovery in digital as we went through the course of 2020 and that tends to be more quickly adjusting, certainly, as we went out from Q2 into Q3 and then with a very strong end to the year. We do expect print advertising to reactivate on a sector-by-sector basis. Jim has mentioned that the areas like food and retail remained very strong throughout the pandemic. Other areas have been much more effective, whether that be sort of travel or leisure. And we expect, as the easing of lockdown occurs through March and beyond, the sectors will start to reactivate, and we will be there. And particularly, that's important in terms of our local business, in terms of SMEs, because we know that some of those SMEs have been most hard hit by the pandemic and therefore it will be important for us to help those businesses reactivate. And one of the things they will want to do is to reach out to customers to say they're back in full operation, and we will be there to help them do that.

And then just to finish on that, Nick, again, a point that both Lloyd and I did raise is that when you look at pre-COVID to where we are just now, our print product had 6 to 7 maximum impact during one of the worst generational crises we have seen. So if you're an advertiser, you're looking at what resilient product can I get out there to basically speak to my traditional customer base, then print is still really, really strong.

And your next question comes from the line of Gareth Davies of Numis.

Two questions from me, maybe 1 for each of you. The first one for Jim really is around -- you touched on the investment in people and continued investment in people, at the end. Can you just give a little color in terms of the data and commercial teams, sort of where we are in terms of -- where you'd like to be eventually, where we are now, where you've been hiring from, kind of how you've been building those teams out and particularly on the commercial side, how many sort of bodies on seats are we at, at this stage? Or is it still kind of pretty aspirational in the context of where we are on that monetization side? And then the second one for Simon is really on the digital yield. I thought it was a really useful slide, Slide 15. Can you give any flavor for, in December and as we've moved into January, how much of the sort of yield uplift is sort of self-help and outperformance to the market and how much of it is sort of market driven? And also -- I mean when we heard future present, I think they've talked about a sort of spike in digital yields through December and then a bit of an easing off in January. I wonder if you can put a bit of context on that as we sort of think about our forecast for Q1 and Q2?

Thanks, Gareth. Simon, do you want to just lead on the second question and then I'll comment on the first one?

Yes. Thanks, Gareth. Yes. So in terms of digital yields, I mean clearly, that is absolutely being helped by the Customer Value Strategy and that did lead into the strengthening in Q4. The whole market does see a drop-off between Q4 and Q1. We know that 2020 was particularly an online Christmas and that did drive a lot of yield strength in December for the whole market, and we felt that we performed strongly against that backdrop given the steps that we've taken around engagement and early stages of our commercialization of the customer data that we have. So we think we were a touch ahead, but the whole market tide rose, if you like. Moving into January, we tend to see, as the whole market does see a drop-off, that was a little exacerbated in January because of Lockdown 3. And we think that, that probably had a mid-single-digit impact in terms of digital pace, in terms of sort of Q4 into Q1, just in terms of removing some advertisers from the online auctions and driving down demand a little bit. Nothing like the level of Lockdown 1, but it did ease a little bit with Lockdown 3. And so what we would say going forward is that yield -- I think the journey of yield and the launch of the Plus packages, it's still very early days. The Plus packages really have only been active and live for a few months. And we would see that yield journey continuing through the course of 2021 and into 2022, too. So I'd say it's still very early days. We think we can -- we're already performing at or above the market level and that should further strengthen as those packages fully embed.

Thanks, Simon. And Gareth, thanks for giving us opportunity in the first question. And the way to answer it is that we are a very misunderstood organization. There is a perception that we were always an analog business, using traditional methods of selling advertising. And when you look at how we've basically modified our commercial offering, our new Chief Customer Officer was our previous Group Digital Chief, the chap who is reaching out on these Audience+ and Customer+ is our Commercial Chief who developed the Mantis product, which is a market-leading product. We just need to get this talent tools and that's what we've done with the strategy. Now that's not to say that we need more and that we are actively hiring. There is no blocker on hiring of tech and insight and data people. And every month, we're adding more. And we've also recognized that we often talk about it in this sector about horizontal acquisitions of other publishing assets. We'll flip that and we're looking at vertical acquisitions, we're looking at vertical strategic partnerships to fill the gaps when it comes to insight and data and platforms. And actually -- I mean I can't say it on the call at the moment, but we're just finalizing a deal over the weekend for a key strategic partnership with a long-standing data insight specialist just to accelerate the program. So all of that is going on. And hopefully, we can sort of brush away that misunderstood analog view that maybe investors or people had for Reach in the past. Thanks, Gareth.

[Operator Instructions] And your next question comes from the line of Natasha Brilliant of Citi.

First one, just thinking about the engagement levels, which have been very high, but in a year where we will perhaps have a bit more spare time on our hand. So how confident are you that you can keep these levels of engagement up when we, at some point, hopefully, return to a more -- to a normal pace of life? And second question is just on churn levels. So you've got 5.8 million registrations. Have you seen any customers unsubscribe or deregister? And if so, do you track the reasons why? And then finally, the registered users you've got, I think you said 2 million registered postcode. So I just wondered why you don't have everyone's postcode. Is it because you just don't ask for it straight up or it's something newer that you guys are getting? And can you just remind us what the customers are actually registering when they deregister?

Thanks. Natasha. Nice to speak to again. Simon, I'll just run through these quickly, and then you can maybe jump in any spots you think I might have missed, okay? Just on the first point on engagement levels. Natasha, we're a straightforward management team and we have openly said that the lockdown -- with Lockdown 1, 2 and 3 that accelerate our registrations. We don't take the credit for that. We think that was a large part of our accelerated registration numbers. And anyone with a brain and intelligence would be able to challenge on that. That is why the engagement levels are so important because essentially, we've got a nice tailwind for registrations, and those are still loyal users. But we have to then build on the engagement. So we accelerated our ability to target content for the right people at the right time, which is why we're seeing those 29% and 30-odd-percent average session times going up, average time spent. So we're really, really confident about that. And we also think that proves the hypothesis. If you get to know your customers better and what they're interested in, at what time of the day and how they want to be spoken to, then you should see an increased frequency and time spent, that is coming through. So the spare time that people have has helped registrations. Now the focus is on engagement, and that's how we should be judged ongoing from the next public disclosure. And with regard to the churn levels, that then follows from the registration. So we monitor that on a weekly, monthly, with 3 monthly or quarterly basis as well. And we see certain newsletters which have high levels of retention. You won't be surprised that, obviously, with Liverpool winning the League, then retention rates were through the roof. I wouldn't be surprised that efficacy of the vaccine and vaccine newsletters, then retention is through the roof. And then you have some certain troughs because of the transfer season, which we didn't really have one. And you've seen that drop through the floor. So we manage all of that. But on average, it's strong and it's above where we expect it to be from an expectations level. And then finally, very quickly on InYourArea and the postcode. If you remember back a presentation we did when we announced the strategy, the registration is the first point by giving an e-mail address and then there is a journey to basically acquire postcodes. Some people do it right away, like me, because I work here, I'm a super user. Some people will take some time to get there. So that 2 million we expect to increase over time. But just some people are quicker than others. Simon, would you like to add to that?

Yes. Just in terms of reminding everyone around that where we get our registration sign-ups from. So the biggest individual area is newsletters and the second biggest area is InYourArea, and that's where we get the postcode information because in order to sign up to InYourArea and be able to get a news feed of news local to you, you need to put in your postcode. And the other bigger area for registrations is commenting. So really, to some extent, the shape of the information we get depends what route they go through in terms of registration. But as Jim just said, over time, we expect people to register with us in multiple ways, whether that be InYourArea as well as commenting or newsletters as well as InYourArea. That's when we start to really get additive information that gives us a much sort of richer view of an individual customer. So at the moment, it's largely dictated by the route of their registration.

And your next question comes from the line of Caspar Erskine of N+1 Singer.

Just a couple of very quick ones for me centered around Page 32 of the slide deck. One was just regarding the new niche and trust site areas. And I was just wondering how much of that is deliverable out of existing editorial capacity and receiving of existing content into those new verticals? Or would you be looking to add new editorial capacity in those areas? And the second one was just on the direct advertising relationships. Are there any advertising relationships that you can repurpose from print to move across onto digital? Or are these going to be all new partnerships you're looking to push through? And also on that, in terms of programmatic reliance at the moment, what level is that at? And so where do you see that sort of falling through over time?

Thanks, Caspar. Simon, do you want to pick up the programmatic and then I'll jump in on the content, editorial and direct advertising?

No problem. Yes. So if you look at the total slots on our sites at the moment, as we've described to the market, the biggest proportion of those slots are consumed by programmatic advertising. And -- I mean that's a really important revenue generator. It's a big contributor to the GBP 118 million of digital revenue that we generated in 2020. But over time, we expect that mix to evolve. And really, we would see it as a sort of value funnel, if you like. And programmatic is going to be an important part of that funnel. But what we can do is we can move people to higher yielding areas, whether that be directly sold, whether that be specific campaigns or homepage takeovers or things like that, that we can work using these new Plus products. So over time, we would expect, if you imagine it as a pie chart, the programmatic part of that pie chart to become smaller and that yield to increase as we get a bigger proportion of whether it be directly sold, et cetera. And I guess the important thing to note is in terms of the yield benefits of that, really with the same number of impressions and, therefore, not assuming any traffic growth and as we've described today, we are getting significant traffic growth. But putting aside traffic growth for a moment, it is a factor beneficial to move people, for example, from the open marketplace through the general auction into directly sold. That can be worth multi-times more in terms of yield for us and, obviously, provides our advertisers with a really highly effective solution too. So that's where that pie chart will evolve with the Customer Value Strategy and will drive digital yield. And that's what will help to drive the doubling of digital revenue over the medium term. We're not going to double the U.K. population, but we will be able to double based on an increased value through engagement and yield.

Thanks, Simon. And Caspar, just to your first question, it's a cracker actually, and I'm glad I get the chance to answer it. It is this, because of the dread of editorial and journalism that we have in United Kingdom, we practically cover all content verticals. But what the difference now is that, again, despite the misunderstood question about, oh, this is a sector in decline, or, this is a business in decline, it is not. We have heavily invested in our digital journalism, in our Live sites, bringing new skilled journalists into the business as well as building upon the award-winning journalism we have. And if you look at the data, which this is really important, the reason why we launched TeamDogs is it reaches over 2/3 of the pet-owning households in the United Kingdom. Now we then layer that over the fact that FMCG pet care is one of the most valuable verticals in the U.K., that was a no-brainer for us to launch that. You then asked a question about, does that mean there's a binary difference between print moving into digital and just having certain advertisers move across. The answer is no. I mean if you take the Euros that are up and coming, where we would have -- and I expect both to have more drinks and sort of food offers in our pages and DPS. Now we will continually run that. That's our traditional bread and butter. But imagine when England do reach the final and we launched that beer offer and that food offer, if you could actually tie that across to our England national newsletter database about what type of offers you could then offer, and that's the opportunity that we have as a business where it used to be, let's put it in the paper, which is still hugely valuable, we are now saying, tell you what, do you have the data of these individuals who we're trying to speak to. That's how we're going to bring it together in the future, Caspar.

[Operator Instructions] We do have 1 more question, gentlemen, from the line of Johnathan Barrett of Panmure.

Just got a couple of questions. I'm not quite sure if you've answered some of this already; the line got distorted. Just turning first to your digital objective for the medium term, I just want to run through some of the assumptions in there. First of all, just to confirm, there's no assumption of acquisitions contributing to that. And then secondly, just on how you get to that number. Can you give us a rough steer on the composition of the growth? How much is going to come from the digital market yield improving and then Reach's yields improving and the component of volume that you expect to contribute as well? I appreciate within that, you -- just heard that you're seeing some contribution from a shift from local marketplace to the private marketplaces. Perhaps you could put a little bit of color on that as well.

Okay, Johnathan. I'll just -- I'll quickly just kick off and then I'll hand it over to Simon on the digital doubling in the medium term. That doesn't assume that we'll be acquiring an asset which will double our digital revenue. That is based on our strategy through the organic growth. Now it doesn't exclude any opportunities that might come, that anyone who is listening, that is the business doubling in the digital revenue in the medium term based on the strategy and the assets that we have. Simon, do you want to pick up on the rest of Johnathan's question, please?

Absolutely. So in terms of the composition of growth, I mean you've seen in the information that we've shared today around page views that we have seen a very significant further step-up in volumes between 2019 and 2020. Page views went up from 1.3 billion to 1.7 billion on average per month, which was over 30%. In terms of unique visitors, however, we are pretty saturated in terms of the U.K. So the increase was more modest. It was still sort of mid-single digits, but it was more modest. And over time, clearly, given we have filled in the map of the U.K. with engagement and so on, that is unlikely to be able to increase sort of materially from where we are. It will be more modest and more tempered. So really, what we're looking to do is ensure that each unique visitor becomes more valuable to us. And that's the basis of the customer value strategy. So the principal sort of driver of the improvement that drives the doubling of digital revenue in the medium term is about each one of those unique visitors, both consuming more and being worth more through the targeted packages that Jim described in the presentation, whether that be the Plus packages or other things we develop such as niche content and so on. Now in terms of how those interact, how volume will interact, how the general auction market rates will interact and then how the value improvement through the Customer Value Strategy, how those will combine, clearly some of those are factors not within our control. The market will move the way the market moves, and it's about us outperforming the market and seeking to drive additional value. And we are still a small percentage market share of digital display. Around 2% market share of U.K. digital display based on some of the external benchmarking. So we think there's a big opportunity to become a bigger percentage of that in a growing market. So we wouldn't sort of want to be drawn on the specific individual elements because there's lots of moving parts. But I think the principal driver, we would say, of doubling digital revenue in the medium term is the Customer Value Strategy. It's about the average revenue per user going up, and going up on the basis of improving the yields from individual customers and improving engagement through more consumption via newsletters, commenting and other platforms.

Is there any particular time line you're looking for in terms of this -- in terms of the greater proportion of sales coming through private marketplace or direct? Have you got anything sort of scheduled in when you expect things to happen?

Yes. I mean Jim mentioned GBP 0.5 million worth of advance bookings and Q1 bookings around directly sold, and that really is -- that is an example of moving slots into higher-yielding privately sold, directly sold. So that's an example of a figure that's live, that's happening right now. We expect that to ramp up through the course of 2021. But really we would say it's over the next 18 months that we will start to see those more significant increases in the move from OMP to PMP. Clearly, it will be an incremental journey. It's already begun, and we expect it to sort of build sort of consecutively quarter to quarter. But we're just -- as I said in my -- an earlier question answer, we're at the early stages of that. And when we're further progressed on the engagement side, we expect the commercial site to really progress through the course of 2021, and that will drive the digital growth rate.

That was your final question, gentlemen. Please continue.

Thank you, everyone, for your time and your interest in the company, and we'll conclude the Q&A. Thanks.

Thank you.

Thank you. Ladies and gentlemen, that does conclude your conference call for today. Thank you for participating, and you may now disconnect.