Q&A: CEO Tellado talks about the overhaul at Consumer Reports

Marta Tellado joined Consumer Reports in the fall of 2014 as president and chief executive officer.

She began her career in the consumer movement and has 25 years of experience as a frontlines advocate and leader for social justice. She is the organization’s seventh president since its founding in 1936.

Tellado came to Consumer Reports from the Ford Foundation in New York, where she was vice president for global communications and an officer of the board. While there, she led strategic communications and advocacy on a range of social-justice issues in the United States and around the world, including economic fairness, free and fair access to an open Internet, and civil rights.

Born in Cuba and raised in New Jersey, she began her career in public policy, advocacy, and social justice working alongside consumer advocates Ralph Nader and Joan Claybrook at Public Citizen.

Since then, she has served as executive director of the domestic policy group at the Aspen Institute; as director for national issues and outreach for Sen. Bill Bradley; and as vice president of the Partnership for Public Service, where she launched the Best Places to Work in the federal government and the Service to America awards.

Last month, Consumer Reports posted revenue of $238.9 million and an operating loss of $13.8 million for its fiscal year ended May 31, 2018. That’s worse than the revenue of $241.7 million and operating loss of $5.4 million for the fiscal year ended May 31, 2017.

However, revenue from subscriptions and newsstand sales rose slightly to $206.5 million from $206 million in the 2017 fiscal year.

Tellado spoke Thursday by telephone with Talking Biz News about how Consumer Reports is changing its business model. What follows is an edited transcript.

What’s been your takeaway from the financial performance of the 2018 fiscal year?

I think it bodes well for us, and I will tell you why. We are at a point historically where we are making some very smart strategic investments, and they are starting to pay off. Some of these have been investing in where consumers are, and some are investing in ways to engage them in new and different ways.

We are seeing younger and more diverse audiences visiting our website, and we are seeing more people overall visit our website. When I joined the organization, we were averaging 10 million visits, but now it’s up to an average of 15 million monthly unique visitors. In a really good month, we’re sometimes hitting 17 million uniques.

We are also seeing really good satisfaction rates from our readers in another core product, the print magazine. They are very satisfied, and we feel good about that.

We also launched membership. I think that transition has allowed us to embrace the notion of something we have always been, which is a community. We have like-minded folks who believe that as a group we can deliver changes in society. Member signups are exceeding our expectations.

We have more work to do to build new products and services. But I feel really good. A lot of that investment is paying off.

Content development expenses rose to $87.2 million from $83.1 million. Why is that?

We had to build new capabilities and new infrastructure. And where that comes from is the desire to be where consumers are, and to be able to give them information however they want it and wherever they need it. So it has allowed us to create and experiment with a lot of new things.

We also have to deliver content on a whole series of new platforms, such as Amazon’s Alexa and Google Home. More people are going to want information by voice. We have seen a dramatic increase in our presence in Instagram and Facebook. And then there is the longer form commitment to investigative journalism on topics such as food safety and auto price discrimination.

We also have to develop the expertise to build those skills around data journalism. The one thing we have is very rich content and sources of data.

What are some of the ways that CR is looking to boost its revenue?

The way we are thinking about [revenue] is a combination of innovating and optimizing. Sometimes you check one or the other, and sometimes you do both. There are tradeoffs between optimizing for the present while reacting and building for the future.

I’d like to talk about a couple of them. The thing we have to focus on is optimizing the current products we do have because they are very squarely in our mission. On the new, we have transitioned to membership, which has allowed us to create new services and products, such as “Ask CR.” That is a very personalized, one-on-one service for consumers who don’t want to do too much digging but they want advice.

The marketplace has shifted to a digital landscape. So everyone is online and engaging. How do you translate our help into that marketplace?

One example of the ways we have optimized something we have already had is shopping. Back in 2009, we asked our readers how we could help them. We discovered that they were shopping online and wanted to go from our search direct to purchase what they need. So we, like others, added the ability to go from searching for reviews and ratings on CR and then straight to purchase the products they need. We just added many new shopping partners. That is one of the fastest-growing streams for us.

One of the pain points for consumers is how trusted are reviews. We have, in beta, a browser plugin for members so if you’re searching on shopping sites, say Amazon for leaf blowers, for example, and if you have that plugin, across the top of the screen you’re going to see ratings and advice from Consumer Reports on the best models. That allows you to make a trusted purchase decision to give you more confidence.

Another is the car-buying process. As soon as you hit the lot, you’re hit with aggressive selling tactics. With our partnership with True Car, we’re able to provide a low, pre-negotiated price so that you have a sense of confidence about what you are doing.

If you think back about the CR model, the reason we are so different is not only are we a rating and testing organization, but that translates into advice in investigative reporting and changes in the marketplace.

Is there a move to sell CR lab test data and CR survey data to manufacturers’ competitors, not just the manufacturers themselves?

The newest revenue stream is around the supply side, those that deliver products and services. It’s about developing new products and services for what I call an expert audience — regulators, engineers, product designers. Anyone who wants richer data.

We have trend data on things like auto purchases. We are a nonprofit, mission-driven organization. We exist to bend the marketplace to consumers. So, how do you create systemic change? I am really excited about using data for social good. The reason it’s so important is that on the demand side it’s waiting for the products to hit the market, we want to use that knowledge and data to inform product design – so that products enter the market already informed by consumer needs, and potential harm.

The data is really intended for that expert audience. How do we share that analysis with regulators with industry engineers and product designers who want to digest and use that data?

CR is doing more video and more content online. How is that attracting more readers?

What we know about consumers and people generally is that we’re all absorbing content in so many different ways. We need to be where they are, and that means we need to engage them in all the ways they want. Do they want to look at more comparative data? Or do they simply want to share their story as part of  a community approach.

You can always come to us if you are searching for a solution. And you can come to us if you want to be part of a larger movement.

What I’m seeing on the video side is significant interest – we’re doing a television show that is also on demand, and we have other video on demand by subject area. We’re also doing podcasting. It comes down to being where consumers are and where they need us. And the data shows that we are reaching them where they need it.

What do you see as your biggest focus for the current fiscal year?

It’s always about how are we having impact on people’s lives. How do we measure the extent to which consumers are being prioritized in the marketplace? That is always top of mind. We always have to be where consumers are so that we can have impact.

That is the heart of social impact. We’ve got to be able to generate that engagement with them so that we can have impact for the longer term in the marketplace.

How do you expand the Digital Standard to more technology going forward?

That one is really near and dear to me. In a world of connected products, software is coursing through everything we touch, and our products are talking to one another, it is a must do. We have to create standards where none exist. How do you began to engage consumers when so much is not transparent? The Standard helps give them the tools so that they know which products protect their privacy and their data.

The larger question of the Digital Standard is who owns that data and where is it going? We’ve made terrific progress there. We have done testing around smart TVs, and mobile peer-to-peer payment services and home security systems. Those tangible findings push the larger dialogue in terms of ensuring the privacy of consumer data. A lot of the consumer protections in the analog world don’t apply to digital.

How is the TV show on NBC going, and are TV shows something you’d like to expand?

This is our first network series, our Saturday morning television show. It’s another exciting innovation. We’ve been up around 800,000 and 1 million viewers each week, and we’re in the top three slots in key markets. We’re seeing good audiences in markets such as Dallas and D.C. and New York. And we’re getting 750,000 to 800,000 video views across social channels. We’re just at the very early stages.

But I am particularly excited that early next year we’re going to be doing a Spanish language version. It is about reaching people and new audiences.

What’s been the biggest hurdle to overcome in transforming CR?

Obviously coming to CR was such a remarkable opportunity. It is an iconic brand, and so many people know of us. But others don’t know us, and those that do know us don’t have a full picture of who were are. So we’re working very hard to reintroduce ourselves to those who do know us and give them a fuller picture and introduce ourselves to people who don’t. There is a lot of noise out there, and an increasing lack of trust in institutions. I think Consumer Reports is needed more than ever, to provide the trusted information consumers need.

While that is a hurdle for us, and all of these programs and ways of reaching consumers are breaking through, consumers face even bigger hurdles. We have to up our game so that we can reach them.

What do you want your faithful CR readers to know about the changes going forward?

I’d want them to know that in a dynamic marketplace, change is a constant, and we are going to be there for them. We’re going to aggressively find the truth and give them a sense of confidence in the marketplace. We have to be a trusted partner every step of the way. I would punctuate that by saying that as members, they are part of a larger community. That’s why it’s important for us to hear from them as we engage that community and grow that community.