Prioritizing the Next Stage of Publishing
With print revenues not returning to pre-recession levels and tablets ushering in the era of mobile media consumption, publishers find themselves confronted with a bold new business paradigm. According to a recent report from eMarketer, Internet advertising in 2012 will, for the first time, surpass print ad spending. (The research firm expects online ad spending to hit $39.5 billion in the United States, compared to $33.8 billion for print.) Mobile ad spending alone is projected to increase to $1.8 billion in 2012, up 50 percent from the previous year. Couple this with new opportunities in non-traditional revenue streams (marketing services, events, repurposing content for e-books, premium content and paywalls, lead-gen) and you've got yourself a recipe for reinvention.
Such developments prompted Publishing Executive to ask several leading publishing executives how they plan to guide their companies into the future.
"This is an old story to us," Bob Carrigan, CEO at business-to-business and consumer tech publisher IDG Communications Worldwide, says. "The peak of print revenues in the tech media category was 1999. We have been moving our business to more Web-centric, interactive business for over a decade now. We view the move from the conventional Web to the mobile Web as a continuation of the story that users and marketers are moving forward in a digital direction, and IDG is all over it."
For more details, we asked Carrigan, Asset International's Jim Casella and Farm Journal Media's Andy Weber to share some details of their core strategies and initiatives going forward.
CEO, IDG Communications Worldwide
In recent years, IDG has diversified significantly into events, marketing and ad network services. The tech giant operates 200 magazines, approximately 450 Web properties and 700 events in 90 countries worldwide.
Publishing Executive: What are the key new directions you are looking to take your company?
Bob Carrigan: The short answer is that we are taking the company in the direction of our customers—both the end users and advertisers. End users want content in a variety of formats and delivery methods including mobile, video, and via physical events, to name a few. It's our job to be there when and where our end users need us. Regarding marketers/advertisers, we try to be just ahead of marketer needs so that we can help show them the way. We were the first to launch a comprehensive suite of social media services via IDG Amplify. When audience-based buying started to become popular in 2008, we launched the IDG TechNetwork, the most comprehensive ad network in the tech media space reaching 450 non-IDG sites. As mobile became important, we launched our Mobile@IDG suite of services.
As Marketing Services became more important, we doubled-down on our Strategic Marketing Services group, which had been around for a decade. I could go on and on, but our business philosophy is to jump aggressively into new areas and not concede any important parts of the market to upstarts or [venture-capital]-backed businesses.
PE: Why did you choose these new directions?
Carrigan: Again, it is about listening to customers. IDG is the leading tech media company, but the definition of category leadership has evolved. It's no longer just about great print brands and great websites. It's about great services for users and advertisers, and this has been the most explosive part of our business.
PE: What do you mean exactly when you say listening to customers? How do you achieve this?
Carrigan: … We have the end-user customers who visit our websites, read our magazines and attend our events. … The methods for watching what users want have evolved. There are lots of analytics, programs and software that we use to monitor Web behavior. We have dashboards that show what users are interested in, what resonates with them, what keeps them on our sites longer. And, of course, we [also] do traditional surveys. One of our businesses is IDG Research, which is separate from IDG, [whose biggest client] is our internal clients. … [Research] is in our DNA; IDG started 47 years ago with IDC, which was our market research company. That started before our first magazine, … Computer World. So our roots are in research, and we are extremely religious about listening to our customers.
The other way to use modern capabilities is through social media. We have hundreds of thousands … of followers and folks that our editors are constantly in touch with. Social media's been a huge tool for us in terms of getting our stories out into the marketplace and harvesting for new users, but also getting real-time feedback from existing users.
On the advertising side, we have a very large field sales force across all our brands both in the U.S. and globally, so we can speak to customers on a global basis. It's very interesting because there are different issues in these markets. Mobile is much bigger in Asia than in the U.S. We've learned a lot from that.
PE: How are you prioritizing new publishing initiatives?
Carrigan: It's driven by customer demand. We stay close to our customers, and when we feel a new opportunity coming, we jump on it. Sometimes it doesn't work out, but more often than not, we have been able to build great new businesses by being aggressive.
The wonderful thing about … the tech media category is that the advertisers are very experimental. We have new products that we've launched—whether it's our social media ad units, our Community Works social media products, or some of our new mobile products—that were experiments for us, but they came from a collaboration with a marketer who said, 'Well, let's go for it and see where it takes us.'
PE: What sort of internal restructuring is required to make these initiatives work?
Carrigan: We believe in focus at IDG. When we launched our ad network, we started a dedicated group, based in New York, that now has 50 employees. We have a dedicated marketing services group. We have a dedicated lead-gen business via IDG Connect. And of course, we have editors and salespeople who are dedicated to specific media brands. To be successful, you need to dedicate resources, especially if you are competing against venture-backed pure-plays.
PE: You mention competing against venture-backed enterprises, which requires smart investment on your part. How do you approach that?
Carrigan: In terms of the big business areas we've gone into, whether the lead-gen business or the marketing services business, or the third-party ad network business—those are things where we saw a big opportunity in our category, and it was only a matter of time before some venture-backed business came in. This happens in all businesses, but especially in the media business. The media business is littered with former category-leading media companies that conceded a big part of their market because it wasn't in their traditional wheelhouse, because they were traditionally print guys. …
It's difficult for larger companies to think about these emerging markets because they are involved with their day-to-day challenges in their core business. We do not concede these spaces to anybody. … Historically, in our category, we sell by brand and around editorial category, but there are all these high-value spaces that are emerging, like selling by audience-targeting methods. These are the realm of these pure-play companies, but what we want to be able to do at IDG is go in and offer our own suite of solutions. That requires focus.
I can't expect the people who come in every day and do a particular thing, whether it's producing a magazine or producing an event, to create these giant businesses and compete head-to-head with pure-play companies. That's why in a lot of cases we create new, focused units that help us to pursue a much more dedicated [goal]. When you dedicate resources, all kinds of wonderful things happen. You get focus. … Sometimes it can be expensive, granted, but that's just part of the game. We've had many more successes than failures, and you just have to take your lumps when you were maybe just too aggressive, but you have to err on the side of aggressive or you will get run over.
PE: Are you moving in any particular direction with monetization models?
Carrigan: It's hard to generalize … but we love end-user revenue. It's a big priority. We're very excited about generating more end-user revenue in the mobile space because of the ability … to give highly personalized content that has very easy payment mechanisms—whether iTunes or other emerging methods. But the ad piece obviously is also a big priority—the advertising/sponsorship/events exhibitor space. That is important to us.
You have to treat each market differently, and in some markets there's a great opportunity to drive subscriptions, even for trade brands. That's why we have focused business units in each of these markets. We don't manage Germany from Boston. In each country, we have a CEO and a dedicated business unit that's dealing with the issues in their local market, so we can take advantage of the difference and the opportunities in each of these markets.
PE: That ties back to what you said before about having your ear to the floor and really being able to track everything in each market.
Carrigan: That's of fundamental importance. All kinds of good things happen when you listen. It seems like a blinding glimpse of the obvious, but it needs to be said, and it is our company's philosophy and … where all these things launch—it comes from that dialogue with the customer.
CEO, Chairman of Asset International
Asset International is a business-to-business information and technology company offering data analytics products primarily targeting the financial services industry. The company specializes in acquiring undercapitalized smaller firms and providing "growth equity," allowing them to invest and expand.
"We want to find companies that have really good assets and brands, but haven't really had the resources to make the migration ... to more of an integrated solution for our advertising partners, or they don't have the resources to go global," Casella says. "So we've brought capital to the table."
The strategy has reaped rewards. Putting aside its acquisitions, Asset International saw organic growth of "well over 16 percent" last year, Casella says. The company expects organic growth of 17 percent to 18 percent in 2012.
PE: In what key new directions are you looking to take your company?
Jim Casella: We try to take brands that have strong brand equity and, where possible, move them into other markets rather than create a new brand each time we look to expand into another country. For example, Plansponsor is a brand we acquired when we bought Asset International in late 2008–early 2009. It is well known in the retirement market in the U.S., but was never taken outside of the U.S. We looked first to see if there were comparable brands we could acquire in the U.K., and we finally decided to launch Plansponsor Europe out of London.
When we look at a market, we look at a full integrated offering—everything from Plansponsor's full digital offering to integrated events. We just held, in November, the first Plansponsor Europe event in Barcelona. … It has become one of our key brand offerings. …
About 60 percent of our business is data-analytics subscriptions focused on fund flows to the mutual fund and bond fund industries. … [Digital advertising] is the fastest-growing revenue stream for us—it grew over 50 percent this past year, and in the prior year, [it] grew over 90 percent. …
PE: Why did you choose these new directions? What trends argue for their implementation?
Casella: I think … the world has become a smaller place, and to create value longer-term, you need to be able to create a global-information services company. Probably the company that has done the best job up until now doing this in the IT space—and I'm a little biased because I spent almost 10 years with them—is International Data Group [IDG]. They have IDC on the research side and brands like Computer World and PC World that span the globe. In the financial services area, we have not seen somebody be able to put that all together. There are strong examples on the data-offering [side] from Morningstar and Bloomberg—and Bloomberg is moving more global with its content—but we see opportunity in financial services to really be global. When you can say to a client, 'What market do you want to penetrate and how we can help you do that?'— it's a very different strategy.
For a lot of companies, it's a very difficult strategy to execute because it requires capital. You can't just put one or two people on the ground; it requires a commitment. For example, in London we've just moved all of our employees into new office space … on the edge of the City of London [financial district] where our client base is. … We have in that office … Plansponsor Europe, [security services publication] Global Custodian and CIO … and we are launching a brand in the wealth management space called Philanthropy Management. … We've already sold out all of the cover [positions] for the first year of [Philanthropy Management]—it's a pretty exciting launch. You don't see publishers today thinking about this, but we look at the market and where there are subsets and opportunities.
PE: How do you make the decision to launch a new brand?
Casella: We've done five acquisitions, and are working on a sixth one. We buy from entrepreneurs [who] are required to stay with us for at least two years. They end up with shares in our holding company. They set the priorities because they know the markets best. For example, John Lee is the gentleman we bought The Trade from. … He was the one who said in the wealth management area there is an opportunity to launch Philanthropy Management. … I rely a lot on these entrepreneurs from whom we've bought companies, who have operated in these markets for many years.
PE: Where do you see publishing in five years? Ten years?
Casella: … There will continue to be consolidation and there will be global expansion. Having said that, consolidation will take place by entrepreneurs seeing opportunities and starting things, and larger players eventually buying them out. I think that will continue. When you look out at the world five, 10 years from now, I have a feeling we are not going to be looking at silos … where [companies] define themselves as 'I'm a U.S. media company,' 'I'm a U.K. media company.' I think you are going to see companies much more defined as a global presence.
CEO, Farm Journal Media
Farm Journal Media, which serves the agricultural market, has long been known for its pioneering efforts to serve niche audiences within its business-to-business segment, such as creating targeted versions of print publications. In addition to a strong presence in print and digital media, the company has recently branched out into events and continuing education programs.
PE: In what key new directions are you looking to take your company?
Andy Weber: We're an enigma in that our print revenues have grown by over 20 percent in the last two years and are actually higher than they were 10 years ago. That said, print advertising is now only 35 percent of our business versus 65 percent 10 years ago. The Internet has certainly grown rapidly, but not at the expense of our print revenues, and we're now deriving a ton of revenue from our audiences via continuing-education events.
'Adapt or die' is a phrase I learned … from one of my group publishers in a previous life in the mid '90s, when he was trying to introduce the Internet to his group. He held his annual sales meeting at a resort in Death Valley as a backdrop. There's a certain cornered-animal mentality to our creativity. We'll have grown organically by nearly 50 percent in three years by the end of 2012, and we don't see that organic growth curve changing. We are not typical in publishing—we've tapped into significant corporate affairs and investor relations budgets. We've tapped into government grants and relationships with NGOs for custom publishing. Internet mainstream buttons and banner advertising matured in our business before it ever hit critical mass, so now we're well ahead in mobile, which is a lifeline for our audience. We've started a nonprofit foundation that will need us to furnish a lot of core agronomic and business education to third-world agricultural economies in the future. We're out of the box.
PE: How are you prioritizing these initiatives?
Weber: We have become very protective of our time and opportunities, and we all embrace a mantra of 'think a decimal bigger.' New business ideas have to have either quick or substantial payoff and usually both. Farm Journal is not a subsidiary of a large corporation or [private equity]-backed with deep pockets; we're investor-owned, but row our own canoe. We strike out sometimes, but we come to bat a lot, and our batting average is pretty good. Farm Journal Media has a very creative and motivated culture.
PE: Where do you see publishing in five years? Ten years?
Weber: The business of business information and media hasn't fundamentally changed and probably never will—just the tools. It sounds cliché, but it's all about filling needs and linking buyers and sellers, and always will be. PE