Wednesday column: Replacing print revenue a fool’s errand, new digital revenue is the goal
Publishing staffs complain on comment boards of management that demands better digital sales results, but fail to invest in their existing print products or develop new digital ones
Reading through employee comments about their comments on some of the online boards can depressing… if you only look at publishing companies. Reading the comments of employees at some companies like Apple or other tech firms is like entering an alternative universe: comments actually have positive things to say about the big work loads and the challenges management present to staff; where at many media companies, employees complain of being over worked, under paid, and certainly fearful of their benefits and ultimately their jobs.
The difference is not that one group of workers want more work, while media professionals are lazy and looking for handouts. The difference is that one group is working at growing, successful companies where new products are produced regularly, while the other group constantly hears of layoffs (or experiences them themselves) as well as product sell offs and closures. One group works for a publicly traded company that must report its earnings and face investors, while the other works for a company owned by a private equity firm where results are closely held secrets… until it is time that poor earnings must result in downsizing.
One constant theme is that print revenue is declining and management is pushing hard to replace that lost money with digital advertising. To many employee commenters, it seems like management believes that there is a belief that print dollars and digital dollars come from the same place, and all one needs to do is push harder on the digital button.
It doesn’t work that way, which is why it is so frustrating for media professionals trying to transition from one revenue stream to the other. It is not like the advertising decision maker at a big construction equipment manufacturer will one day pull their print ad schedules from one trade magazine, but then be convinced to give those dollars back to the same rep for the same magazine for digital products such as the magazine’s website or tablet edition. It’s not that easy, as these employees will tell you (over and over again).
In many B2B media companies, a combination of factors than led to companies having an increasingly difficult time stemming their revenue losses. Sales and editorial (and production) staffs have been reduced at a time when publishers who used to be able to concentrate on one title and one industry now must deal with multiple books, often in different industries. This isn’t a brand new trend, but it has gotten worse.
When I was recruited to Cahners Business Information (soon to be renamed Reed Business Information) there were two publisher openings – one group of two magazines in two different industries, and another group of two magazines, both in the medals industry. I took the two titles in the two different industries because I wanted to avoid a commodities market. At the time there was recognition that no one publisher, or no one sales person, could handle too much of a revenue load. Reps were expected to produce a certain level of revenue, but asking for much more than that meant customer service would decline and clients would be lost. But when Reed Elsevier management started to take more and more control this understanding went away. In order to earn more profits, the company started cutting sales position, thinking that the reduced number of reps would not mean a loss of revenue, only that the reps remaining would make greater commissions – it didn’t turn out that way.
One of the books I took over once had ten reps and $10 million in revenue. By the time I took it over it was down to two reps and $2 million in revenue. The market, meanwhile, had actually grown (though reduced government spending did mean some decline in overall spending).
Now, B2Bs find themselves in a situation where they have less sales power, at a time when their publishers (if they even have one) no longer has the time to be a major player in the trade associations and manufacturing organizations of the industry they cover. With less time to be intimately involved with their industries, many publishers no longer have a clue what the marketing needs are of their ad prospects. Attending the occasional trade show is no substitute for sitting down with a CEO at an association meeting discussing the future of their industry.
When you look at the loss of ad dollars being experienced by the newspaper and magazine industry (especially B2B) one might be tempted to think that ad dollars have simply shifted from print to digital. But that is too simple an answer – they also have shifted in format and from one type of type of company to another. It is clearly not the case that the full page ad in a trade magazine has become a “full page” digital ad being displayed by the digital equivalent of that trade magazine.
For many this is obvious. But look at the comments of those sales professionals complaining online about their companies – it is not so obvious to them. They are being told to sell more digital, to their same list of clients, with the same product offerings they have had for years.
What is needed is new products, new client lists, new tools. Sadly, sometimes it might be necessary to have new sales teams, but many would argue new management is also demanded.
When you look at many of the CEOs in our industries today you see many have moved from the front office of one PE owned firm, to the PE firm itself, then placed back at the next media property. With little actual industry experience, and no experience with digital advertising, these execs are often seen as simply demanding “more” without employees understanding what “more” really means. As one former employee said in frustrating: “they told us to sell more, and then took away our audits, combined media kits, and reduced the editorial staffs. Then said we weren’t producing enough revenue and started the layoffs.”
That is not a digital-first strategy.
Identifying the problem is one thing, identifying the solution is another.
Some companies, seeing that they currently have no answer to declining print ad pages, have begun to shift their companies from being magazine or newspaper driven to being data, event or broadcast driven. This is frustrating for many of us publishers, but one can not argue that from the perspective of the front office this strategy has merit.
But unless you firmly believe there is no future for information products such as B2B magazines or newspapers, it doesn’t really address the issues of concern to publishing professionals.
How do companies such as Apple, Adobe or Microsoft deal with changing markets and shifting revenue streams? By creating new product lines, even as they rely less on their old ones. The problem is, do you lead or do you follow, and can you actually come up with new products that will bring the desired results. It’s unrealistic to say “go out and come up with the next iPhone,” and actually expect it to happen.
But protecting existing products is a losing strategy. If introducing smartphones and then tablets was going to cut into Mac sales, Apple didn’t mind, as long as it meant more customers, more revenue and more profits. Compare that approach to Microsoft’s response to the new competition, withholding Office from the new devices, buying a cell phone company, etc.
For many media companies, creating the products that will kill off their own existing products may be the best answer. Rather than simply shuttering a magazine and moving completely online, might it not be better to create new brands that are digital, ones that can approach prospective advertisers with new digital solutions and not have the burden of appearing to simply be the old brands in a new guise.
This approach actually works in print, too – though most print publishers hate to employee this strategy. But spin off magazines was once all the rage. Some of these new titles were created when the publisher realized that they were attracting new categories of advertisers, but that they advertisers would want their own editorial environments. Fearful of a start-up coming in and stealing their business, they launched their own titles to preempt the potential competition.
One B2B slyly created their own ad network made up of new online properties and the web properties of former competitors. A few competitors complained, but all jumped on board when they realized that clients were migrating to the easy to buy digital solution that could offer greater reach, at a much lower price than buying a group of magazines – and where there was an obvious gap in the coverage, the company launched their own website to fill the gap.
If you know your markets, you may know your solutions – they are the new ideas that you fear others might implement, but your company is to entrenched in its approach to launch.