More than one speaker at the Digital Innovators Summit in Berlin in March commented that we are living in a “VUCA” world: meaning an environment that is volatile, uncertain, complex and ambiguous. I’m sure most media and publishing businesses would recognise that feeling. The two day summit in Berlin, organised by FIPP and VDZ, provided examples from around the world of how publishers were tackling this challenge and finding ways to grow their revenues. Here are the stories and ideas that caught my imagination:
How to add value to a media business
Whether you have immediate plans to sell your media business or not, it is helpful to know what types of activities are most likely to add value for a future investor. Reed Phillips of Oaklins International provided some helpful examples of recent multiples of Ebitda, mostly from the US but still a good guide to the relative value of different activities. Languishing at the bottom of the table is pure print at 4-6x. Subscriptions print businesses fared a little better at 5-7x. Both events and digital media, however, enjoyed multiples of 8-15x. Factors that drive valuations are having a diverse mix of revenues, high visibility on future revenues, and evidence of innovation. Businesses that are still print focussed, ad reliant and lack innovation have achieved values of just 0.7 x revenue or 6 x ebitda. By contrast, High Times which covers the recently legalised and rapidly expanding marijuana market, which has 71% of its revenues from events, recently sold for 5.6x revenues.
Growing digital subscriptions
FIPP has recently completed their Digital Subscriptions snapshot, which ranks publishers with significant digital subs revenues. The list is dominated by large US and UK news and B2B media, topped by the NY Times with 3m digital subs, but there is strong growth in Germany, and also in Asia. Average subs rates are $3.50 a week. Many publishers shared their moves into developing digital subscriptions. Bloomberg has launched a $450 pa content subscription and has dramatically exceeded its forecasts.
Swiss news publisher NZZ has followed an interesting journey to grow its subscription revenues in a small country. They focus initially on driving registrations, and through a series of tests on the mix of free and paid content, and using machine learning to make personalised offers to prospective subscribers, they have grown conversion rates from 0.8% to 2.5%, and now target improving this further to 5%. Along the way they have learnt the best times of the week to make subs offers – Saturday is no good, apparently!
Many publishers are adding exclusive events and benefits to content subscriptions to develop membership packages. Quartz offers a membership package that includes exclusive field guides and the opportunity to ask questions directly to the editorial team. The higher levels (patrons) of the Guardian membership scheme include access to morning news conferences.
Diversifying revenue and launching new businesses
Many publishers are developing new products and services for their audiences. Vogue Business is Conde Nast’s first B2B launch, using their global fashion insight cross all their editions to inform professionals. They tested an email newsletter to a core list of 250 customers, listening to feedback and gradually evolving the product as it grew to reach an audience of 7000. Next step is to build a website to develop a paid subscription proposition.
Active Interest Media has created several new businesses around its equine magazines, spotting underserved gaps and making the most of their niche reach: from an online service for buying and selling horses, to specialist insurance for people towing horseboxes, online learning on equine technique and horse healthcare, and running large scale equine competitions. Latest move is an online e-learning platform for horse trainers to create and monetise their own courses. Trusted Brands Media has also moved into online e-learning, creating a series of courses in DIY and building skills, which has attracted a new audience a number of whom then go on to purchase their established magazines.
Finnish publisher A-lehdet, which reaches half of the population, has packaged preventive healthcare content into a new digital resource which has 2m visitors and 60k articles, videos and podcasts. And possibly the most unusual diversification was that of luxury publisher Heart Media of Singapore, who built a blockchain concierge service that allowed super affluent blockchain traders to buy yachts, watches and other luxury goods using crypto currencies.
Making digital transformation happen
This is a major challenge for incumbent media businesses, according to several speakers, including Axel Springer, Trusted Media Brands and Haufe Group. The goal is fairly clear, to borrow processes from tech firms, be extremely customer focussed, build cross functional teams who can experiment and test and operate under agile principles. Several speakers emphasised the importance of creating basic products and testing them live in the market rather than embarking on exhaustive pre-launch market research. But beware, in large organisations, central interference and hierarchy can kill innovation, running the risk of so-called “zombie agility.” Smart organisations hire in senior staff with a tech start-up background, but patience is needed, as cultural change can be a two or three year journey.
How technology can engage audiences
If the ultimate goal is digital subscriptions, then a necessary intermediate step is engaging audiences and discovering more about their interests and behaviour. Several new technologies are being used to achieve this. Artificial Intelligence (AI) and machine learning are being used to analyse reader comments, spot trends and provide direction for editorial teams. Online polling systems can be linked to relevant editorial content, and with automated sample weighting and user registration, can monitor trends in audience opinions.
BBC Good Food has developed an Alexa skill, allowing users to search their database of 25,000 recipes simply using their voice, and then listen to step by step instructions. This required a significant rewriting of the content to suit the voice environment. It will provide invaluable feedback on user preferences and also sponsored content opportunities. By offering added value features such as favouriting recipes to registered users, the publisher can learn more about their cooking behaviour and make targeted subscription offers. BBC News have developed content for AMP stories designed to appeal to a younger audience. These are short visual explainer style slide shows optimised for mobile and highly shareable. Quartz has partnered with augmented reality (AR) specialist SeeBoundless to develop a series of photo-realistic AR images of innovative city building developments from around the world. AR is more easily shareable than VR, and provides opportunities for sponsored content.
Taking a global perspective
British publishers need to take inspiration from digital media businesses worldwide, not just the US. We have an unfair advantage with English being the world’s most popular second language, especially in business and professional sectors. There were some excellent examples of digital innovation in emerging markets shared by Marcus Branchli of Northbase Media, especially when services are constrained by the limitations of mobile data plans. In India, many people have WhatsApp only data plans, so Duta News has developed a wide range of specialist news services over WhatsApp. It now has 12m users and has spread to Africa and Latin America. Mexico is a large market of 75m people who are abstemious on data plans. Pictoline creates mobile-friendly, visual news explainers that are easily shared, and is funded by sponsored illustrations. IDN Media targets middle class millennial women in Indonesia, creating long form video designed to be watched at home on Wifi.
The growth in viral “fake news”, and the ability of heavily biased content to gain a large online audience very rapidly, has caused something of an existential crisis for many established publishers, prompting several approaches to building trust with cynical and disengaged readers. ProPublica, which is funded by philanthropic donations by both large organisations and small individual supporters, actively shows its investigative journalistic process, avoiding anonymous sources and publishing much of the data behind its stories. Start-up Tortoise Media emphasises more selective and reflective articles, publishing just one 10 minute read each day, plus five stories for the weekend. After a successful crowdfunding campaign, they have 6000 members, and intend to work consultatively with their audience both online and through live discussions, to evolve their content.
The New York Times is wrestling with the issue of whether they should use algorithms to personalise their content, or stay firm to their editorial curation and judgement, as readers are wary of being caught in a “filter bubble” and missing important stories. Large digital players such as Netflix and Spotify find that AI-driven recommendations can generate a large proportion of their viewing and listening, but these systems can take years to optimise.
Yaser Bishr of Al Jazeera, advocates news organisations learning about the techniques that help fake news propagate digitally and employ these tools in a “white hat” manner to ensure their quality content can spread as easily.
Digital guidance for ambitious publishers
So what can an anxious but ambitious media business do in this “VUCA” world? These are six useful guiding principles for future digital growth.
· Diversify your revenues by providing a range of products and services to your audience
· Make sure your readers know that your content is trustworthy
· Get started on your digital subscription journey, which might take some time
· Work on changing your culture to being more experimental and agile
· Test out new technologies that could help you engage your audiences
· Keep learning from other digital pioneers worldwide, not just from the UK and the US
If you’d like to discuss how you can better equip your media business to withstand change and volatility, do get in touch to have a conversation over the phone or over a coffee.
About the author
Carolyn Morgan has bought, sold, launched and grown specialist media businesses across print, digital and live events. A founder of the Specialist Media Show (sold in 2014) she now advises media businesses large and small on their digital strategy through her consultancy Speciall Media.
This article was first published in InPublishing Magazine in May 2019