The magazine industry is consolidating in the face of multiple challenges.
Rather than the newsstand, competition is coming from social platforms. Marketers want the performance advertising sold by key digital players. And as print circulation declines, magazines struggle to maintain the steady revenue from their direct-to-consumer subscription businesses.
The CEOs and presidents of Condé Nast, Meredith, Hearst, Bonnier, Active Interest Media (AIM) and New York Media spoke Tuesday at the American Magazine Media Conference in New York City about how they are addressing these challenges. In recent years, Rodale and Time Inc. CEOs took the stage – but those companies are now part of Hearst and Meredith, respectively.
1. Evolving to serve performance advertisers
Magazines are struggling to prove their value to marketers who know and love their content but need to prove ROI in a more concrete, logical way.
“There is a disconnect between what [marketers] think and feel [about the magazine experience] and … the KPIs and marketing science,” said Andrew Clurman, president and CEO of AIM.
Bonnier has incredibly old brands, but today it’s focused on connecting that editorial authority to the engagement and results that brand voice can create.
“Gone are the days of leading with how iconic or old your brands are in today’s performance-based environment,” said Bonnier CEO Eric Zinczenko.
The magazine CEOs said they were focusing on building first-party data assets and using this data to diversify their own businesses or help advertisers.
Condé Nast, for example, is investing in its data platform – and if it makes an acquisition, it will be driven by data, not a magazine brand, said CEO Robert Sauerberg Jr.
“We are in a world where whether we like it or not, more money is being spent on performance-based advertising,” he said. “We built a database business 25 years ago. We have been doing this forever. One of the things this industry can do is to use our first-party data to create some targeting.”
2. Paid content
As revenue from print advertisers declines, magazines want to boost subscription revenue.
Meredith's Magnolia Journal earns 95% of its revenue from consumers, not advertisers. “Usually, it’s 60-40 the other way,” noted Tom Harty, president and CEO of Meredith.
At Condé Nast, The New Yorker is a standout in convincing readers to pay for its expensive-to-produce content, including a recent scoop about Harvey Weinstein.
“Our culture is about getting these stories right,” Sauerberg said. “Creating really great premium content that consumers will pay for its very expensive, hard and time-consuming.”
But such efforts are paying off, even online: “We have one of the most successful paywalls in the world, and it’s growing 40% a year,” Sauerberg said.
First-party data helps in this realm, too. New York Media is building up its data and analytics to help advertisers, and it’s expanded into events, where it can get its readers to pay for cultural experiences like the Vulture Festival.
“We have taken the understanding of why our audience is attracted to us and applied it to building new businesses and developing new brands,” said New York Media CEO Pam Wasserstein.
3. Brand safety
Magazine CEOs see an opportunity with Facebook’s and Google’s challenges policing their content.
“All these CMOs are saying, ‘I had no idea my content was showing up here and here and here – next to terrorists and Nazis,’” Wasserstein said. “Magazine brands are not only brand-safe but brand-enhancing. It’s a step beyond.”
Magazine media companies are also trying to position themselves as more authoritative than digital media startups.
“We have to remind our clients that smaller startups know if they don’t cut a corner sometimes, they won’t show revenue growth … and might go out of business,” Hearst Magazines President David Carey said. “We need to reinforce that [magazine] companies play for the long term.”
4. Revenue diversification
Magazine companies don’t plan on always relying on advertising to bring in revenue. Instead, they are turning to both conventional and surprising sources of revenue.
Case in point: AIM, which publishes Practical Horseman and American Cowboy, also sells horse trailer insurance. To further diversify, the company, which also publishes magazines about skiing and yoga, is applying its expertise in content and video to create online training and certifications.
Bonnier wants to look like a “magazine mutual fund,” with diversified revenue sources that spread risk. “By 2020, we want a portfolio where we have 33% print, 33% digital and 33% from ancillary activities,” Zinczenko said.
Meredith’s brand licensing business, specifically for Better Homes & Gardens, drew accolades from the crowd, in part because it’s immune to shifts in advertising and subscription businesses.
Ultimately, competing against Facebook and Google may mean becoming less reliant on advertising revenue and more about other ways to leverage legacy brands.
“We are defining for consumers and advertisers what real premium looks like, and we have a diversified model so we are not just waiting for something to happen in the advertising market,” Condé Nast’s Sauerberg said.