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The Right Way To Do Brand Extensions



By FOLIO: Staff
04/27/2006

The magazine industry has always talked about the need to move brands
from a singular magazine-centric business environment to a
multiplatform enterprise. The rationale for such a shift has usually
been the need to achieve greater consumer touch points, to make the
brand more relevant, add integrated marketing opportunities, and to
simply look for new revenue opportunities to drive growth.

Fair enough. But too often, brand extensions are simple reaches into
other traditional or new-media platforms, such as television, DVDs,
ipods, or some other knick-knacks that some executives believe are
brand enhancers.

The truth is that extending magazine brands is more than creating
companion Web sites (even if some of those sites are sophisticated and
highly relevant), or even just thinking about reformatting and reusing
content for different media. Some of these concepts may work, but
they'll work more from serendipity than a thought-through examination
of their brand capability, the needs of their users, and economic
analysis of the opportunities.

You should instead be focusing on audience segments and developing an
entire range of profitable information services and products for that
audience;not for various media.

A Different Approach for a 'Declining Business'
What's the right way to transform? Shift from a magazine
orientation into a ubiquitous, targeted, reader and advertiser-centric
media information and services enterprise. This will lead to more
products and services for the existing customer base, as well as
attract new customers. Most importantly, publishers have to accept that
the initial brand extensions are not necessarily the sexy or fun stuff.

Let's explore why that should be the mission. First, as Alcoholics
Anonymous tells its members, you have to accept there's a problem. In
the case of magazine publishers, the problem is we're in a declining
category.

Sadly, the magazine industry is rushing to a niche business. Certain
categories that require mobility or extraordinary reproduction
qualities can still thrive (until new technologies catch up). For
example, when gamblers gather around the bar and peruse a weekly sports
newspaper/magazine to pick their football bets, it is unlikely they'll
be circled around a PC en masse anytime soon. Fashion magazines still
benefit from the advantage of superior display resolution. Long-form
articles may continue to need paper and ink for the time being, and
many have suggested reading paper is quicker and easier on the eyes.
And some titles have very intimate relationships with readers. Those
are less likely to be easily converted to the electronic format (the
old "curling up with a magazine" adage).

There are several strategies for dealing with declining businesses. These are:

1. Be the industry consolidator: Buy existing competitors so that the
consolidator accrues the benefits of leading share, including pricing
advantage, broader reach and capabilities, and cost scale.

2. Operate the business for cash: Eliminate costs associated with
intermediate-term revenue improvements, and focus on getting the most
cash from existing business. Accept and prepare for gradual decline.

3. Exit the business.

4. Extend the brand into adjacent (more growth-oriented) markets.

This report deals with choice four, and will take you through at least one way to rethink your business and grow.

The first step is to begin the process of deeply understanding your
current readers and prospective consumers of a brand's larger offering
by performing a needs-based segmentation. That's much harder to do than
it seems, and requires market research to hypothesize segments and
validate them. Most market segmentation efforts I have seen tend to
immediately go to audience characteristics (demographics), and not
needs. Needs and characteristics may or may not align. Let's take an
example of a consumer business magazine and a baby magazine publisher.
It's likely that there are several important needs-based segments
associated with both titles. (Note: These are just guesses. I've not
done the hard work to prepare thoughtful and useful audience
segmentations; there are lots of other sources on how to drive a
needs-based segmentation.)

Hypothetical Business Magazine Needs-Based Audience Segments

1. Retirees and middle-aged readers who want to follow important financial events so they can manage their personal wealth. Their need is robust
investment insight.

2. Career-minded professionals either in transition or always on the hunt for new opportunities.

3. Senior managers seeking state-of-the-art "how-to" business information. This segment may look for best-practice functional information, such as how
to retain top talent or multiplatform market.

4. Newshounds who enjoy being "in the know."

Hypothetical Baby/Parenting Magazine Examples
1. Pre-natal woman, first child. These mothers need planning guidance.

2. Post-natal woman, first child. These mothers may want information not just about rearing the child, but careers and the like.

3. Women with at least one child.

4. Single/married women.

5. Fathers, first child. If the mother can get him to read this, they don't need any advice.

6. Other extended family members.

Call these segments "horizontals." The bonus for segmenting markets and
truly understanding them is a leadership aura that quickly is
recognized by advertisers. That's one way that ESPN the Magazine
achieved success. They understood their markets perfectly, and some
claim they stole the market "buzz" from the larger and, at the time,
the much more formidable Sports Illustrated.

A problem for many magazine publishers is that they serve several
customer segments, forcing a dual focus, or sometimes a focus on more
than two audiences. That's the brutal reality of static media. To get
higher circulation, magazines must go broad, even some of the
more-narrowly focused enthusiast publications. Thus, any customer
buying a single issue, or subscribing, gets something a lot less than
100 percent value from each and every page. Many may read 20 percent or
less of a magazine. Take a typical business magazine, which has both
consumer and professional content. Often, there are articles of extreme
value, and senior executives might easily pay a whole year's
subscription price for that single piece of advice.

The old adage that magazine customers are happy to just read a few
articles from their favorite columnists was only true when customers
had little or no choice;before the advent and major penetration of the
Internet, mobility, and cable, among others. That's why circulation
directors are having a tough time with pricing.

And in that environment, advertisers, with the ROI mentality now becoming de rigueur, will gravitate elsewhere. General, undifferentiated media is in decline everywhere.

Applications-Oriented Brand Extensions
So your goal is to address these diverse customer segments,
either current customers or new customers, through a series of
well-chosen verticals. That selection needs very careful consideration.
In the business magazine example, such areas might be news and
analysis, but other less obvious brand extensions, such as innovation
and design, careers, tailored personal finance, and the like. For
mothers, there is preconception advice, relationship advice, product
reviews, and so on. The brand extensions must be applications-oriented.
For example, take a look at www.fortune.com. It has tabs for small
business and careers. Can these tabs be grown from simple content areas
to new services for small-business people and career-minded
professionals, either in transition or looking for benchmarks? Look at
www.americanbaby.com. What services might a mother need beyond advice?
Virtual baby fairs? Expert referrals? The key is applications, less so
content.

Another key consideration is the delivery platform. Brands need to be
pervasive, format agnostic, and ubiquitous, so far as the consumer is
willing to let them be. The platforms are what they are: Print, mobile,
Internet, television, radio, outdoor, and the like. Here the thought is
that the consumer will consume media the way she wishes to, and
information providers have to be where the consumer is. Period.

The difficulty is in managing the necessary edit processes so that
content and applications are not just platform agnostic, but also
tailored to specific niches in specific consumption environments. An
executive might want information presented one way when commuting,
another way when in the office, and yet another way at home.

The Shift to an Audience Segment Approach
Inherent in this approach is the need to abandon the current editorial
habit of focusing solely on content, or focusing on the medium and
developing content to fit the medium. The approach is now to focus on
the audience segment and its usage habits, and accordingly target your
applications, content, services and products directly to the audience
segment, all in the environment that the audience segment consumes
information. Once the audience segment is the focus, then the tailoring
of the service offering will fall out from matching audience needs to
the platforms they use to connect with service offering.

Generating Business Ideas
There are many ways to create ideas. One publisher uses a brainstorming
process to generate an initial list, then winnows down the list by
asking brainstorming participants and other employees to place a
limited amount of "chips" against the ideas. While the executive
team retains the right to overrule the results, they found that voters,
for the most part, identified the best ideas.

The ideas must stand the test of the business case, which typically
involves the usual discounted cashflow analysis. But the ideas should
also be rated against a criteria screen which might involve
considerations such as:

1. Strategic fit with the brand and market position

2. Revenues and profit, weighed against investment

3. Staff passion, staff ability, staff organization

4. Timing

5. Transition/feasibility/upheaval/difficulty

What You're Going to Need
New capabilities will be needed, especially those that relate to
editorial processes and editors thinking in a multidimensional fashion.
Sales teams must be able to design and articulate integrated-marketing
strategies. Business development must be expert at identifying alliance
opportunities, whether the alliance is in the form of a distribution
partnership, joint venture, or merger/acquisition.

The CEO skills are especially important. The right CEO choice must be
an inspirational leader, with enormous vision, and the willingness to
embrace new ideas. Beware the 10-inch-thick-numbers-report-carrying-type. He or she will be ill-suited to provide the vision needed to elicit great thinking.

Summary
The multiplatform world, evolving now at a daily rate of change,
requires magazines to think beyond the general into specific, tailored
content and applications that precisely meet the needs of customers. A
magazine alone, with some small measures to take the same brand into
multiplatform spaces, is helpful but insufficient to move the
needle. Expansions into whole new businesses are needed. This
article suggests one such approach; there are many roads to the
transformation. Magazines that cannot extend will be choosing a harvest
strategy, whether that's a deliberate or accidental.

Daniel E. Aks was formerly Chief Operating Officer of Primedia's Consumer
Media and Magazine Group, and a founder of a boutique media management
consulting firm focusing on business strategy, operations
excellence, and product development.

By FOLIO: Staff
04/27/2006







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