What's on the Minds of the Indies
Looking at the independent publishing market you'll notice some strategic parallels with their mass-market cousins: Revenue diversification, a laser focus on e-media product development, organizational issues. But look closer and you can see underlying priorities that make their business entirely different.
Three publishers profiled here explain how their closeness with their markets drives their business decisions. Almost everything they do is a balance of anticipating a market's needs and reacting to them as they become evident. Okay, so that may be a common driver for any company, but for the indy publisher, strategies are constructed from the depths of an intimate relationship with their target market. These folks are their market.
Yet, as they build out their strategies and re-organize to accomodate them, they're experiencing many of the same growing pains.
Different by An Order of Magnitude
The big numbers the mass market magazines have to chase almost inherently creates a distance between magazines and their markets. This is no more evident than in the $125 million divestment of Time4Media by Time Inc. in March to Bonnier Corp. and the $14 million sale of Backpacker by Rodale in May to Active Interest Media, a private equity-backed enthusiast publisher-all enthusiast titles and all relatively healthy, but unable to keep up in a large company context.
"Our whole perspective on order of magnitude is different," says Andy Clurman, chief operating officer and group publisher of Active Interest Media. "So what moves our needle and what is gratifying for us is to be in a sizeable but not mass-market place-something that's got a critical mass of participants and a sizeable underlying industry that's well defined within its vertical walls."
For Clurman, an independent publisher's first priority is the customer and the market that person lives in. The closer the magazine and its related brands can get to that market, the better. And that closeness is where the opportunity lies for the independent publisher. "When you're in the kind of secular markets we're in you really have to immerse yourself and become a participating member of trying to grow these industries and the interest levels," he says. "You can't just mail it in, you have to be there."
That focus on closeness to market creates certain procesesses that big companies might not feel as compelled to pursue for titles that simply aren't producing to scale. "They are now at a size where they're looking at moving such big numbers that things are not going to have a material impact on their business, the magazines almost necessarily become afterthoughts," says Clurman.
Keeping It Real
Active Interest Media has grown primarily through acquisition and, according to Clurman, is four times bigger at over $100 million in revenues than it was a year-and-a-half ago. AIM has the capital to devote to growing its properties, which span the health, fitness, home and boating markets, but Clurman stresses that new initiatives have to be developed organically. "What works best are the opportunities that are home grown within each one of our markets," he says. "The Yoga people know best what is going to work in the yoga market, but they don't necessarily have access to the people and resources to build out a book publishing operation or a state of the art Web business."
This process of developing new initiatives from the inside out is a characteristic that excels in the independent setting. "One of our priorities is to bring the resources to them to allow them to build these things from within and keep what makes a special interest and independent media business thrive," says Clurman. "That's as opposed to bigger companies, where you're creating these centralized organizational resources because you're operating on a big scale, and you're operating somewhat generically across different markets and media."
The mass-market publishers, says Clurman, move big numbers by building businesses horizontally. Independents build their businesses vertically. To that end, Clurman says one of AIM's priorities, like many other publishers, is building out the Web sites for many of the company's brands. But e-media development, says Clurman, is a moving target: "Just when you think you've developed the perfect mousetrap you look around and you realize there's four new ideas and technologies that change things."
But for the short term, Clurman has earmarked about $2 million for Web development projects.
Tightening the Ratio
For Vance Publishing, a b-to-b publisher in the salon, interior design and food markets, a concerted effort was begun three years ago to decrease the print to new media (e-media, data and events) revenue ratio from 80/20 to 60/40 in five years. A top priority this fiscal year, however, is simply to meet profit goals. "The number-one focus for us this year is to see what kind of plans we can come up with that will actually help us meet revenue gaps during this fiscal year," says Peggy Walker, Vance's president.
Meeting those goals is a short-term effort. Walker has developed a number of initiatives with revenue targets in the $20,000 to $45,000 range. One such initiative is developing more e-mail newsletters that make easy sponsorship targets. "We knew sponsors would support them, so we dropped some things we were doing so we could get them out the door," says Walker. "It's those kinds of things where we know we've got the knowledge of the market and we certainly have the infrastructure to deliver it. It's just a matter of saying this is going to be a priority. When you do that and multiply it across a number of different areas, all of a sudden it has a significant impact."
Research Drives Proximity
For longer term product development efforts, however, Walker echoes Clurman's thoughts on the independent publisher's proximity to its markets. "In all of our new product development, we're trying to stay really close to our customers, and make sure that it's not something that we've just developed in our head, that we think is a good idea," she says. "It has to be relevant to the market and so we do a lot of research."
That research, says Walker, is a combination of quick-hit, Web-based surveys via online panels in each served market, and deeper research that requires actually meeting with customers and prospective customers. "But we're also engaged in industry research where we'll try to get a feel for what people want," she says. "In one of our markets we're going out into the field, sitting down and getting a day-in-the-life perspective to find out what information they need to use regularly, where they're getting it and how we stack up."
For the small- to mid-sized publisher, this research has become more critical, and attainable. Clurman notes that his company's access to Web-based research and reader panels is getting easier and cheaper-for cover strategies in particular. "There's a lot of cover research and people who may not have been able to muster the money to do traditional research can do so on the Web," he says. "It's brought the cost of doing cover studies way down. Time Inc. has been doing cover testing for People and their big books forever, but now with Web-based research and the cost of recruiting reader panels and the turnaround times, smaller independents can be doing a lot of the same things."
In hindsight, Walker's re-org strategies have not been without their challenges. As in many of these cases, what looks good on paper might have a very different outcome during execution. In Vance's case, an issue arose around communication between new titles in the company's divisions. "We hired e-product managers in each division who reported directly to the publisher," says Walker. "Then we created a Web development group within our IT area. The communication between the e-product managers, who are focused on business issues, and the Web developers, who are focused on infrastructure, is still a process we're working through."
The clash between business imperatives and technological ones resulted in more "back and forth" than was necessary, adds Walker. So much so, that she says the vice president of IT is rethinking an open position to act as a liason between the e-product managers and the IT department. "He said, â€˜I think it's because we don't have a common language,'" recounts Walker.
Getting Print Right First
According to Gary Redmond, owner and director of publishing operations at Palatine, Illinois-based b-to-b publisher Construction Business Media, which publishes the 36,000-circ Architectural Products, 30,000-circ Illuminate and the 25,000-circ Architecture SSL, there's more work yet to be done with his print properties before expanding too quickly into alternative revenue streams.
For Redmond, the strategy has always been to launch into niche markets that have no magazine brands representing them. "It's a very difficult thing to bring a me-too magazine into a market, to take a magazine and have it compete with a like magazine with a like circulation and convince that circulation that may be married to the other magazine to come over to yours. That's a difficult proposition right now."
Started five years ago with the launch of flagship title Architectural Products, Construction Business Media has grown into a $3.5 million business, mostly on the backs of the print publications. According to Redmond, there's still more business to be had. "While one of our magazines has been around for five years, we're still very much focused on advancing the print ad page effort because there's still a lot to be had for us," he says. "There's still a lot of advertisers out there that have yet to come over to our side. So that means there is still a lot of promise remaining in that space for us."
Show Me the ROI
That said, Redmond is careful to note that he's aware of marketers' increasing needs for proven ROI metrics, even in print. So as Redmond continues to build his print products while potential diversification strategies are further down the road, he says he understands what the market needs from a media buying perspective. "More than ever before, the media buying public wants to see ROI. They really want to know that there's an affinity between the reader and the magazine and its content. It's not enough to develop a big circulation and say that we're delivering this large number of issues to a large body of people."
E-media is pushing its way into Redmond's budget whether he likes it or not, but he's taking it step-by-step.
"All we want to do is things that the market is asking for with our digital.," he says. "And in the last couple years, they've been asking us a lot for e-newsletters and this year they want us to help them with custom e-blasts. It is clearly the case that the buying public each of the last several years has had a deliberate uptick in their intended investment in digital."
Staying On Track
Redmond is meeting his marketers' needs as they're requested primarily as a way of avoiding buying too heavily into e-media fads.
"It's directing us to build out components of our digital offerings that serve their needs directly," he says. "We look at everything in the digital world right now on a very temporary basis. What is hot this year might not be hot next year. We'll be prepared to adjust and move to fill the hotness index."
And as independent publishers scramble to reorganize their operations to capture new business, they simply need to remain flexible.
"It's all opportunity," says Vance's Walker. "And I'm not sure there's a wrong way to do it as long as you've got your ear to the ground and you're paying attention to how the implementation is unfolding and you're flexible to make a change if it's not working."
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