How two publishers are taking very different approaches to market expansions.
Diversification is critical to sustainability in the modern publishing environment, but every company has a different approach to achieving that ultimate goal. Acquisitions are right for some, new products are enough for others—for many, starting from scratch and launching a brand is the best option.
Niche Media and Atlantic Media’s Government Executive Group have each gone the launch route, though in very different ways.
The latter is following a template it’s perfected over the last several years, while the former is exploring a whole new way of doing things.
While Niche Media’s glossy, thick-stock magazines put the company squarely in the luxury space, it’s also a locally defined, market-by-market enterprise. It’s continually forced to juggle the competing interests of national advertisers and local content, and vice versa.
The company went into the late 2000s with a healthy roster of close to a dozen magazines in several of the most affluent cities around the country, but saw 70 percent of its revenue come from national advertisers. As the economy worsened, those brands were the first to back off, or out completely.
“For us, the last economic downturn hurt [the national luxury brand] segment more than any others,” says Katherine Nicholls, Niche’s CEO. “We were left very, very vulnerable when they said they had to pull back on advertising. When the economy is softer, their budgets get reduced and it’s a lot easier for them to cut regionally. They’re still going to advertise in Vogue and the big national publications—that’s essential to their marketing mix—but it’s a little easier for them to cut regional, or to only select their top three regional markets instead of the 10 they were running in a year ago.”
Recalibrating Revenue Streams
But as Niche’s national advertising fell off, its local brands remained. Coming out on the other side of the recession, Nicholls aimed to restructure the company’s sales force to better reflect that reality and, in doing so, recalibrate its revenue streams.
It invested heavily in putting boots on the ground in each of their respective markets, boosting local sales staffs by 50 percent. Moreover, the company spent money upgrading its local marketing capabilities around the country so it could execute on more and bigger partnerships at the city level.
“In all of these cities, we realized that local businesses need to get their message out no matter what’s going on. If their restaurant is open, if their store is open, they need to be driving foot traffic—so they were looking to us,” Nicholls says. “At the same time, the national luxury brands obviously have a local footprint with retail stores in all of our markets, and they need to be able to connect locally with media like us.”
The revenue split is 50-50 now, and Niche is focused on keeping it that way even as national advertising has bounced back.
Ready for Launch
The commitment to balancing its national and regional interests has manifested itself in Niche’s launch strategy, as well. The company’s latest title, Austin Way, released its first issue last fall.
Few U.S. markets have been attracting as much advertising attention as Texas, Nicholls says, so Niche knew it had to invest there. Attention doesn’t necessarily equate with dollars spent though—at least not yet.
“Austin is a market our national advertisers have their eye on—they’re just opening stores here or have plans to in the next few years—but right now, it’s not a must-buy,” she says. “We knew we had to be there soon though, so for us that strong local footprint and the ability to connect with the local business community is important to the success of this model.”
As Nicholls says, the title is focused on developing its local base at this point, anticipating that the national advertising will build momentum as the market strengthens.
Forging those new relationships can be a challenge—as it would be in any market, geographic or otherwise—but Niche is able to leverage its successes elsewhere. A consistent look and feel across its portfolio makes the idea behind a new product translatable to potential buyers.
“Many of our advertisers hadn’t heard of Niche Media, but they’ve heard of Hamptons or Ocean Drive or Los Angeles Confidential, and they’ve read it in their hotel rooms as they travel,” Nicholls says. “We’re very consistent in our editorial layout and model, so we can walk them through our editorial model using one of our other publications. It’s easy to bring to life what a magazine for Austin would look like.”
Following the Market
Atlantic Media’s Government Executive Group has taken a different approach with the launch of its newest brand, Route Fifty.
Officially rolled out in April, the digital content and events title serves the state and local government space with an emphasis on tech and best practices—an extension of the state and local government channel the company launched last summer as part of its flagship brand, Government Executive.
The move is another step toward the market diversification the group has been pursuing for the last several years, says Constance Sayers, president of Government Executive. It’s a strategy that’s worked so far—group revenue is up 20 percent year over year, according to the company.
“State and local is growing in spending and hiring, and a lot of that growth is being driven by technology—cloud computing, data and analytics, cybersecurity, for example. Those are topics we cover a lot with Government Executive, so it makes sense for us,” she says. “We were also finding that a lot of our clients now have their federal, state and local marketing practices housed together. That allows them to shift investment based on market trends. Our clients were starting to reach into adjacent markets, so it made sense for us to do the same.”
For example, if governmental spending decreased at the federal level, advertisers would make a commensurate change, reducing spend there, and reallocating those dollars to state and local media. Focused primarily on federal government, Government Executive was missing out when advertisers made those shifts.
Stick With What Works
Route Fifty is largely following the model established by Defense One in 2013, and Quartz before that, says Sayers. From launch needs to audience targeting to expansion plans, the company has built up consider- able expertise in branching out to new markets from those prior experiences.
For its part, Defense One has grown rapidly in the year-and-a-half since it started publishing. The brand started small at first, but added 11 staffers last summer, and is generating more than 600,000 unique visits each month.
Quartz, meanwhile, has drawn frequent praise as a model publication for the mobile age. About 30 months in, the site reportedly generates more than 10 million monthly visitors and eight-figure revenue.
“By now, we have a pretty good process of how to get into these adjacent markets,” Sayers says.
Intensive market research is the first step, she says—Defense One and Route Fifty each had about a year of competitive analysis, surveys, focus groups and one-on-one meetings with key influencers before they got off the ground. A well-defined mission follows, along with finding the right leadership with the tools to carry it out.
“When you’re building a new brand, you have to know what’s on-brand and what’s off-brand,” she says. “In my mind, the key thing we’ve done to that end is hire the right editorial leaders. You want to be nimble, but you can’t go to market if advertisers and the audience don’t know what you stand for.”
“You have to know precisely what gap you’re filling,” she adds. “Once you’ve determined that, you can fill it with different product types and offerings.”