“Titles like ours are the keys to the kingdom. A great brand makes a personal
connection with a consumer. It means something. By that definition, there is
no more powerful brand than a magazine title.” –Cathie Black, President,
Hearst Magazines
“Coming out of the ’90s,” Black said, “we knew that the media industry was
changing. We knew what that meant for magazines. But when the dot-coms
imploded and the big convergence plays came apart at the seams, there was
a feeling that maybe we got a little carried away. Maybe this was evolutionary
and incremental, after all.
“It’s not. We’re in the middle of the most radical transformation
in media since movable type.”
As a result, Black said, all media—from the oldest magazine to the newest
Web site—are in overdrive: making investments, making decisions that are
going to earn a place in the who’s who of the coming media mix.
She believes that those who get to join the select circle of media winners will
have four things: a stable of powerful, content-rich brands; enthusiasm for
the risk and investment it is going to take to be successful; the best talent;
and the ability to touch consumers whenever, however and wherever they
wish to receive a message.
The assumption-shredding new fact of life, particularly for traditional media,
is the ascension of the consumer.
“We used to fret that consumers were fragmenting,” said Black. “Now they’ve
atomized. In quick time, we’ve gone from the we generation to the me
generation to the it’s all about me generation. Any successful media
company today has to intersect with consumers on their individual terms:
where they want it, when they want it and how they want it.”
Another place where magazines are fighting for space is the newsstand. The
old network of wholesalers and distributors has consolidated under the
weight of retail consolidation. A new breed of retail giants are as demanding
of magazines as they are of any product that takes up high-value space on
the retail floor.
And magazine advertisers want answers—not to mention a return on
investment. They are increasingly taking a zero-based approach to choosing
the media that will help them win. Combined with economic uncertainty, this
market uncertainty is taking a toll on both ad volume and ad rates.
Granting that it is new territory for a long-standing business like Hearst
Magazines, Black said the Company is steaming into it with a balance of real
strengths and flexible strategies. “The good news is that we have a great
opportunity to build on the strengths. But we have to be nimble to respond to
their new dynamic.”
Leading those strengths is a portfolio of magazine brands that reach 74
million U.S. adult readers. Included are icons like Cosmopolitan,
Esquire, Harper’s BAZAAR, Good Housekeeping and
O, The Oprah Magazine.
“Study after study shows that when a reader has a magazine in her hands, she
is fully engaged with it,” she continued. “Someone said that magazines have a
voice. And in a time-pressured world of marketing overload, voice has real
value.”
The job of base-building begins with energizing core titles, said Black. As the
Company works to build its powerful brand base, it is also investing in
expanding that base and driving new revenue. Since 1999, it has launched or
purchased 12 U.S. titles—winners like O, The Oprah Magazine;
CosmoGIRL!; Seventeen and Veranda.
Hearst Magazines International (HMI) is another major growth business,
having posted a 17 percent earnings gain for the year, for a compounded
earnings gain of 36 percent since 2001.
George Green, president & CEO of HMI, explained that the key to growth is
adaptation. “You can’t just parachute in and do things the way we do them in
the U.S. There are cultural issues, business issues, government issues—and
we have to be sensitive to all of that. Cosmopolitan is a different
magazine here than it is in Malaysia, for example. But it is still all about the
lives of young women.”
In the U.K., the National Magazine Company launched Real People in
a joint venture with ACP and acquired handbag.com, a leading digital
publishing group for women, as well as netdoctor.co.uk, the U.K.’s No. 1
consumer health Web site.
According to Black, one of the keys to the Company’s growth is its
commitment to diversifying beyond the pages of its publications. “We have to
be aggressive in our approach to the platforms that drive revenue. One of the
most fertile sectors for growing revenue is online. That’s why, this year,
under the direction of John Loughlin, we created Hearst Digital Media. It is
going to consolidate and focus our work online and create a full range of
digital capability for our titles and businesses.”
A number of Hearst brands, such as Seventeen and CosmoGIRL!
, are well along in taking their brands across digital and other platforms.
All Hearst Magazines sites are now selling online advertising, presenting
broadband video, and featuring advanced search functionality and the latest
social networking tools.
The U.K.’s National Magazine Company also launched a digital unit, Hearst
Digital Network. It combines all the Company’s online properties into a single
unit.
Hearst Magazines’ digital efforts have been accelerated through content
syndication with partners such as MSN and WebMD. The Division also expects
to sell 1.4 million subscriptions online and is looking to add to Hearst’s scale
via acquisition of sites and development of new ones going beyond its
existing magazine brands.
“Although we’re coming behind the first wave of Web pioneers,” said
Loughlin, executive vice president and general manager, “we’re not shooting
for digital parity. We want digital leadership.”
Hearst Integrated Media, formerly The Hearst Group, is another example of
diversification, combining major-client advertising with customized and
integrated marketing services. Its large multi-magazine corporate accounts
gained in paging for the year, as well as in net revenue.
Said Michael Clinton, executive vice president, chief marketing officer and
publishing director: “Our opportunity with major clients goes way beyond
selling space in our magazines. We’re also creating marketing partnerships.
We become an integral part of the creativity and execution that open up the
possibilities in how marketers reach consumers.”
Hearst Magazines also has a growing service business with other publishers.
Circulation services are a particular opportunity in an industry struggling with
the impact of retail consolidation. Communications Data Services (including
the U.K.’s Tower Publishing Services and Canada’s Indas), CMG in the U.S.,
Comag Marketing Group in the U.K. and Periodical Publishers’ Service Bureau
in the U.S. combined to produce a gain in revenue for the year.
“The debate five years ago was how new media was going to hurt old media,”
said Black. “Today, those distinctions are irrelevant. It’s not about the
technology. It’s about the ability to fill multiple channels with relevant,
exciting and trusted content. It’s about powerful brands that you can take
across multiple platforms, and how well you use those brands to connect with
consumers. The things we do best are the things that build value. And that
value is only going to grow.”
