General Description
A publishing company is confronted with decreasing income from advertising activities and at the same time the costs of operations increases due to macro economic developments like cost of labour, but also the rising cost of its prime medium – paper – rises year after year due to environmental influences. The publisher still makes a fine profit, but turn over developments are not as they used to be due to increasing competition of newly introduced media.
The publishing company scans the market constantly for new initiative that enables them to resist the competition. Their former success has made the company cash rich, so they can afford to buy new initiatives, rather then develop them themselves. Aside these acquisitions the individuals publishers innovate them selves and experiment with various initiatives like real live events, digital streams etc, but every publisher in his /hers own right. There is no joint approach due to the fact that publishers must freedom of operation and profit and loss responsibility.
This results in a governance model that is very agile on one hand, but its down side is that new initiatives are seldom adopted through out the company. This makes it hard to cut costs on a general level and at the same time makes innovation very expensive. I have referred to this as the publisher’s dilemma.
This mechanism is not only found with news paper and magazine publishers, but with all broadcast publishers (TV, Radio).
Facts and figures
Although online news paper advertising spending are still less than 5% of the total news paper advertising spending the differences are becoming evident. In 2005 print spending was flat, while online advertising grew 35% over the same period. Mind you, this is only news paper income. Online spendings in the rest of the market show different figures. (Source; NAA - Newspaper association of America, June 2006)
The sectors FMG (Fast Moving Consumer Goods) and Entertainment in Europe are said to be fastest growing over the next years. Companies expect to expand their online advertising efforts to 9,8% of their total spending in 2008, showing a 75% growth. The entertainment industry is expected to grow even faster to 11,2%. (Source; Annalise.svp)
Strategic challenges
There are many challenges that lay ahead. The most urgent are;
. Mobilise readers
. Define vision on future publishing
. Organise independent content and rights management
. Use still existing power of brands and profits to innovate
Probable solutions
Mobilise readers; the trusted relationship paper publishers have with their audience is a strong one. They should invest in the continuation of this relationship in the online environment. Before they can begin to implement the relationship on content basis publishers have to organise their backbone ICT processes to get the most out of these relationship. If this is neglected the relationship will be damaged due to pour process quality, resulting in weakened market position and competitive strength.
Publishing is changing. The content bundles will change due to mobile consumer behaviour. This results in fundamental changes in content distribution and advertising placement. Media buyers/sellers should develop cross media advertising offers tuned to consumer behaviour.
Independent content management should result in one content factory for many publishers. The entire content generating process should be taken into account. The content management machine should incorporate content sensitive advertising mechanisms to allow on the spot management of advertising mechanisms.
The make or buy decision is a difficult one and should be made per possibility. Many publishers have a general approach for external growth. Most of them buy. Publishers should build innovation units.
Implementation
The nature of a business process is dictated by the behaviour of its users. Since technical solutions made it possible to connect customers directly to business processes. Attracting attention and building a relationship require agile processes and data structures that are well protected and secured against malignant users. The entire infrastructure should be reviewed, starting the analysis with customer behaviour. This implies centralised IT and telecom operations.
Commercial staff should be organised in one strong team dealing with the integrated advertising portfolio. This implies central governance of commercial propositions.
Implement a media / publisher independent content management system. Starting with intake portals, templates, commercial tags etc. Service the publisher with process logistics and advertising mechanisms. This implies one centrally managed system.
Pick your best minds and ask them to invest 20% of their time in innovation practices. Organise an independent innovation unit. Your make or buy decision can always come later.
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