Hoover's Founder Says Big Media and Big Agencies Endangered
By Dorian Benkoil-Teeming Media
Exclusive Interview with Gary Hoover
Gary Hoover is more than the creator of an Internet publishing powerhouse. He's a visionary with strong opinions about what business, including the media and ad agency business,
needs to do to compete in the 21st Century. Hoover, who sold his Hoover's, Inc. to Dun & Bradstreet for $117 million in 2003, likes to look ten to twenty years into the future. He sees a future that for a lot of today's media powers is mixed, at best.
In a wide-ranging exclusive interview with Jack Myers Media Business Report, Hoover said that the major TV networks have no brand; large media companies suffer from some of the same ills that killed retail companies; advertising agencies are all wrong in how they
segment age categories; and creative thinking has given way to a corporate mindset that can't value media companies correctly.
"The entrepreneurs of the past like Ted Turner have mostly sold out. These people are losing their ability to start up new ideas. One of the few remaining players who is free to think on his own and
has the capability to do so, is Rupert Murdoch," Hoover said. "His bid for Dow Jones indicates that he values The Wall Street Journal more highly than anyone at the company or on Wall Street."
Neglected Baby Boomers
Hoover, who commands $15,000 a lecture, comes by his opinions from a breadth of knowledge and experience beyond most media executives. He started honing his business thinking in Anderson, Indiana at age 12 when he began subscribing to Fortune magazine. He
studied the stock market and before the age of 18 had visited hundreds of corporate headquarters and offices, always asking himself what separated losers from winners. He first touched on the publishing business when, at age 30, after stints in banking, finance and retail, he formed the book superstore chain Bookstop. He sold it seven years later to Barnes & Noble for more than $41 million (netting himself a reported $2 million in the process).
His next venture ultimately became Hoover's Inc., which today is the world's largest Internet-based provider of information about business enterprises with a database of some 40,000 companies. Hoover led it
through various subscription, ad-supported, licensing and distribution models. His most recent position is "chief storyteller" of Road Story USA, and CEO of Story Stores LLC., a tourist attraction company focused on entertainment and education through nostalgia, history and museums, all targeted at baby boomers.
Those boomers are being neglected, he says, by being lumped together. Rather than having one, big, over-59 demographic target group, smart marketers in our aging and increasingly long-lived and
healthy society should target 60-70, 70-80 even 80-90 as separate groups with separate needs. "No one over 55 gets much attention except from AARP and the drug companies," Hoover laments.
TV Networks Don't Have Brands
Hoover says many of the largest media companies that have powerful distribution networks and old assets are overestimating the power of their brands and are stuck in old ways of thinking. "What is the
difference between ABC and NBC and CBS?" he asks. "I know the people who work there think there are differences but no one else does, unlike HBO and MTV and ESPN and Comedy Central and The Weather Channel and Fox News, which really stand for something in the eyes of consumers."
TV Networks Don't Have Brands
Hoover says many of the largest media companies that have powerful distribution networks and old assets are overestimating the power of their brands and are stuck in old ways of thinking. "What is the
difference between ABC and NBC and CBS?" he asks. "I know the people who work there think there are differences but no one else does, unlike HBO and MTV and ESPN and Comedy Central and The Weather Channel and Fox News, which really stand for something in the eyes of consumers."
What, Hoover asks, is the real power of media companies and all their assets? "Unfortunately, most of the old warriors do not migrate to the new," Hoover says. Drawing lessons from retailing,
which he has watched closely since he was a buyer at Federated Department Stores, Hoover suggests Target Corporation stands alone as the one retail company that saw the future and committed to making the required changes. "Most of its old department stores are merged or dead in a new world of new competitors like Best Buy, Wal-Mart and Home Depot," he points out. Hoover makes a
case that only a small number of today's media companies will be able to follow Target's example. To do so, they'll have to see the market as it is, not the way it's been.
Turning his attention to advertising agencies, Hoover says they are about creative people, not size, and that he never really saw the value in synergy. "Creative capture of the public's attention is increasingly
about guerilla and other methods, not about clout and size, in a long-tailed YouTube, wiki world," says Hoover. Even as giant ad holding companies report increased billings, much of the growth comes from acquisition of smaller firms. WPP, for example, reported in February that while 2006 revenues increased 10.9 percent to $12.9 billion in 2006, growth was only 5.4 percent when acquisitions were excluded.
HED: An Interview With Gary Hoover of Hoover's Business Information
In an exclusive interview with Jack Myers Media Business Report, Gary Hoover, creator of Hoover's Inc business information, wondered how many of the big media companies and ad
agencies will survive. Hoover's Inc. is the world's largest Internet based provider of information about business enterprises.
Face-to-face and via email, Hoover, 56, spoke with Jack Myers Media Business Report columnist Dorian Benkoil about what the advertising
and media industries are doing right and wrong, and how they can survive. Here is an edited transcript:
Jack Myers Media Business Report: What do you think is happening to the advertising industry? Can it survive in
anything like its current fashion and structure?
Gary Hoover: I think at its heart it is a matter of creative individuals rather than huge firms, and those individuals with
the right skills will be more needed than ever. I am not sure how much we ever needed the giant firms.
“Synergy” is not something I see working in the real world very often. Creative capture of the public’s attention is increasingly
about guerilla and other methods, not about clout and size, in a long-tailed YouTube, Wiki world.
Will "traditional media" suffer the same fate as the airlines? [Hoover says the airline industry has brought its
own demise through arrogance and lack of focus on customers.] Do you see an analog to Southwest — lean, sense of purpose, able to survive rough times — in the media?
We underestimate the value of editorial in our society. Just because we get the newspaper on our doorstep for a few cents a day does not mean that it did not take a lot of work to pick the right stories, and get them
onto our doorstep. Of course the doorstep is electronic now and those firms who can navigate huge changes will be fine. Unfortunately, most of the old warriors do not migrate to the new.
In retailing, Target Corporation (formerly Dayton Hudson) stands alone as the one company that saw the future and
remained committed to making the required changes. Most of its old department store peers are merged or dead in a new world of new competitors like Best Buy, Wal-Mart and Home Depot.
Many of the large media firms are today corporate in their mindset and actions. The entrepreneurs of the past like Ted Turner have mostly sold out. One of the few remaining players who is free to
think on his own, and has the capability to do so, is Rupert Murdoch. His bid for Dow Jones indicates that he values The Wall Street Journal more highly than anyone at the company or on Wall Street.
What is happening/will happen to your beloved Fortune magazine?
There is a continuing need for outstanding business (and every other form) of journalism. I don’t know if we need three
players in Forbes, Fortune, and Business Week. They all have their strengths. They need to differentiate in order to prosper. U.S. News would be long gone if it had just tried to keep up with Time and Newsweek.
Most surprising to me was the launch of another high end business magazine, Portfolio. Having read business magazines since 1963, it strikes me that their initial offering is really old hat, a strictly
New York-based vision of what matters. One of the strengths of the original CNN was getting out of New York. New York is great, but there are other places that matter.
If you could speak to the heads of ABC, CBS, NBC, Time Warner, etc, what would you tell them to do? Ditto the big ad
agencies/holding companies? What would you say to media buyers?
I think the big old media companies are in a tough position. In an age where you can publish your own books (in ones and twos), make your own movies and albums, these people are losing their ability to start up
new ideas. But they still have distribution networks and powerful old assets in their warehouses. Maybe they are just important further down the evolution of an artist.
I think the fact that most of these companies do not have a brand is a real challenge. That is, what is the difference between ABC and NBC and CBS? I know the people that work there think
there are differences, but no one else does. Unlike HBO and MTV and ESPN and the comedy channel and The Weather Channel and Fox News, which really stand for something in the eye of the consumer.
Positioning: The Battle for Your Mind to understand the concept I am talking about here.
How will the demographic shifts affect media? Doesn't the aging of the populace work against adoption of all the cool
new new things we see coming on now? Or will oldsters be as up on media as everyone else?
I think there is huge potential in the aging baby boom. But you must talk to them, try things for them, experiment, to see what
works. They are well-educated and most of them very facile with the Internet. They will have different needs at 80 from their needs at 60.
There is also a global angle.
The aging baby boom is a First World issue. You have very different dynamics in Asia, Latin America, etc The top consumer
goods companies like Coke, P&G, and J&J realize that you cannot plan your future just based on the U.S. and Europe. Wal-Mart is also discovering that.
While I realize the media companies are international, they may still be too U.S-focused. Or perhaps the better term would be
English-language, which works great in Hong Kong, Singapore, Malaysia, and Australia, so it is not just a regional thing. And French flies in North Africa.
As the music and films of other nations increase their global market share (Brazil is particularly a sleeping giant in music) there will be enormous opportunities, which are available to the large companies and to
entrepreneurs, although history would tell us that the new generation companies and entrepreneurs are more likely to see them and make the most of them.
How you communicate to the bottom of the pyramid (look up the book with that in its title) is another big
opportunity. [The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits, by C. K. Prahalad, published by Wharton School Publishing last year.]
World music is increasingly a global creative fusion (see the Putumayo label), and that can take place in business journalism and
other realms as well.
Look how successful The Economist has been in the U.S. with their international outlook. I would love to have an equivalent
magazine for Time, something that covers media and arts worldwide on a more balanced basis than we get from our national-focused media today.
What other neglected demographics do you see by advertisers? (You had mentioned how anyone over 59 is treated as being in a
single group, when they should say, "Are you 70-80, 80-90…".)
No one over 55 gets much attention except
from AARP and the drug companies.
Hoover's, in some ways, is a media company. Can a company like that, that charges a premium for its content, continue to thrive
when so much information is becoming freely available?
People will pay for value. As we get more affluent as a society, our time becomes worth more and more. Those who help us edit, who select and compare for us, are invaluable. Look at Amazon’s recent purchase
of dpreview.com [Digital Photography Review], one of the premiere customer information Web sites. I think there is room for many different pricing models. Look at TV. PBS begs, community cable is supported by the city government, HBO is subscriber funded, the networks are advertiser f
unded, some are funded by ads and subscribers in a more traditional media model. Not only will these old models continue to prosper, but others may arise with the access to open source and other co-op type arrangements.
Do you see a day when Hoover's or others like it will be ad supported?
In our early days at Hoover’s we ranged from being advertiser supported to being small subscribers to being large subscribers to being supported by licensing and selling our content. The future may show equal
variation to the past. All are valid ways to fund the work.
Will the Hoover's of the world put the companies that do print directories out of business (notwithstanding the fact
that D&B owns it now).
The move from print to electronic is very complex. The demand for and production of information and data is going to continue to grow rapidly into the future. While the share held by print (books, magazines,
and newspapers) will decline substantially, I believe that more books will be sold worldwide in 100 years than are sold today. It's just that books' market share will decline. Macy’s is a bigger company today than it was 20 years ago, even without acquisitions, although it has
lost huge share to the discounters and specialty retailers. New York State has grown in population but lost share of the nation. Which types of books do better and which do worse depends on the type of book and on the creativity of the people making the books. Gimbel's died but Nordstrom’s did not, because the people at Nordstrom’s were smarter.
As to types of books, I could see bird field guides going away as iPods are better in every way for that application (movies, sounds). On the other hand the big folding map is very difficult to replace digitally, at least today. 1,400 dot-per-inch art books will be slower to go into print-on-demand than short black and white paperbacks. People like paper, it is comforting, it is cheap, it lasts. It will not go away.
EDITOR'S NOTE: This interview has been edited for length and clarity.
