Conde Nast: Vision, Leadership, Danger and Risk as Company Moves Beyond the Magazine

You are receiving this email as a corporate subscriber to Jack Myers Media Business Report Redistribution in any form except among approved individuals within your company is prohibited As a subscriber you have full access to all archives and reports at wwwjackmyerscom If you require your ID and password contact maryannjackmyerscom In the eight years from 2000 to 2008 consumer magazine advertising investments grew at an average annual rate of 43 compared to total equalized advertising industry growth during that period of 31 Between 2007 and 2009 magazines advertising declined 304 while the advertising industry suffered 198 losses Among major media categories only newspaper advertising declined more precipitously 346It39s against this economic backdrop that Condamp233 Nast last week announced quota new strategic course as a consumercentric media and entertainment companyquot Charles H Townsend Condamp233 Nast CEO claims quotThe company will be realigned to better embrace and harness developing technology broaden consumer touch points and create contemporary value propositions for advertisersquot Condamp233 Nast39s future success will be dependent on management39s ability to quotmove the company to a new business model focused around digital connectivity technology development and consumer insightquot quotWe need to move beyond the magazinequot said Mr Townsend Condamp233 Nast needs to engineer Condamp233 Nast Media Group into a quotseamless multimedia multiplatform sales and marketing services facilityquot integrating the quotcompany39s print digital social ecommerce consumer insight and other assets to create comprehensive marketing solutionsquot and quotdeliver maximum value to consumers advertisers and employeesquotCondamp233 Nast39s shifts and the management changes accompanying them are bold if they are implemented as announced And they come at a time when magazine advertising is having a miniresurgence I39m unconvinced that the culture of Condamp233 Nast amp8211 a culture that has put editorial content and management perks above all else amp8211 can actually adapt to Townsend39s vision But I also believe that even with all the difficulties Townsend is likely to face no media company today has better assets history foundation management fortitude and financial resources to make the changes Townsend is recommending and to make success possibleTownsend39s goals are grand noble and relevant They are also not new The company has consistently taken the lead in delivering quotvalueaddedquot components to deliver greater marketing value to their advertisers In fact they invented the term more than two decades ago when General Motors insisted on deep rate card discounts from magazine publishers resulting in a tectonic shift in magazine ad pricing Among all major publishers only Condamp233 Nast refused instead focusing on delivering value added marketing resources A visit to httpwwwcondenastdigitalcomcustomsolutions offers background details on 85 custom valueadded programs developed by Condamp233 Nast publishers for advertisers But these programs have traditional media buys at their foundation What Townsend appears to be suggesting is a model that would put the relationship and marketing initiatives first building off the brand equity of Condamp233 Nast39s media properties and make traditional media buys secondaryIn a company that has always been hierarchical with each publication and its Internet unit operating independently it will be challenging to achieve the organizational shifts Townsend39s moves will require Significant investments will be required in human resources account management technology and marketing capabilitiesHowever difficult the challenge I applaud the effort When Condamp233 Nast closed four publications including Gourmet last October I wrote quotWhile there has been some restructuring at the company39s online ventures the individual publications remain in the last century in the development of mobile applications social networking initiatives user generated content models virtual and 3D gaming development video content expansion event marketing brand tieins with promotional outreach programs cause related initiatives and other business models that are the hallmarks of visionary media industry leadership todayquot Townsend39s moves are visionary but loaded with costs and riskMoving beyond the magazine will be the most important and the most difficult challenge faced by Mr Townsend and his management team Magazines continue to be a valuable advertising tool with Jack Myers Media Business Report forecasting ad revenue growth of 12 in 2010 and 25 in 2011 Total magazine ratecardreported advertising revenue for the first half of 2010 rose 12 compared to the first half of 2009 In order to successfully transition to a crossplatform marketing partnership model publishers will need to confront traditional obstacles such as the threemonth ad placement lead time still required by monthly publications They will need to radically restructure their organizations to invest in direct marketing capabilities similar to those implemented by Meredith Publishing several years ago But even Meredith has struggled to integrate those capabilities into the daytoday operations of their magazinesCondamp233 Nast39s interactive unit was built with a model that differentiated the company39s digital properties from its magazines with the magazines39 websites focusing primarily on promotion and subscription solicitation The company will require a total management realignment to effectively integrate digital investments and offerings into the organizations of each publicationMost difficult for Condamp233 Nast will be the staid and traditional industry in which it operates Measurement tools on which the vast majority of magazine advertising is valued will be mostly irrelevant in Condamp233 Nast39s visionary model Pricing models remain locked in the outdated costefficiency structure that General Motors and agencies imposed decades ago Agencies for the most part don39t have the organizational resources or compensation incentives to embrace Condamp233 Nast39s proposed capabilities and marketers have limited resources to respond in kind to the opportunities being introducedBut this is the cost of leadership In 1993 I wrote in my book Adbashing Surviving the Attacks on Advertising quotMedia companies in the future will be more valued when they are marketing partners involved with the advertiser39s objectives and goalsquot I also asked if quotmedia companies are prepared to innovate amp8211to react to the explosion of technological advances the expanding universe of media opportunities and the impact of interactivityquot 1993 And here we are nearly two decades later with the most prestigious high quality and brandcentric magazine publishing company finally taking actionFor the longterm health of the total media and advertising business we should all hope that Condamp233 Nast and Townsend succeed

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