Now, there’s nothing new in any of this – this trend has been tracked year after year in the mediafutures benchmarking survey – but it has never created the pressures that it is currently.
The diversification challenge
All of this is set against the general context of diversification. Increasing the number of revenue streams is essential and is built on constant NPD (75% of mediafutures participants are actively working on new product and service launches currently). Yet the survey also highlights the dangers of trying to do too many things at once. Quality control and brand consistency need to be backed up by the necessary tools (customer insight, tech stacks, staff skills and experience, etc). As a result, many companies are consolidating into fewer, bigger activities, which usually means more platforms spread across fewer brands. Diversification also requires significant investment to make sure that it all happens (and at speed), whilst keeping the existing profit engines going, extending their life if needed. There are five key areas of runway extension:
The print runway
The structural “digital shift” across all media sectors continues (mediafutures covers consumer media, B2B, live events & exhibitions, news media and customer media), but digital revenue growth has slowed. Premiumisation (lower volumes + higher quality + higher consumer prices) had been slowing down the long-term decline in print products, until the production cost explosion hit. The industry average print share (the percentage of total company revenues from print products) is 46% now, dropping to 40% (-6% points) in two years. The range of individual companies’ current print share stretches from 0 to 99% currently – there are still some successful print-dependent businesses. The overall projected shift is a distinct slowing-down of the long-term decline. Consumer magazines are much more print dependent currently (66% average share of total revenues) than B2B, which is already “print lite” (25% share). Print was finding its place as a premium and increasingly profitable platform. Yet this is now being compromised by ballooning production and distribution costs.
The advertising runway
The dependence on revenues from advertisers / sponsors / brand owners (58% of total revenues now), as opposed to money from end-users, continues to reduce at an accelerating rate (-6% points in two years’ time), but is still massively important. The strategic intent to shift from brand revenues to user revenues remains central to most media companies, but this does not happen overnight. The shift is slower than many would like and is often the result of a weak ad market rather than of smart subscription and paid-content activity. Yet currently, most companies are happy to take in any money, wherever it has come from.
The retail runway
For consumer media, the strengths of the retail channel are well documented (cost-effective distribution, visibility and brand-building, giving the consumer control over their own purchasing patterns). Yet the challenges of the newsstand are also increasing – reducing number of outlets, reducing space and range in-store, rising supply chain costs, lacklustre retail displays, etc. Yet making the most of the channel, rather than simply deserting it completely for subscriptions or ripping out cost ruthlessly (the newspaper route), is another key “runway challenge”.
The cash runway
In answer to the question, “Do you have the required financial resources to drive change?”, the overall score on a scale of 1 to 10 was an uninspiring 6.9. Although a number of companies have built up their cash or have refinanced, there are still some who simply do not have the money to survive, never mind reshape their organisation.
The people runway
This big, complex and controversial area fills several pages of the mediafutures report. It all revolves around acquiring and retaining sufficient talent (simple headcount plus the required skills, knowledge, attitude, etc) to execute the company strategy. It involves remuneration packages, productivity measures (as a very basic metric, the average company turnover per full-time employee is £162,000, but ranges from a low of £52,000 up to £393,000). The feedback also touches on the delicate and complex issue of the age-shift: ditching more expensive (and sometime inflexible) executives for younger, cheaper, adaptable, new-skill GenZers. There are real pros and cons to this shift, but the biggest negative is losing the skills and knowledge of how the old legacy activities actually work. That experience resides in some of the people who have been jettisoned and who probably built the original runways in the first place.
Beyond all this is the impact of AI and automation on everyone’s role, whatever their age, which will be profound and unpredictable. It is unlikely that the robots will take over from humans completely, but what we do and for how much money are questions that no one really knows the answers to now. Extending the “human runway” is the biggest and scariest issue of the lot!
Balancing “new stuff” against “old stuff” is the single biggest management challenge for any media company. What has become clearer than ever through 2023 is that many legacy activities need to have their life extended for a little longer than people were thinking even a year ago.
Print and retail are perhaps the most obvious legacy runways to extend, but getting the user-versus-advertiser balance right is also critical. And then there are the cash and people issues. Extending a runway may not sound very strategic or forward-looking. Yet the reality is that it buys the time to implement the longer-term plan, which usually requires significant investment and detailed planning. Yet we’d better act fast before the robots get to us first!
mediafutures is an annual benchmarking survey of the industry undertaken by Wessenden Marketing in partnership with InPublishing and Collingwood Advisory. For a copy of the full mediafutures report, contact Jim Bilton: firstname.lastname@example.org
This article was first published in InPublishing magazine. If you would like to be added to the free mailing list to receive the magazine, please register here.