Where will publishers be focusing their energies in 2019? Jim Bilton looks to the Media Futures research for answers.
2019 has already started at a crazy pace. Consolidation and M&A activity continues; the rate of tech change is accelerating relentlessly; and the general political and economic environment is even more volatile than in 2018. Yet beneath the uncertainties of the “Big Issues” and behind the over-arching company strategies, people are still having to beaver away on a pragmatic priority list which drives the day-to-day operation of every media company.
One of the key questions we asked the 83 companies who took part in the Media Futures benchmarking survey was, “What are the critical action areas for your company over the next year or so?” Respondents gave a score of 1 to 10 across 17 potential action areas as to how important these areas were in terms of management focus in the immediate future. These fall into three broad categories:
1. Business streamlining: controlling costs and improving processes.
2. Developing existing revenues: making what works now work better.
3. Developing new revenues: diversifying the revenue streams.
Developing existing revenues (5.9)
This is consistently the highest scoring area in every survey and this year was no different. More importantly, there is a significant year-on-year increase in the scores, showing that there is a real shift to refocus on and improve current activities.
- Predictably, improving digital products and services tops the list (7.1), well ahead of print products (5.8), although the print score has improved slightly on last year – it still has a role to play in the new business models.
- Improving live events has a relatively low score (5.7) given the high profile it clearly has in the industry at the moment. This is partly because this activity is not universal; and partly because many companies are finding the set-up costs and profit margins very challenging. Yet it has a big jump in its score, showing the increasing focus it is receiving.
- The lowest score in this category is overseas opportunities (5.2): it still looks attractive strategically, but “geo-cloning” is much more difficult to execute than appears at first sight. Yet it too shows a big increase year-on-year.
Developing new revenues (5.0)
This is always the most keenly debated area during any company strategy away-day. Yet it is the most volatile area from year to year in the Media Futures survey. This year, it has edged ahead of Business Streamlining, showing that the general emphasis within the industry is shifting away from cost-cutting to revenue-building. Yet the increase in scores is not as big as developing existing revenues, demonstrating the renewed focus on tweaking what works now to make it work better. Starting live events for the first time is the big year-on-year riser (5.7), slotting into second place behind new digital products and services (6.1).
Business streamlining (4.8)
This has always been consistently the second priority area in past surveys, but this has now slipped into third place. Ongoing, grinding costs control remains a simple fact of life, but the emphasis is definitely shifting to the top line – there is a limit as to how far cost-cutting can go.
- The clear priority is to improve internal processes and practices (6.1), which is also tied into investing in IT (rising to second place with 5.8). Changing internal culture and attitudes shows a big drop (4.9), suggesting that many companies have already progressed well down this route.
- There is still a clear bias to bringing in new staff with new skills and experience (5.3) ahead of training existing staff (4.9). Cutting headcount has the lowest score (2.4) in the whole list of change priorities – it looks like the industry has gone through its worst period of culling.
The priority list that emerges from all this varies significantly from company to company depending on where it is in the change process. There can also be major differences in perception within a company. It is not uncommon for leadership teams to believe that there is a logical and well-communicated plan, yet the tiers below them do not share that view: either because they disagree with the priority list itself or because the priorities have not been articulated coherently through the organisation. Another obvious dimension is that newer, younger and more junior recruits tend to want more change than the “permafrost” layer of middle management who are often very resistant to change even though they may not come out and say so.
For media companies facing change, here are two key facts: Firstly, ripping out cost is not the same as a proactive change strategy: in fact, real change is very resource-hungry (in terms of money, headspace and energy) and requires real investment. Secondly, while change has to be driven from the top down, it is actioned from the bottom up: resolving that tension lies at the core of the organisational structures and staff skills required for the brave new world. And to create the magic of real, substantive and sustainable change.