How 3 European media companies are winning with digital innovation

By Marek Miller

eM-Media

Lodz, Poland

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Three of the world’s most renowned media companies — Schibsted Media Group, Fairfax Media, and Aller Media — share a combined 178 years in the business. During INMA’s Media Viking Week, leaders from all three offered insight into how they remain relevant and ahead of the game.

Schibsted Media Group is an international media group with 6,900 employees in 30 countries, and more than 200 million people worldwide engage with Schibsted brands. Tina Stiegler, executive vice president of Schibsted, pointed out there is a similar challenge for publishers across all media businesses, all over the world, and that is the struggle of fulfilling an editorial mission while also trying to transform and deliver healthy economic results.

Schibsted, like other organisations, is transforming its one-to-many communication format to a one-to-one format. This transformation is built upon three pillars: content, the business model, and culture (as well as an ability to constantly change).

In terms of content, Schibsted is focusing on three different output modes: continuous output mode, context mode, and in-depth journalism mode.

VG Direkte, an example of continuous output mode, is a dashboard developed during a Norwegian legal case. For 43 days, journalists explained step-by-step and day-by-day what was going on using live videos, Twitter feeds, and other means. Live communication with the reporter was also possible. VG Direkte generated about 22 million views during the court case, a considerable number since there are only five million people in Norway.

In terms of context, Schibsted is mastering the process of news personalisation by thinking about how to create and deliver better and more relevant news to the audience. Within that process two great ideas were born.

VG Next, an application developed after many interviews in a high school. It is targeted to the 18-  to 25-year-old audience — a group that is not really interested in news but needs it for discussion. The app is curated and very to the point. Schibsted is currently working on personalising it even more.

Afterposten’s front page 2.0. This new algorithm will allow it to create different front pages for different audiences. Schibsted wants to target both news junkies and less frequent users. The company is aware that, unlike Facebook and Google, it has an editorial judgment invested in the project. Journalists will be held responsible for putting news value before publishing.

There will be 62 articles on the front page, a mix of fresh and important news stories and content for subscribers only, ranked on conversion rates and personal preference. This project is currently in its early stages as well.

In-depth journalism for Schibsted is simply good storytelling with articles that require more production time. Its audience wants this, and it’s something the company believes it can do better than anyone else. For example, the article “Glass Girl” was a story about a young girl claiming her life was destroyed after being taken to a child welfare service. This was the longest feature report at 64 pages. Published more than a year ago, it is still selling subscriptions.

Another example of in-depth journalism for Schibsted is the election-night special. It’s an interactive publication where users — apart from finding the latest political information — can plot and match their preferences with political parties. It was put behind the paywall and triggered 800 subscriptions. The average time spent was six minutes.

Nothing could be done without a proper business model. Schibsted has VG Partner Studio, a content-marketing project that brings in 50% of the income. The mix of strong storytelling skills combined with commercial expectations provides extra value for advertisers. The company believes in helping to create ads that are interesting to the audience.

A handy tool for Schibsted is Blink, which uses intent data from marketplaces to target customers on news sites. After browsing classifieds, users can more easily be targeted on other sites like Facebook.

Around 2014, Schibsted realised it needed a huge step up in terms of products and technology. The company needed to be able to scale more quickly, so it started building shared platforms. This provided more room for invention on top of the platform, and it allowed for more and better internal collaboration, though it was a big change in workflow and work organisation.

Gregory Hywood, CEO of Fairfax, discusses transformation at the INMA European News Media Conference in Oslo.
Gregory Hywood, CEO of Fairfax, discusses transformation at the INMA European News Media Conference in Oslo.

Gregory Hywood, CEO of Fairfax, spoke about the transformation inside his company as well. Modern publishers need to drive value for shareholders beyond the traditional mechanisms of advertising and subscriptions.

With large audiences and a depth of marketing inventory, publishers can build new businesses out of their core.

“Every publisher is different, with different assets, different stories. But every publisher needs to find its own journey,” Hywood said.

Fairfax is currently connecting with 70% of Australians and 90% of New Zealanders. The company has essential components:

  • Marketplace business, such as real estate listings and services, cars, jobs, dating, and transactions.
  • Information, such as news, business, sports, lifestyle, weather, and content marketing.
  • Entertainment subscription, such as video-on-demand, running, swimming, food, wine, lifestyle arts, music, and radio.

Australian newspaper advertising revenue has been falling fast for the past 10 years. Ten years ago, newspaper advertising made up 35% of all advertising in Australia, but today it is 9%.

The main objective for Fairfax was to move from a traditional publishing business model toward one that was more modern and had both a diversified portfolio and digital assets with a flexible lower cost base. The strategy was simple: transform the old publishing business, grow new businesses, and build value.

Transforming through cost efficiency and business model innovations focused on profitable, and not mass circulation. Fairfax rationalised its printing footprint. It also underwent extensive partnering, outsourcing, and elimination of redundancy; head count has seen 40% reduction since 2012. The company also introduced a next-generation publishing model for metropolitan business

Fairfax literally divided the business into two: It kept the old business running while creating new businesses.

During the transformation process, Fairfax made the digital news experience more valuable to its audience and focused on providing the highest quality journalism, developing new commercial solutions and products, and diversifying revenue streams. It reset technology and support infrastructure with a new low-cost system that enabled the new model. And, it reshaped the business with new a management team.

Fairfax has shown many signs of growth. For example, it has introduced digital subscriptions for the Sydney Morning Herald, the Age, and Financial Review. It launched events leveraging audiences and marketing inventory. Additionally, it invested in digital and diversifying publishing revenue, and it invested in establishing a domain at the center of the Australian property ecosystem.

The results have been outstanding. There has been significant growth. Revenue from digital is up 25% (up from 13% in 2012), and there’s been a +128% domain revenue increase since 2012. The Australian audience is up to approximately 13 million people, up from 10 million in 2013.

Stephan Granhaug, executive vice president of digital development and innovation at Aller Media, spoke at INMA's European News Media Conference about the digital transformation process.
Stephan Granhaug, executive vice president of digital development and innovation at Aller Media, spoke at INMA's European News Media Conference about the digital transformation process.

Stephan Granhaug, executive vice president of digital development and innovation at Aller Media, spoke about differentiation and ecosystem creation in a digital transformation process.

The legacy magazine and weeklies company struggled to succeed in the digital playing field until it acquired the newspaper Dagbladet in 2013, nearly doubling the size of its Norwegian media business and quadrupling the reach of its digital titles. In addition, the company has run a differentiation strategy moving across the value chain to acquire several companies in the agency sphere over the past decade (content marketing, advertising and campaign development, service design, CRM, and SEO).

Overall, these moves have repositioned the company to become a robust player in the Norwegian media landscape with a strong digital foothold. The key challenges have been Aller Media’s differentiation toward growth in the upstream value chain and building an ecosystem to transform the core media business.

Changes in consumer behavior have created macro pressure. And, of course, transforming print dollars to digital dimes is difficult. Aller Media has found it a challenge to shrink this gap.

The value chain on the advertising side is intercepted by a range of new players, each taking a piece of the pie. New players include public relations agencies, creative agencies, media planners, and media buyers. Additionally, there have been increased competition and loss of control on the distribution side. Due to intermediaries between content and users (such as Apple, Google, and Facebook), publishers don’t control product, price, place, or promotion anymore.

This has had a marked effect. Through a combination of acquisitions and organic initiatives the company has managed to move nearly 50% of its revenues to growing markets since 2012. By 2017, digital accounted for more than 75% of Aller Media’s total advertising revenues.

On the advertising and marketing side, Aller Media was aiming for segments of the value chain where risk was controllable in order to become a leading Nordic player. This was achieved through acquisitions, and now it has several companies in the following sectors in Norway: content marketing, live events, advertising and concept creation, performance marketing, service design, and data enrichment. By getting rid of the middlemen, the company was able to address the increase of new players in the space.

Key success factors included entering at the right stage of the life cycle, putting energy before synergy, and adding the right amount of industrialisation at the right time.

In the first step of transformation, Aller Media decided to transform at its core. It gave and received more value to and from its users. The second step was to consolidate for a viable top position in the magazine sector. It went through a process of selection with the magazines and chose those that would most likely survive transformation.

This all made it possible for Aller Media to optimise for higher ad revenues per visitor and focus on paid content models. Over the last three years, Aller Media has experienced a 100% growth rate of subscriptions year over year.

About Marek Miller

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