A morning meeting with the CEO of Polaris Media at an Oslo hotel produced a quick wake-up call for me: What do you mean you are not based in Oslo?
Per Axel Koch and his corporate team are based in Trondheim, about 55 minutes north of Oslo by plane in the hometown of the group’s flagship daily, the 61,000-circulation Adresseavisen. He says he came to Oslo to visit me, yet surely there are 10 other reasons to be in Oslo this September morning.
Polaris Media is Norway’s third-largest media group behind Schibsted and Amedia. Yet across its 35 community media houses covering the middle and north of Norway, it maintains a No. 1 position and is competitive with Amedia in key geographies.
Koch visited with me in Oslo about corporate priorities and, not surprisingly, the shift to digital subscriptions was highest on the agenda. He described a business model that has evolved from 70%-30% advertiser-to-consumer revenue in 2007 to one in which it is 50%-50% today.
Across its 35 media houses, Polaris Media has sold 35,000 digital subscriptions (at about €25). In addition, Polaris has 150,000 print subscribers (at about €35) – 60% of whom have activated a digital subscription that comes as part of their package. Some 19 of its 35 markets have increased their subscriber base year on year. Nationally, Polaris has 50%+ daily digital reach and 55% daily print reach in their markets.
Polaris is acutely aware of the Netflix Line (the local price for Netflix, on which many media companies start their digital subscription pricing discussions), which in 2014 was €10. Out of the gate, Polaris priced at €20 for digital-only and €30 for digital + print. Today, the Netflix Line has dropped to €8 as Polaris sells subscriptions at €25/€35.
Like much of the world, media consumption is changing rapidly in Norway. A Consumer & Media study released last year shows the mobile shift started in 2009 at about 5% and today stands at 68% — all at the expense of print newspapers and magazines and a slower decline for TV. Transformation in media is accelerating.
Just as Norway has historically been a world leader in newspaper readership per capita, today the country’s high adoption rate of new technology has positioned it No. 2 worldwide in smartphone penetration at 87%. Nearly everyone is connected via multiple devices, nine out of 10 people are on Facebook, and the number of media house subscriptions is increasing. TV consumption is rapidly declining.
Norwegian publishers face a challenging advertising market. While ad revenue is rapidly moving from print to digital, Google and Facebook have seen a 167% increase in the past four years compared with a 17% decline for traditional media houses. Overall, the advertising market has grown 1% since 2012.
Globally, advertiser behaviour is changing from media-centric to user-centric. Media-centric budgets were focused on channel selection based on knowledge of the channels’ target groups and reach. User-centric strategies are focused on specific users or segments rather than channels.
In other words, advertisers are slicing and dicing user segments across news brands instead of buying exclusively with the brands. They are buying audience segments across brands and then re-aggregating those brand segments into a target audience.
The Polaris Media strategy to battle these global trends involves “must-win battles” for people, content quality, personalisation, and advertising efficiency. That plays out across five focus areas:
- Build a strong No. 1 position on all platforms.
- Strengthen the bond to subscribers and increase user-generated content.
- Increase digital advertising revenues.
- Develop new business opportunities in print and distribution.
- Build an organisation of the future.
Koch observed that the difference between 5% annual growth versus 5% annual declines over five years is enormous.
My read of the Norwegian market is that Polaris is more de-centralised than Schibsted and Amedia, though it is centralising more over time in its hunt for efficiencies. Polaris thinks hard about what to centralise and not centralise, as do all groups. For example, it has local CEOs and local editors — yet a centralised unit in charge of subscription growth.
Its Polaris Media 2020 project embraces scalability by establishing new centralised expert units for consumer products and subscription sales, digital advertising products, and editorial insight. The project focuses on digital training, building a data-driven organisation, implementing shared technologies nationally, adapting the cost base, and strengthening collaborations with strategic partners.
That central Polaris subscription unit is focused on increasing sales and customer loyalty, finding more efficient ways to handle customers, produce faster products, and become more data-driven.
Consumer revenue has grown from €54 million in 2014 to €63 million million in 2017, a healthy 17% increase. The number of subscribers has grown 5% to 184,933 this year — including 34,465 digital-only subscribers, or 19% of Polaris’ total. Digital-only subscribers grew 90% year-on-year.
Was going down the digital subscription path ever a true option? Not really, Koch conceded. Polaris advertising revenue declined from €92 million in 2013 to €70 million in 2016. Digital advertising is up slightly versus four years ago, but it is a rocky up and down path.
Consistently worldwide, this is the impetus behind digital subscriptions. It simply is the straightest path forward and a cultural galvanizer to boot. Polaris Media shows this can work at the local media level — and a strong strategy can be built around it.