A panel at the 2017 INMA World Congress represented a few of the media companies around the world that are creating revenue diversification strategies.
Brand name recognisation drives new revenue diversification opportunities for Forbes, said Mike Federle, president and chief operating officer.
After an internal revamp to create a “new newsroom for the digital age,” Forbes realised that there was an opportunity to tap into public perception of the brand’s size and value.
“People who guess scale of business usually guess 5x the size it actually is,” Federle said.
This lead Forbes to a new goal: to build the business as big as its brand. One way the company did this was by creating a contributor platform. Forbes has onboarded 2,000 contributors — experts in their fields — who publish on Forbes.com alongside the staff journalists. “We curated the contributors, allowed them to publish directly onto a technology platform which we built,” Federle said. Another way was by launching BrandVoice, the company’s native advertising platform.
The company also grew non-advertising revenue through licensing opportunities. This includes the Forbes School of Business, Forbes Books, and Forbes Travel Guide. The breadth of licensing is what creates revenue, Federle said.
By creating new non-advertising revenue through branded products, Forbes has seen revenue from non-ad products grow from 13% in 2011 to 32% in 2017.
When asked how many people in the audience work at companies who saw revenue growth last year, very few people raised their hands.
When you look at statistics, said IDG CEO Michael Friedenberg, that is pretty fascinating because the advertising industry, news media’s traditional revenue source, is a US$560 billion industry. This is due in large part to the infamous Google/Facebook duopoly, Friedenberg said.
“It’s pretty hard to compete with a company that controls the traffic,” he said.
This is also a warning to other countries, he added: “Whatever happens in the United States usually starts to spread worldwide in about a two- to three-year period.”
And it is a phenomenon not limited to the media industry. Though the data is a little dated, Friedenberg said, only 50% of Fortune 500 companies actually grew revenue in 2014, and only 30% of all businesses grew worldwide in 2014.
Coming back to media companies, Friedenberg said a reliance on advertising creates an unstable revenue strategy: “Most media companies are a one-legged stool,” he said, clarifying that the leg represents advertising.
IDG has worked to add more legs to its stool, branching out into marketing services and events.
“Whereas most companies have about one to two revenue streams, we have about six to eight and moving to about 10,” he said.
These new revenue streams are all based on a data underpinning, he added.
Growth is based in four cornerstones at IDG:
- Quality: “We are committed to our brands. Our brands actually bring in different levels of audiences.”
- Scale: The definition of scale has changed, moving from physical scale to virtual scale. “As we know, everything is going virtual now.”
- Data: “Data is the new world currency.”
- Creativity: “Even though the pendulum has swung vastly to the science side, there still is a place for art. Media is all about art and balance.”
To give a more national and regional perspective, Anthony Tan, deputy chief executive officer at Singapore Press Holdings, shared insight to the media company’s diversification strategies. He began by emphasising that the company is indeed a media company at the core because, he warned, “many of the things we’ve done in the following slides may cause you to question.”
In 2006, SPH saw 80% of revenue from its media operations. In 2016, the company saw 74% of revenue from media. While print and other media are still at the core of its operations, SPH has diversified its revenue much beyond media: “Today, we are more than a media company,” Tan said.
Some if its non-media holdings include high-end retail malls and nursing homes. These provide a stable source of revenue so SPH can feed the newspaper business, Tan said.
Tan went on two make two important points:
“Don’t chase readers but audiences.”
In the new economy, he said, news media needs to move out of a restrictive ad or circulation revenue mindset.
With its core-adjacent ventures and even those away from core, SPH can sell ads anywhere because it not only has a print and digital audience, but also can reach people in other unique ways.
“Content can only go so far.”
SPH has created a lifestyle ecosystem, Tan said. The question news media companies need to ask: How do we extend our value proposition to audiences?
His company hosts events, such as coffee and beer festivals. It also creates new partnerships to sell wine and golf subscriptions. SPH has also made a significant investment in education, Tan added.
“Education is important to us because we are cultivating the next generation of readers,” he said. “If they can’t read, they can’t buy our papers”
After all of this, Tan said that diversification cannot solve all of the problems news media companies may face, present or future: “Even if we diversify, I always say the journey is far from over.”