30 October 2024

From scale to engagement: Lessons in revenue diversification from Hearst Magazines

For any publisher over-reliant on SEO for search, the emergence of artificial intelligence has been a huge wake-up call. Studies shows that up to half of searches on Google now result in ‘zero-clicks’, with the search engine generating an AI response to a query rather than sending any traffic back to publishers. How should media companies adapt to these shifting sands? If you are Hearst Magazines, you focus less on scale and more on fostering greater engagement.

“If the reality is a slightly smaller audience than the levels at the peak of the pandemic then, surely, it’s better to have a deeper relationship with them – a shift in focus from serving traffic-driving partners to better serving our customers,” says Joe Martin, VP, Media Licensing at Hearst Magazines – one of the speakers at this year’s FIPP World Media Congress.

“While publishers around the world produce great content, perhaps an area of improvement is how we build our relationships with our customers and how they interact with our brands – and also being able to serve them additional monetisable experiences.”

Experiences like memberships and marketplaces – two crucial revenue drivers at Hearst that is built on an in-depth knowledge of readers.

“A sole focus on uniques and page views can lead to a slightly superficial understanding of an audience, so we need to dig deeper, we need to gather and analyse data to be able to understand more about customers’ needs, preferences and behaviours,” Martin points out.

Investing in and building a membership base not only drives additional membership revenue, but also helps Hearst build better data, which then helps to fuel all of the other areas of their business.

“It allows us to create better products. It helps accelerate ecommerce because the more we know about a customer, the better we can serve them and the more likely they are to come back and helps us to build better ad products,” adds Martin. “And of course, it helps us to feed information to our editors to be able to serve more of the content that we know our users want.”

Please come again

With programmatic CPMs declining and the use of AI rising, it is going to be increasingly important to make sure users stick around. This is backed up by stats showing the difference in value between a one-time referred Google user compared to a return visitor.

A return visitor on average spends about a minute more per visit, is much more engaged and is about twice as likely to click on products that are recommended than a one-time Google-referred visitor.

“In short, the return visitor is much more valuable than a one-time visitor,” says Martin. “Does that mean that we should abandon SEO altogether? Of course not. It’s still very valuable to us and the approach will be – we’re brand-specific, but we’re going to have to take a balanced approach. And of course, as everyone knows, engagement metrics move slowly.

“If programmatic CPMs decreased even further, the manager of a site may believe they can actually get a better return from investing in something like digital membership or ecommerce.”

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Membership matters

In addition to striving for deeper engagement for its own products, Hearst is innovating in other areas as well to create a more diverse base of revenue.

After being hugely successful in the US, print membership and digital subscriptions remain a massive part of the media company’s international strategy and is being rolled out across different brands.

In the UK, Elle Collective allows members to access exclusive fashion and beauty content, advice from industry experts and curated offers and experiences. Meanwhile, Harper Bazaar’s Business Club in the Netherlands brings together woman in business who pay more than €1,000 a year to join.

“That’s obviously meaningful revenue, but also opens up other kinds of advertising opportunities for events for attracting that very valuable audience,” adds Martin.

Another area where Hearst has focused on in the past couple of years is accelerating its ecommerce and affiliate business and moving on to having its own marketplaces. For instance, the Elle store in Japan makes up a huge part of the overall revenue mix for the country.

 “The key here is the ability to move on and gather first-party data,” says Martin. “The more we know about our customers, the better we can serve them, and the more likely they are to come back.”

Brand awareness

When it comes to brand licensing, Martin implored publishers to ask the question – are we really maximising the potential of a brand outside of just our content? An example of doing just that is Hearst’s UK office with House Beautiful, Good Housekeeping and Country Living having sofas at DFS. Meanwhile, House Beautiful kitchens at Homebase account for more than 40% of their overall sales, something Martin describes as “staggering’.

“It’s obviously meaningful revenue, but what better way for our brands to be a part of people’s everyday life as well?”

Beyond products, Hearst has invested in different types of experiences, with the launch of the cruise-based Harper’s Bazaar Wellness at Sea – a high-quality, monetisable experience that deepens engagements with existing customers.

Hearst has also been leaning into truly immersive experiences, like the Cosmo Sleepover and Esquire Townhouse, which sees a property taken over for a month and filled with art curations and watch exhibitions.

Licensing 2.0

Hearst’s global network comprises over 200 brands editions worldwide in 47 markets. Seven of these are wholly owned businesses, with the rest made up of large group of licensees.

“We simply can’t be experts in every single market, so that’s why we partner,” says Martin. “When you think about extending our brands, it’s also important that we set up our partners for success as well.

“So, we think about this as a kind of licensing 2.0. Rather than just giving the keys to our brand and say here’s the content, good luck, we think about supporting our partners in all of these other areas. How can we best give them the knowledge, the support, the infrastructure to build their own membership offerings and ecommerce offerings.

“We believe that the best way to set our brand up for success is through deepening our relationship with customers and obsessive focus on the customer and diverse revenue streams to not only set up ourselves, but also our partners, for success in the future.”