How a young digital entrepreneur turned around the fortunes of a Finnish magazine icon
At DIS 2017 Ilkka explained in detail how the transformation took place. Below he provides his take on Finnish media, tells the story of the digitisation of City Magazine and offers his views on how a startup approach can pay dividends for larger companies.
Here’s our report on his session.
See the presentation slides.
See the session video.
See the DIS 2017 video playlist.
Can you give us some background on yourself, your professional experience and the Finnish media industry in general?
I started my career as a 17 year old entrepreneur 20 years ago. The Internet as we know it was only just becoming mainstream. But I was obsessed with it and I have been building web pages for companies all my life. I was at the inception of media digitalisation and to me it became second nature.
Nowadays companies call those sites “owned media” – for me it is and always has been a natural step as technology has evolved. I started my business with one employee who did everything; that was me. Now I have over 100 people working in my companies.
Eight years ago I got invited to be on the board of a big Finnish media company Lehtiyhtymä. They were publishing 21 newspapers and had their own printing machines. At the time, the media industry was facing a dramatic and growing decline in “print” and there were only a few players who knew how to truly digitise media; I was one of them. Now of course, digital is bigger than print but still many media companies don’t understand how to digitise effectively and with agility.
What position was City Magazine in four years ago and why did you decide to buy it?
City Magazine was founded 1986 to tell stories about the great places to visit and key events in big cities. It focused very much on restaurants, lifestyle and night life in the city of Helsinki, Finland. It is a key part of Helsinki’s media history, an icon.
In 2012, while I was on the board of the media company Lehtiyhtymä, City Magazine was offered to the but they didn’t proceed for 2 reasons:
- Print was not profitable and in decline
- The digital side of the business was small (only 100k euros)
For me I saw the 100k digital revenue as a great platform and I knew how I could accelerate the growth. It was clear there were unexplored revenue streams and big opportunities to grow the brand. City Magazine is very well known in Finland. I was really interested so I asked if I could buy City Magazine and I was given the permission to continue with the acquisition process privately. Only a few months later I was the very proud owner of the legendary City Magazine.
There were so many rumours spinning about how long it would last, what would I do. My plan had three foundations:
- Focus 100% on the digital business
- The power of content
- Company culture
To cut a long story short, four years later, we were included on the Deloitte Fast 500 as the 2nd fastest growing company in Finland and we were recently listed 10th fastest growing Media Company in Deloitte Fast500 EMEA competition.
We are turning over €3 million revenue on a yearly basis. We have been working very hard with this turnaround case and now we are back on our mission to tell stories about the awesome restaurants, places and events in big cities and the growth speed continues (revenue +2367%) and we are healthy and profitable too.
Was it a difficult decision to close the print element of the business? Was there any backlash?
The print business on City Magazine was not profitable so it was just good business for me to make that decision. Naturally I really cared about the brand, I love this brand (!) and of course I wanted to ensure I listened to what people who also loved the brand wanted.
Its survival was, and is based on digitisation. This will allow the brand to live on in the long term.
Originally, City Magazine’s print edition was delivered to restaurants and key spaces in Helsinki so it was very visible for people. When we moved to 100% digital, the brand was not that visible on physical places anymore so we had to to underline that “we still exist” and we are digital. We even changed name to City Digital Ltd to underline that we are digital.
The strong print history had help build great brand awareness, but the same history had made City’s business culture quite difficult to transform. This is in fact pretty usual when going through a transformation of this kind. We had to do lots of work internally and externally to convince people that this business could be a digital success.
As part of this we employed a research company to audit how our campaigns work because we wanted to convince ourselves and our buyers that our mission of transformation was right. We wanted to be absolutely sure. The research came back really positively.
So, we pushed forward with our new full digital campaigns and through testing and experimentation we finally learned that actually our new campaigns performed better and also we could track them carefully through digital data tools. It was an incredible journey, but mostly I am grateful to our readers and clients who came with us and are more engaged than ever.
What tactics did you use to grow the business digitally in terms of readers/subscribers etc?
In digital media being relevant and in the right place at the right time is everything. We believe in multi-channel marketing. For our digital teams this means articles on city.fi – eat.fi – tableonline.fi – email – social media and data based advertisement network reach on desktop and mobile ads. Sometimes we also use location based, in-restaurant advertisements when we run events.
We are a “free to read” medium so we don’t charge customers a subscription fee. Our business models are based on our business strategy. We are a PaaS (Platform As A Service) company. This means we:
- Measure € that we can generate for our customers.
- Track article read-time and native ad view-time because we want to underline the quality of journalism and time spent.
- Look carefully at actions like payments, reservations and clicks to optimise relevancy and improve the services.
- Forecast Customer Acquisition Cost vs Customer Lifetime Value
And what monetisation strategies did you adopt? Why do you think that they have been successful? What are the key issues you overcame?
City Magazine’s mission is to help people find awesome and “relevant-to-me” experiences in the City. We have always been in touch with restaurants so we have been looking continuously for new revenue streams in the restaurant business. We looked and searched for new revenue streams in a structured lean startup build-measure-learn feedback loop.
First we tried to sell more display ads, but reaching more readers did not scale fast enough so we learned that we have to scale up impressions dramatically and establish an data based advertisement network. The amount of impressions grew from 5M to 160M monthly. It was amazing.
The second lesson was that our restaurant customers wanted to see people in restaurants so we had to deliver real results. We organised new campaigns for restaurants, and that yielded great results with some of our restaurants being fully booked six months out!
Thirdly, we realised that in the digital world we have to be interactive. We recognised that we have to give voice to our readers. So, we acquired a restaurant portal software which allowed our readers to rate, review, interact and discuss their experiences. We have to be the most relevant source for restaurant information and, of course, while journalists bring big value to the review space, by giving this power to our readers too, we can be super relevant and real time.
A fourth and key finding in our build-measure-learn cycles was that we needed to be more interactive with the restaurants themselves.
Restaurant articles about “5 new restaurants in City” was just not enough. We had to provide people tools to interact with restaurants directly from these articles. As always, we moved fast and acquired the leading table reservation company in Finland. Now, we make the experience seamless for our readers, by driving reservations to restaurants directly from articles. We also combined this with our rating system so we receive relevant reviews in real time.
Was adopting a startup like approach central to the renewal of the business? How did this work out in practice?
Lean Startup methodology is simple in my mind and I stay pure to two foundations:
- Build-measure-learn. We built many Minimum Viable Products and we went quickly to learn from real buyers about our products to hear, measure and act on feedback. With this feedback we: a) either quickly closed down the product and evolved a new one or b) improved the product based on feedback and optimised.
- Accept fast failure and be ready to try different product solutions and learn constantly. For example, we noticed that even what we thought were our best ideas can fail. We can never truly predict how customers will react to new ideas and products, so the best way to find out which product is successful is to go out there and talk with your customers. Learning with real customers is the best way to improve business. Be humble, listen and react quickly.
Do you think it is difficult for established media companies to adopt a start up style approach? What advice would you give publishers in this situation?
This is what I call the “magnificent seven”. It is tough to stay true to these, but in doing so it will help you transform:
- Accept that failure is an awesome place to learn something.
- Invest fast and fail fast if investment does not bring you traction.
- Always improve and push forward. Don’t look back.
- Be ready to leave old business models behind – new business model may disrupt your old business and if you don’t do that, someone else will.
- Show your team that you want growth. Empower them and take them with you.
- Implement and accelerate build-measure-learn innovation cycle.
- Never give up.
How important do you think acquisitions have been to the growth of your business? How have you integrated the businesses you have bought into your company?
We have successfully completed four acquisitions in four years. 50% of those failed but it’s always important to remember:
- Failure is opportunity to learn something new.
- That for every failure there is a success; two of these acquisitions have been very successful and our teams from the original City, plus acquired companies, are more innovative together.
- Acquisition can be good source to find innovative people and innovative business models.
- Our best integration brought one acquired company 109% growth year-on-year through co-marketing.
What advice would you give to media entrepreneurs in other European cities? In other words what lessons have you learnt from City Magazine?
Digitalisation is huge opportunity.
Now you can radically transform your media business into a successful global business. You don’t have to hold onto your traditional market. There are billions of new people you can serve with smart digitisation.
Implement a build-measure-learn innovation loop and give new businesses an opportunity to happen.
If you want to try our methods in the restaurant business, we can help you to implement those with our findings and Restaurant advertisement Platform for Media. We’d be delighted to help, because we are in the innovation and digitisation business. It’s our passion.
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