Ajakirjade Kirjastus, publishers of some of the largest magazines in Estonia, and SL Õhtuleht, publisher of the largest daily and weekly newspapers in Estonia, as well as the online portals and several popular magazines, merged after Ajakirjade Kirjastus sold around half of its business to Ekspress Meedia, the flagship of the Estonian media landscape and part of Ekspress Grupp, owners of SL Õhtuleht. The newly formed company – Õhtuleht Kirjastus with 200 employees – came into existence on 1 June this year.
In Estonian terms this a massive development. Coming from SL Õhtuleht, Erik Heinsaar, CEO of the newly formed publisher, explains that besides the already large portfolio of lifestyle magazines, newspapers and online offerings, the merger brings a wide range of relatively huge magazines into one fold. These titles include the women’s magazine, Naisteleht with a print run 28,300, a lifestyle title, Nipiraamat with a print run of 18,100, a television listings magazine, Teleleht with a print run of 36,300, a home and leisure title Kodukiri with a print run of 12,900, a handcraft magazine Käsitöö with a print run of 7,500 and a range of crossword magazines – under the name Ristik – with a combined print run of 74,500. There’s also Kalale! and Basketball, focused on fishing and basketball.
On top of the extended magazine portfolio, Õhtuleht Kirjastus publishes the largest daily newspaper Õhtuleht with a print run of 45,100, accompanied by the third largest online portal ohtuleht.ee, and the largest weekly paper Linnaleht, a free sheet available in four cities and towns in Estonia, solely funded through print advertising.
Opportunities for synergies
The diversity of the portfolio within the new company, says Heinsaar, creates opportunities for more synergies between titles and parts of the new business. This is something he is particularly excited about because both former companies were quite successful in terms of print and online advertising as well as generating subscription revenues.
“As SL Õhtuleht had been investing in online business models for the last couple of years, it gives the new company added momentum to boost the content of our magazines in the digital sphere. This will result in increased advertising revenues, as well as increased online subscription revenues.” Heinsaar references the daily paper Õhtuleht, which holds a 25 per cent share of online subscribers. Within the entire portfolio of the company, the online subscriber share is only 10 per cent. So we do have a lot to do. We are looking into how we can benefit the most with this enormous amount of content produced and how this content could be sent to our readers no matter what platform they are on. We now have a very solid base for accomplishing this.”
Having said this, Heinsaar adds, “we are not leaving print behind. On the contrary, we have been quite successful in keeping the status quo in print sales and have lost the least in our market”.
Despite recent costly increases in newspaper paper and magazine paper prices, “we’ve managed to sail successfully in a perfect storm: subscription revenues were up almost three per cent in 2017, print advertising sales were up 9.5 per cent in 2017. And of course, as the portfolio is quite big, we see different trends across products, but most of all, all our products are performing well. Õhtuleht as a newspaper is very successful with several magazines holding their positions quite firmly”.
But it would be a mistake to ignore the reality of digital growth. Online advertising sales grew nearly 33 per cent last year and Heinsaar says the Estonian market, just as in the rest of the world, is seeing online content consumption gradually pivoting towards mobile. “We have taken this opportunity to provide both content and advertising solutions across all devices. At the moment we are building a new web platform for our online portals to improve our user experience offering both on browser and mobile. Our aim is to develop a fully responsive platform. The response has been positive and we are confident that we will optimise our future development costs.”
Optimising the customer experience
Part of this would be to not only keep innovating how content is being served but also to find new formats for advertisers and how they can add value for advertisers in terms of return on investment. “Especially because we now have this huge portfolio of content to our disposal that can be optimised to increase the customer experience and serve the need of advertisers.”
As far as expanding content platforms go, market realities dictate that development in Estonia remains conservative. “The market as a whole is not that big. We try to take maximum out of creating video content, but at the same time we need to be cost-efficient as it is very easy to increase costs in a faster pace than revenues. It is increasing year-on-year but it’s difficult for us to keep it profitable with only video ads. So, we need to be clever and only execute projects that makes sense financially. We also have several podcasts going. This may develop further as we continue to develop our new web platform.”
Heinsaar shares the belief that mining into data is already one of the most important aspects of ensuring publishing success. “Knowing what to do with data is key in both advertising and subscription growth. Google, Facebook, Instagram and some of the others are very good at knowing and targeting their customers. Media companies are behind and have fewer tools to compete with but we can create value content that they simply cannot provide. We do not view Google as an enemy. Instead, Google is a partner for us as we use many of its tools to do our daily business.”
He references Google’s DoubleClick for Publishers (DFP), which provides them with advertisement software. It also assists them with managing the sales process of online ads assisting their own dedicated sales team. “Also, a refreshing thought for us is that even though more and more ad spend are going to Facebook and Google, the number one and number two players in our market combined in terms of online ad revenue are still roughly eight to ten times bigger than us. It tells me that there are plenty (advertising revenue) left to take away from them.”
More about Erik Heinsaar
Coming from the telecommunication sector, Erik Heinsaar started his career in publishing as advertising sales director and member of the board of SL Õhtuleht in the beginning of 2016. In January 2017 he continued as CEO of the same company and took over as CEO of Õhtuleht Kirjastus after the merger of SL Õhtuleht and Ajakirjade Kirjastus.
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