Given the ongoing fallout of the pandemic, the war in Ukraine and the climate crisis it’s not surprising Collins chose ‘permacrisis’ – defined as an ‘extended period of instability and insecurity’ – as its word of the year for 2022. How, then, have media businesses been coping during these tumultuous times? The latest report by mediafutures mostly paints a positive picture.
Mediafutures 2022 to 2024: Surviving & Winning in a Permacrisis World shows that 74% of the UK’s leading media companies are currently seeing turnover growth, at an average rate of +10% year-on-year. According to the report – featuring detailed operating data of 97 businesses across consumer enthusiast and lifestyle, newsbrands, membership, B2B, live events and marketing services – 90% are in profit, with the average profit margin being 14% of turnover.
“As the economy worsens and morphs into permacrisis, the smarter media companies are pushing on with their plans and are clawing their way back to previous levels of performance,” Jim Bilton, Managing Director of Wessenden Marketing, authors of the report, told delegates at the recent Publishing Show in London. “The industry’s key metrics are moving upwards – turnover, profitability and headcount – and that is linked to confidence, self belief and resilience.
“Resilience is the word that really comes through – just to keep on going relentlessly in this test and tweak environment where things don’t always work, and you are constantly tweaking the business model. Linked to that is a widening range of business models and operational performance.”
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As business models diverge from brand to brand, defining the shape of an increasingly sprawling media industry is becoming harder.
“While the industry is clawing back out of the 2020/2021 trough, it’s fragmenting,” explained Bilton. “The companies that are out there now are leaner, smaller, restructured and with diversifying revenues and clearer priorities. There is a realisation that you can’t do everything.”
The report shows that two trends have accelerated over the last couple of years – the shift out of print into digital, and a shift away from advertising revenues to user and reader revenues. The relationship between B2C and B2B has also become more complex; the distinction between the two blurring.
“With ecommerce and transactional marketplaces, consumer companies are looking a bit more like B2B companies in some respects and need the tech and the platform to make that happen,” said Bilton. “In company performance, consumer still lags behind B2B in almost every area and metric but is closing the gap.”
The holy trinity
According to the report, the size, ownership and geography of businesses matter more than ever before in how publishers negotiate the permacrisis.
For instance, much of the activity, creativity and growth in the media industry is coming from beneath the major companies in the small to medium-sized sector.
“We pick up companies like Hearst, Future, Immediate and Burda in the report but the real activity is happening lower down than that as the stress test continues for the whole industry,” Bilton pointed out.
Who owns the company is equally important. “The difference between private equity-owned and a family-owned business attitude is fundamental and ripples through the whole culture and the attitude towards staff,” said Bilton. “Do you bring staff and develop staff in a paternalistic or maternalistic approach that is for the long view?
“Some of the family businesses are trying to build businesses for the next generation rather than for short-term PLC shareprice or the exit of private equity. So, the nature of ownership makes a real difference.”
And then there’s the all-important issue of location and whether to allow your staff to work from home. “People claim to have sussed out what the new workplace looks like. They haven’t,” Bilton pointed out.
“They may have a template, but there are lots of companies who are rowing back from letting individual departments sort out which days they are in the office and which days they aren’t, resulting in absolute chaos in a number of organisations and organisations becoming tougher as to what they’re actually doing.
“Being in central London is very different to being in the London commuter belt or being in a university town like Bournemouth or Bristol. Or operating from a converted barn in the middle of nowhere which may seem like a good idea at the time but has massive implications for staff churn, availability and salaries.”
Taking care of business, front and back
While developing diversified front-end revenue models and smart marketing are both still critically important, the backend has become just as crucial.
“The biggie is automating internal processes from accounting and finance through to payment collection – things that are considered the boring backend stuff,” said Bilton. “So, frictionless payments, data and insight, trying to measure productivity and efficiency department by department and brand by brand, driving through efficient supply chains.
“And lurking behind that is a major issue – pricing. How do I price bundles – do I go a la cart, do I bundle, what choice do I give the end user? That is probably a two-year exercise in planning an overview of what your strategic pricing policy should look like.
“At at the moment people are just putting their prices up willy-nilly and because the operating costs are rising, they are just taking a leap into the dark and say, we are going to try this and see what happens.”
A combination of man and machine
Having seen some best laid plans torn up more than once over the last few years, media businesses are understandably keen to find ways to identify positive hotspots and avoid challenging whirlpools as they look towards the future. Whatever strategy they draw up, two things are increasingly important: people and tech.
“There is a subtle shift from trying to predict and plan for the future to building an organisation that can simply handle unpredictability and the need to build two key assets,” said Bilton.
“The one is tech stacks – investing in simpler, more flexible, more integrated tech which is still a long way off for most companies. Most companies are still on this tech journey. The other one is people – recruiting and retaining right skilled staff has never been more important or more challenging.”
For more about the report and to get a free Executive Summary, contact Jim Bilton.