Publishers faced with declining print ad revenues need to look beyond digital to pick up the shortfall, according to James Wildman, CEO Hearst Media.
Hearst Media is in the fortunate position of not only having a roster of strong brands – Elle, Cosmopolitan, Esquire, Harper’s Bazaar, Good Housekeeping to name but a few – but also the backing of a wealthy owner. “It’s a strong balance sheet,” Wildman acknowledged to an audience at ad:tech London.
Its titles shift five million magazines a month in the UK. “There is real strength in that business, we’re hardly in decline at all,” he said. The challenge, he added, is around advertising and how to replace lost print ad revenues – and it’s no use simply hoping digital spending will do the job.
“We are developing a diversified business model which has digital as one very important growth driver of several.” he explained, others including events, licensing, customer marketing, commerce.
“By next year (2018) we will have tipped back into topline revenue growth. New revenue growth will more than offset old revenue decline,” Wildman said.
“We’re developing a very interesting business, a highly diversified business with the big draw of phenomenal brands and trust and quality and premium.”
Trust, he suggested, is at an all-time low globally, whether that’s in government or media. “But we’re seeing a very significant trend in the market towards trust,” he added – advertisers are now taking more interest in how and where their advertising shows up for a number of different reasons.
“There is a gravitational pull to those rubies in the dust. Context and environment are coming back into vogue.” YouTube blunders, Facebook metrics, transparency issues – “all of that is helpful for a brand such as Hearst”.
Hearst may not be charging for online access to its premium brands, but it does see their footprint growing alongside their influence.
Editors are the ultimate influencers, Wildman argued, taking a swipe at the trend for brands to turn to influencers on YouTube. “People understand that those influencers are being paid by an advertiser to say whatever they say and the very next day will drop it like a hot potato. That authenticity is very flaky.”
Contrast that with a title like Good Housekeeping, whose Institute tests 4,000 products a year with the ones that get the “seal of approval going on to sell phenomenally well”.
And in what might be considered a logical next step, the title has done a deal with Procter & Gamble that saw the beauty editor fronting a UK campaign for P&G’s Olay skin care line. “It’s earned the endorsement of the Good Housekeeping Institute,” Wildman explained.
But he stressed that a readiness to leverage its brands would not be allowed to jeopardise the consumer trust that has been built up over decades.
“We will never ever risk losing one iota of the integrity of these brands because that’s the cornerstone of the business we build everything on. But we can work more creatively, for sure, and more commercially, as that example shows.”
The trust and credibility of its magazine brands are vital to the diversification that is taking place within the Hearst empire.
“Content-to-commerce is a big emphasis within our business – because we have some of the most influential content in terms of driving purchase decisions,” said Wildman. It’s an obvious route to go he admitted, and Hearst titles have affiliate relationships with online retailers.
Hearst has also built an award-winning events team that delivered 100 individual events last year, as the company leveraged its brands to take advantage of the shift of advertising budgets from display to experiential.
“It’s a profitable business for us and one we intend to scale very aggressively,” Wildman asserted. Its Country Living title, for example, has run fairs in the past but, in a “hugely ambitious approach”, will be taking over Bath city centre in May, shutting roads with the agreement of the local council to offer street theatre and ticketed events alongside the usual stalls.
Licensing is another route being explored that can use the trust in Hearst’s brands. A deal with DFS, for example, saw the furniture retailer sell £50 million-worth of Country Living-branded sofas last year, with the title taking a percentage.