David Carey: The Architect

Condé Nast Portfolio was one of the most costly magazine launches in recent memory, burning through a reported $100 million. Few were more ardent in their support for the launch than its publisher, David Carey. Still, the high-end business monthly ran up against a harsh economic climate and confusion over its editorial concept, a blend of business and lifestyle aimed at men and women. Condé Nast folded it after just two years.Carey, who recently became president of rival Hearst Magazines, probably won’t be seeing the birth of another publication of that scope anytime soon, if ever. Hearst’s newest title, Food Network Magazine, launched on a shoestring and is expected to turn a profit after two years. Carey, not surprisingly, praises his new employer’s leaner approach: “I think the Food Network model is the model for the industry,” he says. “It’s a slower build, but it’s done in a way that you don’t get too far ahead of yourself.”At Hearst, like all media companies shaken by the recession, the portfolio Carey inherits is much smaller than it was just a few years ago. The downturn has forced the company to close some of its magazines, including CosmoGirl! and O at Home, that were started by his predecessor, Cathie Black. Even before the recession, the magazine division itself had become a smaller part of parent Hearst Corp., as the 122-year-old company diversified beyond its newspaper roots into broadcast, digital media and other businesses. With its 14 remaining titles, Hearst has been characteristically thrifty. Food Network Magazine has one of the smallest magazine staffs at Hearst and keeps circulation costs low by getting about half of its subscribers from the Web. Elsewhere, Hearst has combined the marketing staffs at two of its luxury-focused magazines, Town & Country and Veranda. It also has pared the staff of House Beautiful, mostly through attrition.With only a few weeks under his belt, Carey says he wouldn’t be ready to detail his plans until at least the end of the summer. But, he says he sees opportunity to wring more growth out of Hearst’s magazines through new brand extensions and ad units. He expresses strong admiration for branded events Cosmopolitan has spun off and declared Town & Country, which has struggled in the recession, as having a “real opportunity” to remake itself.“You have business model innovation, editorial innovation and a set of digital businesses that are perhaps not as appreciated,” Carey says. He particularly sees potential for two properties that Hearst recently acquired: social shopping site Kaboodle and consumer health site RealAge, but he declined to be specific.The iPad so far hasn’t turned into a big moneymaker for magazines, but Carey, an admitted Apple aficionado, thinks that with its potential to charge consumers, the iPad and other e-reading tablets stand to generate a bigger business than the Web has for most publishers. “I’m a big believer that, maybe not in the immediate term, the tablet publishing business is going to be significant,” he says.One of Carey’s immediate tasks will be to figure out how to help Hearst justify its expensive purchase of iCrossing, a search marketing and optimization agency that the company bought in June for a reported $325 million. Black, who is taking the title of chairman of Hearst Magazines, said iCrossing would remain an independent company at Hearst but one with particular application in the magazine division, whose ad clients are increasingly looking for ways to put out their message across digital platforms. “Magazine companies, for at least the last seven, eight years, have begun to function more like a creative idea bank,” she says. “We’re always thinking, what is a big idea we can take to a client? iCrossing tends to fit very nicely with social media and all those applications people are interested in today.”Hearst, if a benevolent place to work (it’s known for rarely firing anyone), has nonetheless made some business and editorial gambles, with apparent success. Food Network Magazine, for one, seemingly defied logic when it launched as a test in 2008 into a crowded food media category and ad downturn. But its rate base tripled to 900,000 in year one on its appealing combination of celebrity chefs and accessible recipes and climbed again to 1.25 million with the current July/August issue. FNM was headed to becoming the top newsstand seller among food titles, says Black.While its peers have looked to cut corners in the recession, Hearst has gone in the other direction, converting titles Good Housekeeping, Redbook, House Beautiful and Country Living to a bigger format. With the wider and taller trim size, Hearst sought to attract more advertising while offsetting the higher paper costs by raising the newsstand price.“During these tough times, they’re one of the few that have invested in their magazines,” says Brenda White, svp, publishing activation director, Starcom USA, expressing a view fellow buyers seem to share.Flouting convention seems to be working for Hearst, at least from an ad-page standpoint. Through the first half of this year, ad pages at 13 of its 14 U.S. magazines grew 7 percent (excluding Food Network Magazine, where issue-per-issue comparisons aren’t available). Meanwhile, ad pages fell 4 percent for the industry overall, per Publishers Information Bureau. Other improvements came in the area of technology. The magazine division, addressing a longstanding advertiser gripe over the long lead times required by monthlies, worked with its printers to let all of its titles accept ad materials closer to the publication date.In its management ranks, Hearst also has shown signs of aggressiveness. The company raised eyebrows with its hire of Carey, an outsider, his early stint as publisher of SmartMoney notwithstanding. Carey, 49, whose low-key style contrasted with some of his brasher publisher peers at Condé Nast, is widely respected in the industry, but company watchers had expected the job to go to CMO and longtime Hearst exec Michael Clinton. Carey’s hire comes at a time of ample change in the top echelons of magazine publishers: Bob Sauerberg assumed the presidency of Condé Nast after Carey left, and just last week, Jack Griffin resigned from Meredith, reportedly to succeed Ann Moore at Time Inc.Hearst in recent years also has brought in outsiders for other high-level positions, including Scott Sassa, onetime president and CEO of Friendster and president of NBC West Coast, as its president of Hearst Entertainment & Syndication; and Matt Peterson, who ran Meredith’s integrated marketing, to head Hearst Magazines’ marketing services unit. At the title level, the magazine unit has gone outside for several top editors and publishers at brands like Country Living, Redbook, Marie Claire and Veranda.Black leaves behind a legacy of big, splashy launches, some of which survived (O, The Oprah Magazine), while some didn’t (Talk and Lifetime). But the Hearst Carey takes over is more likely to launch a title cautiously, if at all, and focus on advancing the digital strategy. Food Network Magazine’s success notwithstanding, the rest of the magazine portfolio faces nagging questions.Three of them–Harper’s Bazaar, Town & Country and Veranda–have bet their fortunes on luxury advertising, which has shrunk considerably during the recession. O, The Oprah Magazine has been one of the company’s few recent big blockbusters, but one wonders what will happen to the title (whose ad pages and newsstand sales were badly bruised last year) when its namesake and founder goes off the air in 2011.And with fewer ad dollars being spread around, Hearst’s Esquire and House Beautiful cut frequency this year by one and two fewer issues, respectively. Cosmopolitan remains a brand and newsstand powerhouse (bucking convention by raising its rate base to 3 million in 2011, a 3.4 percent increase), but Redbook and Marie Claire have at times struggled to differentiate themselves within a large pool of women’s service and fashion magazines.Hearst has benefited from having mass-reach titles like Good Housekeeping and Cosmopolitan whose ad base has held up in the recession. Dennis Santos, vp, media director, PGR Media, says Hearst also has been aggressive in offering incentives to advertisers and introducing innovations like Esquire’s augmented reality cover and Marie Claire’s September issue that will let readers shop from the pages with a mobile phone. “I think it’s the nature of, when your books aren’t always the [category] leader, you have to be more aggressive and scrap a little more,” he says.Black says she believes Oprah’s namesake magazine continues to have strong potential, noting that Hearst is talking with her about future partnerships and that “anywhere Oprah goes, she always talks about the magazine.” She’s bullish on the magazine unit in general, as ad pages rebound this year. “We have not had a consumer problem; we’ve had an advertising problem,” Black says.Still, Hearst is aware not all advertisers share that view. To that end, it’s preparing a presentation to underscore consumers’ strong engagement with magazines that it plans to take out to print advertisers and buyers in the fall. In digital, Hearst has taken a multi-pronged approach, buying Web properties as well as launching its own, like RealBeauty.com. Today, Hearst operates 11 online-only brands, nearly the same as the number of its magazine Web sites. And it’s prepping apps for several of its magazines on the iPad this year, including O and Esquire.While Hearst has done a good job of using its Web sites to sell subscriptions to its magazines, its digital revenue, at more than 10 percent of its magazine revenue, is only slightly better than the industry average. Carey indicates he won’t be navigating the division’s future in a vacuum, saying he’s already met with the heads of Hearst Corp.’s other divisions to share ideas. “You have the heads of these units all sitting down and sharing how they’re changing their business models,” he says. “Having more of a sense of collaboration gives you more confidence as you navigate through troubled times.”

Performance Marketing

David Carey: The Architect

Lucia Moses

About

Subscriptions

Events

Publications

WORK SMARTER - LEARN, GROW AND BE INSPIRED.

Subscribe today!

Lucia Moses