Death of a Salesman?

When Condé Nast picked Bob Sauerberg, a consumer marketing veteran, as its new president last month, a feeling of validation arose among his peers.The highest ranking people at publishing companies have traditionally been executives who have come up through ad sales. But the less sexy consumer marketing side has gained visibility as companies recognize that they need to generate revenue from sources other than ads. The shift is notable for Condé Nast, a company where the corporate culture was once dominated by hard-charging sales guys like Tom Florio and Ron Galotti (the model for Sex and the City’s “Mr. Big”).Condé Nast is by no means abandoning its ad roots. Chuck Townsend is remaining as CEO, with the publishers still reporting to him, while Sauerberg focuses on building a new business based on technology and consumer insights.The decline of print advertising has forced publishers to turn to other business drivers, leading to the emphasis on consumer intelligence, said Chris Vollmer, who leads the global media and entertainment practice at Booz. As PricewaterhouseCoopers predicted in its 2010 media outlook, print advertising was expected to decline each year from 2008 to 2012 and not grow again until 2013—by just a scant 0.7 percent.Meanwhile, the share of revenue publishers get from circulation has declined to 32 percent in 2009 from 44 percent in 2006, per figures from Magazine Publishers of America.“You’ve got to be able to drive the business in different areas,” Vollmer said. “The consumer marketers have been analyzing audiences on behalf of the brands, and they can apply that know-how to different parts of the business as they try to monetize the brands in different ways. It’s much more data-oriented. That’s the fundamental shift.”John Loughlin, evp, general manager of Hearst Magazines, said the wake-up call for Hearst came in 2007, the year magazine print ad revenue peaked. “Ad revenue was growing, and circulation revenues were relatively static,” he said. “We said, how do we reinvigorate the revenue stream that exists within consumers?” Loughlin has taken steps to reach more desired readers, which he said has led to more productive subscription offers and enabled him to raise newsstand and subscription prices on many magazines. As a result, circulation as a percent of revenue rose 4 percentage points from 2007 to 2009, he said. Consumer marketing also has taken on a bigger role in other parts of the company. To help Hearst’s magazines sell their content on other platforms outside the monthly print format, Loughlin has also gotten consumer marketers involved in brand extension development earlier in the process.Loughlin admitted the company has a way to go in rebalancing the revenue mix, though, and that it will be a challenge to undo a longtime consumer habit of paying low prices for magazines. “I think we are in a leading position, but we have a lot of work to do,” he said.Beyond Hearst, the job of the consumer marketer itself has evolved. When circulation contributed more than half a magazine’s profit, the job of a circ director (as they were called) was bottom-line driven. As the ad pie grew, publishers realized they could make more money off circulation. The circulation department’s raison d’etre was now to grow circulation for the ad side, with less regard to cost and quality. “Advertising people didn’t have a lot of time for [circulation directors],” said one former publishing exec who’s worked on both sides. “It was, ‘Get me my subs so I can sell the advertising.’”That mentality has changed. Big rate bases have come under scrutiny as ad buyers called into question practices such as the use of direct marketers like Publishers Clearing House to drive subscription sales and free, public-place copies to plug rate base shortfalls. Then came the recession, and print ad revenue, which had up until then subsidized magazines’ inflated rate bases, cratered.Lately, the drive to get subscribers via the Web and charge consumers for content on digital tablets has further fueled consumer marketing’s importance. Accordingly, consumer marketing higher-ups like Hearst Magazines’ Chris Wilkes, Time Inc.’s Monica Ray and Meredith’s Andy Sareyan have added digital responsibilities.At Condé Nast, Sauerberg emphasized the role of technology as a way to leverage consumers’ connections to its brands like Vogue, The New Yorker and Gourmet, the now-defunct magazine that is slated to be reborn later this year as a social media app.“There’s technology wind at our back, and we have the best brands,” he has said. “What we’re interested in doing is utilizing technology and content to create new experiences that provide value to consumers in ways they haven’t before.”It’s not an understatement to say advertising and consumer marketing people come from different worlds. The stereotype of the circulation director is a math geek whose job involves careful, methodical testing of pricing offers. As one publishing executive who’s worked on both sides put it, if salespeople’s focus on cutting advertising deals can lead them to be short-sighted, circ people can be guilty of placing too much importance on numbers. “Sometimes they overvalue that which can be measured,” the executive said. “Circ people don’t appreciate the power of the brand enough. You’re creating a bit of a mystique—that’s something people on the ad side have a lot more facility with.”But in the future, consumer marketers stand to become more relevant as advertisers get more sophisticated at how they buy audiences (a trend wrought by the Internet) and as the selling of media becomes more client-centric. While in the past, many media companies dealt directly with agencies, Vollmer said, “now they’ve got even more of a client-centric view. They have to think about how their audience matches up to their consumer targets.” In such a world, said Vollmer, “these consumer marketers and their skills have even more relevance.”

Performance Marketing

Death of a Salesman?

Lucia Moses

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Lucia Moses