Outside-the-Box Revenue Generators

If the publishing industry has any advantage in these tough economic times, it’s that the imperative to discover new revenue streams far predates the current crisis. Publishing’s woes are not analogous to a bursting bubble so much as a deflating balloon—with the hissing sound of advertising steadily moving from print to online. “I like to talk about it in terms of analog dollars and digital dimes,” says Jeff Reinhardt, a former industry consultant with Berkery Noyes Media and Marketing & Information Services Group, and former executive at Primedia Business. “A lot of the Web stuff, unfortunately, is underpriced given the value of what’s being delivered. The marketplace has way undervalued it. We’ve gotten rid of 10 analog [print] dollars and replaced them with 10 digital dimes. In my opinion, no matter how much you sell, you will not catch back up to where you need to be.” Meaning there is genuine market pressure to diversify—and publishers have responded, especially as the need to find innovative revenue streams has become more acute. Recent innovations might be classed into two types: those dealing with the repurposing of content in innovative ways (such as rich media), and those that embrace the idea that publishers have assets to leverage beyond core media products (for instance, marketing and IT know-how or deep contacts and knowledge within certain industries). The latter trend reflects the realities of the current economic climate, Reinhardt says, citing data from Forrester Research that shows that the majority of marketing money in the business-to-business space in 2008 was spent internally—on companies’ own Web sites and promotional venues. “If that is where they are spending their money, then I [as a publisher] should be helping them do that,” Reinhardt says. “If they are buying more lead-[generation], then offer lead-gen. If they are doing more events, then who better to partner with than a media company?“So, are we media companies, or are we media and marketing services companies?” Reinhardt asks. “If you only look to media, then that is the only money you will get.”An excellent example of this new push to fully leverage available assets comes from within the beleaguered manufacturing and construction trades sector, where Washington, D.C.-based Hanley Wood is finding new ways to help clients make the most of tight marketing and training budgets.“We leverage our expertise in design, content, SEO [search engine optimization] and SEM [search engine marketing] to create a business where we take those experts who we have working for Hanley Wood and make them available to our best customers to help them with their own Web sites,” explains Peter Goldstone, president of Hanley Wood’s business media division. “We want to help them with that and want a piece of that action. Fifty [percent] to 60 percent of the marketing budget [of companies] is going to developing Web sites.”With roughly 75 percent of the market share in the residential construction industry and a growing share in the commercial construction sector, according to Goldstone, Hanley Wood has the reach, base of knowledge and depth of content to expand its revenue options on multiple fronts—and on the road (literally), where it has taken its event-staging expertise. The company has outfitted a fleet of trucks that tour home improvement centers around the country in partnership with Lenox Tools, accompanied by a high-profile publicity campaign utilizing Hanley Wood’s media properties.“They’re huge mobile-marketing events for Lenox, and Hanley Wood produces the whole program,” Goldstone says. “Lenox could do this [themselves] … but they wanted to tap into the huge media reach that we have. They don’t have the promotional capability that we have to create microsites and branding opportunities between all the magazines.” Another successful initiative is Hanley Wood University, a continuing-education space for architects tied to the company’s architectural brands. Utilizing existing and custom content, the publisher works with corporations like Whirlpool to create courses that allow architects and others to stay certified in use and installation techniques. The courses also generate valuable lead-generation data for partnering clients. Hanley Wood also has launched or expanded a number of media products in the past year, most notably Hanley Wood TV, a video platform embedded in all of the company’s e-media operations. The network has combined editorially driven, news-driven and advertorial content with standard advertisements, and has produced $1 million in new revenue since launching the product a year ago, Goldstone says.The New NetworkingA different way to leverage marketing and industry expertise has been pursued by Boston-based IDG. The publisher of many products in the IT space, including Macworld, Computerworld and GamePro, utilizes its extensive knowledge of technology Web sites to offer an aggregation service to ad clients—called IDG TechNetwork (IDGTechNetwork.com).“The challenge right now of buying media on the Web is there has been a huge growth in [the] number of Web sites, and it’s very hard to know about them all,” says Peter Longo, IDG CEO of syndication and networks. “We aggregate these sites under the IDG brand, organize the sites into specific buying purposes, and give [clients] the opportunity to advertise on hundreds of vertical sites across the tech network.” Other publishers are offering similar ad network services—Forbes and Martha’s Circle (by Martha Stewart) being two of the best-known. “It’s a growing trend for publishers,” Longo says. “If you have a strong brand and strong relationships with advertisers, you can extend that halo outside the brand.”IDG also has developed a successful syndication program, distributing its content on non-IDG Web sites such as New-YorkTimes.com and ChicagoTribune.com. “We have been able to leverage our content through the fantastic assets at IDG, our editorial teams and deep understanding of the technology marketplace,” Longo says. “In an era when newsrooms are being reduced, IDG can come in. We have fantastic technology resources, and the message is, let us be your technology content editors for you.” IDG’s syndicated materials come with embedded links to related articles. A reference to Microsoft, for instance, might lead back to additional articles in Computerworld or PC World. “It benefits our own Web sites in that we enjoy healthy CPMs [cost per thousand impressions],” Longo says. “By distributing our content through so many outlets, people will see those links and travel back to our Web sites. That increases our [traffic], … introduces content to new users and raises the amount of salable inventory.” It also boosts SEO, he adds, because having links back to different publications is rewarded on Google’s index. IDG sells ad space, video ads and custom sponsorships for the syndicated content and shares advertising revenue with Mochila, an online marketplace that facilitates syndicated content. "Purpose Driven" PartnershipsLeveraging trusted brands to form lucrative partnerships is not just the stock-in-trade of business-to-business companies. Reader’s Digest Association (RDA) recently announced a collaboration with pastor Rick Warren’s Saddleback Church in Southern California to produce a “personal growth network” of multimedia products. The project is anchored by a quarterly magazine, Purpose Driven Connection, sold with a study guide and DVD, and aimed at people interested in the self-help philosophies and practices laid out in Warren’s best-selling book, “The Purpose Driven Life.” While the magazine will be sold at newsstands and carries advertising, the principal revenue strategy adopted by Alyce Alston, who oversees RDA’s Home & Garden and Health & Wellness brands, is that of a membership model. “We decided the greatest probability of success was to create a suite of products” accessible to members, Alston says. The products are carefully crafted to meet the needs of their intended audience; for example, DVDs are used instead of streaming video because they are better suited to wide-screen viewing by small groups. In addition to the magazine, DVD and workbooks, products include a subscription-only Web site and a number of planned in-person elements, including courses, retreats, summits and group-service projects. Plans also call for daily, inspirational cell phone texts and podcasts. While all of these elements can be purchased a la carte, each is designed to introduce individuals to the membership program. Data collection will allow RDA to learn about who is purchasing the products. Alston believes Purpose Driven Connection allows Saddleback to capitalize on Reader’s Digest’s “unique core competencies”: distinct values associated with a venerable brand, the company’s worldwide reach and massive existing customer lists. Reader’s Digest, in return, benefits from Warren’s large following and the power of the Warren brand, which fueled sales of 10,000 copies of Purpose Driven Connection in three days at Wal-Mart. “To promote the brand, we ran [ads] in all of our RDA assets,” globally, she says. Selling Industry FamiliarityAt least one publisher has taken profiting from industry expertise to a new level. Baton Rouge, La.-based BIC Alliance has parlayed its knowledge of the energy industry (from publishing a trade journal that connects various industries within the petroleum sector) into intermediary services such as recruiting, corporate headhunting, and merger and acquisition (M&A) management. Company founder and CEO Earl Heard says about a third of the company’s income comes from such services. “Last year we did four transactions [worth] over $70 million and [added] $1.5 million to our bottom line,” Heard says of his M&A service, which essentially works as a matchmaker, pairing companies that want to buy with companies that want to sell. “Basically … you’ve got a lot of publishers that are owned by investment banking firms. We are the opposite. We are a publisher who owns an investment banking firm [IVS Investment Banking]. We use our data and personal contacts to help with mergers and acquisitions in the industry context.” Heard believes now is an ideal time for publishers to put their specialized industry knowledge to work in the M&A game, as many baby-boomer business owners are contemplating retirement and need exit strategies. “… Publishers know the people in that industry,” he says. “I could not necessarily go into health care or food-processing businesses and be successful unless I had a publisher [as a partner] who knew those industries.”While not every publisher will be interested in dipping their toes in the M&A water, embracing all potentialities inherent to occupying center stage in the knowledge industry seems likely to be a guiding principle for publishers going forward. “If I only sell brown shoes and never sell black shoes, I will never get revenue from black shoes, even if I am a shoe expert,” Reinhardt says. “So publishers need to open the circle of services and products they offer to better match the needs of their clients.“It’s going to be a land grab,” he says of the demand for next-generation marketing and media services. “There is a need, and it will be fulfilled by someone.”Or as Heard puts it, “Right now, if you can’t think outside the box, you are putting yourself in harm’s way.”

General

Outside-the-Box Revenue Generators

James Sturdivant

About

Subscriptions

Events

Publications

WORK SMARTER - LEARN, GROW AND BE INSPIRED.

Subscribe today!

James Sturdivant