The Answer to the B2B Online Content Conundrum Is a Hybrid

B2B Digital content model

B2B Content Model

One way of of thinking about the new content model for B2B is to deploy a range of data to generate income in more than one way.  Our traditional strength – the delivery of news, remains a powerful audience grabber.  But as we have discussed, news is a commodity and must be delivered free, funded by an advertising model.  Because this, on its own is insufficient to support a reasonable economic model we must add a jobs board, available free to the user.

The next segment is the production of leads for suppliers.  Suppliers will pay for leads if the information and data about the lead is validated through a registration process.  Product information, product specifications and supplier white papers can all be offered to users from behind a registration wall.  These validated leads are enormously valuable to suppliers and can be sold for prices varying from £25 to £100 each lead.

Paid information is the next content segment.  This might be research data, research white papers, reader panel data any of which can be sold on a subscription or pay / view basis.

At the top of the heirarchy B2B media can offer applications and work flow tools on a licence basis.

Each of these four elements deserve a post in their own right, but if all four are deployed in a co-ordinated fashion then we have the makings of a sustainable and growable digital model.  The key to understading this, is not believing that the answer lies either in the information model or the ad sales model, but rather in a hybrid model which addresses each slice of the b2b content pyramid.

 

 

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Thinking About the B2B Paid Content Problem

Rory rightly notes that I haven’t posted much about the paid content model.  Let’s have a tour around some of the issues we face.

For traditional business media companies whose living has been based on magazines, paid content has been an ancillary activity.  Its’ provenance was in the sale of subscriptions and occasionally retail copies of magazines.  In 1983, when I was new to all this, paid for titles were under threat from controlled circulation targeted magazines.  I remember how Electronics Weekly, originally a paid for magazine, was busy trying to convert its paid readers to CC to exploit the growing ad market that was being colonised by the free but demographically elegant Electronics Times.  Giving up an entire revenue stream looked like madness to me then, and in the long run so it proved.

Meanwhile the paid circulations of those titles who stuck with it has declined progressively over time.  As the annonymous Business Media Blogger has pointed out, this trend has been evident for ten years.  Magazine publishing, traditionally the dissemination of news, is no longer a paying model.  News, even in business to business, is a free commodity.

In traditional business publishing companies, led by managers whose background is often largely advertising sales, paid content has become a minority sport.  Even in the large corporates, most of which have substantial divisions which rely on paid content, there has been little transfer of learning and competence into the divsions which are advertising dependent.

So this is my first hypothesis.  If paid content is to be a larger part of the revenue mix, the first challenge is to recruit some expertise and competence into the organisation.

In digital publishing, there are some really interesting paid content models that could inform our future strategy.  Before we do that lets consider some of the barriers to making this real.

1) The Value problem, We have an inflated view of the value of the content we already produce.

2) The breadth problem.  Most of our original content is neither deep enough, original enough, comprehensive enough or complex enough to command a high price,

3) The scale problem.  Building paid revenues is a long game.  It is easy to sell a little, but it is hard to sell a lot.  Most b2b online publishers struggle to get users to stay on their site for more than a couple of pages at a time when the content is free.  How can we expect to scale a paid content model when we can’t engage our users for nothing?

4) The problem of abundance or the competitor problem.  There are hundreds of sources of b2b information and a lot of it is free.  What could it be about our infomation that makes it distinctive?

Does this mean the paid content model is uninteresting?  Not a bit of it. In coming posts we will have a look at the alternative paid content models and consider how we can use them in building the new era business media model.  The topics include, curated content, subscription news, online membership models, micropayment models, premium and “freemium” models.  If you have a view, I would love to hear it.

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Quantitative Easing And the Business Media Economy

The Bank of Englands announcement last week that it plans to use quantitative easing to restart the economy is important news for business media strategists.

Interest rates have been cut so low that any further cuts are impossible or meaningless.  Despite this unprecedented situation, there is no sign that consumers are ready to go out and spend.  If consumers do not spend, corporate profits decline and we, in the business media, struggle.

Most consumers, if they borrow beyond their mortgage will use credit cards and store cards.  Here interest rates are still an eye watering 16-18%.  No surprise then that interest rate cuts in the base rate have not led to a boom in consumer spending.  Neither have the cuts released bank lending – a necessary lubrication for the corporate economy.  Banks are trying to restore their liquidity ratio so in simple terms any cash they get they hoard.  Quantitative easing, it is argued, will pour more money into the economy and eventually the tipping point will be reached, bank ratios wil recover and lending will flush through.

I am no economist but this macro economic approach tells us all we need to know about our future planning assumptions. Quantitative easing does not always work.  The side effects can be worse than the disease it is trying to cure (look at Zimbabwe).  Increasing the supply of money must stoke inflation as sure as petrol flames a fire.  If the easing is judged just right there will be just enough inflation to prevent deflation.  But getting it right is like threading a needle with oven gloves on.

Even when it works the effects can take a long time to come through.  The recession in Japan took ten years to work through the system and the economy there had not fully recovered when the global crisis hit.

The implications of all this are obvious.  Our planning assumption should be that the current state of the business media economy is as good as it is going to get for the plannable future.  Any strategy which offers cost cuts now to ensure the business is well placed for recovery is likely to disappoint.

The general economy will likely be lubricated by the Governments measures.  Almost as soon as this happens inflation will rise, hurting corporate profits.  Taxes will start to rise to rebalance the exchequer – hurting corporate profits.  Unemployment will stay high which will continue to compromise recruitment advertising.

So our challenge is to build a business model for our industry that is profitable in the circumstances we are in today.  There are six urgent tasks to tackle.

1) Building a new approach to magazine publishing that provides compelling service to readers and advertisers on a permanently lower cost base than in our history.

2) Develop a digital strategy built around delivery of data and information that aids decision making.

3) Build an advertising model for the digital business that delivers value to customers.

4) Re invigorate the events model.  It is doing well so far, but if this is an extended downturn even events could be damaged.

5) Stop hoping that the recovery will begin in Q3 and everything will be back to normal by 2012.  It won’t.  Even if quantitative easing works, this is a ten year recovery.

6) Operate the entire enterprise with an overhead that is half the size of the current model.

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Recruitment Advertising Opportunity Is Ripe for Picking

We haven’t talked about the elephant in the room – recruitment advertising.  The profit model of the old business media paradigm was built around job advertising.  For weekly titles the recruitment industry made the difference between a 10% contribution margin and a 30% margin.  Without substantial recruitment income the affordability of large circulations and content teams is undermined.

In this post we will consider what happened to the recruitment business and what if anything the media industry can do next.

Track back ten years when we first started to wrestle with challeng of the Internet.  Much of the internal debate was about how to exploit the opportunity presented by online without destroying the profitable print model.  There were some early experimenters such as Morgan Grampian/Miller Freeman that tried to build an online solution (dotjobs I think it was called).  Most media companies built a model that gave online recruitment away with the print sale.

The trouble with a model designed to protect the parent product was that  was always vulnerable to new entrants and that proved the undoing of the strategy.  Only RBI with invention of Total Jobs, invented following the demise of technology recruitment, attacked the new opportunity with gusto.  But even this intitiative is small compared with the largesse of riches once enjoyed from the print model.  The reasons for this are obvious.  The price point for online recruitment is low – say £100 whilst the price point for a page of rectruitment advertsing was high, perhaps based on up to £50 a single column centimetre.  In addition there is a raft of new competitors, monster, jobsite, fish4 and numerous specialist boards all driving down prices.  Worse, the value proposition for job boards is fundamentally different from the print model.

Let’s think about this for a moment.  A thriving recruitnment market depends on tightness in the labour market.  It requires more companies trying to hire than there are skilled staff looking for jobs.  When competition for talent is high, recruiters will advertise to find not just job seekers but also those who are happy in their current role but need to be tempted to move or consider a move.  This requires push marketing, high levels of creativity in copy writing and presentation.  With loyal audiences reading the leading business weeklies media selection was easy.  The job ads went where the response was.  The response was where the job ads were and one or two titles in each market would clean up in a monopoly or duopoly. 

In a recession job advertising collapses.  As soon as GDP grwoth falls below 2% rectuiment volumes satrt to drop.  Recession has always made it hard for media owners in recruitment and it is certainly tough now.  Some markets have seen revenues fall by as much as two thirds.

So what can be done?  In the absence of a better plan what many companies are doing is signing up with Madgex, the leading supplier of job board software for publishers.  Although Madgex is a pretty small company, (turnover less than £3m), their solution is definitly fit for purpose.  But there are two problems.

First, all the job boards on publishers sites present pretty much identical functionality leaving few points of difference between competitors.  General job boards also offer similar functionality but with more jobs and more traffic and more response.  Second, job board presentation mitigates against recruiter creativity. 

If the jobs model is to be a substantial revenue earner for media companies they must either compete and win against the general job sites which is hugely expensive and probably too late to do; or they must develop a distinctive model for their niche which presents opportunities for recruiters to spend more than £100/job.  Why?  Well lest imagine a b2b market with a universe of 100,000 people.  Let’s imagine that all of them are using a single b2b website.  Let’s assume that everyone changes their job once every three years.  On job board models thats a maximum market value of  around £3m if every job is advertised.  Not enough to keep to keep two or three players in the market. 

How can we make the oportunity bigger? 

1) Disintermediate the the recruitment agencies.  Although it is quick and easy to build job volumes through agencies, in the end, if you let them in, they will earn more from your audience than you will.  An agency will charge the client 20% or more of the first year salary.  Now we have lost most of our print recruitment what is stop media owners being the agency?  Recruiters don’t care about the cost of a recruitment ad – what they care about is the cost of the hire.  So charge for the hire not the ad. It requires some new skills but if you have a relationship with the job moving audience you already have a head start.

2) Develop models which nurture push marketing.  Create promotional inventory for job advertising which is digital and creative.  (There are many ways I can think of doing this).

3) Don’t worry at all about the impact on your print business.  If you can think of a way of killing it, so can can your future competitors!

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One Press, One Paper, One Day – Emaps Vision of the Future for Mags

There was a most interesting announcement last week from Emap Inform, the APAX/GMG backed publisher of Local Government Chronicle and Retail Week.  They plan to co-ordinate all their publishing dates so to that the magazine printing can be handled on a single press.  In addition, and of necessity, all the titles will move to a single format A4 on common paper stock.  By conincidence I bumped into a friend of mine who works for one of the major printers.  He told me that this annoucnement had promoted a queue of enquiries from other publishers wondering if they could do the same thing.

This set me wondering whether the Emap intiative was a necessary evil in the current market, or a clever part solution to permanently reducing the costs of being in print publishing.

The problems are obvious.  If any one of the titles is late passing, then all the titles will be late.  If the press breaks down, or suffers a series of web breaks it won’t just be one title that suffers but all of them.  If readers prefer some format other than A4 then that’s just tough.  Publishers and editors input into the creativity of the magazine presentation has been neutered. The single publication date might suit the manufacturing process but it  might not best suit the needs of the readers, advertisers or the publishers own competitive position.

On the other hand, in the current climate who would not want to cut production costs?  As a strategem on its’ own it has no other advantages I can think of.   It might imply that some publishers have concluded that the only way forward is to maximise the cash generated from print while they can.   I can’t help thinking though, that there is a better answer.  The poll on this site shows that two thirds of you think there can be a growth future for printed magazines.

An interesting conversation with the PPA last week prompted a thought that the industry could run a competition to create a business magazine format for the future.  I bet the winner would be someone we had never heard of before! If you have thoughts on what business magazines could be like in the future please email me and I’ll post your thoughts on the site either bylined or annonymously if you are shy.