Neil Thackray’s Business Media Blog

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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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March 10, 2009 - Posted by | business media strategy | ,


  1. Nice post but you’re bullet points are eye-watering – 4 urgent tasks go up to 5 and then back to 3…

    I think the thing you’ve missed discussing in recent posts is paid content. Those companies that have a heavy weighting towards renewable subscription revenue streams have been reporting some relatively impressive results recently.


    Comment by Rory Brown | March 10, 2009

  2. My subbing is atrocious. Noew corrected the bullets. Too many things to do. You are right about paid content. Results will hold up better and there is more scope to win revenue from paid content. Look at what Euromonitor do. Of course the condition for paying is that data is useful to the buyer in a decision process – the same condition that drives readership of free info supported by advertising.

    Comment by neilthackray | March 11, 2009

  3. […] 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 […]

    Pingback by Thinking About the B2B Paid Content Problem « Neil Thackray’s Business Media Blog | March 17, 2009

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