“Go West, young man. Go West and grow up with the country.” That was the rallying call for an expansionist America in the late 19th Century, attributed to newspaper editor, Horace Greeley. There was a moral dimension to the mission: leaving the decadence of the affluent East Coast behind. Yet it also had a more material drive: to grab the natural resources beyond a mature economy that had plateaued and run out of steam.
Revenue diversification is one of the key strategic goals of most media companies. It is a key theme that has been picked up over the last few years of the Media Futures project. And it has never been more important than now in the pandemic.
The more obvious dimension of revenue diversification is activity. Here, Media Futures picks up an average of 5.3 key activities per UK company, ranging from live events through to customer publishing, with B2B operations tending to be several years ahead of Consumer Media. Yet the project highlights the challenges of getting into new areas – having the required skills, knowledge and resourcing, which create real problems in execution. It also shows the downsides of diversifying too quickly and destabilising the core business in the process. So, too much diversification can be as dangerous as too little.
The other less obvious dimension of diversification is geography: taking an activity and rolling it out into other territories beyond the mature domestic market. International activity is already important to the media business. For B2B, it accounts for an average 26% of total turnover in comparison to only 9% for Consumer Media. Yet both are predicted to grow over the next two years.
However, there has been a real change in mindset over the last few surveys. Go back four years and international expansion was high on the priority list of many media companies. Then the enthusiasm began to cool as people realised that “geo-cloning” is not as straightforward as it appears on first sight. The current survey shows that going international was starting to edge back up the to-do list. Then, coronavirus struck, which is making many companies think again.
The international dimension offers opportunity in almost every area.
- Live events is the most obvious one, yet this activity has been dealt a devastating blow by the pandemic.
- Advertising is another area, as many multinational companies centralise their marketing budgets and co-ordinate spend across geographic boundaries.
- As the influence of a handful of international social media platforms grows, then publishers’ own content delivery, marketing activity and audience footprint become increasingly cross-border.
- Copy sales is another area, although this is rapidly shifting from print to digital in overseas territories.
Revenue diversification is one of the key strategic goals of most media companies.
Westward bound
Media Futures highlights three big issues. Firstly, where to go in search of growth? Over the last few years, there has been a big shift for many Western European media companies out of Russia and Eastern Europe. Also, many economies can wobble quite rapidly from growth to contraction – the Middle East and South America being two prime examples. And the local tech infrastructure in terms of internet access, mobile penetration and device usage can vary massively from country to country. So, the focus has actually shifted from the East to the West, with the USA currently being seen as ripe for a bit of disruptive British thinking, even though historically it has been the expensive graveyard for many colonial expeditions. Just look at what Future and Dennis are up to as high profile examples from Consumer Media. Go West indeed!
Secondly, the cultural differences between countries are usually completely underestimated and can lie hidden just beneath the surface. These can range from how business is actually done through to consumer behaviours, which include such basic issues as how people pay for things – direct debit, for example, is simply unknown in many advanced countries. These differences often demand the use of a local partner in joint ventures and franchising deals, or the usage of local consultants and representatives, at least in the market entry stage. China is the most extreme example of this and it is really debatable as to whether this actually does offer a true, profitable expansion opportunity because of the commercial constraints and barriers.
Thirdly, going international raises all kinds of organisational and structural issues. Should the organisation be structured vertically by territory or horizontally by common processes? The obvious answer is a bit of both. Yet “matrix solutions” often result in fudged structures, political infighting, lack of accountability and constant reorganisations, unless there is a strong vision and control from a clear-sighted leadership team – often sadly lacking.
Yet despite all the caveats and complexities, going international is still a key opportunity, with the global pandemic opening up all kinds of unexpected gaps and alliances.
This is reflected in Media Futures itself. Now in its eleventh year, the project is going international with the help of Folio: in the USA and Flashes & Flames in Europe and RoW. By the time this article is published, the fieldwork for the 2020 project will be well under way. And some early results ready to be shared in the next issue of InPublishing.
Go West, young man! And we shall report back to let you know what it looks like.
The cultural differences between countries are usually completely underestimated and can lie hidden just beneath the surface.
Media Futures is an annual benchmarking survey undertaken by Wessenden Marketing in partnership with InPublishing.
This article was first published in InPublishing magazine. If you would like to be added to the free mailing list, please register here.
