Visibility. Control. Quality. These three words capture the industry’s mood in this year’s survey. The fog is clearing and the new publishing landscape has become much clearer over the last year – both the opportunities and the challenges – so visibility has improved. The industry seems more aware of what needs to be done in order to prosper, so everything seems more under our own control rather than feeling on the receiving end of external trends. The quality dimension is best summarised in the words of one of the respondents… “We’ve made an assessment of what we think we need to do. We’ve invested in that and we’re beginning to see a return on that investment… not as fast or as big as we’d like, but we know that this is a long game. We’re investing in quality. And quality will win!”
Key vital signs moving upwards
The graph charts the movement of three key indicators from 2009 through to respondents’ estimates for the end of this year.
* Turnover growth. 69% of the companies report that their turnover is currently growing. For B2B, this is at an average +7% annual growth rate; for Consumer, a more modest +1%.
* Profitability. 82% of companies claim to be profitable currently. So, more companies are in profit than are showing topline growth – the result of ongoing, grinding cost control. Also, the B2B figures are stronger than in Consumer. Among those companies in profit, the average B2B margin is 18%, while Consumer is 13%.
* Headcount growth. After a wobbly few years in the 2010 to 2012 period, the trend in headcount has become more stable, with 45% of companies currently reporting that their staff numbers are rising.
So, all three vital signs are strong and moving in the right direction with ongoing growth predicted for 2015. Also, there is a recurring theme of B2B being stronger than Consumer, which is lagging behind the business sector in terms of their journey into digital.
Publisher confidence increasing
All these positives are feeding through into increasing confidence levels. Respondents were asked to score on a scale of 1-10 how confident they felt about the financial success of their company over the next two years. Both Consumer (7.3 out of 10) and B2B (7.9 out of 10) publishers show robust and growing confidence, but again with B2B delivering the stronger figures. In a business world where self-belief, resilience and staying power are becoming increasingly important corporate qualities, confidence levels are a significant indicator. Or, as one respondent put it, “It’s not so much about being confident per se, but having the self-belief to make bold moves. To keep ahead of the game, you have to be bold and proactive, rather than sit back and wait for all indicators to be pointing in the right direction before you commit.”
Digging into the detail
The report provides some granular detail across a wide range of areas…
* Digital is a massive, complex and fast-changing area covering devices, websites, digital magazines, magazine apps and social media. In each of these areas there have been subtle changes as to how each are being managed by the industry. Yet the key factor is that, as individual companies are integrating digital more seamlessly into their operations, publishers are creating their own bespoke business models in each area of activity.
* In Advertising, digital is driving bigger, multi-platform packages, but having the internal resources to execute everything is a real challenge. Fighting the ongoing battle against the commoditisation of advertising inventory is also a big issue.
* Retail is under severe pressure, but there are still opportunities in increasing the retail universe and engaging with retailers better.
* The membership bundle, shaped by deep and real-time data, is a key focus of activity in subscriptions, but here too, having the resource to execute well is a challenge.
* Marketing budgets for both promotion and R&D are growing, which is a good sign of increasing confidence and investment in the future.
* Although competition is growing rapidly, Live Events are offering an added dimension for both B2B and Consumer companies to engage more interactively with their audiences in an increasing range of formats.
Managing the change process
Each company is at a different point in the change process, with B2B generally well in advance of Consumer. Yet a significant 26% do not see “change” as a process at all, in the sense of having a beginning and an end, but as a constant state of never-ending tweaks.
While 89% of companies claim to have a “clear vision of the company we need to be,” only 77% feel that their company culture “encourages change and innovation” and a lower 63% think that they have the required company structure.
In terms of having the resources to drive change, finance is seen as the main requirement, but still with a relatively low 61%, and then a big gap before staff and then IT (46%). There clearly are concerns about whether the industry has the required technical tools to keep pace in the digital world, when the new competition includes Amazon, Apple, Google, etc and not just other publishers.
Is the mood of the industry changing?
There are some subtle, but significant changes showing in this year’s survey.
There is a shift in focus from external threats to internal challenges – resources, IT, staff, company culture and structure. The upside of this is that rather than feeling hostages to fortune, there is a stronger sense that the industry has more control over shaping its own future.
There are fewer big themes. Last year, there were perceived to be some dominant opportunities and priorities – mobile, video, social, ecommerce, international. All of these factors are still present, but individual companies are clearly developing their own specific and tailored “to do lists”. The industry seems to be picking out the appropriate tools from the toolbox for the jobs in hand, acknowledging that there are different business models for different situations and markets.
Increasing competition is a recurring message. As one respondent put it: “We used to be able to describe our “competitors” as a defined set of rival publishers. Now, the more things we do, the more competition we create for ourselves… content marketers, etailers, blogs, social media, etc, etc. Now the whole world seems to be our competition!”
There is more focus on what works now. There is a subtle shift from the dominant focus being on doing “new things” towards making the old things work better. This is partly because the funky new stuff is taking longer to deliver a hard return on investment; partly because some of the old legacy activities – print included – look to have more life and value in them than was felt to be the case a year or two ago. They may need some serious overhauls, but they provide a robust platform for the future.
There is clearly a growing debate about the benefits of scale in a digital world which is driven by both scale and one-to-one interactions at the same time. Some small publishers feel that they have agility and speed, but lack the resources to make an impact. Some large publishers state that they are inflexible and slow to change, yet have assets they can leverage and the scale to invest and take a long view. That trade-off looks to be being debated in every publishing organisation at the moment.
So what does it all mean?
Visibility, control and quality. These three words capture the mood of the industry at the moment. If the last few years have felt like driving at high speed through thick fog, the twists and forks in the road are now becoming easier to pick out. That does not make the decisions any easier, but the insight to make those choices and the tools to execute them are more readily to hand. In addition, there seems to be a greater confidence in the quality of the industry’s assets – content, communities, knowledge and skills – and a belief that “quality will out”. Yet that all means a bold commitment to the long game. And that is the biggest challenge facing every publisher, large or small, for the next few years.
About the report
This is the sixth annual Publishing Futures benchmarking project polling the views of publishers across a wide range of commercial areas. The Professional Publishers Association (PPA) commissioned Wessenden Marketing to create and manage an online self-completion questionnaire. InPublishing was the media partner. The fieldwork for the project ran from October to December 2014. 86 questionnaires, with an equal split between Consumer and B2B operations, were received and analysed.
* The full report is available at a cost of £495 to non-PPA members and is free to PPA members. For all enquiries, contact Nicola Rowe at PPA (nicola.rowe@ppa.co.uk / 0207 404 4166).
* For more details on the survey process and structure, contact Jim Bilton at Wessenden Marketing (jim@wessenden.com / 01483 421690).
