Chuck TownsendPresident and CEOCondé Nast
"Retail's Role in the Evolving Publishing Model"Retail Marketplace 2010June 30, 2010Boston, MA
GOOD MORNING!
IT IS MY GREAT PLEASURE AND PRIVILEGE TO BE HERE TODAY. THIS IS SUCH A VITALLY IMPORTANT AUDIENCE FOR CONDÉ NAST. AND IT’S GOOD TO SEE SO MANY FAMILIAR FACES.
I’M HERE TODAY TO GIVE YOU MY TAKE ON THE FUTURE OF MAGAZINE PUBLISHING AND DISTRIBUTION.
THERE’S BEEN A LOT OF HAND - WRINGING OVER THE FATE OF MAGAZINES - AND THE RETAIL CHANNEL - SO THIS MORNING, LET ME SHARE OUR POINT OF VIEW AT CONDÉ NAST.
NO DOUBT 2009 WAS A BRUTAL YEAR FOR RETAIL… AND WE SHARED IN YOUR PAIN.
MAGAZINES AT RETAIL PERFORMED MUCH AS CONSUMERS DID AT RETAIL LAST YEAR…WITH ONE IMPORTANT DISTINCTION. CONSUMERS DIDN’T ENTER STORES. MAGAZINES DIDN’T LEAVE THEM.
NOW, AS THE ECONOMY TENTATIVELY REBOUNDS, WE’RE WONDERING WHAT COMES NEXT. CONSUMERS ARE COMING OUT OF THEIR CAVES… SALES ARE UP…BUT THE WORLD AS WE KNEW IT HAS CHANGED FOREVER.
AS RETAILERS…WHOLESALERS…AND PUBLISHERS, WE’RE ALL COMING TO GRIPSWITH THAT. BELIEVE ME, IT’S DAUNTING NAVIGATING THROUGH THIS CHANGE, AND VISIBILITY IS VERY LIMITED.
BUT THE FOG IS STARTING TO LIFT, AND I’M OPTIMISTIC ABOUT WHAT THE FUTURE HOLDS AND I’M HERE TO TELL YOU WHY YOU SHOULD BE, TOO.
I’M ALSO HERE, HOWEVER, TO ISSUE A CHALLENGE - A CHALLENGE TO STEP UP AND EMBRACE THE FUTURE. CLOSE THE DOOR ON THE LAST DECADE AND FIX YOUR GAZE ON WHAT’S AHEAD.
NOW, I NEVER THOUGHT I WOULD HEAR MYSELF SAY THIS, BUT THE MAGAZINE BUSINESS IS RAPIDLY EVOLVING…THANKS TO THE ACCELERATING DEMANDS OF CONSUMERS ENABLED BY DIGITAL TECHNOLOGY.
BUT HERE WE ARE, AND THAT’S THE REALITY.
TODAY, I WANT TO CONVEY THREE KEY MESSAGES:
SO, FIRST, DESPITE RUMORS TO THE CONTRARY, THE MAGAZINE BUSINESS IS VITAL AND GROWING. IT’S TRUE THAT ADVERTISING TOOK A HIT AS THE ECONOMY WENT INTO A TAILSPIN…BUT THAT TAUGHT US A VALUABLE LESSON.
THE DOWNTURN REVEALED TO US THE DISPROPORTIONATE WEIGHT WE MAGAZINE PUBLISHERS HAVE PLACED ON ADVERTISING, AS COMPARED TO CONSUMER MARKETING.
THE TRUTH IS: THE CONSUMER IS OUR FUTURE. YOU WILL HEAR ME SAY THAT EVERY TIME I SPEAK, REGARDLESS OF THE AUDIENCE.
AND SO, WHILE THE RECOVERY HAS ALREADY SPURRED AN UPTICK IN ADVERTISING, THERE HAS BEEN A SECULAR SHIFT IN OUR BUSINESS. AD DOLLARS HAVE BEEN REALLOCATED, AND THEY WILL NOT ALL FLOW BACK.
WE CAN NEVER GO BACK TO THE BLOATED STATE OUR ECONOMY WAS IN. AND, AS MAGAZINE PUBLISHERS, WE CANNOT GO BACK TO THE ADVERTISING - CENTRIC BUSINESS MODEL THAT SUSTAINED US FOR THE PAST 40 YEARS.
THOSE DAYS ARE GONE IN MY OPINION.
AND THAT IS WHY I SAY THE CONSUMER IS OUR FUTURE. THERE, I’VE SAID IT AGAIN.
AND THAT’S A GOOD THING, BECAUSE CONSUMERS LOVE MAGAZINES! FOUR OF FIVE U.S. ADULTS READ MAGAZINES.1 AND IT’S THE YOUNG ADULTS – THOSE UNDER 35 - WHO READ THE MOST, DESPITE THE ABUNDANCE OF NEW MEDIA ALTERNATIVES.2
THE FACT IS: MAGAZINE READERSHIP IS GROWING AND HAS BEEN FOR THE PAST FIVE YEARS - RIGHT THROUGH THE RECESSION - AND NOWHERE MORE SO THAN AT CONDÉ NAST, I MIGHT ADD.
THE NUMBER OF MAGAZINES READERS AS WELL AS THE AVERAGE NUMBER OF ISSUES READ HAS GROWN INDUSTRY - WIDE.3
AND THAT APPETITE HAS ENABLED US TO STEADILY AND SUCCESSFULLY RAISE PRICES AT RETAIL, AN IMPORTANT PART OF OUR STRATEGY. 4 AND ONCE A READER PICKS UP A MAGAZINE AT RETAIL, WE’VE GOT A LOCK ON HIM OR HER THAT IS INVIOLATE AND UNRIVALLED.
WE ALL KNOW THAT A CONSUMER’S ATTENTION IS THE MOST PRECIOUSRESOURCE IN TODAY’S SUPER - SATURATED, NOISY MEDIA MARKETPLACE.
WELL, STATISTICS SHOW THAT MAGAZINES “OWN” THAT CONSUMER’S UNDIVIDED ATTENTION FOR 43 MINUTES AT A STRETCH. NO OTHER MEDIUM COMES CLOSE. AND GUESS WHAT - THAT CONNECTION IS REINFORCED AND ENRICHED ONLINE.
I’M SURE YOU’RE AWARE THAT WEB TRAFFIC, UNIVERSALLY, CONTINUES TO GROW AT A HEALTHY CLIP.
BUT YOU MAY NOT KNOW THAT BRANDED MAGAZINE WEBSITES - SUCH AS GQ.COM AND GLAMOUR.COM - OUTPACE THE GROWTH OF THE WEB IN GENERAL BY A CONSIDERABLE MARGIN5…EXTENDING THE REACH OF OUR BRANDS TO AN EVEN WIDER AUDIENCE.
AND THAT IS IMPORTANT TO YOU FOR A VERY COMPELLING AND OFTENMISUNDERSTOOD REASON: BECAUSE RAISED CONSUMER AWARENESS DRIVES TRAFFIC INTO YOUR STORES.
YOU KNOW THAT ADVERTISING VIA NETWORK TV OR OTHER BROAD REACH MEDIA WOULD BE COST - PROHIBITIVE FOR US, OR FOR ANY MAGAZINE PUBLISHER…BUT WE CAN NOW GENERATE THAT SAME LEVEL OF AWARENESS THROUGH OUR WEBSITES… AND NEW IPHONE AND E - READER APPLICATIONS AT A FRACTION OF THE COST OF NETWORK ADVERTISING.
AND SO INCREASED AWARENESS LEADS TO INCREASED SALES. YOU KNOW IT’S COMMON KNOWLEDGE THAT THE AVERAGE NEWSSTAND PURCHASER BUYS MAYBE 2 OF 12 ISSUES IN A GIVEN YEAR. THINK OF THE UPSIDE IF WE CAN INFLUENCE JUST ONE MORE PURCHASE OVER A 12 - MONTH PERIOD WITH BROAD REACH DIGITAL CONTENT. THAT’S A 50% GAIN.
60 MILLION UNIQUE VISITORS SEEK OUT CONDÉ NAST WEBSITES EACH MONTH.THAT’S A HUGE CONSUMER BASE EXPOSED TO OUR “WORD OF MOUTH.”
AND THESE INDIVIDUALS ARE SAMPLING OUR BRANDED CONTENT, WHICH WHETS THEIR APPETITE FOR THE FULL MAGAZINE. IT’S THAT SIMPLE.
AND WE’RE COMMITTED TO BROADENING THAT EXPOSURE AND DRIVINGCONSUMERS TO OUR MAGAZINES…
NOW THIS DIGITAL CONNECTIVITY NOT ONLY GIVES US PHENOMENAL REACH, IT ALSO PROVIDES INSTANTANEOUS FEEDBACK…WHICH ALLOWS US TO CURATE OUR CONTENT AND IMPROVE THE OVERALLCONSUMER EXPERIENCE OF OUR MAGAZINES.
THAT’S ANOTHER REASON WHY WE’RE SO EXCITED ABOUT OUR FUTURE PROSPECTS AT RETAIL.
FOR DECADES, WE WERE IN A DESPERATELY STATIC WORLD WHERE CHANGES IN CONSUMER BEHAVIOR AND INTERESTS WEREN’T QUICKLY REFLECTED IN OUR PRODUCTS FOR A LONG TIME. THE WHEELS OF PROGRESS MOVED SLOWLY.
NOW WE CAN REACT AND ENHANCE THE CONSUMER EXPERIENCE IN THE HERE AND NOW. WE CAN PRESENT THE MOST CONTEMPORARY AND RELEVANT MAGAZINES POSSIBLE.
THE RESULTS ARE BRANDS THAT ARE MUCH MORE VITAL, CONTEMPORARY, AND ATTRACTIVE TO YOUR CUSTOMERS.
SO, I HOPE I’VE SUCCESSFULLY SHED SOME LIGHT ON MY FIRST POINT: THE MAGAZINE BUSINESS IS VITAL AND GROWING. AND I’M CHARGED UP ABOUT THAT!
OK, THE SECOND MESSAGE I WANT TO DWELL ON IS THIS: THE RETAIL CHANNEL REMAINS THE CORNERSTONE OF OUR BUSINESS.
PRINTED MAGAZINES MARKETED AND SOLD AT RETAIL ATTRACT AND ENGAGE CONSUMERS LIKE NO OTHER MEDIUM.
PRINT’S COMPELLING BRANDS SPEAK WITH DISTINCTIVE APPEAL AND AUTHORITY TO CONSUMERS WHO FIND THE MEDIUM TO BE IDEAL FOR THEIR LIFESTYLE - SATISFYING, REWARDING AND RELAXING.
IN FACT, IF YOU THINK ABOUT IT, THE PRINTED MAGAZINE IS A GENIUS FORMAT BY TODAY’S STANDARDS. IT’S TANGIBLE, PORTABLE, AND THE PERFECT SHOWCASE FOR RICH CONTENT AND STUNNING PHOTOGRAPHY.
THIS POWERFUL BOND MAGAZINES FORM WITH CONSUMERS IS FORGED AT RETAIL - ON NEWSSTANDS, IN DISPLAY RACKS, AND AT THE CHECKOUT COUNTER IN STORES, SHOPS, AND KIOSKS AROUND THE WORLD. THAT’S WHERE CONSUMERS, MORE OFTEN THAN NOT, FIRST CHOOSE OUR PRODUCT, FORMING WHAT WE CAN ONLY HOPE IS A LIFELONG MEDIA HABIT.
AND IT’S A TWO - WAY STREET.
YOU ATTRACT CONSUMERS TO OUR PRODUCT… AND WE, IN TURN DRAW TRAFFIC TO YOUR STORE AND MAKE THE CASH REGISTER RING.
WE’VE LONG KNOWN THAT MAGAZINES ARE THE #1 DESIRED ITEM AT CHECKOUT6 AND PROVIDE HIGHER PROFIT PER UNIT THAN ANY OTHER TRADITIONAL FRONT - END CATEGORY.7
BUT, MAYBE MORE IMPORTANTLY, MAGAZINES SOOTHE THE JANGLED NERVES OF TIME - STARVED CONSUMERS WAITING TO MAKE A PURCHASE OR GET A PRESCRIPTION FILLED. AND I’M NOT KIDDING ABOUT THAT. WE HAVE THE ETHNOGRAPHIC RESEARCH TO PROVE THAT VERY POINT.
NOW, THAT SORT OF GOODWILL IS IMPOSSIBLE TO REPLACE WITH ANY OTHER PRODUCT.
LIKE MANY OF OUR PUBLISHING COLLEAGUES, CONDÉ NAST INVESTS MILLIONS OF DOLLARS A YEAR TO SECURE CHECKOUT DISPLAY SPACE IN THE U.S. AND CANADA. WE ALREADY HAVE MORE THAN HALF A MILLION CHECKOUT POCKETS IN RETAIL STORES LIKE YOURS.
AND, IN CASE YOU HAVEN’T HEARD, WE HAVE JUST OUTLINED EXCITING PLANS TO INTRODUCE NEW QUALITY PRINT PRODUCTS INTO THE RETAIL MARKETPLACE - SPECIFICALLY, SPECIAL EDITIONS OF MANY OF OUR ICONIC BRANDS.
JUST YESTERDAY, WE ANNOUNCED THE ROLLOUT OF A GLAMOUR SPECIAL EDITION IN AUGUST, AND THAT’S TO BE FOLLOWED BY SPECIAL EDITIONS OF GQ, BON APPETIT, VOGUE AND THE NEW YORKER BEFORE YEAR - END, I’D SAY THAT’S JUST THE BEGINNING.
AND I’D SAY THIS IS A BIG ENDORSEMENT OF OUR FAITH IN YOUR BUSINESS.
AND IT DOESN’T HAVE TO STOP WITH THE NEWSSTAND. WHAT ABOUT THE REST OF THE STORE?
WE’RE CURRENTLY EXPLORING LICENSING OPPORTUNITIES THAT COULD VERY WELL PROVIDE YOU WITH NEW REVENUE STREAMS FROM CONDÉ NAST - BRANDED MERCHANDISE … YET ANOTHER ENDORSEMENT OF OUR FAITH IN YOUR CHANNEL.
SO, TO RECAP, THE RETAIL CHANNEL IS THE CORNERSTONE OF OUR BUSINESS…AND IT’S A STRONG BUSINESS, IN WHICH YOU ARE VALUED PARTNERS.
AND SO, FINALLY, MESSAGE #3: DIGITAL MAGAZINES, DELIVERED ON THE NEW GENERATION OF TABLET DEVICES LIKE THE IPAD, ARE PART OF OUR FUTURE.
I PROMISED YOU A CHALLENGE, AND IT IS TO JOIN ME IN EMBRACING THIS REALITY.
RAPIDLY EVOLVING TECHNOLOGY ALLOWS US TO FINALLY TAKE ADVANTAGE OF FULL COLOR, HIGH RESOLUTION, MULTI - FUNCTIONAL E - READERS. THESE ARE BOTH TABLETAND MOBILE DEVICES.
WE AT CONDÉ NAST CAN NOW ENGAGE CONSUMERS WITH A DIGITAL MAGAZINE PRODUCT THAT FINALLY MEETS OUR STANDARDS OF VISUAL AND JOURNALISTIC EXCELLENCE.
IN RECENT MONTHS - AS PART OF A TIGHTLY CONTROLLED R&D EFFORT - WE HAVE LAUNCHED DIGITAL VERSIONS OF GQ, WIRED, AND VANITY FAIR, AND OTHERS WILL FOLLOW.
AND WE EXPECT TO FURTHER EVOLVE OUR EFFORTS AS THE MARKET BECOMES MORE MAINSTREAM, AND AS WE EXPAND OUR OWN EXPERIENCE BASE.
TO BE CLEAR, WE EXPECT TO REACH MOSTLY NEW CONSUMERS WITH THIS DIGITIZED CONTENT, CONSUMERS WHO HAVE HISTORICALLY NOT SELECTED MAGAZINES AS THEIR VEHICLE OF CHOICE FOR INFORMATION AND ENTERTAINMENT SERVICES.
AND OUR EARLY EXPERIENCE CONFIRMS THAT ASSUMPTION.
THE GQ IPHONE APP - OUT SINCE LAST DECEMBER - CERTAINLY TELLS THAT STORY. TOTAL SINGLE - COPY SELL - THROUGH ON A “TYPICAL” ISSUE HAS BEEN PLUS OR MINUS A POINT OR TWO ON A YEAR - TO - YEAR BASIS. AND SO OUR DIGITAL SALES, AS MANY AS 28,000 MONTHLY, HAVE NOT COME AT THE EXPENSE OF NEWSSTAND SALES.
THE SAME HOLDS TRUE FOR WIRED. ITS PREMIER DIGITAL ISSUE THIS PAST MONTH HAS BEEN DOWNLOADED MORE THAN 90,000 TIMES… ACTUALLY SURPASSING NEWSSTAND SALES, BUT WITHOUT CANNIBALIZING THEM.
IN FACT, NEW DIGITAL MAGAZINES HAVE ACTUALLY CONFIRMED SOME READERS’ PREFERENCE FOR PRINT.
WE KNOW THIS BECAUSE A RECENT POLL OF 1,000 CONSUMERS WITH DIGITAL EXPOSURE INDICATED THAT 90 PERCENT OF MAGAZINE SUBSCRIBERS PREFER THE PRINTED FORMAT TO THE NEW E - READER APPS. 8
WHILE MANY FEEL E - READERS HAVE THEIR PLACE, THEY, LIKE ME QUITE FRANKLY, ENJOY FLIPPING THROUGH THE PAGES OF A MAGAZINE MORE. AND LET’S NEVER FORGET THAT.
THE MOVIE INDUSTRY OFFERS A USEFUL CASE STUDY ON HOW NEWDISTRIBUTION AND CONSUMPTION PATTERNS CAN EXPAND THE PIE… RATHER THAN CANNIBALIZING IT.
DESPITE THE INTRODUCTION OF VHS, DVD, BLU - RAY, NETFLIX AND NOWDIGITAL STREAMING, PEOPLE STILL SEE THE THEATRICAL RELEASE OF A MOVIE AS THE BIG EVENT AND CONTINUE TO PAY UP FOR TICKETS.
IN FACT, 2009 WAS A RECORD YEAR AT THE BOX OFFICE.9
SO, DIGITAL TECHNOLOGIES OPEN UP THE LONG TAIL…TO USE A TERM COINED BY OUR OWN CHRIS ANDERSON OF WIRED MAGAZINE.
DIGITIZED VERSIONS OF OUR MAGAZINES AND BRAND NEW DIGITAL CONTENT PRODUCTS EXTEND OUR BRANDS, REACH MORE AND NEW CONSUMERS, AND WORK IN A COMPLEMENTARY WAY TO MAINTAIN AND REINFORCE THE VITALITY OF OUR PRINT PRODUCTS.
WE AT CONDÉ NAST FIRMLY BELIEVE THEY WILL BROADEN THE APPEAL OF OUR BRANDS ACROSS ALL CHANNELS, AND EXPAND OUR READERSHIP BASE, WHICH WILL ACCRUE TO ALL OUR BENEFIT.
JUST AS RETAILERS HAVE WORKED HARD TO DEVELOP THE RIGHT BALANCE BETWEEN THEIR BRICK AND MORTAR AND ONLINE OPERATIONS TO MAXIMIZE SALES AND PROFITS…
… SO MAGAZINE PUBLISHERS ARE SEEKING THE OPTIMAL PORTFOLIO OFOFFERINGS TO BETTER SERVE THE BROADEST NUMBER OF CONSUMERS AND TO GROW OUR OVERALL BUSINESS.
WE KNOW THAT MANY OF THE RETAILERS REPRESENTED IN THIS ROOM HAVE WI - FI NETWORKS IN THEIR STORES AND VIBRANT E - COMMERCE SITES. YOU SHOULD KNOW THAT WE ARE VERY OPEN TO CONVERSATIONS ABOUT MARKETING OUR PRODUCTS ACROSS ALL YOUR VIRTUAL FORMATS. WE KNOW CONTENT, YOU KNOW DISTRIBUTION. TOGETHER, I’M HOPING WE CAN COME UP WITH SOME CREATIVE AND MUTUALLY BENEFICIAL IDEAS.
ON ANOTHER FRONT, FIVE LEADING MAGAZINE PUBLISHERS HAVE JOINED FORCES TO CREATE A DIGITAL STOREFRONT FOR OUR PUBLICATIONS… PROVING - TO THOSE OF US WHO’VE BEEN AROUND THIS BUSINESS FOR A FEW YEARS - THAT NOTHING IS IMPOSSIBLE.
WE ALL KNOW THAT DIGITAL IS A BIG PART OF OUR FUTURE… BUT IT’S NOT THE END - ALL BE - ALL. THE IPAD APP WILL NOT REPLACE THE MAGAZINE. AND INNOVATION IS NOT MARRYING OURSELVES TO ANY ONE TECHNOLOGY PLATFORM OR PARTICULAR FORMAT.
IT’S UNDERSTANDING WHAT OUR CONSUMERS WANT - AND WILL WANT -
…AND BREAKING DOWN ALL THE BARRIERS THAT STAND IN THE WAY OFDELIVERING OUR CONTENT HOWEVER…WHENEVER…AND WHEREVER THEY WANT IT.
AS WE LOOK AT NEW DIGITAL FORMATS, DEVICES, SOFTWARE, AND SOLUTIONS, IT’S IMPERATIVE THAT WE KEEP OUR EYES ON THE PRIZE.
AND HERE IT IS, FOLKS - IT’S NOT WHAT CONSUMERS LOOK AT, IT’S WHAT THEY LOOK FOR…
…AND WHAT WE BELIEVE OUR CONSUMERS LOOK FOR AT CONDÉ NAST IS THE CONTENT…THE DESIGN…THE WRITING…THE PHOTOGRAPHY… AND THE EXPERIENCE THEY’VE COME TO EXPECT FROM OUR GREAT MAGAZINES.
AND, OF COURSE OTHER PUBLISHERS OFFER SIMILAR RICH AND RESILIENT VALUE PROPOSITIONS, TO BE SURE.
BUT, THE POINT IS: WE SHOULD ALL MAKE SURE THAT THE TECHNOLOGY TAIL DOES NOT WAG THE CONTENT DOG.
NOW, A LAST, BRIEF POINT.
I BELIEVE THAT WE HAVE ALL EMERGED FROM THIS RECENT CHALLENGING ECONOMIC CHAPTER AS STRONGER, MORE ROBUST BUSINESSES.
AND I FIRMLY BELIEVE THAT WE ARE ENTERING AN EVOLVING MARKET OF POTENTIALLY LIMITLESS OPPORTUNITY.
IT’S A BOLD NEW FRONTIER WE ARE CHARTING, AND THIS JOURNEY IS NOT FOR THE FAINT OF HEART.
BUT, TOGETHER - AND WITH THE TREMENDOUS EFFICIENCY, REACH, UTILITY, AND VERSATILITY OF EMERGING TECHNOLOGY - WE CAN DO MORE, OFFER MORE, AND BE MORE.
WE CAN ENHANCE OUR VALUE PROPOSITION TO THE CONSUMER… AND IMPROVE OUR OWN FINANCIAL PROSPECTS AS A RESULT.
AND EACH ONE OF US IN THIS ROOM IS IN THIS TOGETHER. THAT’S WHY I’M HERE.
SO, TO SUM UP: THIS IS ALL YOU NEED TO REMEMBER:
IT’S BEEN MY PLEASURE TO SPEND THIS TIME WITH YOU.
THANK YOU.
ENDNOTES1 MRI, Fall Studies 2004 and 2008. MPA Handbook 2009/2010, p. 7.2 MRI, fall 2008.3 MPA Handbook. Over past 5 years.4 $24.83 to $28.01 and $3.44 to $4.70 between 1999 and 2008 per MPA from ABC Publishers Statements.5 Nielsen Online analysis, based on quarterly averages of 476 magazine brands online, Q4 2008, Q1, 2009. MPAhandbook, p. 10.. Measured uniques, reach, sessions, and total minutes.6 80% of women ranked magazines #1 when asked “at the checkout in a store, what do you like to see there?”, WSLStrategic Retail, Magazine Purchaser Survey, 2007, MPA p. 19.7 Willard Bishop Grocery Super Study, 2007, MPA p. 19.8 The Chief Marketing Officer (CMO) Council study, http://www.cmocouncil.org/resources/form - leveragingloyalty.asp9 For the first time ever, the annual U.S. box - office total exceeded $10 billion ($10.5851, to get into pi calculations),outpacing the previous record, in 2008, by nearly 10%.Read more:http://www.time.com/time/arts/article/0,8599,1951371,00.html#ixzz0ribn0Y1y
