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U.K. B-to-B Companies Share Media Bundling Models, Advice
by Karlene Lukovitz
These days, it's hardly news that B-to-B media companies are heavily focused on the critical need to turn themselves into media-neutral hubs of must-have data. With the last few years' depressed B-to-B ad climate only now beginning to show signs of some tentative recovery-and the Internet and search engines changing the rules of the media game on what seems like a daily basis-there's greater consensus than ever that a fundamental shift in business models is a do-or-die proposition.
But as many have discovered, the road to transitioning from traditional B-to-B publisher to multimedia information services company can be mighty bumpy. Developing a one customer/one record database that enables efficient, user-friendly access-difficult as that is-is just the start. Using that data profitably is the real challenge.
How to choose among the array of potential new products and spin-offs made possible by multimedia? How to bundle these for maximum customer usefulness? How to price and effectively market information services packages? Not to mention how to get departments and people who are accustomed to working in silos to function as a unified cross-media team? All of these issues and more must be tackled up front, and the model needs to be continuously honed and reinforced thereafter.
However, forewarned is forearmed, and B-to-B's are finding that one of their most powerful weapons in the battle to transform themselves is simply sharing information about their successes and failures along the way.
In that spirit, executives from four U.K.-headquartered B-to-B information companies-Jane's Information Group, Emap Communications, William Reed Publishing Ltd. and KHL Group-shared their experiences with media “bundling” during a recent, one-day Business Circulation Management Association conference, held in London. The cross-media conference was the first in an ongoing series of seminars to be sponsored by the not-for-profit BCMA, which was formed last December by major U.K. and European-based business-to-business media companies and key suppliers, as an international forum and educational resource for business media circulation.
Here are highlights of the four B-to-B's cross-media offerings and marketing efforts, along with their advice to other companies seeking to implement their own cross-media models:
Jane's Information Group
Jane's Information Group, founded by Fred T. Jane in 1898, offers a compelling example of a traditional publisher turned, in its own words, “global information solution business.”
Jane's provides intelligence news and analysis on national and international defense, security and risk developments to governments, militaries, business leaders, police and law enforcement bodies, and emergency services. And it provides this data to customers in more than 100 countries, in virtually every format and media imaginable: print magazines and newsletters, digital editions, online, CD-ROM, conferences, consultancy services and any combination of these desired by an individual or organization. The CD-ROM's were launched in 1989, www.jane's.com in 1995 and a full online service in 1999.
The full online service, Jane's Data Service, can be delivered direct to a company's intranet or controlled network environment as raw data, and includes frequent updates via email or FTP. All data, supplied as HTML, can be exported into desktop and portable applications for integration into internal reports and presentations. JPEG images are also supplied, for recognition training, internal briefings or analysis.
Jane's offerings also include libraries covering a wide range of intelligence areas, which can be accessed online, on CD-ROM, via Jane's EIS or through Jane's Data Service. Customers may select an existing Jane's library or build their own personalized libraries, covering all the topics relevant to their organizations.
The Jane's business model is not only all-paid; it's strictly based on the premise of “premium offerings at premium prices,” stressed Joan Scanlon, until recently the company's corporate communications director. “This is constantly reinforced internally.”
The value of Jane's information, which is gathered from existing public information sources, lies in the analysis brought to it through the company's worldwide network of independent analysts, journalists and researchers, and in Jane's reputation for accuracy, authority and impartiality. “In our market, people are information-overloaded, and speed of assessment and clarity are highly valued,” Scanlon explained. “We say, 'We've done the legwork, we've pulled the information together, we can make your working schedule far more efficient. We are unaware of any other source that does this at the same level in this market. Some of our information is available elsewhere, but not with the same depth, breadth and analysis.”
Customers yield significant cost efficiencies by using Jane's information, rather having to hire their own information analysts. “We set our prices accordingly, and our customers feel that it's value for money, and they're paying them,” Scanlon said.
Customers generally pay about two-and-a-half to three times more for the immediacy of accessing the information online, Scanlon reported. A typical Jane's news publication in print format is priced at about £230 to £250, versus about £700 to £750 online. Some online offerings cost up to about £1,300, or about $2,000, annually.
Marketing such premium-priced products has required particularly close collaboration between the marketing and sales departments, and the development of materials and methods that are quite different than the typical direct marketing techniques used by publishers. “Again, we do not make discounted offers, so typically, 75 to 80 percent of our marketing collateral materials focus on brand awareness,” Scanlon said. “In many cases, these are not mailed to customers, but left behind by our sales force; it's an awareness-raising, sales lead process, with a subtle call to action. We provide links to our Web site and do salesperson follow-up.” Scanlon noted that this can make it more difficult to budget and forecast sales, compared to traditional direct marketing.
Jane's is now beginning an email alerts program that drives Web traffic and generates leads. The alerts provide free extracts with the goal of driving recipients to order one or more of the paid services. There are five separate alert content types, geared to various prospect segments. In total, about 50,000 prospects are currently receiving the alerts.
“Moving 'resistors' from free information to a commitment of perhaps £800 or £1,000 is difficult,” Scanlon acknowledged. “We are now working on a model to bring these people in at a somewhat lower price. With no discounting, the conversions to online are not huge.”
One lesson Jane's learned along the way was that allowing prolonged free information sampling was not the most effective way to build sales. “We used to have three-month free trials, but we learned that this devalues the information. Now, the trial period is one week, and to get a free trial, the prospect usually must first be qualified by a salesperson,” she said.
Jane's has also created event microsites that provide lead generation. In some cases, the company offers a prize drawing to generate traffic. Scanlon confirmed that electronic marketing efforts have indeed increased revenue and profitability.
The online services are also promoted prominently on the mastheads, tables of contents and even covers of Jane's various print magazines, as well as in house ads and fliers/brochures. “We view the print versions as 'snapshots in time,' and we definitely don't hide the availability of the online services,” Scanlon said.
Of course, Jane's has experienced challenges, and has made some mistakes, along the way.
One ongoing challenge is the secretive nature of the market sectors that Jane's serves. Firewalls and prospects who are hidden behind secure networks pose significant marketing challenges (60-percent bouncebacks are not uncommon). “Our knowledge of why intelligence is required and how it is used is limited by the secrecy,” Scanlon noted.
A related challenge is the complexity of the chain of people involved in the buying process, and the inaccessibility of most of these. “We mainly talk to the purchasers and authorizers, because the influencers and users are less accessible,” she explained.
Other ongoing challenges include the impact of the Internet's growing volume of free information (“There's definitely more competition from free information, and some people are willing to trawl through this,” Scalon said); increased user sophistication, which mandates that search capabilities be “100-percent glitch-free”; and the previously noted “resistors” to moving from free trials to paid online subscriptions.
Jane's advice to other media companies about marketing cross-media?
- Develop a clear vision and strategy, and stick to them. Make sure that they are continually communicated at all levels, from the top down. While marketing high-ticket services with no ability to offer an introductory or discounted price can be tough, the Jane's “premium products at premium prices” strategy is constantly reinforced internally, and the entire team knows that their mission is to develop ways to sell effectively within this framework, Scanlon pointed out. “We test many things, but we also control these so that they do not conflict with the overall strategy, or devalue our offerings.” Of course, the Jane's strategy would not be appropriate for many companies. Each organization must analyze its own strengths and offerings, develop its own model, and then make sure that this model guides each and every marketing effort.
- Don't be afraid to abandon some core direct marketing techniques. At least when marketing high-ticket services/products, long-term profitability may well require foregoing the standard discounting or “call to action,” in favor of conveying value through more brand-oriented materials and methods. “At times, it can be uncomfortable for traditional direct marketers to do things like produce an expensive brochure with no direct sales call to action, but the nature of our services and our strategy require a more subtle and complex sales process,” Scanlon said.
- Do not make assumptions. “At first, we did not make our offerings clear enough,” Scanlon noted. “We learned that you have to state and restate what the service is and what it can do.”
- Respect that the delivery format is the customer's choice-and that that choice may be print. Although online/electronic offerings account for the largest portion of Jane's business, print publications remain a significant, profitable revenue stream.
Emap Communications
With more than 240 products, Emap Communications is the second-largest B-to-B publisher in the U.K. and the leading B-to-B exhibition producer. Its leading titles include Retail Week, Broadcast, Construction News, Nursing Times and Health Service Journal.
But the division has multiplied its revenues and profitability in recent years through offering enhanced bundles of its print news publications and online services. “Our core strategy is to be media-neutral,” said Michelle Tempest-Mitchell, marketing director, Emap Media. Emap seeks to dominate a market by taking a weekly publication and turning it into a multimedia offering that includes added services for readers and advertisers, she said.
Indeed, the division's paid-circulation print information products, events/exhibitions and recruitment and display advertising produce about £210 million in annual revenue, while complementary, add-on digital products/services (paid electronic subscriptions, digital editions, advertising and sponsorships) now contribute £3.2 million annually. Within the electronic arena, paid subscriptions account for 30 percent of the total.
“In reality, however, the real, total value of bundling, is not easily quantified,” Tempest-Mitchell added, because it is impossible to determine how much the end-user value added through the synergies contributes to the success of both the original product and the add-ons. As she points out, bundling not only generates greater revenues from the same customer base through enabling value-added, higher-priced products; it provides competitive advantage by enabling Emap to be in continual contact with its customers and build and defend its market position.
There are many examples of successful bundling at Emap, but the underlying strategy for MEED (Middle East Economic Digest) is typical. While readers may still choose to buy a solo subscription to the weekly magazine, Emap has made it very attractive for them to instead purchase MEEDPlus, which provides open access to the MEED Web site. That site offers a host of news and information services, including a three-year archive of all articles and features. In addition, MEED's weekly content is uploaded online every Friday, giving MEEDPlus subscribers early online access prior to receiving the print copy.
On the Web site, a magazine-only subscription costs between £387 and £450 pounds ($710 to $778), depending on the subscriber's geographic location. MEEDPlus is priced between £490 and £553 ($848 to $956). Readers have proved quite willing to pay that 20 percent-plus difference for the combined package, according to Tempest-Mitchell.
Based on that success, MEED is now launching a more enhanced and considerably more costly subscription bundle, by partnering with an existing, high-end outside online service that allows subscribers to track the status and progress of large business projects in the Middle East. This offering, called MEEDprojects, is expected to yield an average annual subscription value of $12,000.
In Emap's experience, successful cross-media bundling requires the following core components:
- Market position analysis. Coming from a position of strong, existing market demand naturally enhances the likelihood of success in adding paid Internet services to create a multimedia offering. Emap's titles are number one or number two in their markets, according to Tempest-Mitchell. But each company should assess its market position and make sure that a proposed bundled offering fits appropriately with that position.
- True value-added. The products being bundled must have the right fit with the marketplace's needs, as well as your market position. “You might see the potential revenues, but will the end-users see real benefits?,” stressed Tempest-Mitchell. If not, take-up and renewals for the offer will be limited. And while Emap seeks to offer premium-priced packages based on true value-added, it also rewards loyalty and purchase quantity with discounts.
- Matching market knowledge with specialist skills. Emap forms product teams comprising the internal experts in that market, who together have all of the skillsets needed to implement the cross-media offering. A strong team leader helps foster shared goals and a good working relationship among team members.
- Careful attention to systems issues. Legacy systems can create implementation challenges unless those in-house who are responsible for fulfillment are fully on board and working closely with suppliers to ensure seamless, user-friendly applications. “You can't just stick systems together,” stressed Tempest-Mitchell.
- Analysis of implications for the wider business. What are the implications for circulation audits and the sales message? For long-term yields and market position? Each company must look closely at such issues, within its own market and other contexts.
William Reed Publishing Ltd.
William Reed publishes 10 paid magazines for the food and drink industry: The Grocer, Convenience Store, OLN, Forecort Trader, Multiple Buyer & Retailer, Morning Advertiser, MA Scotland, Food Manufacture, Shopping Centre and CLASS. Annual print subscription prices listed on the Web range from £38 to £81 within the U.K.; from £60 to £130 in EC countries; and from £90 to £220 in other countries. Its brands also sponsor events/exhibitions.
But while print products formed the company's foundation, its stated mission is to become “the communications hub of the food and drink industry,” and it is far along in making good on that claim. William Reed focuses on maximizing the value of its information, both in terms of offerings for readers/users and audience data offerings for outside marketers, by organizing it in “a very vigorous way,” said Mark de Lange, director.
For starters, the company's brands offer multi-level cross-media subscription bundles. For example, on The Grocer's Web site, in addition to a stand-alone print magazine subscription (£70 pounds per year in the U.K., £130 EC, £220 worldwide), four levels of access to Web site services are offered. Registered site users have access to Grocer Jobs (including classifieds search and job email alerts, and to Grocer Directories (including sample searches for brands and companies, and for products, suppliers and retailers). A subscription to the GrocerToday news service (£50 per year) includes breaking online news, weekly or daily email alerts, a weekly summary of the week's news, a round-up on the latest big industry story, and a summary of newspaper stories. These subscribers also have access to Grocer Jobs and Grocer Directories. An “Archive Only” subscription (£150) brings access to six years of past articles, plus Grocer Jobs and Grocer Directories. And an “Access All Areas” subscription (£125) includes all of these areas, plus pay-per-view access to two categories of special reports. Corporate, as well as individual, online subscriptions are available.
On higher levels of customer commitment, the company also offers unique, high-value online newsletter content and access to company-specific data on food and drink establishment owners, including information on strategies, branded divisions of pubs/restaurants, and corporate acquisitions.
The Knowledge Store is the database marketing and data management division, which offers a total of over 600,000 current company contacts working in more than 300,000 sites within the FMCG, food manufacturing and pub sectors. There are four specialized industry segment databases. All records can be selected by a comprehensive range of criteria, reflecting their role, status, purchasing influence, location, business area and company size. Multiple third-party sources are used to keep the database up-to-date, and building verification around the information received from companies is key to the information's value.
In addition to database management, The Knowledge Store offers outside companies business services such as list rental and brokering, data licensing, telemarketing, and direct marketing fulfillment.
William Reed also experimented with a digital television program, Grocer TV. This, according to de Lange, was well-supported by advertisers, but its audience, though loyal, proved too vertical and small to sustain the enterprise. In addition, the venture was expensive to produce, requiring a large investment in editorial content, and the production time required created a time-delay factor that tended to reduce the value of the content.
The overall philosophy driving William Reed's cross-media efforts is that customers will pay premium prices if the right information (expert, in-depth industry news and content) is delivered in the right way, at the right time, de Lange emphasized. (This has become even more true as marketers have found it more difficult to contact targeted prospects because of the strictures of the Data Protection Act, he noted.) Each B-to-B universe has various “microcosms,” and the media owner's job is to put the buyers and sellers in touch with one another effectively by serving the needs of each microcosm separately, through a variety of channels and media.
B-to-B's “need to find new ways for content to flow from buyers to sellers,” de Lange said. For instance, while hard-copy directories are still important, they must also be online, to keep their information up-to-date. He also emphasized the critical role of improved IT systems and central databases. “We need much better information about our customers,” he said. “Whether a customer is buying our print magazines, or online services, or attending our exhibitions, this must all be on one record. Otherwise, departments may not fully share their customer information.”
KHL Group
The most recent cross-media initiatives of KHL Group, a publisher of six monthly, international magazines for the construction industry, come in the form of offering e-magazines, or digital versions. (KHL also produces seven directories annually and two exhibitions, which are held every three years.)
The digital editions, started in 2003, are free on a controlled basis, as are U.K. and international subscriptions to the print magazines. Readers can choose to receive either version, or both.
With 80 percent of its readers, advertising clients and revenues coming from countries around the world, digital editions offer the opportunity to better serve readers with timely information delivery, on a free basis. They also offer potential for added revenue through cost-effective circulation building and providing added value for advertisers, said Peter Watkinson, group marketing manager, overseeing both circulation and IT.
“With the big reductions in advertising budgets and reduced revenues over the past few years, we have to look at our costs, and e-magazines can potentially save significantly on distribution costs,” said Watkinson. The digital magazines also demonstrate innovation to advertisers (KHL is talking with major advertisers about creating digital ads with various “bells and whistles”), and offer the potential to supply advertisers with more information about reader/customer response, particularly given the decline in response to traditional vehicles such as bingo cards, he notes.
Like most publishers offering digital editions, KHL is not yet ready to offer advertisers access to click-throughs, though that is a possibility in future.
KHL is building its circulations through digital, and reports digital-only subscribers in its overall circulation totals on its BPA Worldwide circulation reports. (Digital subscribers are broken out throughout the reports, and can only be reported once, without duplication, if they also receive the print version.) “Currently, only BPA allows digital figures to be included in the circulation statement headline figures,” Watkinson noted. “That's really important, because if one of the reasons you are offering digital is to build your circulations, and you can't show digital within your circulation totals, it really takes a lot of the benefits away from digital distribution.”
However, the company does not charge advertisers separately for digital advertising. At least initially, cost savings and added value are the focuses. “We knew that more research will be needed to prove that the impact of digital is at least as good, in order to sell digital ads separately,” said Watkinson, although he added that KHL knows that about 85 percent of all of its e-magazine email alerts are opened within the first 48 hours of distribution. He also noted that special advertising inserts, and even “cover mounts,” are possible in the digital formats.
Digital also offers the potential to test magazine launches at low cost, to readily repurpose content into segment-specific packages for marketing to readers and/or advertisers, and to produce editions in various languages, Watkinson pointed out. In addition, editorial and new product development opportunities can be enhanced by the ability to track which articles are being read by readers.
KHL researched various digital vendors. But given that the company was already producing high-resolution PDF's for the printer, KHL decided to use a combination of Adobe and other third-party software to highly compress the digital-edition Adobe PDF's in-house. The PDF's are housed on a Web site (internal hosting will commence late this year). The email alerts announcing that the latest editions are available include highlights of each issue's content.
Watkinson said that readers have reported satisfaction with the digital edition experience, and like the ability to view rich media content and advertisements.
He advises other publishers considering digital edition launches to pay particularly close attention to ensuring that their production and circulation teams work together very closely.
He also stresses the importance of ensuring that data and systems will accommodate the needs of the circulation auditor, by working with the auditor up front. BPA requires showing email logs, in a specific format, from an independent, third-party distributor of email alerts. Watkinson further recommends having print and digital on the same database to readily produce the necessary data and documents for auditing.
Karlene Lukovitz became VP, communications for BPA Worldwide in March 2003. Prior to joining BPA, she was a journalist covering the media industry, serving in positions that included editorial director of CM/Circulation Management Magazine; editor of Inside Print, a magazine for media buyers; and executive editor of Folio: The Magazine for Magazine Management.
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