MINT’s - perhaps - the only paper (business or mainstream), which has been consistently covering the print-media and issues related to it. In my earlier posts, I have referred to some of the articles it has published. This Saturday (December 27th) edition carries a piece by Ashish Bagga (CEO, Living Media) – as a part of its series on ‘2009 Trends Predictions’ (click here to read article).
It is sort of a ‘laundry list’ of several possible fall-outs – some obvious (lower pagination, falling ad revenue, lower ad-edit ratio, ‘right-sizing’ of manpower etc) but others not so apparent and hence more interesting.
First, Bagga talks of consolidation across businesses that were so far working in silos to exploit synergies. He rightly points out that both systems have their merits but under revenue pressure there is a greater urge to unify structures.
Focus vs.Scale
Obviously the reference is primarily to the Media Marketing teams and the Circulation Sales force. This is a classic conundrum I have seen in many organizations. While having a common sales organization is probably simpler (and most companies have it anyway), the real dilemma arises when it comes to ad marketing. This is more so – when you have separate “Business Heads” for different publications or ‘divisions’ within the group or ‘house’, as some prefer to call themselves. The debate always centers round “focus” vs. scale or synergy – and, tends to heat up when ‘accountability’ for ‘bottom-line’ rests with the so-called Business Head – and the responsibility for ‘ad-revenues’ is with someone else, who usually reports directly to the CEO. Under such a system – the Business Head feels naturally dis-empowered and accusations of the
smaller / niche publications or divisions being ‘short-sold’ begin to fly. In reality, however – it’s often the other way around. When the smaller or weaker publications are sold on the back of the flagship brand – it is usually at the expense of the bigger or mother brand / edition which end up subsidizing its smaller (or younger) siblings. In a game of accounting “allocations” - the revenue apportionment goes in favour of the brands or editions, which are being supported (especially – say, if it’s a new Brand or a new city Edition which has just been launched).
Tonnage vs Grammage
Parallels are often drawn with the FMCG industry – where the same Sales system is used to market brands and products across divisions or profit-centres. While the comparison may hold somewhat true – as far as Circulation Sales is concerned it could be fallacious to extend it beyond that to ad-marketing. Even in FMCG – the debate has raged on for years. The comparison is not just between the proverbial ‘apples and oranges’, but as a legendary Marketing ‘Guru’ of Hindustan Lever had once put it very pithily – it’s very often between “peaches and potatoes” – tonnage vs. grammage ( read niche publications). This would apply particularly to new fledgling brands, which have to be nurtured with care. But then, as Bagga says – in the current market scenario very few companies would have the luxury of launching new publications or editions. And, for that matter nurture the un-profitable ones.
It would be interesting, however, to see if the same logic of consolidation and exploiting synergies would now get extended even to other areas of operation such as the newsrooms and news-gathering.
It is sort of a ‘laundry list’ of several possible fall-outs – some obvious (lower pagination, falling ad revenue, lower ad-edit ratio, ‘right-sizing’ of manpower etc) but others not so apparent and hence more interesting.
First, Bagga talks of consolidation across businesses that were so far working in silos to exploit synergies. He rightly points out that both systems have their merits but under revenue pressure there is a greater urge to unify structures.
Focus vs.Scale
Obviously the reference is primarily to the Media Marketing teams and the Circulation Sales force. This is a classic conundrum I have seen in many organizations. While having a common sales organization is probably simpler (and most companies have it anyway), the real dilemma arises when it comes to ad marketing. This is more so – when you have separate “Business Heads” for different publications or ‘divisions’ within the group or ‘house’, as some prefer to call themselves. The debate always centers round “focus” vs. scale or synergy – and, tends to heat up when ‘accountability’ for ‘bottom-line’ rests with the so-called Business Head – and the responsibility for ‘ad-revenues’ is with someone else, who usually reports directly to the CEO. Under such a system – the Business Head feels naturally dis-empowered and accusations of the
smaller / niche publications or divisions being ‘short-sold’ begin to fly. In reality, however – it’s often the other way around. When the smaller or weaker publications are sold on the back of the flagship brand – it is usually at the expense of the bigger or mother brand / edition which end up subsidizing its smaller (or younger) siblings. In a game of accounting “allocations” - the revenue apportionment goes in favour of the brands or editions, which are being supported (especially – say, if it’s a new Brand or a new city Edition which has just been launched).Tonnage vs Grammage
Parallels are often drawn with the FMCG industry – where the same Sales system is used to market brands and products across divisions or profit-centres. While the comparison may hold somewhat true – as far as Circulation Sales is concerned it could be fallacious to extend it beyond that to ad-marketing. Even in FMCG – the debate has raged on for years. The comparison is not just between the proverbial ‘apples and oranges’, but as a legendary Marketing ‘Guru’ of Hindustan Lever had once put it very pithily – it’s very often between “peaches and potatoes” – tonnage vs. grammage ( read niche publications). This would apply particularly to new fledgling brands, which have to be nurtured with care. But then, as Bagga says – in the current market scenario very few companies would have the luxury of launching new publications or editions. And, for that matter nurture the un-profitable ones.It would be interesting, however, to see if the same logic of consolidation and exploiting synergies would now get extended even to other areas of operation such as the newsrooms and news-gathering.
(in the next post I intend discussing some of the other very relevant issues raised in the article)
1 comment:
Sandip,
The so called revenue allocation is a direct result of the reward skew that senior management puts to the so called beneficiary and not look at the reality.
The same legendary man from HUL also said is "keep the focus right and give it time to deliver".
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