The document discusses how magazine publishers need to transform their business models in response to the shift from print to digital advertising. It notes that while digital advertising is growing, traditional publishers face challenges competing against large online players that dominate areas like search and social media. The publishers have lost some of their share of the overall advertising market and will need to adapt their business models to address this change in order to remain successful in the future.

1. MAGAZINE PUBLISHERS’ TRANSFORMATION:
THE TIME TO ACT IS NOW!
PERSPECTIVE JANUARY 2014
Demetrio Di Martino, Charles Monteux, Mark Weston

2. Magazine publishers’ transformation:
the time to act is now!
Published by
Value Partners Management Consulting Spa
via Vespri Siciliani 9
20146 Milan, Italy
January 2014
Written by:
Demetrio Di Martino, Charles Monteux,
Mark Weston
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3. PERSPECTIVE MAGAZINE PUBLISHERS’ TRANSFORMATION
INTRODUCTION 5
MIGRATION FROM PRINT TO DIGITAL ADVERTISING 7
LIMITED SPACE FOR PUBLISHERS IN DIGITAL ADVERTISING 11
EVOLVING BUSINESS MODELS TO RECOVER ‘LOST’ 15
ADVERTISING REVENUES
CONCLUSIONS 19
AUTHORS 20
CONTENTS

4. 4 – 5
How print publishers
can succeed in regaining ‘lost’ advertising revenues

5. PERSPECTIVE MAGAZINE PUBLISHERS’ TRANSFORMATION
INTRODUCTION
THIS WHITE PAPER PRESENTS THE RESULTS OF SEVERAL STUDIES
CONDUCTED BY VALUE PARTNERS INTO THE IMPACT OF DIGITAL
DEVELOPMENTS ON MAGAZINE PUBLISHING BUSINESS MODELS.
MORE SPECIFICALLY, OUR ANALYSIS FOCUSES ON UNDERSTANDING
THE DIFFERENT APPROACHES THAT HAVE BEEN ADOPTED BY
LEADING PUBLISHERS IN ORDER TO COMPENSATE FOR DECREASING
ADVERTISING REVENUES.
IN RECENT YEARS, THE GLOBAL ADVERTISING MARKET HAS
GROWN AT A SLOWER RATE THAN GDP, WITH A MOVEMENT AWAY
FROM TRADITIONAL AND MORE EXPENSIVE PRINTED ADVERTS TO
CHEAPER DIGITAL FORMATS. WHILST DIFFERENT MARKET DYNAMICS
EXIST WITHIN MATURE AND DEVELOPING MARKETS, THIS TREND HAS
BEEN SEEN IN BOTH ALIKE AND IS EXPECTED TO CONTINUE FURTHER
WITH THE INCREASING PENETRATION OF BROADBAND,
AND THE RISING POPULARITY OF SMARTPHONES AND TABLETS.
WHILST SOME OPPORTUNITIES FOR PUBLISHERS DO APPEAR TO
EXIST WITHIN ONLINE ADVERTISING, THESE ARE OFTEN NOT ABLE
TO FULLY COMPENSATE FOR THE DECLINE IN THEIR TRADITIONAL
REVENUE STREAMS. THIS IS DUE, IN PART, TO THE ESTABLISHMENT
OF GLOBAL ONLINE PLAYERS WHO HAVE COME TO DOMINATE
THE DIGITAL ADVERTISING MARKET WITH A SCALE AND EXPERTISE
THAT TRADITIONAL PUBLISHERS CANNOT EASILY COMPETE
WITH. FURTHERMORE, EVEN THE REMAINING ADDRESSABLE
OPPORTUNITIES FOR PUBLISHERS ARE NARROWING
AS A CONSEQUENCE OF MORE TARGETED OFFERINGS BROUGHT
BY SOCIAL MEDIA AND AD-NETWORKS.
WITHIN THIS CONTEXT, PRINT PUBLISHERS HAVE THUS HAD TO
ADAPT THEIR TRADITIONAL BUSINESS MODELS IN ORDER TO
COMPETE EFFECTIVELY. THIS PERSPECTIVE LOOKS TO INVESTIGATE
HOW SOME OF THE LEADING PLAYERS HAVE GONE ABOUT THIS.

6. EXHIBIT 1
Globally, advertising has grown less than world GDP
Total advertising expenditures, global, USD in billions
EXHIBIT 2
Digital advertising has been the key growth driver, reaching ~18% of the total market
Total advertising expenditures, global, USD in billions
Note: (1) Traditional media: TV, radio, newspaper, magazine, etc.
Source: JPMorgan, Media, “AdStats: Fact Book on Advertising Expenditures”, May 2012; ZenithOptimedia, March 2012; Value Partners analysis
0.86%
0.81%
0.74%
0.73%
0.71%
1%
0.70%
5%
ADVERTISING
GDP
2007
2008
2009
2010
2011
2012
464
463
418
445
461
498
39%
27%
-12pp
TRADITIONAL MEDIA (1)
DIGITAL MEDIA
% OF PRINT ADS SPENT (NEWSPAPERS AND MAGAZINES)
VARIANCE 2007-2012
ADVERTISING / GDP
CAGR 2007-2012
2007
2012
91%
82%
9% 464
18% 498100%
+9pp
-9pp
6 – 7

7. PERSPECTIVE MAGAZINE PUBLISHERS’ TRANSFORMATION
Over the last five years, the total value
spent on advertising globally has not
kept pace with world GDP growth. This
trend reflects a more cautious alloca-tion
of companies’ budgets and cuts in
‘discretionary’ or ‘non-core’ spending
following the financial crisis. As a result,
the advertising industry accounted for
only 0.70% of world GDP in 2012, down
from 0.86% in 2007 (Exhibit 1).
In addition to these cut-backs,
the divergence between advertising
revenue and GDP growth has also
been driven by the steady growth
of lower-priced digital advertisements.
These have doubled as a percentage
of publicity spend between 2007 and
2012, rising from 9% to 18 (Exhibit 2).
This trend has been intensified by the
rapid uptake of smartphones and tab-lets,
and the corresponding migration
away from traditional media consump-tion
to its digital counterpart.
These new devices, together with more
powerful analytics tools, have afforded
marketers more interactive and engag-ing
platforms from which to target
consumers, as well as new performance-based
revenue models, which further
strengthen the digital advertising
proposition.
The migration to digital advertising has
predominantly come at the expense
of printed adverts (i.e. newspapers
and magazines), with the percentage
of overall advertising revenues from
these sources decreasing from 39%
to 27% between 2007 and 2012.
This ‘shift of power’ in favor of digital
platforms has occurred in both develop-ing
and mature markets alike though
to differing degrees, with traditional
advertising continuing to grow in
developing markets but contracting in
mature markets (Exhibit 3).
MIGRATION FROM PRINT
TO DIGITAL ADVERTISING

8. 2007
2007
2012
2012
TRADITIONAL MEDIA (1)
DIGITAL MEDIA
Note: (1) Traditional media: TV, radio, newspaper, magazine, etc
Source: OECD Broadband statistics, Fixed Broadband Subscriptions, June 2012; IMF World Economic Outlook, 2012;
eMarketer, B2C E-commerce sales, 2012; JPMorgan, Media, “AdStats: Fact Book on Advertising Expenditures”, May 2012;
ZenithOptimedia, March 2012; Value Partners analysis
EXHIBIT 3
Migration to digital has occurred unevenly between developing and mature markets
Total advertising expenditures, global, USD in billions
EXHIBIT 4
Digital advertising growth at the expense of print, fueled by broadband and e-commerce
BROADBAND PENETRATION (ENABLER)
PRINT ADVERTISING (SUBSTITUTION EFFECT)
E-COMMERCE MATURITY (CATALYZER)
0%
0%
5%
500
10%
5%
0
0%
0%
1000
20%
10%
1500
30%
15%
2000
40%
20%
2500
50%
25%
30%
35%
40%
45%
10%
UK
UK
2007
2008
2009
2010
2011
2012
GERMANY
GERMANY
USA
USA
ITALY
ITALY
BRAZIL
BRAZIL
FRANCE
FRANCE
ARGENTINA
ARGENTINA
10%
10%
20%
FIXED BB PENETRATION
US$ / CAPITA
% PRINT ADVERTISING
% ADVERTISING DIGITAL
% ADVERTISING DIGITAL
% ADVERTISING DIGITAL
20%
15%
30%
30%
40%
40%
20% 79385126373
DEVELOPING MARKETS
LATIN AMERICA, AFRICA, ASIA/PACIFIC AND MIDDLE EAST (EXCLUDING JAPAN, SOUTH KOREA, CHINA AND AUSTRALIA)
MATURE MARKETS
NORTH AMERICA, EUROPE, JAPAN AND KOREA
10%
-1 %
32%
13%
20%
5%
10%
8%
87%
80%
95%
90%
15%
-3%
CAGR 2007-2012
8 – 9
R2 = 0.81
R2 = 0.95
R2 = -1

9. PERSPECTIVE MAGAZINE PUBLISHERS’ TRANSFORMATION
Changes in broadband penetration
and e-commerce maturity are two key
factors that help to explain this ongoing
substitution and the different dynamics
that have emerged globally.
More specifically, broadband penetra-tion
has played an ‘enabler role’ within
this migration, whilst e-commerce matu-rity
has helped catalyse the advertising
shift, reflecting the recurrent, ‘trans-actional’
nature of online advertising
(Exhibit 4).
Source: JPMorgan, Media, “AdStats: Fact Book on Advertising Expenditures”, May 2012 (ZenithOptimedia, March 2012); Value Partners analysis
Within the markets analyzed, we have
observed an interesting ‘polarization’
effect of advertising media.
TV and internet-based advertising have
managed to establish themselves as
‘stronger’ media platforms compared
to printed media that has become
increasingly ‘stuck in the middle’.
However, it should also be noted that
newspapers and magazines have
not been affected in the same way
across each of the markets in question
(Exhibit 5).
EXHIBIT 5
Across the different markets, newspapers and magazines have not been affected
in the same way by digital developments
Total advertising expenditures by ad type, selected countries, USD in billions
UK USA BRAZIL
2007 2012 2007 2012 2007 2012
TV NEWSPAPER MAGAZINES INTERNET RADIO OTHER
ITALY
2007 2012
19.7 18.9 177.7 159.7 10.5 17.2
68%
38%
27%
64%
33%
27%
12%
16%
20%
17%
28%
31%
7%
11%
7%
9%
14%
12%
6%
19%
34%
3%
19% 8%
4%
4% 10%
4%
4% 12%
3%
8% 5%
3%
8% 4%
11.8 8.3
58%
45%
15%
16%
10%
12%
7%
3%
7%
5%
3%
19%

10. Source: JPMorgan, Media, “AdStats: Fact Book on Advertising Expenditures”, May 2012; ZenithOptimedia, March 2012; ZenithOptimedia, Advertising Expenditure Forecasts, December 2010; IAB UK; Value Partners analysis
EXHIBIT 6
Global, well established pure online players are narrowing the space left to publishers
in the digital market
Digital advertising expenditures by ad type, selected countries
USA
UK
COMPETITIVE DYNAMICS
ACTING SPACE FOR PUBLISHERS
IN THE DIGITAL MARKET
% MOBILE
CLASSIFIEDS
BANNERS
ONLINE VIDEOS AND RICH MEDIA
SOCIAL MEDIA
SEARCH
44%
56%
45%
60%
2%
0%
0%
11%
5%
9%
13%
3%
27%
25%
20%
15%
18%
19%
11%
17%
2006
2005
2012
2012
0 %
9%
0 %
10 %
54 %
44 %
44 %
35 %
• Rise of pure online players
• Reduction of prices, increasing competition
• Strengthening of YouTube
• Dominated by Facebook
• Dominated by Google
10 – 11

11. PERSPECTIVE MAGAZINE PUBLISHERS’ TRANSFORMATION
Whilst it is clear that there has been
a noticeable shift from print to digital,
an important question to ask is whether
traditional publishers are able to com-mand
a significant portion of this new
form of advertising. The results of our
research illustrate that, despite there
being some opportunities for traditional
publishers, late entrants are likely
to face many challenges when entering
the online advertising market.
Historically, the online advertising
market has been divided into three main
categories: search, display and clas-sifieds,
with a further sub-division of
display advertising into banners, social
media and videos.
The Google supremacy in ‘search’ ap-pears
to limit the potential addressable
opportunities for publishers to display
and classified ads, however, even the
share of these opportunities has been
narrowing due to the rise of pure online
players. As a result, in mature markets
such as the UK, the portion of online
advertising revenues addressable to
publishers has fallen from 44% in 2005
to 35% in 2012. If publishers were to
have kept the same share of a few years
ago, their potential addressable mar-ket
would have been around a quarter
larger (Exhibit 6).
Previously, the online display advertis-ing
market possessed a well-defined
structure that was relatively consistent
between countries. High traffic sites –
such as Yahoo, MSN and AOL –
resided at the top of the ‘web pyramid’,
accounting for more than 75% of total
page impressions. These players were
able to sell advertising space based
on a value proposition of both ‘scale’
and ‘reach’. The layer below this was
occupied by more ‘targeted’ sites,
including magazine websites, which
accounted for approximately 15% of ad
inventory. These ‘targeted’ sites were
able to differentiate their proposition
from ‘high traffic’ ones through contex-tualized
adverts and more segmented
audiences that helped to command
higher CPM prices. Finally, the millions
of ‘long tail’ websites sitting at the
bottom of the web pyramid accounted
for roughly 10% of total page impres-sions.
These websites offered a low cost
inventory, typically offloaded through
ad-networks and, together with the
remnant inventory from other players,
represented approximately 20% of total
online advertising revenues (Exhibit 7).
However, there have been some signifi-cant
developments within online display
advertising that have greatly altered
these pre-existing dynamics.
Firstly, the establishment of companies
such as Facebook and Twitter, as well
as more niche social media players, has
brought a highly targeted advertising
inventory to the market that previously
did not exist.
LIMITED SPACE FOR
PUBLISHERS IN DIGITAL
ADVERTISING

12. 12 – 13
Source: Value Partners analysis
EXHIBIT 7
Display advertising can be segregated by premium and remnant inventory
Online display publishers and inventory — example of market structure
PROPERTIES
AD-INVENTORY
SELLING PROPOSITION
CAPTURED VALUE
LARGEST
WEBSITES
LARGE,
TARGETED
WEBSITES
‘LONG TAIL’
Top
~5 sites
75% of page impressions (PI)
• Scale & reach
~80% of revenues
~50 sites
~15% of PI
• Audience targeting & reach
• Differentiation base on context and content
Millions of sites
10%
of PI
• Low-cost
~20% of revenues
EXHIBIT 8
Recently, development of social media and ad-networks have threatened
the positioning of targeted websites
Online display publishers and inventory – ongoing trends
INDUSTRY TRENDS
IMPLICATIONS
PREMIUM INVENTORY
PREMIUM INVENTORY
REMNANT INVENTORY
REMNANT INVENTORY
LARGEST
WEBSITES
LARGE,
TARGETED
WEBSITES
‘LONG TAIL’
Increased inventory supply driven by social media
Price pressure on remnant inventory
Facebook provides highly targeted inventory
Positioning threat by Facebook’s targeted inventory and ad-networks
Improved targeting technologies expected to enable
‘targeted remnant’
Improved ROI may offset price pressure deriving
from increased supply
INVENTORY
1
1
2
2
3
3

13. PERSPECTIVE MAGAZINE PUBLISHERS’ TRANSFORMATION
This has not only put a downward pres-sure
on CPM prices for remnant inven-tory
- which is now much more abun-dant
- but has also enabled social media
companies to target higher-price CPM
opportunities. Secondly, ad-networks
and ad-exchanges have invested heavily
in analytical capabilities in order to pro-vide
a more targeted approach for their
inventories, and hence justify higher
prices. As a result, the element
of differentiation that ‘targeted’ web-sites
previously held, such as those
of magazine publishers, has become
severely threatened (Exhibit 8).
The high level of competition
within the
online video advertising market also
appears to provide limited opportunities
for publishers. Specialized players, such
as YouTube and Vimeo, are strengthen-ing
their position in this high growth
sector (to the detriment of publishers).
This challenge is becoming increasingly
significant for publishers within mature
markets such as the US, where video con-tent
advertising has grown to reach 13%
of total online advertising spend in 2012.
Significant disruption has also occurred
within classified advertising. In the UK
market for instance, companies such
as Craigslist, Gumtree and eBay have
been able to exploit the significant op-portunities
offered by digital technolo-gy,
including the wide geographic reach
of adverts and the almost negligible
marginal cost for additional adverts.
Users are also able to search online
adverts using their own keywords
or desired properties in a way that had
not previously been possible.
This has further differentiated the digital
value proposition (vs. printed) and helps
explain the resulting movement toward
online classifieds. For online classifieds,
we have seen that scale plays a crucial
role in success, with both buyers and
sellers benefitting from the ‘network ef-fect’
of a busy marketplace. Interestingly,
we have observed that it has often been
the case that a single dominant player
(approximately 2-5 times the size of their
nearest competitor) has emerged within
property, automotive and general online
classifieds. On the other hand, it appears
that a number of large players can more
happily co-exist within employment
advertising due to its more specialised
nature. Nevertheless, it has seldom been
the case that the emerging winner in any
category has been a traditional publisher
(Exhibit 9).
The next section examines how, in re-sponse
to these new market dynamics,
publishers have adapted their business
models by expanding their position-ing
in the online market, increasing the
scale and the coverage of their tradi-tional
operations and venturing into
new diversified businesses that are less
reliant on advertising.

14. AUTOMOTIVE EMPLOYMENT
EXHIBIT 9
Within online classifieds scale plays a crucial role
PROFITABILITY VS. MARKET POSITION
EXAMPLES FROM THE CLASSIFIED WEBSITES OF SCHIBSTED GROUP *
RANKING
2011, TOP CLASSIFIED WEBSITES, BY UNIQUE VISITORS
GENERAL PROPERTIES
5-30%
0%
30-50%
50-70%
100%
1x
EBITDA
SIZE VS. 2ND PLAYER
3-5x 8-10x
• Size matters:
- Network effect – buyers and sellers attracted
to busiest marketplaces
- Allows the basic listing charging
• Established leaders can achieve very attractive
EBITDA margins of 50% to 70%
• In consolidated markets, the verticals general,
automotive and properties have a sole leader...
• ...2 to 5 times bigger than the closer competitor...
• ...opposite to employment, where specialists
websites can coexist irrespective of the level
of market development
Source: *Schibsted Media Group, Quarterly Results Q3 2011, p.13; Google DoubleClick Ad Planner, Company websites, Company reports,
World Bank, Value Partners analysis
EBAY.CO.UK
AUTOTRADER
REED
RIGHTMOVE
FINDAPROPERTY
GUMTREE
PARKERS
TOTAL JOBS
ZOOPLA
34 %
7.5 %
3 %
9 %
9 %
1.5 %
2.5 %
4 %
4 %
UNIQUE VISITORS AS % OF TOTAL POPULATION
14 – 15

15. PERSPECTIVE MAGAZINE PUBLISHERS’ TRANSFORMATION
The ongoing digitization of content
has long been considered a threat
to the established media, and particular-ly
to print publishers. For many, the loss
of revenues within the physical space
has not been matched by the increase
in revenues online, calling into question
the sustainability of existing business
models and putting pressure on publish-ers
to react.
Despite these challenges, some pub-lishers
in mature markets have found
success in their diversification strate-gies.
Interestingly, due to the ‘time-lag’
between mature and emerging markets,
these successes can offer important
insights to help inform the future strate-gies
of players in developing markets.
Below, we illustrate some examples
that aim to provide a more tangible
grasp of the initiatives that can be pur-sued
by publishers.
In Germany, Axel Springer, Europe’s
largest publisher, was more than able
to offset ‘lost’ revenues by means
of a ‘digitally focused’ business strategy.
The company has achieved this through
its expansion within the online publish-ing
value chain, entering, among others,
the online classifieds and ad-network
businesses. Through this strategy, Axel
Springer managed to grow revenues
by around 28% between 2007 and
2012, with the contribution from digital
sources rising from about 8% to 35%.
Another example comes from the
RBA Media Group, a leading Spanish
magazine publisher that has focused
on growing its traditional publishing
business by means of an expansion
strategy. Through this strategy, RBA
has managed to consolidate its position
in both the Italian and Portuguese
markets, aided in part by the 2007
acquisition of the Portuguese arm
of Hachette Filipacchi which gave
the group access to leading titles such
as ‘Elle’ and ‘Ragazza’.
During this period, RBA has also con-sistently
invested in reinforcing its port-folio
through acquisitions of new titles
and joint ventures with other publishers.
As a result, RBA managed to increase
revenues by roughly 15% in the 5 year
period to 2011.
EVOLVING BUSINESS
MODELS TO RECOVER ‘LOST’
ADVERTISING REVENUES

16. Exhibit 10
The recovery of revenues occurs in three “development axes”
Source: Value Partners analysis
GROWTH
IN SCALE
• Ad-sales network
• Ad-exchange
• Digital marketing agency
• Online presence
(e-magazine, website)
• Audience profiling
• Multi-platform advertising
• Online classifieds
EXPANSION IN DIGITAL PUBLISHING
DEVELOPMENT
OF NEW BUSINESSES
SERVICES
ADJACENT BUSINESSES
DIGITAL PUBLISHING
BRAND EXTENSION
NEW BUSINESSES
PORTFOLIO OF TITLES
GEOGRAPHY
• Licensing of products,
services and events
•E-commerce
•Games
•Social media
• Internationalization
• Regionalization
• Launch / acquisition
of new titles
16 – 17

17. PERSPECTIVE MAGAZINE PUBLISHERS’ TRANSFORMATION
However, some publishers have opted
for more radical shifts away from their
traditional activities. Hubert Burda
Media, a major German magazine pub-lisher,
has heavily diversified its business
through new ventures that leverage its
brand strength and audience knowl-edge.
More specifically, Burda has suc-ceeded
in creating service ecosystems
that draw on their deep understanding
of its end-users and the development
of ‘audience communities’.
In the technology segment, for exam-ple,
Burda has utilized its IT magazine
to create: a) a website where users can
download software; b) a mobile app
to compare gadgets prices; c) an online
shop to buy computer related items
and d) a network of physical computer
stores. Similarly, it has also created ‘au-dience
communities’ for the travel and
business segments. As a result, printed
magazines now represent only a small
portion of Burda’s revenues that have
grown 30% in the last five years to 2012.
Based on the findings of our assign-ments
within the publishing sector, we
have identified three main ‘development
axes’ that may enable the recovery of
‘lost’ revenues for magazine publishers
(Exhibit 10):
1. Expansion in digital publishing:
this axis encapsulates publishers’
attempts to enlarge their scope
of activities along the online publish-ing
value chain. Initiatives range from
enriching the advertising inventory
by means of detailed audience profil-ing
and multi-platform advertising,
to expanding to high potential adja-cent
businesses such as online clas-sifieds
or entering into the services
business of ad-networks, ad-exchang-es
and even marketing agencies.
2. Growth in scale: this axis encap-sulates
investments aimed at con-solidating
the traditional publishing
business through increased scale.
Initiatives are likely to include port-folio
growth through the acquisition
of other complementary titles and
geographic expansion.
3. Development of new businesses:
this axis encapsulates publishers’
moves into new business areas.
Whilst these new areas may be
considered distant from a publishers’
traditional revenue sources, some
of these opportunities will likely lev-erage
publishers’ existing assets such
as audience understanding
and brand recognition and ‘reach’.
Brand-extension arrangements, such
as brand licensing and e-commerce
are amongst these activities.

18. 18 – 19
Our analysis of leading players’ performance indicates that publishers will likely need to invest in more than one ‘development axis’ to be successful in their revenue diversification strategies. The adoption of initiatives within a single axis may, at best, off-set their decreased advertising print revenues but is unlikely to enable publishers to grow their top line.
It is also important to note that one of the key critical success factors of these diversification strategies is the strong alignment with the publisher’s overall company vision.
For instance, Axel Springer’s focus on the ‘expansion in digital publishing axis’ is part of a concerted company aspiration ‘to become the leading digital publisher’. This can be seen through their investments in ad-networks (4 acquisitions covering 10 countries since 2007) as well as in classified portals, which are currently valued at approximately $1.25.bn. Furthermore, Axel Springer has recently acquired a 24-hour news broadcaster – N24 channel – with the objective of supplying video content to its digital platforms.
Similarly, the CEO of Bauer Media Group declared that: ‘Bauer is print and Bauer shall remain print’, an idea that has been supported by its recent investments
to help grow their magazine portfolio and expand internationally.
Between 2010 and 2012, Bauer doubled
the number of titles it published
and invested in a range of additional markets, including the UK, Australia, New Zealand and Poland.
As a result of this strategy, and of the complementary advances in the other ‘development axis’, Bauer was able
to not only offset the ‘losses from print’ but also grow its top line in about 15% between 2006 and 2012.
Finally, in an interview with the Business of Fashion blog, the International
chairman and CEO for Condé Nast recently declared ‘our business can
no longer be defined strictly as publishing, but takes the form of brand management’. As such, in addition to a well thought through (and cautious) digitalization of its portfolio, Condé Nast
has ventured into business opportunities away from traditional publishing.
Through brand extension arrangements, it has launched themed-bars, coffee shops, night clubs and even a fashion college in London. As a result, at the end of 2011, non-publishing business was already representing 10% of Condé Nast group revenues.

19. PERSPECTIVE MAGAZINE PUBLISHERS’ TRANSFORMATION
CONCLUSIONS
Digital developments have had
significant effects upon print magazine
publishers, requiring them to signifi-cantly
alter their business and operating
models and to pursue new diversifica-tion
strategies.
This adaptation has been particularly
challenging for publishers due to the
intense competition and dynamism
of the digital world compared to the
traditional publishing industry.
This ongoing digital migration has also
presented further challenges as it has
spurred publishers to enter new, some-times
completely different, businesses
where they may have no previous
experience.
From a corporate strategy perspective,
in order to succeed in this environment,
it is crucial that publishers develop a
clear roadmap that defines the intensity
and timing of investments in each
of the ‘development axes’.
It is also fundamental that they have a
holistic view of their business portfolio,
ensuring resources are correctly allocat-ed
and synergies are properly captured,
as well as dedicating adequate focus to
new initiatives.
From an operational perspective,
organizations need to be prepared
to act upon new business development
opportunities and the resulting
intensification of M&A and post-merger
integration activities.
In addition, it is important that publish-ers
adopt new commercial approaches
to sales that better reflect their
multi-channel offering. A more holistic
cross-channel approach helps increase
value for advertisers and thus enables
publishers to demand correspondingly
higher fees.
They should also look to add further
value to their advertising proposition
through effective analytics capabilities.
The ‘mining’ of relevant data would
help publishers to better profile their
end users and build more engaged
audiences, both of which advertisers
find very valuable.
Whilst the ongoing digital transforma-tion
of the publishing industry may
provide significant challenges for
traditional publishers, we believe that
attractive and feasible opportuni-ties
do still exist. We also believe that
important insights from more mature
markets, such as those presented within
this perspective, can be used to inform
publishers’ strategies within develop-ing
markets. However, time is of the
essence, and in light of the rapidly
changing digital landscape, publishers
must be sure to act now.

20. 20 – 21
AUTHORS
MARK WESTON
Business Analyst, London Office
mark.weston@valuepartners.com
DEMETRIO DI MARTINO
Partner, Singapore Office
demetrio.dimartino@valuepartners.com
CHARLES MONTEUX
Senior Engagement Manager, São Paulo Office
charles.monteux@valuepartners.com

21. PERSPECTIVE MAGAZINE PUBLISHERS’ TRANSFORMATION
In mature markets, many
publishers have found success
in their diversification strategies
which can offer important
insights to help inform
the future strategies of players
in developing markets

22. 22 – 23
ABOUT
VALUE PARTNERS
Value Partners is a global management consulting firm that works
with multinational corporations
and high-potential entrepreneurial
businesses to identify and pursue
value enhancement initiatives across
innovation, international expansion,
and operational effectiveness.
Founded in Milan in 1993, Value
Partners’ rapid growth testifies
to the value it has created for clients over time. Today it draws on 25 partners and 280 professionals from 23 nations, working out of offices
in Milan, London, Istanbul,
São Paulo, Buenos Aires, Beijing, Shanghai, Hong Kong, Singapore and Dubai.
Value Partners has built a portfolio
of more than 350 international
clients from the original 10 in 1993
with a worldwide revenue mix.
Value Partners combines methodological approaches and analytical
frameworks with hands-on attitude
and practical industry experience
developed in an executive capacity
within each sector: telecommunications, new media, financial services,
energy, manufacturing and hi-tech.
In 2007 Value Partners acquired
Spectrum Strategy Consultants
– a leading UK company specialized in publishing, broadcasting, entertainment, IPTV and mobile – thus further strengthening its international presence.
Today Value Partners is a leading
advisor in the telecom, media
and technology sectors worldwide.
For more information on the issues
raised in this note please contact
the authors.
For more information on the issues raised in this note please contact
the authors.
Find all the contact details on
valuepartners.com
Milan
London
Istanbul
São Paulo
Buenos Aires
Beijing
Shanghai
Hong Kong
Singapore
Dubai

23. PERSPECTIVE MAGAZINE PUBLISHERS’ TRANSFORMATION

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