Magazines are perfect for ecommerce. Or are they? Well, the major online women’s retailers – like Net-a-Porter, ASOS, HauteLook, TopShop and Groupe Gilt – use content in magazine-like ways. They employ a raft of former editors and, tantalisingly, either collaborate with magazines or advertise (just a little) in them. They also produce online magazines. And ASOS even publishes a hard copy one.
These powering sites represent the fusion of retail and media, just like Amazon with its film production and ebook publishing. The ecommerce pioneers are moving quickly to build strong retail-media franchises. Magazine publishers now know that online retailing is the competition. They hope it is also their opportunity.
Like the rising tide of free magazines (see recent Flashes & Flames post), these sites are also effectively giving consumers free editorial with the convenience of click-through shopping. Advertisers are building sales and data – and paying only by results. And even the Gilt and HauteLook membership-only approach strikes a chord with consumers, familiar with the ‘community’ of their favourite magazine. So everybody’s happy – except, perhaps, paid-for magazines watching enviously from the sidelines.
That is the temptation and the challenge for the world’s magazine publishers, at a time when copy sales and advertising in most developed economies have continued sliding – and when ecommerce is widely considered to be the salvation. But there are three fundamental questions:
- Can magazine publishers successfully compete as online retailers?
- Will ecommerce slash magazine advertising revenue?
- Will it accelerate the growth of free publishing (and does this matter)?
The Hearst Corporation might be expected to have the answers. It is the world’s largest women’s magazines publisher – and the most international magazine business of all.
Hearst is a comforting web of cosy contradictions. It was founded 125 years ago by Citizen Kane himself, the late William Randolph Hearst – the first Rupert Murdoch. As if in the old man’s memory, his company carried on piling into newspapers long after it was fashionable – and into money-spinning cable TV long before it was. It has become the much-envied leader in the international licensing of magazines: its legendary Cosmopolitan (still sexy after all these years) is published in 64 countries and 35 languages. And, just as magazines were in a tailspin and being divested by major companies across the world, Hearst enthusiastically paid Hachette $900m to create a worldwide business of 300 magazines in 80 countries.
Hearst is now breathing down the neck of the leader, Time Inc. But there is a big difference: Hearst loves magazines and Time Warner wishes it didn’t have to. Hearst Corporation is booming. This year’s revenue is expected to reach $9bn – an increase of 400% in 25 years. CEO of the family-controlled media group is the affable and sharp-as-tacks Frank Bennack. He is (you would not guess) 79 years old and has been with Hearst for 50 years. In this, his second spell at the helm, Bennack has a plan. And, of course, it is very digital.
But who would have bet on Hearst setting the pace for magazine publishers searching for a new role in ecommerce? Well, soon after buying Hachette, the company started picking the brains of its managers in iCrossing, the digital marketing agency it had acquired in 2010. iCrossing began life all of 14 years ago as a search marketing agency before we had heard of SEO. It can now be seen as a highly strategic investment for a traditional media company in pursuit of transformation. Read more…