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The False Allure of Going All Digital

Posted on Wednesday, October 30, 2013 at 12:33 AM

Take stock of where the bulk of our industry's revenues are still coming from.

By William Dunkerley

A call came in from the publisher of a monthly in an agricultural field. He was looking for advice on switching from print to all digital. A lot of publishers seem to have a similar interest. They say print revenues never recovered from the recession. They've operated at a loss and can't keep it up. They're looking for drastic cuts in expenses to bring them out of the red. Cutting out the cost of print production seems like an obvious choice.

I sent this publisher a copy of last month's article, "Growing Your Digital Audience." I advised him to be very cautious about cutting out print. We're now addressing this issue again for the purpose of giving emphasis to some very important related concerns.

The idea of going all digital can be very seductive -- especially for a publication that has fallen into debt. Digital publishing is widely regarded as the future of publishing, and a bright future at that. So taking a giant leap into the future and solving daunting financial problems at the same time sounds great. Even many advertisers are clamoring for good digital advertising opportunities.

We turned to Google Trends to compare the interest in print vs. digital advertising. Figure 1 illustrates the comparative interest from 2004 to the present. It shows much greater interest in digital than print. Interest in both forms of advertising is on a generally downward slope, however.

Figure 1: Interest in digital advertising far exceeds that with print. The graph exemplifies this in relative terms. (Source: Google Trends)

Interest and excitement over digital publishing isn't the whole story, though. Unquestionably, digital publishing is growing by leaps and bounds. Nonetheless, on average, it is still a relatively small part of the revenue pie for magazine publishers. Figure 2 shows the 2012 revenue sources for magazine publishers who have extended themselves into digital. A projection for the year 2016 is shown for comparison.

Figure 2: For most print publishers, digital revenues are still a very small part of the revenue pie. By 2016 digital is expected to double. But that still leaves it well below print circulation and advertising in size. (Source: Veronis Suhler Stevenson Communications Industry Forecast, 26th edition)

What does this mean to you? It suggests that if you are a print publisher who's not yet entered the digital competition, you may be able to grow new digital ventures to the extent that they would represent about 7 percent of your total revenue. By 2016 that number could grow to 14 percent.

That means that going into digital is certainly worth doing without delay. The pie charts also stand as a point of comparison for publishers who already have digital extensions of their brands. If you're not getting 7 percent of your revenues from digital, you should set your sights higher and perhaps reformulate your digital plans.

But where does all this leave the agricultural publisher who called looking for advice? And what about other publishers who are looking to digital to save their flagging publications?

The answer is to enhance the productivity of what you are doing in print.

The Great Recession came as a big shock to a lot of publishers. They believed that they were running a successful magazine. They even had profits to prove that. But now it is important to ask whether they were operating with optimal effectiveness. What was adequate in good times may not be enough now.

Sadly, many publishing operations never were truly optimized. They were producing profits in a good economy, but their modus operandi was not strong enough to stand up to serious economic difficulties.

This is a message that many publishers find difficult to accept. It can conflict with one's sense of pride over past accomplishments. But it is not a message meant to disparage prior achievement; instead it is a message of hope. In my experience it is rare to find a publishing organization that cannot make great gains from a concerted effort at productivity enhancement coupled with the acquisition of new skills and business strategies.

William Dunkerley is principal of William Dunkerley Publishing Consultants, www.publishinghelp.com.

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