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Will You Survive the Next Recession?

Posted on Thursday, February 28, 2019 at 12:09 PM

Preparation will help. Complacency won't.

By William Dunkerley

The next economic downturn may be just around the corner, suggests Editor & Publisher magazine. A recent article points out: "The entirety of US history tells us that it's a question of when, not if, the next recession will hit."

The article explains, "With a 10-year stretch in the 1990s as the only exception, we've never gone longer than eight years without one. And it's been nine and a half years since the last recession."

Are you prepared for the inevitable at your magazine?

E&P's audience of newspaper professionals are particularly vulnerable to a recession. In the past, many have dealt with diminished business prospects by cutting expense. E&P points out that if a publication "has already been cut below a point of minimum viability, where will [the publisher] find the expense cuts to offset deeper revenue decline?"

In my experience, solving profit/loss problems by knee-jerk across-the-board cuts in spending is a problematic reaction. But I've seen many publishers (newspaper and magazine) choose that route because they believe there are no practical ways to boost revenues. In most cases that belief is based on a misjudgment of growth potential coupled with a deficit in skills and strategies for going after increased revenues.

Another factor for newspapers is that they were slow to realize that the future of classified advertising was online. As a result, they lost that market to Craigslist and eBay. For many publishers that mistake became the difference between profit and loss.

Many magazines have coped better with the digital transformation in publishing than their newspaper cousins. Nonetheless, magazine publishers will face new challenges come the next recession.

A major problem is that, as an industry, we still haven't perfected revenue production in the digital world. What we're now doing is, in my view, still feeling our way. And we're doing it in an atmosphere of rapidly evolving change in consumer reading and information consumption practices.

Even putting digital challenges aside for the moment, consider that a recession has always been a daunting experience for a lot of publishers. My career as a magazine consultant spans several recessions. And with each one I typically begin receiving calls from publishers who are at wits' end. They've been operating a business that has been producing acceptable results. They suddenly find that they are underwater and can't figure a way out. Lamentably, for some there is no way out short of folding.

The unrecognized problem their publications faced is that they were not operating optimally during good economic times. Results were acceptable but not optimal. An analogy I like to use is that of a poorly tuned car. It can travel along a flat road and get its driver to where he or she wants to go. But if the driver encounters a steep hill, the car engine sputters and spits in fits and starts and ultimately just stalls in its tracks.

What were those publishers doing wrong?

There are several oft-occurring problems:

--Advertising salespeople lack sufficient skills to prevail in difficult times.

--Advertisers are not convinced that advertising in the publication benefits them.

--The magazine's fundamental business strategy may not be optimized for providing concrete results for advertisers.

--Subscription sales also suffer from poorly strategized and poorly implemented campaigns and practices.

--Editorial content may be attracting readers who fail to develop an emotional commitment to the publication that results in continued readership.

Just to name a few.

I often tell a story that epitomizes the foregoing. It's of a magazine that was struggling to survive. After talking with the publisher, I interviewed the key players: the managers for ad sales and circulation marketing, and the editor-in-chief. I asked each one the same question: "What's wrong here?"

The ad sales manager told me that his sales team was doing a great job selling advertising. The problem was that the circulation manager was selling subscriptions to the wrong people, to people without an interest in buying what was advertised. As a result, advertisers would go away when they got little response to their ads.

The circulation manager indicated that her department did extensive testing and had developed highly targeted marketing approaches that were very successful at bringing in new readers. The problem was that the editor was writing to a different audience. The articles he was publishing didn't resonate with the new readers, and they rarely renewed.

The editor explained that he and his staff did a masterful job of creating highly interesting and insightful articles. The problem was that the ad director was filling the magazine with irrelevant advertisements, and the marketing manager was selling subscriptions to the wrong audience.

Clearly this was a publication with a dysfunctional underlying strategy. Nothing was fitting together to provide synergy and business success. It was an untuned machine.

Another publisher called while in the throes of a recession. He thought he could just cash out and let a new owner fight the battle. But his publication was a money-losing machine. There's not much market for that kind of magazine business. He countered by pointing out how much money he and his investors had put into the business. Surely that must be worth something, he asserted. But of course it wasn't. It would have been less expensive for someone to start a new publication in the same field than to buy and turn around that white elephant. The publisher should have fixed his publication's strategic problems earlier.

Now's the time for magazine publishers to assess whether or not their magazines are well tuned and ready for the uphill climb that a recession will present. If you put that off too long, you may experience untold difficulties in surviving.

The Editor & Publisher article concluded, "There will be little chance of success if publishers don't plan now for the inevitable 'rainy day,' and start to build a model for survival."

I heartily agree.

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

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