Why I make no apologies for having a business model
So on Friday, the editor-in-chief of AdNews had something of a pop. Announcing a downsizing of the magazine to cut costs, he took aim at “some trade titles” who organise events and write linkbait stories.
I think he may have been talking about us.
And he hinted to agencies that if they don’t start advertising with his title, it might just disappear.
As it happens, I’ve been thinking about business models lately, so allow me to retort.
The piece from Paul McIntyre was top item in Friday’s AdNews email and I presume that when its print edition eventually hits my desk (see the clue about the issues their business model faces?) it will be in there too.
Before I get into it, I should say up front, McIntyre is the most experienced trade journo left standing after redundancy took The Australian’s Simon Canning and The Herald’s Julian Lee, while the AFR’s Neil Shoebridge moved to spin duties at Ten. McIntyre is a good operator – if it doesn’t work out at AdNews, I’d give him a job.
I should also say that this is a long one – the subject had been on my mind for a while before McIntyre’s piece.
First to his comments.
“What you are in for is more of what we see in some trade titles today: lightweight tabloid-style yarns, beat-ups and narrow angles – usually negative – on anything that generates online traffic. You’ll get blatant and relentless daily editorial self-promotion of higher-margin conferences and events.”
Now, I could be mistaken about it being aimed at us. He might be talking about something closer to home. I can think of one trade title whose digital presence went through an extraordinary personality change a few months back and moved a tad in the, dare I say it, linkbaity direction.
The giveaway is when you admit it:
More than once:
And do it quite a lot:
See what I mean?
Curiously, they seem particularly keen on Ikea-based linkbait:
As they try desperately to link the topical to the industry:
It has recently begun to feel like AdNews is trying so hard to become Buzz Feed that at times the result is just gibberish:
There have been days where emails from AdNews have arrived and there have been howls of laughter in the office. To see an 80-year-old title try to get down with the kids is not unlike watching your dad dancing at a wedding – he’s not actually doing any harm, but you wish for his own sake nobody was watching.
How about the “editorial self-promotion of high margin conferences and events” McIntyre speaks of? Like this, you mean?:
And organising high-margin events? Like launching an outdoor awards with 23 separate categories, charging $143 per entry perhaps?
Not, by the way, that I’m saying we do any different. Few of our readers, I’m sure, were unaware of Mumbrella360 in the run up to the conference last month. More on Mumbrella360 in a moment.
But as I say, I’ve been thinking about media business models in the trade press recently – not just the tiny vertical we do battle in, but all the business verticals out there. And it’s started to look to me that for those who can rethink what they do, there is a viable business model.
First we have to accept that a couple of old models are going, or gone. Let’s accept that there may not be enough display advertising out there to support titles on its own. I do, by the way, have sympathy with McIntyre’s view about the people who rely on trade press coverage failing to support it through advertising, even if there’s little point in complaining about it:
“Everyone wants it, values it, spruiks it in their case studies and credentials and award entries and will spend loads of money on PR to get it. But they fail to understand that it has somehow got to be funded. Agencies of all types are the most guilty of it yet they are the ones which benefit most from trade journalism. Media companies are quickly following suit. As for digital and tech players, it’s a joke. PR is their ONLY marketing strategy and they, along with their tech PRs, don’t get that somehow someone else is paying for their exposure.”
To a point, he’s right. Wouldn’t it be nice for the trade press if a few of the agencies actually did what they advise their clients to do, and advertise their wares? If they all spent 10 per cent of their PR budget on advertising, we’d all be laughing.
But they don’t, and (although it would be a smart thing to do) probably won’t. Getting cranky about it is to deny that reality. As one commenter on McIntyre’s piece said:
“The number one vibe I get from any print publisher when they talk about their medium, and its coming off this piece in waves, is an unswayable and haughty belief in the right for print media to exist; that you should be afforded some kind of protection that other products in a free market are not offered, because you know better than your readers what is good for them.”
(We went through a similar process when our free jobs board took off. Despite all the help it was giving recruitment agencies, why weren’t these bottom feeders doing anything to support us, we used to angrily ask ourselves? The answer being, of course, because they didn’t need to. But then we found a business model for the job board – small ads next to a particular specialism, bookable for a month at a time. Competitive tension kicked in, the recruitment companies signed up and we soon stopped thinking of them as bottom feeders. Well, the ones who signed up, anyway….)
The same goes for expecting readers to go on subscribing to a print product. That’s going, or gone. And we learned this the hard way – we dropped at least $200k when our title Encore was in print.
But there’s a new reality. And it may turn out to be the best thing that ever happened to the trade press.
It’s a reality where your advertisers will no longer be in charge. But that doesn’t mean that trade titles are doomed. In many ways, because of their highly defined communities, they’ve got a lot more going for them than the mainstream press.
The liberating – and dangerous – thing is that your readers will be in charge now. The success of your business will depend entirely on how much your readers trust you.
And it’s about getting back to the old principles.
Your job as a title is to understand your readers and deliver them relevant, interesting content that will help them in their careers and to do their job better. The most vital thing is that they trust you to do that.
You may notice that makes no mention of medium. A successful B2B title has often included magazine, email, website, conference, awards, training and perhaps a directory of some sort.
And this is where the trade press should be looking to the likes of conferences and training.
While there are plenty of standalone businesses doing that, few have the opportunity to develop as deep an understanding of what’s going on in the industry, what new trends are shaping business and what the gaps in understanding are, as those trade titles who are out there every day talking to readers and living the industry.
All they need to do is to develop the skills to then offer training and events.
Almost by accident, we began that process.
Four years ago, we offered our first social media masterclass, inspired to do so by what our readers were talking about, and using our contacts in the industry to get the best possible speakers.
Now of course, our big annual event is Mumbrella360 – a two-day conference with more than 1000 people coming through the door.
We also organise the Festival of Branded Entertainment, which returns later in the year, and in February we launched our communications and PR event CommsCon.
Shortly, we’ll be offering night classes in different subjects in Mumbrella House three evenings per week. This includes Digital School, Social Media Academy, and a forthcoming PR offering. In each case we do it with partners who we trust to deliver high-quality content.
In each case, the success of these events has come because a sufficient number of readers have trusted us that we will give them a good, relevant event.
On paper, these events are, as McIntyre describes them, “high margin”. That’s if you only take into account the direct costs.
Yet, something like Mumbrella360 couldn’t come about without the insights I pick up across a whole year of being out there in the industry, delivering the contacts and sparking the ideas that make for interesting, relevant sessions. Many of the best sessions are actually curated by agencies and other organisations that have got to know Mumbrella through our journalism. Many of my best ideas for speakers or debates have come half way through writing a story about it.
The event couldn’t exist without our journalism – and Mumbrella as a site couldn’t do what it does without the cross-subsidy of our events.
Not, by the way, that we’re exactly profiteering. Our accounts for the financial year just gone aren’t quite finalised, but it looks like we’ll have had a turnover of about $2.6m, and a profit of less than $10,000 after tax.
It could be more, but for the nearly five years we’ve been around we’ve always chosen to reinvest in building a quality business. When fully staffed, we employ seven journalists – more, I think, than any other trade publisher.
In truth, our reinvestment is self interest.
I’ve watched too many events in the space chase easy, short-term dollars in order to hit the next quarter’s target, deliver a disappointing experience for the delegates, and destroy value for the following years.
My former employer B&T had a successful annual training event called Boot Camp. But it got to the point where almost every single speaker was a sponsor. My view on why the audience stopped coming back, and the event died, was that there was more selling than teaching going on. They didn’t so much kill the golden goose as rip its head off and strangle it with its own entrails.
The same went for AdTech Sydney, which is now a shadow of what it once was.
I’ll always remember the time I saw an AdTech sponsor from a word-of-mouth agency give a talk on the topic, completely ignoring that he was at a digital-focused event. He talked hypothetically about how you would build word-of-mouth about Nutella. I kid you not, his answer was to persuade brand advocates to organise a poker night for their friends, give them Nutella on toast and slip in some history of the brand while they were eating it (or throwing them off the balcony as seemed slightly more likely to me). To this day it was one of the most out-of-place and bizarre sales pitches I’ve ever seen.
I’ve also stopped accepting invitations to moderate at one or two other events where I’ve experienced a a sponsor jammed on to the panel despite them having nothing to add.
This coming week sees the first outing for B&T’s MAD Week, which is its attempt to push into the events space. Commercially, it looks like a success. There are a lot of sponsors. I notice that a fair few of those sponsors are also speakers. I wonder how that will go down with people who have paid to attend. This will decide whether the market will support the event in a second year.
I should be careful not to be hypocritical here and point out that Mumbrella360 included six sponsor-curated sessions out of its 70 or so sessions. We’ve always insisted on being transparent and labelling them as such when this is the case. And we have always had a policy that nobody gets to be on one of our own panels by being a sponsor. We often miss out on sponsors as a result of this, then see them appear on stage at somebody else’s event.
Which isn’t to say we never get our content wrong. We always survey our attendees, and I can think of a guest at a Melbourne event we did a few months back who won’t be invited to speak at one of our events again, after the feedback was that he did nothing more than a sales pitch.
We worked our model out more by accident than design, by applying the same principle you do to good journalism. Put the reader first.
Another project inspired by insights into what we think will help readers do their job better has seen us invest in launching The Source – which has become an excellent tool for anyone trying to work out which brands work with which agencies. (For those in the industry, there isn’t a better way of investing $999 – plug over).
We also continue to experiment with Encore, now as a free weekly tablet edition with an audience gradually growing to one I’d like to think we’ll be able to fully commercialise.
Funnily enough, AdNews isn’t the only one to seem to have a problem with our model. Last Monday’s Media section of The Australian saw Michael Bodey also take a swipe, labelling us an “event organiser” as if it was an insult.
The truth is, it’s a compliment. Please excuse us for having a business model. Last year, more than half our revenue (admittedly including sponsorship that could probably otherwise have been advertising dollars) came through our events.
Before newspapers’ model collapsed, they weren’t in the business of news. They were in the business of display and classified advertising. The news was the means of delivering the ads. This is no different.
If we are to succeed, we need to continue to offer our readers interesting news stories, insightful opinion pieces and entertaining content. And from that, build trust that when we put on an event, or awards, or training session, we’ll do it with their best interests at heart.
Trust becomes becomes ever more important, with readers and advertisers. There is less and less room for shady practice with the greater transparency of digital. Our rivals have no real excuse for not auditing their online traffic, yet most of them don’t.
The same opportunity to widen the model is available to any trade press publisher, in virtually every vertical. Many have been doing it for years, and simply need to change their focus a little.
So who are the potential losers in all of this?
It strikes me, it may well be pure play conference and events companies that lose out.
In part because many of them simply aren’t close enough to the audiences they want to serve. Publishers should, in theory, be positioned to do it better.
And also because their days of getting free advertising in the trade press are probably over. I remember when I first arrived in Australia being amazed at the common concept of the “media sponsor”. Trade titles would be invited to give pages of free advertising to event organisers in return for having their logo displayed to a room full of the very delegates who were only there because of the ads they’d just seen.
It wouldn’t surprise me if we see publishers acquiring event companies, and event organisers getting into the publishing business.
So yes, I hope you find lots of interesting, relevant content from us. It can be a lazy term, but call it linkbait if you must.
And expect lots of events. Come along if you think it will help you do your job better, or help you in your career. We’ll do everything we can to ensure you get value for money.
I know we don’t and I’m sure we won’t always get it right. Occasionally we’ll succumb to chasing traffic with a populist headline. Sometimes our events won’t hit the mark. But we’ll always be trying to do right by our reader.
It’s our business model. I’m glad we’ve got one.
Tim Burrowes
Tim Burrowes founded Mumbrella in 2008. He worked on Mumbrella until 2021. At various points he was editor, content director and editor-at-large.
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The issue facing the AdNews and B&T’s is that to add value to someone in a career/profession you ultimately need to understand it intimately and know where it is heading – this allows you to add value through evolving your product and the ancillary activities that exist around it.
Reading AdNews and B&T I’d hazard they have minimal idea of where the ad world is going – look at the hires they make (McIntyre is an exception as he has experience) and the content they pump out. Most don’t drive the debate or discussion, they are extremely low on influence aside at the lowest most easily persuaded levels.
The vanity of the ad world will probably keep the lower standard trade rags in business for a few years (the echo chamber is still highly coveted) but the gap between where mumbrella sits as a business and contributor to the industry and the rest is pretty wide.
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Effectively what you’re saying is that it’s much easier to tap into the HR and R&D budgets of marketers and agencies than to tap into their marketing budgets, so you’re re-shaping your model to take advantage of that fact.
It’s the equivalent of the model change that agencies are in the process of undertaking – it’s much easier and cheaper for them to create content of a useful nature to their clients and prospects and connect with them directly via newsletters and social media, than to pay Industry publishers to “advertise” their services.
All industries have to constantly adapt to their changing markets- there’s only so long that you can fight against the changes before you need to move on. We work with a wide variety of clients whose business models are being turned upside down by digital (retail, music, publishing, even pharma) so it’s fascinating to watch and see how those closest to the industry are evolving their own models or fighting against the changes. The joy of the publishing industry is that you guys do it all in public.
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The best events I’ve been to recently, in fact for a good year or so, have been organised not by events companies, or publishers, but by tech companies, specifically Nielsen & Google.
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Sounds like somebody’s going to have to leave the cosy threesome…
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I find this all rather amusing, particularly coming from Yaffa Publishing. One of Adnews’s sister publications, Ragtrader, is desperately trying to get into the events business, starting Ragtrader Live this September. Their twice weekly e-newsletters are currently being supplemented with a stack of unsolicited spam marketing the event and their past two print issues have been loaded (and I mean several pages) with articles promoting the event.
It has been my suspicion that the title has been running at a loss for some time now (it last year moved to monthly from bi-weekly), and despite the launch of an ipad edition, the magazine has shown very little innovation and has failed to adapt to the changes in the fashion/retail market to remain viable. I don’t have an issue with publishers (like you Tim) getting into events, for all the headaches associated with them good luck to you, we have moved in another direction and that is digital (and no I don’t mean digital editions, more content production and design).
And yes happy to disclose that we have a magazine which competes (a small crossover as far as I am concerned) in the same industry.
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Loud applause from the lunch table up here in Coffs Harbour Tim, Well put and well put down!
“The price one pays for pursuing any profession or calling is an intimate
knowledge of its ugly side.” – James Baldwin
I know so well the business model you are pursuing and have been heartened to see you rabidly chasing it, losing money in the process which you know as an investment rather than a failure. Diversity is going to be your saviour as it was mine when I went from journalist to music directory publisher (print & online as well as App) to public relations conniver, tech/music business conference producer, industry portal operator and now semi-retiree. Oour parallels are quite remarkable.
Our audience trusted us as ‘data-drug dealers’ whether it was our daily news aggregation service, weekly online magazine, bookseller of industrial titles and scandal tomes or conference producers. We had to earn that trust and had to give away a lot of free stuff to lure them happily into a Freemium economy.
I’ve been following you boys and girls since I met you at my house when you considered buying our assets (at a time you couldn’t afford them) and I truly rejoice not only in your success but also in your wisdom and strategies.
“”Make no little enemies — people with whom you differ for some petty, insignificant personal reason. Instead I would urge you to cultivate ‘mighty opposites’ — people with whom you disagree on big issues, with whom you will fight to the end over fundamental convictions. And that fight, I can assure you, will be good for you and your opponent.” Thomas Watson, founder of IBM who believed we’d only need six or seven of them in the future.
If you’ve managed to get this lunkhead to Page 1 you, you’ve already won.
Keep it up kids.
” “To sustain hatred is a very difficult thing to do, year after year. It’s exhausting.” Nick Cave
PHIL TRIPP
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I’ve always admired the way Mumbrella operates. I think in the wider ad market where we are all walking around chanting “there’s no money”, Mumbrella is actually seeing opportunites and expanding into Hong Kong and Singapore, pretty impressive.
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Chin up Sadnews find something your good at doing and do that instead.
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Talking about events, which are not run by a publisher or a pure play conference/event company 🙂 I reckon you should come to The Domain http://www.the-domain.org on 23rd July Sydney as Tim Burrowes will be sharing his story with Tim Addington former Editor of B&T and now Communications Director at The Works. You need to register but It’s free and there are no advertisers! I reckon it will be a most interesting evening
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Remarkably honest – that is refreshing…
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13 years ago (as an intern), I’d always be a little disappointed when it was the latest copy of B&T that had arrived, and not AdNews.
7 years ago, I subscribed to both publications.
5 years ago, I dropped B&T, maintained AdNews, and started viewing Mumbrella and B&T online.
3 years ago, I would check Mumbrella daily, didn’t bother renewing OldNews (just read AdNews online daily), and B&T.
Now, I check Mumbrella, B&T (industry op-ed/commentary seems to be a tad better), then AdNews.
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Key words for AdNews here are “relevant” and “interesting”.
We piffed our subscription to AdNews a few years back because of a lack of interesting, relevant content. The whole magazine seemed to devoted to stories about how some new revolving agency head was going to “make things more strategic” or pictures of blond Account Managers tiling their heads toward each other and pretending to look like besties…
It gave me the feeling I was reading porn for narcissists…right up there with Who Weekly…
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For some reason, the criticism received reminded me of Gerry Harvey telling Australians to buy from him – and not go offshore for cheaper prices… as he’s the only one allowed to import, and bump up prices 100% before re-selling to Aussies.
Woe is he.
Truth is, through digital the world has changed and for the better. It simply means that we have to find new and innovative ways to do things.. from furniture to marketing, to sales, to well, all of it
Trust is still the no1 agenda item for me. So, reading a trusted publication and from there attending the event associated seems fair and reasonable.
.. and I no longer trust Gerry
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we’re with you, stay humble
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I too thought this rant by Paul was a little bizarre. It’s fine to be struggling and adjusting the way you do business behind the scenes (isn’t that simply “Doing Business”?) but to openly blame your customers and then send every customer and prospect a note blaming them but asking them to increase their interaction with your business at the same time….
And having been to the Adnews Adsales day in Sydney myself and witnessing a panel of 10 x 40-60yr old males advising on the future of this industry but needing to refer to the female category leader left in the crowd to get their first point correct – I now realise the downsides of low margin conferences.
Surely positivity, proactivity and professionalism should make for a winning recipe?
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There’s a bigger picture here too. Not that I’ve seen the Adnews’ editor’s full article, but to publicly implore advertisers to spend with them is indicative of the dire state of many media outlets in this country. And by ‘media” I mean quality news, not a Facebook blog…
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Well done Mumbrella for making it work… though the criticism of Adnews is probably a little bit misplaced/ an overreaction.
Anyway, I think the business model you’re hitting is one that most other publishers have recognised and are also targeting. IMO the main difference between Mumbrella and other news/B2B titles is that it can reinvest its profits and improve the product, while other publishers see their cash farmed off to some other region of the giant corporation they are a part of. To me the key is not Mumbrella’s business strategy per se, but its corporate structure. Future-proof publications need to be lean and reinvest in their product. Sounds obvious but I’ve very rarely seen that happen in my travels.
One more point. As a journo I find this new strategy somewhat disheartening for one reason. In the old days/now journos were never forced to juggle writing with selling ads, but these days they seem increasingly forced into working on conference/events production rather than journalism.
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It should be noted that James Boston is the editor/publisher of Australasian Textiles & Fashion Magazine, so his comments on Ragtrader, an industry title that has been servicing the fashion sector for the last 40 years, are not without bias.
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