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.

mcintyre rantThe 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:

ad news linkbait

More than once:

adnews linkbait

And do it quite a lot:

adnews linkbait 3

See what I mean?

adnews linkbait4

Curiously, they seem particularly keen on Ikea-based linkbait:

adnews linkbait 5

As they try desperately to link the topical to the industry:

adnews linkbait 6

It has recently begun to feel like AdNews is trying so hard to become Buzz Feed that at times the result is just gibberish:

adnews linkbait 8

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?:

ad news media sales summit

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….)

encore_coverThe 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 relevantinteresting 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.

Mumbrella360Now 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.

Branded entertainment festival

PR and Comms conference

DigitalSchool-LogoShortly, 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.

SocialMediaAcademyIn 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.

the sourceAnother 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).

Encore issue 22We 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


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