The Best of Both Worlds: Diversifying Your Business Model with Hybrid Circulation

As the global economy has shifted in recent years, publishers who support the business-to-business market have found themselves facing the challenge of reworking their business models to support new ways of gaining revenue with targeted audiences. Randall Friedman, vice president and group publisher at Lebhar-Friedman, stated during the February 2010 Cross Border Media Inc. Global Business Media Forum, “Business-to-Business Media has always centered around a targeted audience.” As these audiences have become more diverse, many executives have realized that this target of business decision makers is becoming more difficult to maintain.

As traditional advertising revenues have dropped substantially, many business-to-business publishers have sought methods whereby they can better monetize their content to enhance revenues. While many methods exist to realize this goal of increased revenue, one thing is clear – business-to-business publishers must embrace flexible circulation models that encourage a multichannel, diversified approach to their business.

By utilizing a flexible circulation model, publishers can better reach business decision makers and build relationships with their targeted audiences. By implementing an integrated, hybrid system that can handle both paid and controlled circulation, you can better support your business and grow your bottom line as you diversify into new revenue models and seek new ways to monetize your unique, high-value content.

Shifting trends in the market

The business-to-business landscape is changing, and business-to-business publishers must change with it. As Gabriel Chahine, a partner at Booz & Company who leads the organization’s consumer and media practice in the Middle East, stated in his 2010 Media Industry Perspective, “As 2010 begins, the industry is truly at a Darwinian moment, in which the evolutionary process will rapidly distinguish between winners and losers. … To succeed in this more dynamic environment, companies need to acquire and build new skills. They must excel at … managing a mix of monetization models across advertising, subscriptions and commerce.”

This mix of monetization models can come in many forms, from the type of media (e.g., print, online) to the distribution method (e.g., paid, controlled). As the industry shifts its focus to a diversified strategy, companies must be able to keep up with the speed of change. In its 2009-2011 Strategic Plan, American Business Media announced, “The recessionary environment has accelerated significant media shifts that were already taking place. These changes include the growth and diversity of digital media, the extension of trade-shows virtually, the precipitous decline in print, the significant growth in custom media and the enormous opportunity presented by data. … All of these issues added together have resulted in an entire industry in a state of flux.”

While it is true that print media has certainly taken a hit in the recent economic recession, print is not dead. According to the Signet Research AdStudies conducted over a period stemming from October 2009 through January 2010, 75 percent of 2,307 respondents from varying industries within B-to-B media selected print as their preferred format, either in print only (52 percent) or a combination of print and a digital or online format. So, print is an important medium for generating revenue for the business-to-business publisher. However, with declining ad revenues, some of these publishers are migrating their controlled circulation titles to paid circulation models.

Challenges

The challenge becomes how best to make the migration to mixed monetization models and how best to track the revenues they produce. Publishers must be able to not only monetize their data effectively with a diverse set of targeted audiences, but also track the relationships with these audiences through robust, flexible data management systems that provide a single view of the audience, whether the subscriptions are based upon paid or controlled circulation.

Advertising revenue in the B-to-B market has shown significant drops recently, making B-to-B publishers look for additional methods to bring revenue into their business and monetize their content. According to American Business Media’s Business Information Network, trade magazine advertising pages fell 30.2 percent through the first half of 2009, with revenues down 26.5 percent. Trade show revenue, as tracked by the Center for Exhibition Industry Research, was down 18.6 percent through the first half of 2009, making for a combined magazine and trade show revenue decline of 22.3 percent.

Clearly, if these trends continue, business-to-business publishers will need to find new ways in which to monetize their content. But when many readers are used to (and now expect) to receive content for free through controlled circulation titles or websites, the challenge to find new revenue streams, including migrating content to paid circulation models, becomes even greater.

The Solution

Although the shift to paid circulation can be difficult, many publishers are making the transition and doing so effectively. Of course, making this shift will not work with every title or every subscriber. Publishers must not go into this migration lightly, and must consider their audiences carefully when making decisions that will greatly affect their business models. However, for those who do make the shift to paid circulation, Heidi Cohen, president of Riverside Marketing Strategies, an interactive marketing consultancy, notes there are five characteristics of content that encourage readers to pay:

1. Information helps make money.
2. Information saves money.
3. Information is specialized and/or hard to find because it’s scarce or difficult to obtain.
4. Information aids usage ofother products.
5. Information is enhanced and repackaged for added value.

The key when seeking to monetize data is to help readers see the high value of the data being provided and thoroughly analyze possible paid content offerings. To help guide the analysis, Cohen shares this five-step framework:

1. Identify which of your proprietary products, information and content providers your customers consider “must have” and/or are willing to pay for.
2. Assess your audience’s needs.
3. Think broadly about your competitors because they develop new offerings to help meet their customers’ needs, plus they may be more efficient in doing so.
4. As with any strategic initiative, you should give careful consideration to your analytics.
5. It’s critical to approach pricing with care.

While a paid circulation model may be difficult for many publications, there is often a subset of a publication’s subscriber list that can be monetized. Placing small segments of your circulation that are less likely to be the primary audience of your advertisers on a paid model can provide incremental revenue opportunities that require very little risk on your part.

Handling your circulation data

Once the decision to migrate to paid content has been made, it is important to consider how best to manage your customer relationship data. Publishers must partner with a provider who is able to handle multiple circulation models, as many publishers have realized that their brand families are becoming a mix of paid and controlled circulation titles and content. Whether the interaction is through print or online, many publishers realize that a move to paid circulation, while needful, will not happen overnight. Therefore, a diverse portfolio of paid and controlled circulation titles is becoming the new trend.

However, this mixture can make it difficult to maintain a single customer view and lifetime value of your subscribers when having to keep your paid and controlled circulation titles on separate databases with separate vendors. Therefore, choosing an integrated, hybrid circulation system that enables you to keep paid and controlled circulation on one database is the best way to build your brand and track unique customer relationships across your brand.

By utilizing variable demographic information and real-time database environments present in a best-of-breed hybrid system, you can better track the demographics and history records of your subscribers. This information, when paired with accurate, dependable reporting, can assist you in making necessary adjustments to your business rules that will help you manage your audience and potential advertiser data.

Conclusion

As the business-to-business landscape moves to a mixed monetization model, it is important to find a partner that can provide the solutions and consultative services necessary to test your circulation segments for new revenue opportunities. The provider must also offer a circulation system flexible enough to manage the diverse set of relationships you form with your subscribers. By implementing an integrated, hybrid circulation system, your business-to-business publications can better serve this changing market, helping you to track lifetime value and build loyalty with your brand.