Strategic Planning Issue Number 3: Establishing Resource Requirements

By Rebecca McPheters
Media Industry Newsletter
August 31, 2009

The depressed economic climate of the last two years has led many publishers to drastically reduce their staffs, while others have reduced salaries and work weeks to “share the work” – a concept we applaud as both ethically and economically sound. In many cases, budgets for non-essential services have been slashed – and frequently budgets for services that may have been essential as well. Yet the continued softness in the marketplace has many publishers wondering whether they have indeed done enough or whether further belt-tightening is needed.

Here are a few guiding principles that we think will help publishers make appropriate decisions as they strive to “right-size” their organizations for the coming year and to differentiate between expenses that are merely customary and those that significantly enhance their ability to compete:

Identify Resources Required to Best Protect Your Core Revenue Base
Identify the assets that are most essential to your core revenue base. Typically these will involve both brand assets and human capital:

• Brands and products with which consumers want to interact and which advertisers want to buy
• The people and resources required to produce them
• Sales professionals with strong relationships who understand the needs of both buyers and their clients, and can effectively communicate why your brand is well-suited to those needs
• Sales support that allows the salespeople to maximize their time on the front lines, documenting the unique benefits of your media brands and relating these benefits to the needs of the individual advertiser
• Consumer marketers who will help you strike an optimum balance between content-related revenues and audience development
• Back-office operations that allow everything to run smoothly and efficiently
• Product or service enhancements that allow you to better withstand commoditization and command fairer prices for your product

Protecting your revenue base should include aggressively pursuing revenue-producing business models that are less dependent on paper, ink and postal regulations. If this pursuit is to be successful, for most publishers it will require dedicated resources.

When an industry is under intense financial pressures, as is ours, creativity and the ability to come up with innovative solutions to perennial problems is particularly important. For every headcount or budget allocation, the following questions should be asked:

• Does this contribute – directly or indirectly – to revenue?
• Does it (at least) pay its way? If so, is there a better or more cost effective way to provide it?
• What would happen if I didn’t have it/spend it? Would the franchise or our ability to compete effectively be compromised?

Invest for Future Growth
While the first priority is to protect your core revenue base, it is also necessary to identify sources of future growth. Discernment is key, given that current economic conditions for most publishers allow for little additional investment. Future growth can come from a variety of sources, and those identified here are far from exhaustive:

• Distributing content across additional channels
• Licensing
• Creative services
• Outsourcing services to other publishers

Your wish list should be carefully prioritized, based on the probability of generating an acceptable return, and the appropriate resources identified. An item should be considered only if a clear revenue model can be identified.

Organize Your Resources For Maximum Impact: Is There A Better Way?
I continue to be surprised that no one has yet undertaken – or at least tested – a fundamental re-engineering of the magazine sales or editorial effort.

Current ad sales efforts have lots of different sellers calling on lots of different buyers. In many cases, publications that are clearly ill-suited to a given schedule are still sending sellers to plead their case – and wasting the time of all concerned. The magazine sales effort cries out for re-engineering. This is a task that could be initiated by either publishers or media agencies – or perhaps, most effectively, by the two working in concert.

On the editorial side, at least for large multi-title publishers, there may be an opportunity to organize at least a portion of their editorial resources around subject matter rather than title. For example the fashion staff of a large leading fashion title could produce fashion content for other books, with a less singular focus on this topic, owned by its parent company – and perhaps perform a similar service for other media companies as well.

Utilize Information Effectively: Break Down Silos
Silos impede the ability of organizations to effectively share and leverage information across the organization. Their absence reduces costs, improves efficiency, and has the potential to improve job satisfaction and morale as people understand more clearly the overall objectives of the organization and not only those related to their own patch of turf.

Forums need to be established in which information is regularly shared across departments. The needs of consumers and advertisers should be central to all facets of the organization, and information on their identities, their needs, and how they view the publication should be regularly shared throughout the organization. All too often information that can be used to inform not only ad sales, but consumer marketing and editorial is not shared beyond a single group – and more often than anyone would believe, different groups are commissioning separate projects to generate similar information. Sometimes this is the result of ignorance and sometimes distrust. In neither case should the hoarding of information that can bring value to other parts of the organization be tolerated.

An Opportunity Often Missed
All too often the strategic planning process is viewed as both burdensome and routine, when in fact – if given the thought and attention it warrants – it provides an enormous opportunity to make appropriate adjustments to the direction of both the brand and its organization.

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Rebecca McPheters, the former New York Times Magazine Group group executive and Simmons president, now heads McPheters & Company. The company specializes in strategic planning and research for brands and for companies in media-related fields, including media owners, advertisers, and ad agencies. She can be reached at RMCPHETERS@MCPHETERS.COM.