by Gill Moodie (@grubstreetSA)Naspers, the giant multinational that owns Media24, released its annual results recently – always the biggest event of the year for listed media companies in this country. Because of its remarkable success in markets such as China, Russia and India, the South African division out of which Naspers grew is often ignored at results time. Grubstreet interviewed (via email) Media24 CEO Esmaré Weideman about how it fared in the greater group and in a tough market.
GILL MOODIE: The annual results said that although subscriptions in the news division were up, circulation declined and ad revenue was under pressure. Where do you think this ad revenue is going if digital advertising is not picking up enough to compensate for the loss in print?
ESMARE WEIDEMAN: There are two reasons for the pressure on ad revenue: the changing media landscape and the economy. The latter is easier to explain: marketers are simply cutting back on their ad spend. Things get more interesting when you look at the evolving media landscape. Electronic media, TV in particular, is having a good run and takes a huge chunk. Digital ad spend too is growing in leaps and bounds but is still priced well below other mediums and will remain so for the foreseeable future.
MOODIE: I have an idea that content marketing might be hoovering up ad spend too, for example, Woolies today is able to reach customers directly through its own magazine, social media, its website & email newsletter while Foschini, for example, has its vast stable of custom magazines for which club members actually pay for.
WEIDEMAN: Yes, that is indeed another reason for the pressure on ad spend. Many retailers are doing their own thing, either in print or on social-media platforms. Custom publishing is on the up and at Media24, through New Media Publishing, we get quite a chunk of this. “Traditional” print media — consumer magazines and newspapers — remain a very strong contender for marketing budgets though, and the teams who realise advertisers are looking for more innovative, interesting, targeted and measurable campaigns — in print or including print — are the ones who are getting their slice of the pie. Another big trend internationally, and picking up in South Africa, is marketing campaigns involving events.
We have incredibly powerful brands with long-standing relations with millions of readers, and advertisers realise this, so increasingly marketers are utilising the power of these brands to speak to customers at events. A current case in point is the huge Days of the Dinosaur exhibition in Johannesburg, then Cape Town, brought to South Africa by Huisgenoot, YOU and DRUM in association with Cell C.
MOODIE: There was mention in the results of transforming the news business into a 24-hour offering spanning digital and print platforms, with new video recording studios in Jo’burg and Cape Town. Can you give me more details about this?
WEIDEMAN: Yes, exciting times indeed! Let’s talk video first. 24.com already produces and broadcasts more than two hours of video per day and the audience growth is looking good. The cost of serving this content is currently quite high and we look forward to government’s progress in driving a telco strategy that will provide faster and cheaper broadband to more people. We believe video offers us a strong value proposition to bring broadcast (and print) advertisers into a digital environment with a targeted and engaged audience.
The multimedia teams at Media24 News — the division previously known as Newspapers! — are also producing great work. Beeld ran an interesting experiment during the Oscar Pistorious trial, broadcasting 30 minutes of live analysis from their studio in (Media24 HQ) Media Park each day of the trial. The content was excellent — who better to get into a studio for analysis than the journalists who were in court that day? The audience was small but hey, it was a milestone for us and an indication of things to come.
As far as a 24-hour digital-first news operation across all our publishing units is concerned, we are working on it! Our heads are in the right place but the execution is not yet good enough. Of course the truly digitally minded teams at 24.com have been doing it for years and do it very well but in the traditional print businesses we have some way to go. There are some exciting new developments happening so watch this space.
MOODIE: What can you tell me about the recent review of Volksblad’s news operation and the talk that the paper might be shut or downgraded to a regional issue of Beeld?
WEIDEMAN: There was so much misinformation around this issue, it’s actually scary. We continuously review the performance of all our properties, print and digital, as is our job. Much as we are passionate about all our brands, we have to keep emotion in check when we do this. As a management team we have to focus on strategies to position the company for long-term sustainability. We have shareholders to whom we are accountable, such as the Welkom Yizani shareholders, for whom we have to create value in Media24 over the long term.
MOODIE: Tim du Plessis told me recently that Rapport is still a very profitable newspaper. Why is it able to buck the trend of declining ad revenue, in your view?
WEIDEMAN: Sunday newspapers generally fare better than dailies. The cost base is also lower. Rapport delivers a unique and highly desirable audience to advertisers. It competes very well in value and maintains high standards of editorial quality. Rapport is an important contributor for Media24. So too, by the way, is City Press.
MOODIE: The magazine division did well in the annual results, retaining ad-market share and I see digital sales were up? Can you tell me more about the digital sales. I presume they relate to the bundled digital deals on offer in the past year?
WEIDEMAN: Yes, they had a great year. John Relihan, the CEO of the magazine division, runs a tight ship, has done a lot to adjust his cost base over the years and has great brands in his portfolio. Digital sales showed excellent growth across the board. MyEdit, our content aggregator, is showing a lot of promise and the digital magazine bundles have attracted a solid audience but we find that the growth is increasingly coming from subscriptions to individual titles. As smartphone penetration increases and once broadband becomes more affordable, we believe digital subs to our titles will accelerate.
MOODIE: Spree is showing growth although off a small base. Can you give me some insights into the challenges of growing the e-commerce wing and what you’re pleased about and what’s working well there?
WEIDEMAN: Spree has gone from zero to hero in a very short time and we are very pleased with this. Our efashion store was actually only launched under the Spree brand in April last year, following the promise shown when we tested it on SARIE.com, and it is now the biggest online fashion store in South Africa. We believe the success comes from a really good curated collection, excellent customer service, fast delivery and the buy-in from our magazines whose fashion editors select their own Spree offering for publication in print and online.
The challenge going forward is to scale the business fast. As the customer and supplier base grows rapidly, Spree’s operations need to scale accordingly to ensure the same great quality products, fulfillment and customer service.
MOODIE: Naspers has prioritised e-commerce internationally as a future growth area. How important do you envision e-commerce will be to the future of Media24?
WEIDEMAN: We’re taking baby steps compared to Naspers! Most of the Naspers e-commerce aspirations in South Africa fall under Kalahari, with efashion now consolidated within Media24 because it is so closely linked to our core expertise and our brands. We will continue to explore opportunities related to that.
MOODIE: 24.com is showing good audience growth among mobile users – and the Election 2014 app was amazing work from your team.
WEIDEMAN: Thanks. The News24 election app was the best piece of digital publishing we’ve done, I believe. On the day after the elections, we had 22-million page views across the 24.com platforms. To put this in context, the previous high was 7-million on a day in the week after Oscar shot Reeva Steenkamp. It was phenomenal. Our official company strategy is: “Reshaping Media24 to remain relevant and useful to consumers and clients”. The election app just shows what can happen if we think “relevant and useful” and execute properly. Kudos to the team!
MOODIE: Where is 24.com’s mobile growth coming from? From the News24 mobisite and apps? I’d love to know about successes among the apps.
WEIDEMAN: Mobile is a prime focus across our digital-media businesses. We are seeing much faster growth in the entry-level smartphone market, primarily on Android devices. This — tied to higher customer education, a pass-on factor (where old phones with apps installed are handed down to a new generation of smartphone users) and good marketing through our digital platforms — is leading to very encouraging growth.
South Africa’s leading media commentator, Gill Moodie (@grubstreetSA) offers intelligence on media, old and new. Reprinted from her site Grubstreet. This piece was published first on Journalism.co.za, the website of Wits University’s journalism school.
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