State of the -ation: behind Bauer's strategy of content creation, diversification and digitisation

  • Media
  • August 22, 2014
  • Ben Fahy
State of the -ation: behind Bauer's strategy of content creation, diversification and digitisation

It was officially announced yesterday that Bauer had made some major structural and staff changes. So we had a chat with chief executive Paul Dykzeul and commercial director Paul Gardiner about the thinking behind that strategy. 

Whenever there is a restructure—and there's been no shortage of them among media companies in recent years—the first question is inevitably: how many casualties will there be? But Bauer's chief executive Paul Dykzeul says the decision to make some big changes to the business are not being made just to reduce staff numbers. They're being made to "run more efficiently and to generate more ad revenue". 

He says that may have been the case under its previous private equity owners, which loved nothing more than cutting costs and, according to Dykzeul, didn't really understand the business. But “we’re not like that anymore”. So for him these changes are about reorienting the business, rather than gutting it.  

  • Check out some of the staff and structural changes here

"We are always reviewing staff numbers to make the business as efficient as possible [currently it employs around 340 staff across the group]. We’re reviewing the whole structure and inevitably when you review that you are going to make changes. But in some areas, we've increased headcount ... We want to develop more senior staff and less juniors. I want people who can hold their own in conversations about markets and audiences in an intelligent way." 

He says it has been almost five years since Bauer's last major restructure, which saw it split its publishing divisions in three. And plenty has changed in that time. 

"We’ve spent many, many months debating and talking about where the media is heading, where ad sales are heading. And the old days of flogging a page in a magazine are gone," he says. "We’ve got to have integrated solutions. What we’re now doing more than anything is we’re selling audience and these are deeply engaged audiences and ultimately they will go across multiple platforms.”

While there’s no doubt magazines have declined in the face of digital, Dykzeul says they’re much more robust than newspapers. And the New Zealand market has fared better than some others. Ad spend resource SMI shows a decline in magazine spend from media agencies, but ASA figures show an overall increase for magazines, something Dykzeul attributes to the “exponential growth” of direct.

And with the rise of disintermediation and clients increasingly getting onboard the content marketing bandwagon, Dykzeul says it's finding that clients are "talking to us a lot more than they were in the past".

"But they’re looking for multiple layers of solutions across the business. We’re having to respond to that and there’s been a lot of debate internally around how we do that.”

A big part of the answer is the Bauer Media Collective, a content division that will offer integrated solutions across its audiences, brands and platforms, both for external briefs and existing clients. Amber Ardern, who has held senior marketing and sales roles at Bauer for the past six years, will lead this new six-strong team. And JWT’s Suzanne Bull has been brought in to run the agency sales team. 

Commercial director Paul Gardiner says this is a publishing solution, not a sales solution. "And that’s a big change for our business." 

“It’s not just a trading situation, because what we expect to deliver is different,” says Gardiner.

Bauer already has an internal creative department, but a lot of the work it did was production for clients that was basically thrown in for free to get them across the line. It has already done a few integrated projects, Gardiner says it's won a few more recently and it launched an integrated endorsement scheme for Woman's Day advertisers involving food columnist Chelsea Winter.

“But we want to do more,” says Gardiner. “And we want to be flexible and fast-moving. We feel like we’re in a position to pull it off." 

Media owners around the world are moving in this direction and putting their skills to use for paying clients, occasionally to the chagrin of creative and media agencies who feel this is their domain (Cannes Lions chief executive Terry Savage mentioned this as one of the big trends when he visited New Zealand earlier this year). In this market, TVNZ’s Blacksand is leading that charge from a TV perspective. And Dykzeul mentions its success as a partial influence on its decision to invest in this area. 

Dykzeul says Bauer has successfully targeted low-spending TV advertisers by showing them how much more they could get for their money if they used magazines (it was able to prove the effectiveness of mags with its Chelsea Sugar project). He says this strategy will definitely continue, and because it’s already so dominant in magazines, especially with the addition of the APN titles, everyone knows growth isn’t going to come from stealing share from other magazines. 

Following the resignations of publishers Lisa Lewis and Fiona Lyon, Tanya Walshe will change her focus from research and insights and assist Dykzeul on the publishing and new product development front. He says Bauer has an appetite to launch new things (overseas it has a particular penchant for TV guides), but it won't necessarily be new magazines. 

“We’re looking at print options, online options, and other options where we can deliver an audience," says Dykzeul (there were rumours of Bauer even trying to buy up a few radio stations a few months back, but Dykzeul says that’s not happening). "Some of them aren’t quite so obvious, but we think there are some really interesting opportunities ... Media is still a fantastic business to be in.”

While he wouldn’t discuss specifics around financials ("Bauer is an intensely private company," he says, although APN's records showed it paid $7 million for the magazine titles), he says the company is still extremely profitable, something those who think all paper-based media is heading swiftly off to the great recycling bin in the sky seem to find hard to believe. And while he says its Trader Group business has been beaten up by Trade Me and isn't the river of gold it once was, it's still going well and the market is changing. All dominant companies get to a point where growth is hard to find, so they look for margin, which often means users get pissed off. He says that’s when competitors start to see the chinks in the armour, and that's something Trader Group is now doing.

“We’ve come up with some really interesting ways of doing things that are proving quite successful," he says. 

He says the arrival of the APN magazines into the business has also been successful. And the fact a private company that’s keen to invest in the company—and loves New Zealand—bought those titles has been very positive for the industry.

"It’s had its challenges. But the people we brought across have been absolutely outstanding. Without exception they’ve been of great calibre." 

Bauer tried to breathe some life into the struggling Creme brand, but closed it down recently (they also resigned the publishing rights to Little Treasures after almost 30 years of publishing as it didn’t fit with its strategy); New Zealand Women’s Weekly took the readership lead back off Woman’s Day, which has declined significantly since Q3 2013, in the latest figures; and Dykzeul says it’s pretty confident about the Listener, which is “getting quite a few ads”. The yields for both these titles have improved significantly under its watch, he says. 

“They were doing ridiculous deals, so we’ve pulled that back.”

He’s brutally honest about the Listener’s paywall, however, and says it’s going “crap”.

“We want to do it, but if paywalls were easy, why aren’t the newspapers doing them yet? It isn’t a doddle, but there’s got to be a way.”

Bauer readily admits it’s got plenty of catching up to do on the digital front. And while Gardiner says it has a total unduplicated audience of 2.3 million across print, it only has total UBs of around 500,000 on its digital platforms. But digital solutions are most definitely on the agenda and there’s a big team of 120 in Australia to add to the team of nine in New Zealand (Bauer is currently recruiting for a head of digital in New Zealand) working hard. 

Dykzeul says this weakness can be partially attributed to a restrictive relationship with MSN during the ACP days. But it has launched new Cleo and Metro sites, and it has recently launched a suitably aesthetically pleasing site for Home and a fairly simple new website for Woman’s Day. That site is unlikely to win too many digital design awards, but Gardiner says it's an exact replica of the very successful Australian site and Bauer's model is to build it once and insert local content and ads. 

Where applicable, it has also been partnering with other digital players like Yahoo to give advertisers the digital reach they now demand.   

“Online is a shifting game. It’s about brands, and audiences and pillars. The truth is it’s a mix of them all,” says Gardiner. 

In the good old days of print, the idea was that premium titles could charge premium rates for ads to run beside their expensive-to-produce content. And the more people that read it, the more expensive the ads were. And that rule still applies in some cases. The same thing was meant to happen with online publishing, but, as this great story details, the rise of adtech and network buying has given brands the opportunity to buy audiences at very cheap rates, as long as they don’t really care where their ads run. Spend figures don’t really show that trend slowing down, but Dykzeul believes there is a creeping realisation that "being everywhere and nowhere at the same time is a bad strategy" and targeting an engaged audience is the way to go.​

Bauer has also invested heavily in research and analytics over the years, both because it gives it a lot of ammo for pitches and a lot of guidance for editorial. It was never intended to be a money maker, and it doesn't treat it like that, he says. It’s there to provide insights (some of which have made it money by default by helping to win business), but it also offers its All Women Talk and His Call panels to advertisers so they can find out "what’s important to New Zealanders".

It also uses the panels to test responses to writers, sections and covers (like North & South’s anxiety issue, which made it on to Cover Junkie), sometimes to the chagrin of the editors who still feel intuition is key, Dykzeul says.

“If ever there was a time we had to have a two-way conversation with our audience, it’s today. And if you can’t, it won’t be a one-way conversation for long.” 

Dykzeul and ze Germans are obviously keen on running a profitable business, which is why these big changes were made. But he believes some of his titles—and journalism in general—also play an important social role and there are some “serious issues that clearly need more debate”. 

“A lot of the models for media are profoundly broken," he says, and he believes it's debatable whether publicly listed companies have the people's best interests at heart (check out the bonuses senior Fairfax staff received for meeting cost cutting targets) and he says the advantage for Bauer is that it’s owned by a private company investing its own money in an effort to grow and set it up for the future. 

“Close your eyes for a minute and imagine having to rely on Cameron Slater.” 

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