Early on in my trip around the swanky new NZME building in central Auckland with chief executive Jane Hastings as tour guide, we run into group revenue manager Laura Maxwell and I jokingly tell her that I’m thoroughly enjoying the Kool-Aid.
To which Hastings replied: “Everyone is. You have to.”
Having visited the Albert St offices of the Herald and the radio offices in Cook St a few times, it’s a massive step up, there’s a definite buzz around the place and it’s pretty clear Hastings is extremely house proud as we venture through the modern (but still empty) newsroom, the broadcasting studios of its different radio brands, the iHeart Lounge and the various commercial divisions upstairs.
All of New Zealand’s major media companies are talking about integration, or convergence, or, perhaps behind closed doors, the end of days, but NZME is the first to have actually brought (or, at least almost brought) all its assets together under the same roof. So the obvious question is: is this actually a good idea, or just a necessary evil?
“I think it’s a bit of both. Does it work? There are case studies where it has worked. Axel Springer has done it [it eventually decided the German model was the best one to emulate]. Even Seven West Media, they have TV, print and digital integration. We are completely unique in the assets we are integrating. Nowhere can you find an ecommerce, digital, radio, publishing, experiential, events mix, so the principles of what you’re trying to achieve—content first, growing audiences, sell audiences and sell to audiences—the level of channels you have don’t really make a difference to the concept of integration. Everyone’s doing it. Every media company is finding their own way to do integration. We haven’t invented it. But they’re doing it in their own way because they have different assets.”
She says one major difference in comparison to a lot of the other media companies in this market is that it creates a lot of its own content—and it’s planning on creating a lot more, particularly in the form of branded content and video.
“We’re not a business that buys in a lot of content internationally, so that’s another change in the way we operate. I think the principles of integration are similar but the way it’s executed and therefore the product you get as a result is different.”
- Check out all our feature length stories on how the country’s media leaders are adapting here.
Speaking at ad:tech recently, Hastings explained NZME’s genesis. It was all about reorientating the business around people’s interests—sport, entertainment and news—rather than channels (as she pointed out, Australian Provincial Newspapers wasn’t particularly relevant to its ambitions in New Zealand and, as it turned out, neither was the dot at the end of the logo to represent its digital assets, as it eventually got rid of it following protests from its journalists).
It makes intuitive sense to do this, but it’s easier said than done. And when things need to change quickly in a legacy business, there’s always going to be some pain. At Fairfax, Simon Tong has moved away from mastheads; at MediaWorks, there’s been a fair bit of chaos following Mark Weldon around as he and the team try to bring its assets together; and at NZME, Hastings seems to have well and truly lived up to her nickname of Hurricane Jane. So how are the staff coping with all the changes?
“You don’t go through a merger of three separate businesses and have an easy ride. You’re questioning, challenging, looking for best practice and saying best practice is good for today but we need to do this instead. I have a huge amount of respect for our team. We keep talking about merging, moving, operating and innovating. Operating and innovating are what every business needs to do. Add in merging and moving and it’s been an exceptionally challenging year.”
At the beginning of 2015, she says it formed its new strategy, so it has also been a year of testing to find out what works and what doesn’t (in the newsroom, it’s also done some role playing—and hired a few expensive consultants—to find out who should be sitting where in the new set-up). And she says one of the successes was the Rugby World Cup.
“We had one head of sport planning for content who had access to every single bit of expertise around the business and they were coming into a single conference every day and asking ‘what are the angles, how does it get fed across the business, is it even relevant? And we had our biggest ever video day. We had 700,000 video views in a single day. That video was created from the different parts of the business, but it was just really well curated. We had record growth [online]. Of course it’s the RWC so you’re going to have growth. But it wasn’t comparing it to same day. It’s compared to relative competitors. In terms of where we sat and how much audience we got, we led the way.”
As many have pointed out, short-term wins and the lure of measurement tools to find them can be a dangerous thing when the media’s primary business model is clicks (ahem *Donald Trump* ahem). But Hastings says this approach meant it was able to commercialise it differently.
“We were able to offer a much larger audience, we were able to offer much more innovative ways to connect in with that audience and therefore the revenue we generated out of that exercise was substantially higher than the previous tournament. You’re able then to create ideas and say ‘these are all of the things we’re doing that you can connect with. If this is your brand ambition or problem to solve, here are the options’.”
Stopping in for a look at the yet to be completed Newstalk ZB studio, Hastings gives an example of John Key coming in for a half an hour interview, filming it, tailoring it to different brands and then distributing it far and wide. The purists may rail against the idea of prestigious newspaper and radio brands turning into what has been called a ‘content factory’. But she she says it won’t move away from “the grunty interview”.
“If there’s a topic and one section [of the business]needs the whole half hour, they’re going to get it. It’s all about looking at what it is … That’s why we’ve got great editors. That’s their role to select and plan and create the best content. We’ve got Dean [Buchanan] who’s across all of entertainment and Shayne [Currie] who’s across news and sport and they make the calls. There is no way we are going to be a content factory. It won’t work either. We actually really like our loyalists liking particular channels. It’s got to be relevant to the channel you’re taking that person or content into. It’s not just because they’re here that we’re deciding to put it everywhere. It’s got to have a sense of relevance and you’ve got to let those brands do it in the way they want to.”
Whenever there’s a restructure in media, they seem to be at pains to point out that there is no reduction in headcount; that it’s merely a realignment of resources.
“Our headcount in the newsroom has not gone down. But we had to make the changes to facilitate that operation. If we really want to be in data journalism and other areas then we need the best in class. You can’t just add things on, you need to alter things.”
She says the number of journalists has fallen in the past five to ten years (she wasn’t able to provide data on how staff numbers have changed and she says it is a very different business from when it was the Radio Network and APN News and Media and “this year alone we’ve done three joint ventures with Fairfax” so it’s difficult to compare), but the people they’re working around and with have evolved. Overall, the number of print journalists in New Zealand dropped by 61 percent between 2006 and 2013 according to census data. And with the perfect storm of dramatic declines in print ad revenue, limited growth in the supposed saviour that is online advertising and falling circulations, that’s not entirely surprising, however.
“Print is in decline globally and we’re not reversing that trend. So what are the businesses we need to add to ensure we continue to grow … We want to be better than the decline trend globally but we’re not expecting to turn that around. However, what we’re saying with integration is that we can create a bespoke piece of content and filter that through our channels. We’re not talking about ‘would you like a full-page ad.”
So with everything seemingly fusing—and with some very experienced journalists left off the invite list for the new newsroom—is specialisation an anachronism in a multimedia environment? She believes you will always need a mix.
“The concept of integration and everyone’s a generalist overnight is flawed in my belief. Just because you can do all these things doesn’t mean everybody can do all of these things. We want to maintain and respect specialists and then work out the right ways to integrate … We’re hiring who we believe are the best at branded content and we’re hiring the very best in social media. Lauren [Hopwood, general manager of digital audience engagement] came from doing all the social media for the Top Gear team. You need those people in the business because we want to be really good at everything we do and we also want to have the best people to learn and grow. But we’re not saying if you can’t do all these things then you can’t work here.”
She admits there has been some resistance from those who have attachments to channels, whether in sales or editorial. But it still respects those channels. But maybe not as much?
“No, just as much. It’s not an ‘or’ strategy, it’s an ‘and’ strategy. Look at the fabric of New Zealand. I think too many organisations look at how they market and communicate to customers through the lens of how Auckland operates. We’ve got 26 offices around the country and how our customers get results is different. In respecting that, we’ve gone ‘if you’re really good at long form journalism or print journalism, we want great people in that area because we have a big business in that area’. It’s the ‘and’ that we’ve been working on. If you want to stay in radio and be a great radio broadcaster, terrific, we need great radio broadcasters. However, we ask ‘who wants to extend into other areas?’”
From a sales perspective she says some people are selling categories, and some teams are purely selling a single channel.
“If you want to sell radio, then you sell radio, because there are plenty of people who still want that.”
Selling and storytelling
Hastings, who was appointed chief executive of APN NZ in May last year after almost two years as chief executive of TRN, says branded content is “probably our single biggest area of focus” and it’s set to launch a new division at an event next week. She also says its creative capability is “probably the area growing the most” and the launch of CreateMe is another example of a media company attempting to muscle in on territory historically owned by creative agencies.
Hastings went to visit Vice, Business Insider, Longform.org and The New York Times’ T Brand Studio to observe what she feels is the best in class in branded content in news, sport and entertainment, “because they are quite different areas”. And she thinks The New York Times has done a very good job of taking a traditional, trusted and qualified news brand and integrating the branded content within that business.
“That’s a great model for the Herald. But across our entertainment brands we can be far more creative and lateral, which is why we’ve launched WatchMe. For me, with branded content, all our channels are a blank canvas. And it starts with a creative idea and with great content ideas. If we’re going to talk about something within Viva, then we’re going to get Amanda [Linnell, managing editor] involved from the start so it doesn’t come in as a sales lead and work its way through the business. We need to get content thinkers and creative thinkers together and we say if we owned that company and they told us they were buying all our assets, let’s think about how they would want to create that within our assets while still maintaining their brand integrity.’”
The doubters might suggest that this focus on commercial content will inevitably lead to less focus on in-depth investigations and so-called ‘proper’ journalism—or even a slow erosion of the editorial independence that newspapers have long traded on and a potential threat to democracy.
“I think that’s a completely insane assumption. Don’t you think it’s going to lift both sides of the boat? That’s the aim.”
Fairfax’s Simon Tong said people have been criticising journalism for decades and Hastings doesn’t believe the criticism of the current state of journalism, the lowering of standards or the dumbing down of society is warranted. She just thinks it’s the fear of change.
“If you were considering becoming a journalist—and I think Shayne would say this—there is no better time because you have so much more access to insight and research and data to tell a story … The way that people are consuming stories has changed. You can’t stand still, you have to enable more capability around it.”
With newsrooms being made more ‘efficient’ around the world, expectations increasing around what journalists need to do—whether it’s filming events or writing up stories for different mediums—and more bad news for investigative journalism after 3D was canned today, that might be a stretch for some.
Falling off a new revenue cliff?
If the loss of newspaper ad revenue has been the main concern of publishers for the past few years, the fact that the audience is moving so quickly to mobile and away from desktop is another big one. Over 50 percent of nzherald.co.nz’s audience now comes via mobile, where display ads struggle (although its mobile blast product, which is often taken up by Mitre 10 in the lead up to and over the weekend, is thought to have been been popular). And with high demand for video inventory, WatchMe is a way to provide more of it.
“I think that we’re quite ‘decline-fit’. I think I have been really fortunate to inherit a publishing business because they’re not waking up every day and saying publishing’s challenged. They wake up every day and say ‘right, what’s next and how fast can we create it and what is it going to look like?’. If you look at The New York Times EBITDA performance, it’s gone back—substantially. But if you’re not trying, do you sit there and wait till the day it’s zero? It is going to decline, our job is to find ways to make sure we’re building in new areas.”
And rather than simply selling ad space on the mobile app, Hastings says it will be moving closer to the feed-based native advertising model that Facebook and others have exploited so effectively.
“But there’s a big caveat around that: it’s got to be better. The way The New York Times T Brand Studio have done it well is because they’ve hired the very best to create and write that content. It’s not advertorial.”
Some of the work Netflix has done with publishers is at the pointy end of the shift towards branded content. And while they are just sophisticated ads, they’re also worthy of attention and filled with good journalism. While some are surprised that branded content often gets higher engagement metrics than ‘pure’ editorial, it’s not that surprising because the publishers are often putting a lot more effort into them, both in terms of creation and distribution. And Hastings wants to replicate that.
“The key thing is I want our branded content stories to be the most read pieces of content so I grow audience.”
The Brand Insight section on nzherald.co.nz was one of the first experiments in that area. So is it off to the knacker’s yard for that?
“It will evolve. Everything evolves.”
At present, she says Herald staff write all of the content on Brand Insight, or at least they review, tweak and align before it’s published.
“With our branded content area we create it. This is not about going ‘just come up with it and we’ll put it in our channel’. That’s advertising. We want to create it, we know our channels, we know our talent, we know what fits. So it’s quite different. If you take and place, it’s a press release.”
Keeping it current
Vice’s ISIS documentary and the work of other media brands has proven that news and long-form current affairs can appeal to a younger audience. But as Damien Venuto wrote recently, tone is crucial and you’re not likely to see the future in a teleprompter. Hastings says Vice makes its documentaries look very natural, but they are very well produced. And NZME is also looking at that model.
“They are perfectionists and they are making it look natural through exceptional planning and styling and creating … Another myth is that young people only snack. What rubbish. If it’s great and it’s pitched in a way that they want to engage with it, my son will be on a piece of content for an hour. If it’s really good content, the time taken to tell the story is irrelevant.”
That depends on context, of course. During the day, everyone seems to be using that terrible phrase ‘snacking’. At night, it could be a four hour marathon watching your favourite show. Although, as Lance Traore pointed out, the average length of the most shared videos of the year have increased every year and are now around two-and-a-half minutes.
“People only have short attention spans if it’s shit,” he said.
Getting to know you
A few months back NZME launched an updated mobile app and asked users to register. But unlike TVNZ, which now has over 900,000 signed up, it didn’t demand it before allowing access. So was that a cop-out?
“There are always stages. There’s a plan. We want data. We’ve got the GrabOne database and we’ve got the subscriber database. We’re data rich and we want to get as much data as possible. We spent time in the US looking at the best paywall subscriber models and where it works is where you have highly unique content and if you look globally the models are changing very fast. Three years ago it was the drumbeat and everyone was jumping onboard. Is the subscription fee ever going to outweigh your advertising model? It’s not doing that for any other businesses around the world. All of them do. There is no case for which that is different.”
But there do seem to be a few rare examples, some of which are putting extra strain on ad-funded media companies. Netflix, for example, which was recently shown to have been used by 51 percent of US internet users, is funded entirely by subscription revenue. And The New York Times reported that subscriptions make up 91 percent of Spotify’s revenue, with the rest coming from ads.
Mainstream news is a different beast, of course, and just as there will always be a factory in a different country that will make your t-shirts for less, there will seemingly always be publishers willing to do it for free if they get ad revenue (or government funding). But she sees a good future in the digital targeting and advertising model.
“Our business model is framed around how do we make sure we get as much data as possible. But we do have a plan in the future. There will be pieces you pay for. It could be an iHeart event. It could be a pay-per-view model. When we genuinely believe it’s unique and it’s been well-tested, then our ambition is for people to pay for content.”
She admits this highly unique content is hard to create. But it already has “a loyal and strong subscriber base and a good benchmark on what people deem as value and pay for and what that looks like”.
On his recent visit to New Zealand, Facebook’s Mark D’arcy provided a compelling sales pitch for why marketers should use the targeting ability of modern tech brands like Facebook to create more relevant ads. And it’s difficult to imagine many ‘traditional’ media companies being able to compete with its sophisticated algorithm (they will also find it more difficult to pull the old Double Irish on their taxes).
“But we have to compete with that. You can’t be scared of it. It’s happening. There’s no point in thinking it’s not. Actually, speed up and find better solutions and know what you’re good at versus what they are. We will always—and I’m sure you’ve heard this a hundred times over—generate local content. If you’re in Hawke’s Bay, we have the media. If you’re a business owner in Hawke’s Bay you can be pretty much guaranteed that if you work with us you can target and make sure you get the foot traffic you need.”
The reason Facebook and Google claim to be so good at targeting is because of the data they’re collecting. It’s still early in the piece for NZME and other local publishers, but she says it has created a data management platform, it’s put its data team in place and it’s collaborated with other large New Zealand publishers to fight against what it deems to be its biggest competition through the KPEX ad exchange, something that would have been unheard of just a few years ago.
In a way, magazines have always organised around people’s interests, something D’Arcy mentioned during his presentation at ad:tech (he was also pretty impressed with NZME’s offices and change in approach). And while everyone’s talking about targeting, Hastings says it’s certainly not new.
“What did you call database and direct marketing? Why do you think loyalty programmes were established in the first place? I launched the first Airpoints scheme and went to Hong Kong to help Cathay Pacific set up Asia Miles. The intention with data has never changed, we’re just more able now.”
When we spoke to The Spinoff’s Duncan Greive last week, he said the beautiful thing about the internet is that it’s something of a meritocracy and, with everyone fighting for attention, the power the mainstream media had has been diluted.
“We’re not sitting here saying ‘what is the Herald today?’ We’re going what’s the Herald to an 18-year-old now and what do we need to do around that. One thing I’m passionate about is strong and trusted brands, the power and importance of that has not changed. As long as those brands evolve for the audiences, you’re okay.”
Although, interestingly, recent data shows that young people tend to trust search engines over traditional media brands for their information.
Chief executives who love a challenge often stick around to watch the vision come to fruition and then move on to the next one. So is that Hastings’ plan?
“I’m happy,” she says, although there’s a fairly long pause after she says it. “I love innovating and I love change and this is a really challenged industry. My most enjoyable period was my eight years in Asia, when I arrived on the shores I lived in Tokyo and I could scan my shopping. Technology wise the world had moved on and we look at things in New Zealand and we say it’s really evolving. Actually, it’s already evolved. Go to one of those countries and you can see what the future looks like and go ‘ah, so it can work and that’s how it needs to work so how do we get there’.”
She admits she may be slightly mad to want to take this job on. But, then again, what is there to lose?
“If you want to innovate and change, no-one in the world has worked this out. So why not give it a go?”
I’ll drink the Kool-Aid to that.