This story is part of the Digiday Masters of Uncertainty series, a look at the people and companies at the center From the storylines that define the media. Find the rest here.
It’s time for media acquisitions, and many acquisition companies use a similar guideline: snap up assets that complement an existing portfolio, connect them to shared technology infrastructure, and then maximize the resulting scale with direct sales.
After spending more than $400 million buying titles last year, Future plc took a look at its own version of this guide recently, to the benefit of its balance sheet.
At the end of its 2021 financial year, which ended on September 30, Future’s annual revenue grew 79% to $804.5m (£606.8m) and operating profit grew to more than $260m, according to its latest earnings report.
Much of that growth came from new acquisitions, including US Marie Claire and 10 Dennis Publishing brands, despite organic revenue up 23% year over year, the company said.
Even after a busy period of mergers and acquisitions, media companies enter 2022 as hungry as they have ever been to make acquisitions, and Future is among them. In particular, Abby Watson, chief research analyst at Enders Analysis, said the company’s owned technology group enables “almost immediate revenue growth.”
But as Future continues to make acquisitions, the effectiveness of its integration strategy will be put to the test. Watson said the sheer number of addresses in its portfolio – 250 in total – likely “hiding the disparity in growth levels within the Future portfolio”.
“It is very likely that its revenue, as with other magazine publishers, will depend on a few major assets, and that there is a long tail of poorly performing companies,” Watson said.
When Future considers buying something new, executives ask themselves several questions, said Jason Webby, Future’s chief revenue officer in North America, “How can this particular acquisition add value to our existing portfolio? Is it either supporting one of the areas in which we are Are they really powerful in them or does it give us a new ability, reach, or editorial experience in a new class?”
For example, when Future bought several Dennis Publishing titles in October, her Kiplinger and Money Week brand added a fortune as a new advertising opportunity.
Similarly, Future’s acquisition of CinemaBlend at the end of 2020 increased its digital audience by 19 million unique monthly users, but more importantly enabled the company to begin signing ad deals with Hollywood studios and streaming vendors.
“It gives us leverage in new areas,” Webby said.
Moving different media brands to one CMS makes sense. But Future says the move generates greater profits for brands that acquire because brands have access to their proprietary suite of e-commerce technologies, Hawk, which compares prices for products from online sellers in real time. While affiliate commerce is a growing bright spot for most digital publishers, it has been the mainstay of the business of the future; The company said its commercial revenue increased 36% from fiscal year 2020 to 2021, representing $285.6 million and 35% of total revenue.
Marie Claire has been doing affiliate e-commerce for a while – and it was also a priority under the previous publishing license owner But Hook has made a more user-friendly shopping experience possible on their website by providing multiple links to places to shop, said Sally Holmes, Editor-in-Chief, Hearst.
towards a gradual transformation
But incorporating new sources of income takes time, even when the tools are available. For example, CinemaBlend only started thinking about the role e-commerce could play in diversifying its revenue before joining Future. Editor-in-chief Mac Rawden said, while it made sense to the team at the time, that Title didn’t have the experience needed to build and maintain a successful affiliate business.
“Every now and then, we’d make a small, small attempt here or there with very little oversight or understanding of what was going on,” Rawden said.
That changed after CinemaBlend came under new ownership. “Suddenly, we are in the same company as many other brands that are working [affiliate commerce] On a scale we could never imagine.”
Today, CinemaBlend now includes affiliate links whenever it feels like an obvious next step, as in a round-up of 10 shows to watch on Disney+. During Black Friday and Cyber Monday, CinemaBlend began publishing first trade stories including gift guides and news about store sales that were relevant to its audience.
“moving in [to e-commerce] It happened much more quickly and with a lot more authority than would have happened in other circumstances,” Rawden said.
Merchandising still represents a fraction of CinemaBlend’s revenue – The brand made nearly $7,000 from that business in 2021, according to the company — but those steps weren’t final.
Rawden said he and the Futures team will work together in 2022 to develop a more coherent e-commerce strategy. CinemaBlend also had a set of revenue targets for this business at the beginning of this year, but the company declined to share what they were. However, this is exactly the kind of additional income opportunities that Future is prioritizing when evaluating potential new brands in its merger strategy and strategy in 2022.
The strategy has impressed Ken Harding, senior managing director of the communications, media and technology industry group at FTI Consulting, who credits publishers in Europe for taking major strides to grow the business, especially when buying America-based publications.
Europe has always been [more] “It’s more consumer-driven than in the US, so they may feel they have more sophisticated tools for a consumer economy than in the US,” Harding said. “They think they can do some things faster than the United States is doing.”