Insights into how one of France’s biggest media companies is winning & growing in an increasingly challenging market [interview]
The French media market is the one the biggest markets in Europe, worth an estimated €4.2 billion in digital alone. As with all media markets, France is being challenged by the transformational impact of digital and the rise in influence of new media companies like Facebook and Google. Prisma Media is a company very much at the heart of the French media world. Owned by German media behemoth Bertelsmann (via its publishing subsidiary Gruner & Jahr), Prisma Media is one of France’s biggest magazine publishers employing over 1,400 and doing over €500 million in revenues.
Founded in 1978 by media visionary Axel Ganz, Prisma Media under the stewardship of Gruner & Jahr is going through a purple patch of growth, rather than facing a mid-life crisis like many similar European media companies. To understand how Prisma Media has maintained its market dominance, Hackers.Media spent a morning chatting with Philipp Schmidt, Prisma Media’s Chief Transformation Officer and Managing Director of Prisma Media Solutions.
Q: Context: what is Prisma Media and what's it doing from a digital perspective?
A: Prisma Media is a ‘full media company’ focused on embracing consumer behaviour; for us, there is no print strategy, no digital strategy, but instead we’re all about consumer needs. Media for Prisma is about people’s lives, which happens in real life and digital life; in the same way as Burberry has shops and websites Prisma has magazines and websites - matching consumer behaviours.
The Prisma Media strategy is very simple - in French we say it’s ‘to anticipate consumer needs, and to match user experience and how people interact with content - from apps through to print’. This is our raison d’etre.
And this philosophy is working. At the beginning of 2017, we touched 40 million French people, our biggest audience ever - across more devices ever. Today we employ 1,400 employees - the most people we’ve ever employed. Whereas many publishers are struggling, we’re thriving.
Q: Growth not survival: how has Prisma Media continued to grow in today’s challenging media environment?
A: We’ve achieved our position via three core pillars:
1) Healthy organic growth
2) External growth
3) Integrating expertise and know-how / ‘métier'
Starting with our healthy organic growth. In many other companies the majority of growth is driven by M&A; we’re different, as our main focus has been around managing our internal resources, and building organic growth from there. As a content business we identified that the power of combining editorial teams, meaning that we now have a central newsroom of 110 people dedicated to creating the best editorial content, organised horizontally rather than vertically, with editors creating content across all devices - from Smart watches, web, app and print.
Proof of the success of our strategy is the fact that we’re still launching new brands - year-on-year. It’s definitely becoming more difficult to launch new titles, however we’ve found that niche titles work well in the current media market. For example, the Harvard Business Review has worked really well for us and is profitable for us, despite selling for €18 a copy and the website being behind a paywall. Our new women’s brand Flow is another good example of niche publishing working. After a year Flow turned a profit, in the context of selling for €7 a copy and being a print only publication.
After pushing internal growth we’re then focused on ‘external growth’ i.e. M&A (mergers and acquisitions) activity. To get M&A right you need shareholders that are aligned with your objectives and who back your strategy. For Prisma Media, our main focus has been around three core segments: women, premium and entertainment; with a secondary layer focused on video, mobile and data.
In the last five years we’ve bought a number of different companies including HelloCoton (a female bloggers platform aggregating 30,000 blogs, which we integrated into Femme Actualle (an existing Prisma brand); Advideum (a video technology platform) and Mobvalue (focused on mobile). Our biggest acquisition to date was Groupe Cerise, which is one of France's leading digital media brands with 110 people and revenues of €10 million+
The final success driver is building and expanding internal expertise and know-how - what we call ‘métier’ in French. In France we don’t have the same hire and fire culture as the US, meaning that team transformation is down to investment in the team. Prisma Media is unique in that it has a training budge of x4 of its competitors. Of course, training and transformation takes time, however this is a big focus for us - for example, training up our teams in programmatic, yield management, community management and UX.
Q: Digital strategy: explain in a bit more detail what Prisma Media's digital strategy is, and how it's moving from a print-first publisher into the digital world?
A: We used to have a digital strategy; when we started our digital revenue was 1%. Last year, our digital revenue was 30% Now digital is undifferentiated from print - it’s all one holistic strategy for us. When we started, we had a 'digital core', a start-up within the bigger group. If companies are wanting to change, they need to start with a digital strategy to help ignite change. This mechanism is the same for data or programmatic. We start with a small team of expertise, and it's grown from there. Now our business had matured, digital / programmatic etc has scaled across all parts of the business.
Q: Challenges: could you touch on some of the challenges you experience helping scale / accelerate Prisma Media's digital strategies (and making it a commercial success)?
A: First of all it’s important to understand that there’s a ‘global game’ going on; if you’re a major media company you can’t avoid the fact that global platforms are having a big affect. As a national publisher, it’s a challenge as some of the budgets are happening at a global level. We’re actively looking internally at how we can address this.
We treat ‘G-Fa’ (as we call the two major platforms Google and Facebook) as frenemies, given that we work with them to help grow audience and work with Google, for example, on programmatic. However, it’s important not to become too reliant on these big global platforms, and there’s a need to not become too addicted.
The third player in the market is Amazon - with their focus on big data. Key to publishers’ success is being smart with their data and media strategy, co-operating with the big three but also remaining independent at the same time.
Beyond the challenge of the global nature of media, there’s also the challenge of meeting basic advertiser needs. In the future, and to a point now, advertising will be bought/sold in two main ways, computer-to-computer (i.e. programmatic) and via content marketing. At Prisma Media we do both, and the answer for the best outcome for advertisers is for us to be connected as closely as possible to advertisers / brands.
Q: Business models: could you talk in a bit more detail about Prisma Media’s digital business models, including: advertising, subscriptions, e-commerce and any others?
A: Our revenues are roughly 1/3 advertising and 2/3 subscriptions / circulation revenues. Stablising print revenues have been hugely beneficial in protecting us commercially, as we sell 180 million magazines a year which obviously brings in significant revenues. The real problem for us is around the distribution system, which we’ve been doing a lot of work around.
We’ve also done a lot of work around growing print subscriptions via digital channels, for example using programmatic / data driven marketing to sell print subscriptions.
Q: Innovation: what is Prisma Media's main focus from an innovation perspective?
A: As a general rule, Prisma's first priority is to acquire audiences and to get them to stay. Second comes innovation. Our main aim when it comes to innovation is to win the battle of attention. We have an approach called Smart Publishing, based around using data to enhance a consumers content experience. For example, for our TV Guide magazine Télé-Loisers we launched My Télé-Loiser which provides personalised TV guides for all our users. The KPI here is actual length of time per visit, rather than page impressions or benchmarking against competitors.
To give some context to how we run innovation you have to understand where Prisma Media comes from and in particular the heritage set by our founder Axel Ganz, who organically grew our first 19 magazines. How did we do this? By management by empowerment; through running bottom-up approaches. For example, we have some thing called ‘Eureka’ which is a once a year brain-storming event, which runs alongside our ongoing programme of ‘Talent Taskforces’ where new products like Offinity, a content aggregation app, was first thought up.
Q: 2017 / the future: what do you see as the biggest growth areas for Prisma Media in 2017 (and beyond)?
A: We have a plan from now to 2020 to hit 50/50 - online / offline revenues, which we think is a healthy situation for a full media company like us. The must win battles for us to get there are: video, mobile and data. We’re already making good headway in these areas, for example in video where we’re now France’s leader in video, via the acquisition of Cerise along with our internal growth strategy based around hiring 50 people tasked with creating 100+ videos a day across 6 different studios (e.g. food content, live concerts etc.). Another must win battle for us is Millennials who are important to seduce for Prisma's long term success.
The key to winning these battles is to have strong management and investors in place - which Prisma Media does luckily. Strong media companies have a glorious future, which puts us in a great position to win.