Roger Lynch, Condé Nast’s Global CEO has been driving change in the group’s culture since 2019 in order to put it on a sustainable path. For, despite accelerated growth in recent years, Lynch believed there was a need to position the group for the future by investing in technology, streamlining its processes, and diversifying revenue. This thinking was behind the recent restructuring.
Last October, Javier Esteban, Managing Director of Condé Nast LATAM, detailed the transformation process to participants of WAN-IFRA’s LATAM Media Leaders Summit in Bogotá and explained how the group has managed to maximise its revenues in recent years.
Esteban discussed six pillars – based on Lynch’s philosophy – that other publishers could consider to thrive:
Esteban provided specific examples of how Condé Nast then developed and incorporated some of these points within the company.
Incorporate diverse talent
To consolidate operations around the world and transform Condé Nast into an international company and a global brand with common goals and teams collaborating on a global scale, changes were made to the group’s Executive Team. Two global employee councils were created: one on diversity and inclusion and the other on sustainability.
Condé Nast’s consolidation as an inclusive, multicultural organisation was achieved by ensuring that people of all backgrounds, perspectives, and experiences were represented in the workplace, in the content they create, and across their global business.
Today, 70% of Condé Nast’s senior management are women, 30% are women of colour and 30% are LGTBIQ+. Condé Nast also worked to attract the best digital talent to the company and establish a culture of innovation.
Digital culture
“Before, the heart of publishing companies was in print, but it is not until you move that heart from print to digital that you change the culture and therefore transform a company,” Esteban said.
That transformation requires vision, investment, and adaptability to thrive in this fast-changing environment and requires an in-depth analysis of media companies. It requires designing the strategy, securing the resources (human and financial), building the technology, and creating an operational infrastructure that guarantees content production and distribution agreements.
“We cannot talk about innovation in media if we keep talking about the need for digital transformation. Everything today is digital, our consumers are mostly digital, and above all, advertising spend has gone digital. If we are not capitalising on it better it is because we have not transitioned in the right way to digital,” Esteban said.
Control of the advertising value chain
Esteban assures that the media still have a great opportunity to monetise digital, according to a recent study by eMarketer, 82% of media revenues from a market as advanced as the US have been banners.
In LATAM, WAN-IFRA has found countries such as Colombia where 46% of digital investment continues to be banners, suggesting news media have a great opportunity to increase their digital revenues.
Returning to the case of the US for example, 73% of digital advertising investment was through programmatic tools, with direct selling tools being the majority (75%) and although the remaining 25% was through RTB tools.
“The interesting thing is that advertisers want to take their investments to the media as they invested $3 out of every $4 in media PMPs, but to capitalise on this investment they need to put the focus on digital and take control of their advertising value chain,” Esteban noted.
He believes the media hand over too much control of their advertising value chain to third parties, since a significant percentage of investments are fraudulent impressions, another percentage of around 35% is captured by intermediaries, then there are agency rebates – ”something particularly dramatic in some LATAM countries” – and the excess demand for media inventory in the market, which ends up devaluating the CPM.
Condé Nast decided to take control of the value chain by analysing the Ads.txt files and reducing the lines in them, among others, as well as placing a specialised team monitoring web impressions to identify those investments that came from programmatic RTB tools and tried to transform them into direct sales.
“At Condé Nast Mexico & LATAM, programmatic sales represent 15% of sales. We have specialised teams behind programmatic sales that analyse the programmatic inventory, who buys it, to identify the sales opportunity and have a direct deal with the advertiser” Esteban said.
Ads.txt
It is an IAB initiative to prevent ad fraud and promote transparency in digital ad buying and all platforms implement it.
Condé Nast followed the example of The New York Times by reducing the number of lines in their files. Early in the process, they found that 20% of their authorised resellers did not even exist.
“I don’t recommend that they go into their files and eliminate all resellers, they have to first understand what role each reseller plays in their revenue. But controlling this file will increase your CPMs, and you will see an increase in direct sales,” said Esteban.
The responsibility for these files, Esteban argues, should not fall on the technology area but on the commercial area, as it must know where and how this inventory is being sold.
“We have to teach our salespeople how to compete in the digital ecosystem and we have to compete as those who are really making money in this ecosystem. Condé Nast’s structure is divided by industry, specialising teams and people in specific sectors who are able to offer solutions that cut across the entire portfolio,” Esteban said.
Consumer focus and the value of first-party data
Condé Nast invested heavily in its digital infrastructure, ensuring that its websites and mobile apps provided a seamless and engaging user experience, prioritising not only functionality but user-centric design.
After-sales, focus on user experience
According to Esteban, once you have control of sales, the important thing is to focus on the user experience.
“We have to be more aware of our responsibility to the audiences that migrate to other platforms for information. If we want to retain users, let’s give them a unique experience,” he said.
Their investment in data engineering has positioned them among the best, as they effectively combine contextual and behavioural data to reach the most demanding consumers, while respecting consumer privacy across all media.
“Most of the media stay in the first part, which is our subscriber data, but there is a lot of first part data that can be incorporated, such as reading times, data from the platforms, or data from our affiliation programmes, and the real value is in crossing the data provided by the retailer and crossing it with the user profile that you have and relating it to the purchase intention… That is what advertisers are most interested in,” Esteban said.
Giving value to intellectual property
Video has been one of their most ambitious projects which led to the creation of Condé Nast Entertainment (CNE), a global film and television production and digital studio division, to create and distribute content in all formats and across all platforms.
“At Condé Nast the Video strategy is one of the most important and all IP content depends on it, and we are very clear about one thing, our video inventory is only marketed by us so the revenues are quite significant. Whether it’s pre-roll, mid-roll or branded content, we offer advertisers the properties we generate for social media,” Esteban said.
CNE produces more than 4,000 videos a year (documentaries, animation, celebrities, and tutorials) distributed on around 60 platforms and 2,300 websites.
In recent years it has experienced 40% year-on-year growth but this year, revenues fell due to a shift in audience habits towards a shorter video format that is more difficult to monetise. Despite this, the CNE operation continues to work, as the format is still very important.
“Today it is a fact that audiences are on social networks, that video consumption is moving to the short format, the growth of TikTok and the new formats of YouTube. As a company, we adapt to these new consumption models and to be able to do so it is necessary to organise teams and therefore structures to cover this need,” said Esteban.
Exploiting intellectual or industrial property across multiple entertainment platforms has been one of the least travelled paths for media companies, but for Condé Nast it has been a costly but lucrative one that has brought great surprises and increased prestige: seeing its IP on the big screen. “At Condé Nast, we protected our intellectual property and saw how to put it to good use by turning the stories once told in our titles into films or series for the platforms (Spiderhead) and scripts for the cinema (Old Man and the Gun, Cat people). In the case of The New Yorker, this year five of those stories that were once published, now turned into documentaries, have earned five Oscar nominations,” Esteban said.
Although in the last quarter of 2023 Condé Nast decided to maximise the management of the operation by rethinking and restructuring, what is undeniable is that for a company that was registering annual losses no more than 5 years ago, working on these six pillars offers a recipe for leading the company to a sustainable footing.