In part I of this post, I laid out some of the reasons why 2009 will be a difficult year for most content companies. But that doesn’t mean we should all just crawl up in the fetal position until the recession passes. In fact, for many companies, the next 12-18 months can be a critical opportunity to position themselves strongly for the eventual market recovery. So, which companies will fail, which will survive and which might thrive?
Even during the darkest times, there will be market forces that favor certain companies and industries. Will government stimulus efforts favor your market? In my Part I post I spoke of the incredible challenges facing trade publishers. Yet some may thrive. As hundreds of billions of dollars are funneled toward municipal infrastructure, a trade magazine like American City & County is well-positioned to benefit. Similarly, a b2b online service like INPUT, which matches prime and sub-contractors for government contracts, should do well in the coming year.
Similarly, in the wake of Bernie Madoff and the bank failures, you can expect new regulations for financial compliance. Just as the Patriot Act brought a greater focus on anti-money laundering laws, the financial failures will lead to legislative action on risk, leverage and transparency.
While the recent drop in energy prices combined with the deepening recession may have moved green technology off the front page, alternative fuels and clean tech will be a major part of an Obama presidency, even if some actions may be deferred for a year or two. These industry trends will create new markets for publishers who stake out early positions.
But what if your markets are in difficult times? How will you survive?
For b2b information publishers, much of that depends upon your relationships with clients. In every industry, companies will be cutting their content budgets. Will your deal be cancelled or downsized or will you be able to retain your current relationship? That will be largely determined by two major factors:
The first factor is the strength of your value proposition. Can you clearly quantify the value that your clients get from your products? More importantly, can your clients quantify that? And, if so, does their view match yours?
The second factor is the relationship that you have with your clients, and their perception of your company. Do they believe you have their best interests at heart? How did they feel about the last negotiation you had with them? Did they feel you treated them fairly? Are your licensing policies designed to fit their needs? If not, it’s too late to do much about it now, but those who treated their customers well during the good times can expect to be treated fairly during the downturn.
So, what else should companies be doing now?
While things look bleak right now, eventually the markets will come back. And when they do, there’s likely to be a growth spurt. History shows that the boom that follows a recession is often where transformational change occurs. For small, nimble companies, that means that there is a tremendous opportunity to position yourself to take market share away from your larger competitors.
What are the big companies doing right now? Most of them have begun a period of deep retrenchment. Multiple rounds of layoffs have most employees hiding under their desks and growth engines like product development have been slowed to a crawl. This creates a great opportunity for innovation from upstarts.
For companies with cash in hand, this can be an exceptional time to make modest acquisitions. One area to explore is acquisition of blogs, which can provide a big bump in website traffic at a modest cost. Recent acquisitions such as Consumers Union's purchase of the Consumerist and the Guardian's acquisition of PaidContent are great examples of traditional publishers acquiring a compelling online brand at a reasonable price.
This is also a great time for companies to increase market share at a reduced cost. Trade media continue to keep their content locked behind subscriber walls. Many have no RSS feeds and for those who do, the feeds are often headline-only. Breaking down those barriers will allow trade enable trade publishers to gain new subscribers and increase brand awareness.
While focusing on your core customers should be your top priority, publishers looking for incremental revenues should explore additional sales channels and sales models. Publishers of high-end subscription content may be able to reach new markets with transactional sales. While some publishers are hesitant to embrace the transactional model for fear of cannibalizing existing subscriptions, that can be controlled through appropriate pricing. Priced right, transactional sales can generate incremental revenue and can provide a conversion path to new subscription clients. We have seen this model work effectively with our Alacra Premium and Alacra Store transactional platforms.
So, there’s no doubt that 2009 will be a challenging year. But nimble publishers can use this period to solidify their customer base and prepare to steal market share during an eventual recovery by:
• Identifying market segments with growth potential even in a down market;
• Focusing on customer needs and delivering exceptional service;
• Explore acquisitions while prices are low;
• Developing innovative new products in preparation for the turnaround; and
• Exploring new sales channels and sales models