Breakthrough study on industry released

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Booz & Co. outlines two "paths," urges media companies to choose There are two transformational paths media companies can walk down, and while the two are not mutually exclusive, companies will be more successful if they explicitly pick one or the other and organize their mission, staffing and technology accordingly. That was the stark conclusion of a study, “A Roadmap for Profitable Revenue Growth,” presented by Booz & Co. at American Business Media's annual Top Management Meeting last month in Chicago. “This study's timing is absolutely spot on for all of us in this room,” said ABM President-CEO Gordon T. Hughes II. The Booz study outlines two paths for media companies. The first, called “marketer-driven solutions,” includes advertising, marketing and custom services “that meet b-to-b advertisers' unmet needs.” The second, “end-user driven solutions,” includes content, data, applications and services that “enhance end-user productivity.” Matt Egol, a partner at Booz & Co., said the report's recommendations were especially appropriate in the current harsh economic environment, as they suggest the need for “major cost reduction through fundamental changes” and a refocusing on corporate assets and products that map to one or the other paths. Noting the “significant complexity” and organizational challenges for companies that try to follow both paths simultaneously, Egol's co-presenter and Booz & Co. partner, Harry Hawkes Jr., said: “We didn't find a single company in the top quadrant.” For instance, it would be extremely difficult to task a single sales staff against selling both advertising and database products, they said. Of the two paths, an emphasis on end-user solutions appears to have more upside, the Booz partners said, with 80% of these companies outperforming the industry at large, compared with 70% of those in the marketing solutions camp. Moreover, companies that are far along in the lifecycle of one path or the other are much more likely to outperform the industry in terms of overall revenue growth (11% vs. 6%) and print revenue growth (5% vs. -2%), Hawkes said. Interestingly, the Booz executives did not say one path or the other was preferable, arguing both could be “attractive paths to profitable growth.” Nor did they specify a timeframe. “You're in control how fast you move down this path,” Hawkes said. Hawkes noted that next-generation products, specifically Web sites, e-newsletters and ad networks, are growing substantially faster, at 15%, than print advertising (-6%) or events (-1%). The Booz analysis uncovered seven building blocks for success and charted a lifecycle and best practices for each. Those seven elements are: editorial/data capabilities; market and end-user insights; innovation; sales effectiveness; relationship marketing; operational efficiency; and globalization. Asked during a Q&A following their presentation—before ABM members retired to closed-session workshops about the study—it was clear that many ABM members wondered why they couldn't pursue both paths simultaneously. Some expressed a worry that picking one or the other destiny would deny them a profitable business in the other. Previous surveys for ABM—including a recent one conducted by Forrester Research—have made the case for b-to-b media as an important, relevant tool for readers and advertisers and thus were made available to ABM members and the wider marketplace. But the Booz study, which is aimed at helping ABM members fundamentally restructure their business models and operations, will not be released to the general public, ABM executives said. Between deep interviews and an online survey, Booz collected information from 76 of ABM's 120 media company members for the study. M
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