Time Inc. Shifts to Selling Ads by Category Instead of by Its Brands. Will It Make A Difference?
As a "digital-first company," Time Inc. is now trying to keep pace with tech giants like Google, Facebook, and Comcast, in addition to fellow magazine publishers like Hearst and Condé Nast.
That's one of the big reasons why Time Inc. is embracing a category-focused, more streamlined approach to selling advertising to agencies and clients, organizing around the types of buyer more than its own powerful brands, which include People, Fortune and Time.
Time Inc.'s competition has changed, said Mark Ellis, president and COO of sales and marketing. "I wouldn't say we copied them," he said of powers such as Facebook and Google, "... but it is a similar approach."
In early April, Time Inc. created three sales categories -- automotive, pharmaceutical and technology/telecommunications. And, last week, the company announced the addition of four more categories: food and beverage, beauty, retail, and financial services. The four new categories will be implemented in two weeks, Mr. Ellis told Ad Age.
Comparing the old, more brand-focused approach to the new one, he said, "It was confusing, it was redundant, and now we're operating one-stop shopping."
Acknowledging that some agencies and clients still prefer to buy by brand, Time Inc. also still offers brand sales teams. They report to Ellis, like the category sales and digital sales groups. So the company is selling both audiences and brands.
Mr. Ellis projected that 60% of sales business will be covered by the category sales structure and 40% from brand sales, with digital spread across both.
While Time Inc. is positioning the move toward a category-focused approach as "forward-looking," the company's success probably still rests on the power of the magazine brands that comprise it.
"I truly believe that advertisers and sales folks are still in the business of selling and buy name brands," said Samir Husni, director of the Magazine Innovation Center at the University of Mississippi's school of journalism. "Beauty means nothing unless there is beauty magazines, and politics means nothing unless there is a Time magazine."
Also, while Time Inc. seems to be making strides at streamlining the sales operation, there are questions of hierarchy and reporting structure. "Where is the decision-making coming from?" one media executive who did not want to be identified asked. "You can't have a Venn diagram and call that a sales team."
But the sales reorganization drew plaudits from Robin Steinberg, exec VP-director of publishing investment for MediaVest. "This change is creating centralization vs. decentralization, which will streamline the opportunities and communication and stop the 'infighting' or competition between brands," she said in an email. "I applaud Time Inc. for being a first 'traditional publisher' mover in this space, reinventing a 100-year-old company, and repositioning their seat at the table."
With any significant organizational restructuring, Time Inc., and its shareholders, are hoping to see some benefit to the bottom line, at least eventually. In a conversation with Ad Age in mid-July, CEO Joe Ripp said it was too early to tell how the addition of three sales categories had impacted the business -- though, he said at the time, "I do know that we're having much more signficant conversations with advertisers at all levels."
We may not have to wait long to hear how it's going. Time Inc. is reporting its second-quarter earnings on Thursday, and a spokeswoman confirmed that the category reorganization will be on the menu of topics discussed.
For the first quarter of 2016, Time Inc. reported advertising revenue of $360 million, an increase of 2% from the first quarter of 2015. The increase was attributed in part to "growth in digital advertising revenue from video and programmatic sales." That number is still down from the second quarter of 2014, Time Inc.'s first as an independent company after splitting from Time Warner, when it reported advertising revenue of $461 million.