World News Publishers Outlook 2017

WNPO2017-Cover

Executives worldwide want their organisations to be innovative. And, of course, news media firms always have been. Innovation – the process of transforming creative ideas into outputs with impact – has, and continues to be, the fuel that drives newsroom engines at every organisation. But wide-ranging changes compel us to rethink how we go about innovation in every part of our enterprises – across editorial, commercial, technology and operations. We also need to identify and develop new opportunities to sustain and grow our businesses.

Decisions about what to innovate and how to go about it fall largely to the company’s leadership. That is why WAN-IFRA has once again teamed up with Dr François Nel and Dr Coral Milburn-Curtis of the Innovation Research Group to survey decision-makers worldwide in 11 languages: Arabic, Chinese, English, Finnish, French, German, Italian, Persian, Portuguese, Russian and Spanish.

The perspective of this report is truly global. The 7th annual world news media innovation study had 235 responses from 68 countries across six continents: Africa, Asia, Australia/Oceania, Europe, North America, and South America.

By far the largest group of respondents, 43 percent, sit in C-suites, serve on boards, or own their companies. Other responses came from editorial, commercial, and technology managers, as well as from a very small number (2 percent) of consultants and academics.

The survey’s 22 questions look at four areas:

  1. The profile of respondents, including the nature and activities of their firm;
  2. Current revenue streams, financial performance during the past book year, and the anticipation of future revenue sources;
  3. Specific priorities for change and investment in the next year and in the medium term (3-5 years); and
  4. How leaders experience change and risk.

This 86-page report analyzes the responses in depth.

First, it reports back on the the current situation: how the respondents’ firms have performed financially during the past year, what the primary sources of those revenues are and the risks they face. Then, it reports on their short and medium-term outlooks, along with 10 key areas the respondents say their organisations need to change to achieve their aims. Finally, because respondents flagged the importance of their organisation’s capacity to innovate, it looks more closely at that issue.

In Chapter 4, it considers the building blocks of an innovation culture. It also uses advanced statistical methods to analyse the relationship between organisational culture and organisational success – and it points out the strong link between Innovation Role Models and company performance.

To provide additional insights and suggest further practical action points for consideration, the authors invited five guest analysts to contribute to this report.

Key takeaways

These are a few of the key takeaways from the survey results:

  • The biggest risk to future success is not seen to be challenges to business models, technology disruption, advertising declines, or political instability – but firms’ own reluctance to innovate.
  • When asked what is the single most important change that has to be implemented in their news organisations over the next year, the top response (21%) was Organisational Culture.
  • Although trading conditions are tough worldwide, 30 percent of nearly 250 decision-makers surveyed reported overall financial growth during the past financial year, while about 35 percent said there had been no change. This is the highest proportion of positive responses since the study began in 2009/10 in the wake of the global economic recession.
  • The outlook for the future success of media firms depends on the extent to which they can diversify their revenue streams. In the short term (next 12 months), 70 percent of respondents say they will need up to a third of their income to come from non-traditional sources (i.e. traditional advertising and existing content sales) to meet company revenue expectations.

The full report is available at http://www.wan-ifra.org/reports/2017/09/13/world-news-publishers-outlook-2017.

#POLIStrust Q. Why is data of strategic importance to newsrooms? A. The 3Ps – Production, Performance, Permission

Thought leaders who work inside, alongside and outside news media firms were invited to workshop hosted by Prof Charlie Beckett of POLIS, the London School of Economic’s Journalism think-thank. The discussion was sparked by concerns about fake news and focused on three themes: data for better journalism; engagement tools and systems that deliver value for user and publisher; and, public context and audiences.

Charlie asked me to facilitate the discussion on data and to make a few opening remarks on the strategic importance of data to news firms. I was happy to oblige, not least because findings from IRG’s latest study into the decision making of newsmedia executives shows that leaders at financially-successful firms have data top of mind.

I also got to point out that data is a strategic priority for news media companies for a variety of reasons, but that I like to organise them into three areas conceptually, though the boundaries are rather blurred and there are overlaps practically. That said then, here are the 3Ps:

There is the data we need for (1) PRODUCTION of the stuff we make – data that helps us identify news, data that helps us assess and evaluate sources, and data that underpins decisions we make about the shapes and timing of the news.

Then there’s data we need to understand our (2) PERFORMANCE strategies – data about the performance of the content, the performance of the content makers, performance and creation of the cash.

Finally, there’s also the data we need for (3) PERMISSION. That is, the data about our activities that is of relevance to policy makers, regulators, pressure groups, and the public at large (whether or not they are our customers).

Consider those data categories through the lens of trust invite a number of questions.

While my remarks were open, we followed The Chatham House Rule during the (very frank and fascinating) workshops. For a flavour of the discussions, search the Twitter hashtag #POLIStrust.

Charlie will be writing up insights from the event more formally, but in the meantime I wanted to share my slides and notes here.

And, of course, I welcome any feedback – and look forward to continuing the important conversation at the next Digital Editors Network meeting to hosted by Rob Owers of Twitter London.

World News Publishers Outlook 2017 Previewed

While publishing the World News Publishers Outlook 2017 report is still some months off, industry insiders are already discussing the study’s interim results previewed recently at the 14th International Newsroom Summit in London.

Executives from 68 countries on six continents responded to the 22-question survey of the decision-making strategies of newsmedia managers across editorial, commercial, technology and senior management roles. “Our results show significant differences between the strategic choices made by profitable and unprofitable companies,” said IRG’s Dr François Nel, co-author of the study conducted in collaboration with the World Association of Newspapers and News Publishers (WAN-IFRA).

“However, one of the most surprising findings was that when respondents were asked what the biggest risk to their organisation’s future was, they did not see the greatest risk coming from the decline in advertising revenue, or from Google and Facebook, or from other digital disruptions. The biggest single threat to their future success, was not from outside the organisation but from the inside: the reluctance to innovate.”

Organisations that prioritise innovation efforts are almost three times as likely to be reporting significant increases in revenues, compared with organisations which do not. (Odds ratio = 2.9)

This threat is also directly linked to organisational performance, the study results show organisations whose leaders model the right innovation behaviours for others to follow are more than 4 times as likely to be reporting significant increases in revenues over the last 12 months, compared with organisations which do not. (Odds ratio = 4.3)

Nel challenged conference participants to consider what these finding means for them: “Building an organisational culture that promotes innovation is the responsibility of a firm’s leadership. So, is the biggest threat to your organisation’s success your leadership team. Is it you?”

Research Update: News executives worldwide might share one big headache – but they’re taking three very different approaches to tackling it

Yes, our study into innovation in the news media industry surveyed decision-makers in 10 languages in worldwide.  And it’s true that even our new summary report is packed with fascinating insights into the current performance and future priorities of media firms on all continents.

So, you might have thought it would be difficult for me to pinpoint one issue that is on the top of the agenda of most innovating news organisations. It wasn’t.

With 8 of 10 respondents reporting that print advertising was down or flat over the previous 12 months, the pressing issue amongst the majority of publishers is this: What to do about advertising? Or, more specifically, what can be done to stop the hemorrhaging of traditional advertising income streams – and to get a substantial share of the growing digital adspend that PwC forecasts will account for 38.7 percent of total global advertising revenue in 2019, up from just 16.6 percent in 2010?

Before I talk about how senior executives are answering that question, it might be worth recalling the four key challenges news firms face in this area: the intense competition from digital pure play advertising-supported firms such as Facebook, Google and Twitter; the possibility that digital advertising exchanges will drive down the market price of their inventory and take a larger slice of the revenue; the proliferation of ad-blocking software; and the preference that key advertising agencies have for buying digital audiences at scale wherever they may roam online, rather than buying advertising space in the context of specific content, which is key to media’s traditional value proposition.

I recently shared the stage at a Westminster Media Forum with Maxus UK chief executive Nick Baughan, who pulled no punches: “I’m an ad buyer, I like numbers; I like easy ways to access numbers and I like homogenous category with which I can deal with.”

Baughan said he estimates his company, part of WPP’s media investment arm Group M, represents about 30 to 40 percent of the total advertising market across all media in the United Kingdom and “roughly similar” numbers globally. “We go to where scale is; so for media agencies like ours it’s all about Facebook because that’s where the scale is, not because Facebook is a great community area or whatever it is, it’s because that’s where the numbers are. Now the problem with that is, is you are clearly then sacrificing some of your editorial context for the numbers that go with Facebook and that’s just a decision that we’re all going to kind of have to make in life.”

“We go to where scale is; so for media agencies like ours it’s all about Facebook…”

Of course, news publishers won’t give up on the digital or print advertising opportunities easily. What to do about it? Whatever else this year’s study results show, this much is clear: There is no one-size-fits-all approach to future news media business models. I’ve identified three broad strategic mindsets emerging amongst publishers. I like to think of them as the Guards, the Rangers and the Pioneers.

The Guards are those who doggedly defend their traditional business model and are expecting at least 90 percent of their future profits to come from advertising and content sales. About one in 10 of the respondents fall into that category. Meanwhile, more than a third of the respondents (33.8 percent) say 10 percent or less of their income comes from alternative sources; only a tenth of the respondents expect that to be the case in the next five years.

The Rangers are those who are doing all they can to protect their current businesses, but are also working towards to earning up to half their income from alternative sources. The majority of this year’s study participants might be described that way. Almost 70 percent say they expect that their company will need to earn more than 10 and up to 50 percent of their incomes from different sources in the next five years.

Then there are the Pioneers. They are not only seeking out a variety of new revenue streams, but they’re expecting that their companies will have to earn more than half their income from sources other than traditional advertising and content sales to meet their revenue targets. Two out of every 10 of this year’s respondents can be defined as Pioneers, a third of whom (7.1 percent) say that they anticipate their companies will need to draw more than 70 percent of their revenues from sources other than traditional advertising and content sales.

Pioneers say that they anticipate their companies will need to draw more than half their revenues from sources other than traditional advertising and content sales.

These findings invite a variety of further questions. Those media executives who might be described as Guards and are banking on advertising for the bulk of their incomes in the longer term, might want to ask themselves why nine out of 10 of their peers have made a different assessment about what would be required for longer term success? The Rangers are likely to be asking themselves how do executive teams straddle the twin challenges of identifying new ancillary opportunities and exploiting current activities without losing focus? The Pioneers, who are stepping over the line into new business territory and expect to settle there, are likely to be questioning whether to keep hold of their news media assets at all.

The need for business focus was the primary reason Pearson’s chief executive John Fallon gave when the publishing and education company first sold the Financial Times in July 2015 and then a month later dispersed of its 50 percent share in The Economist.

“Pearson is proud to have been a part of the Economist’s success over the past 58 years, and our shareholders have benefited greatly from its growth,” Fallon said in a company statement at the time. “Pearson is now 100 percent focused on our global education strategy.”

The issue of business focus is increasingly important, particularly as rapidly emerging technologies continue to challenge existing operations and open up an array of new opportunities. More than 38 percent of respondents in this year’s study say their companies are prioritising developing new digital products that extend their current brands over the coming year, while 24 percent say their companies are looking to invest in non-media businesses.

Perhaps the key question for news media boardrooms is this: Do we diversify, or do we specialise?

Perhaps the key question for news media boardrooms is this: Do we diversify, or do we specialise? On the one hand, there are risks associated with having all one’s eggs in a single basket. On the other hand, there is also the risk of becoming a jack of all trades and master of none. To answer that question, senior leaders need to be absolutely frank about what the company’s core competence is at present and what partnerships they need to forge to grow. – by Dr François Nel, founding partner: IRG

The World Newsmedia Innovation Study 2015 was conducted by Dr François Nel of the University of Central Lancashire in association with the World Newsmedia Network. The project was made possible through collaboration with a variety of academic and industry partners, including: Dr Coral Millburn-Curtis of Green Templeton College, University of Oxford; Emma Urjasova; Dr Katja Lehtisaari of the University of Helsinki; Dr Datis Khajeheian of Aalborg University; Ali Alrowaili of the University of Central Lancashire; Dr Oscar Westlund of the University of Gothenburg; Global Editors Network; Digital Editors Network, UK.

From 2016,  we will continue our research into the decision making of news media managers worldwide in collaboration with the World Association of Newspaper and News Publishers (WAN-IFRA).