Jeremy Bullmore pursued an interesting analogy during last week's
"On the Campaign Couch" therapy session. In dispensing pearls of wisdom
to Worried From Cyberspace, he took us back to the 50s, when satellites
answered to the name of Sputnik and computers were the size of a
Internet advertising in 2001, he said, is in the same sort of state as
TV advertising was in the late 50s and early 60s. It's hard to believe
it now, but back then advertisers didn't believe in the power of TV,
agencies paid lip service to the business, and ITV franchises were
anything but the licences to print money that they subsequently became.
Bullmore also pointed out that Associated Newspapers, a shareholder in
the franchise then believed to have the greatest theoretical potential,
Associated Rediffusion, lost its nerve after years of losses and pulled
And, of course, Associated Rediffusion's London weekday franchise went
on to fulfil its potential. So fear not, Worried From Cyberspace. It's
only a matter of time before online publishing becomes a licence to
print money and one day we'll all shake our heads in disbelief when we
think back to those dark days at the turn of the century.
And publishers, eh? They never learn, do they? In the past few weeks,
two of the UK's more proficient magazine publishers, IPC Media and Emap,
have been thrashing about trying to engage ever more powerful reverse
gears when it comes to the internet.
Last week, IPC closed its women's lifestyle portal, BeMe.com, its
listings site, unmissabletv.com, and its offering aimed at juvenile
delinquents, uploaded.com. IPC will now concentrate on its smaller
spin-offs, such as nme.com. Meanwhile, Emap was completing a structural
review that looks set to continue a retrenchment begun back in April.
Sources say it's almost certain that the specialist Emap Digital
division will now be closed and online expertise will be relocated to
the various relevant publishing divisions.
Neither development is exactly a bolt from the blue but it does make you
wonder just how much further the business can contract without dropping
off the radar altogether. Hadn't the two publishers previously told us
they'd pared down to a base from which it would be possible to move
forward? So what conclusions can we now draw?
John Owen, the head of digital services at Starcom Motive, is certainly
disappointed: "They are being unbelievably short term and the timing
seems typical of the current climate. A year ago, people were investing
ridiculous amounts of money, now they're doing the exact opposite.
Sanity has to return at some stage."
Some, though, see a positive side. They argue the online publishing
industry is now almost entirely focused on niche opportunities and this
is where salvation will lie.
Perhaps everyone is starting to learn a few tricks from Conde Nast - a
publisher that's reputed to have cracked the internet in its own modest
way. Conde Nast's online operations are not completely in the black but
they're not far off - and the company boasts some profitable digital
assets, such as vogue.co.uk and cntraveller.co.uk. Advertising is still
the centrepiece of the Conde Nast digital business plan and it offers
niche audiences similar to those offered by the parent magazines.
Advertisers know where they are with the Conde Nast offerings. In other
words, the classic "small is beautiful" creed.
Conde Nast's managing director, Nicholas Coleridge, says that
sustainable development is fundamentally important. He says: "The
publicly owned companies would have been penalised by the City if they
hadn't thrown ludicrous sums at the internet. Privately owned companies
have been able to get on with things in a far less hysterical
atmosphere. Our policy has been to run it tightly, develop off our
existing magazine brands and be much more cautious in our
However, some sceptics remain, well, spectical. They argue that the
dominant business model - that advertising revenues are bound to grow as
internet usage grows - is still flawed.
Not so, Andrew Walmsley, the chief operating officer of i-Level,
He states: "Advertising revenues as a whole will be down by 3 per cent
here, 4 per cent in the States this year but online will be up by 10 per
cent. It's continuing to buck the trend. What last week's news did for
me was to reopen the question about whether online media is best handled
by traditional players or brand new players? Traditional players still
have the advantage in terms of leveraging resources they already have
but that doesn't mean they'll make best use of that advantage."
Which brings us back to the ITV analogy. And the more you look at it,
the more dangerous it seems. For instance, ITV's early struggles are
much exaggerated by industry myth-makers. Associated Rediffusion was
only wobbly for its first two years and its worst year was its first
one, when start-up costs galloped out of control. It was making massive
profits by 1959.
And the more cosmopolitan of those in the 50s ad industry over here
would also have heard of the US, where commercial television was already
going like a train.
You still can't say that about the internet. So in that respect, Owen
agrees that complacency remains the big enemy. He concludes: "The
industry must work hard collectively to put together credible
propositions. The thing is that I honestly believe companies such as IPC
and Emap will eventually be back making lots of money in this market.
But they have to think more laterally. They have to get out of the habit
of tying to replicate what they do in print. The values are different.
They have to sit down and ask themselves what they can do on the
internet that they can't do elsewhere."