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The future of print

The future of print in the Middle East

by Gabriel Chahine

Although print media is virtually on life support in other parts of the world, it is remarkably healthy in the Middle East. Until the global economic downturn, advertising at pan-Arab magazines was expected to grow at about 21 percent annually through 2015. Newspapers in vibrant United Arab Emirates and Saudi Arabian markets were projected to enjoy year-over-year gains in ad revenue of roughly 17 percent through 2012. These numbers, coming at a time when publishers in North America and Europe are hemorrhaging ad pages, are all the more remarkable stacked up against Middle Eastern profit margins of as much as 20 percent for magazines and 40 percent for newspapers.

As elsewhere, advertising in the Middle East has slowed, so these ad projections are now being revised downward. But a series of cultural and political factors that distinguish the Middle East from the West nonetheless ensure the potential for continued steady growth for Gulf Cooperation Council (GCC) publishers. Among these factors are a large and growing population of people under 25, high leisure and entertainment consumption, greater demand for media than in most developed countries, ongoing social reforms and a growing thirst for political content, a strong emphasis on real estate development, and new telecommunications networks and travel. All of these factors generate jobs and advertising and the development of knowledge and information-based economies.

Yet, while enjoying clear advantages over their counterparts in the West, Middle Eastern print publishers face the same critical challenge: finding the appropriate strategy for dealing with the increasing popularity of the Internet and other digital media. Or, put another way, publishers face the task of increasing revenue, readership and advertising on the Web without cannibalizing the profitability of the print publication. In this quest, Middle Eastern media companies are in a propitious position. Local content on the Internet is still relatively immature and digital advertising and purchases on a broad scale have yet to develop, leaving the field wide open for Middle Eastern print publishers that are sufficiently nimble to take advantage of these opportunities.

To implement a profitable Web presence, four strategies are available for the innovative Middle Eastern media company of the future:

1. Build deeper relationships: Media companies should imitate marketers of consumer goods, cars and beauty items, who already recognize the power of digital media to start conversations with consumers. Publishers could offer branded online environments targeted toward interest areas that are valuable for advertisers. Print media have a privileged relationship with their readers, who trust the publication’s content and make buying decisions based upon it. In many categories, such as bridal, fashion and people, the ads are valuable consumer content in their own right. Newspapers are also divided into interest areas, such as entertainment, technology, auto, food and travel. Premium online environments, built on rich, exclusive content and applications, can enable print players to develop a still more intimate relationship with their readers. As consumers become more engaged by content they are more willing to register and share personal data that can be used to target them with tailor-made ads. Targeted content that is tagged and contextually relevant can capture a 20 to 30 percent premium over run-of-site advertising for a media company’s Web site.

2. Tap new revenue streams: In print, media companies strike a balance between readers paying for content directly and marketers subsidizing access to it. They should pursue both sources of revenue in the digital arena as well. Charging for content online is increasingly difficult as free information is so widely available; only specialized business publications such as The Wall Street Journal, The Financial Times, and The Economist are successfully charging for their content online. Most general-interest publications that have experimented with paid content models have failed, including The New York Times. But there are other sales opportunities that print publishers should consider as well. Perhaps the most obvious is to develop a portal. Unlike in Western countries, there are no dominant local online portals in the Middle East. This is a perfect opportunity for a media company to use its editing, production and presentation expertise to offer a single site with interactive applications, digital brands and aggregated content to generate high Internet traffic for potential marketing revenue and transaction fees. Other possible new online revenue streams include selling reprints and repackaged content, and establishing community-driven hubs that perhaps allow people to join for free but charge for relevant perks, such as archived material or clues to solve games or puzzles.

3. Reinvent the content model: Print media companies need to dramatically lower their costs by changing the way they approach content development and focus resources on their “profitable core,” the set of print and digital content that most drives audience engagement around well-defined interest areas. Recently, the number of magazines in the Middle East proliferated wildly, cluttering the marketplace with newly launched specialized titles — for example, about boating, automobiles, and real estate — that were generally lacking in quality.

Publishers should prepare for forays on the Web by strengthening their print portfolios, disposing of unprofitable magazines while acquiring international licenses from companies like Condé Nast, Lagardère and Hearst for strong brands in lucrative content areas like golf, women’s and children’s interest, computing and games. It is only with such distinctive content assets that a media company can build a “right to win,” competing for attention against marketers, user-generated content, and other media companies. Also necessary is better sharing of content across “sister” publications and the development of more centralized, outsourced or offshore editorial capabilities (for example, production for magazines and analytic tasks for newspapers). Other ways to lessen disruptive options while continuing to produce sizable savings include negotiating lower costs with outside vendors, using more stock photos and video footage and leveraging production technology.

4. Innovate with new products and pricing: When a significant share of consumers carry smart phones or other Web-enabled devices, they will expect new and more convenient delivery and formatting of content. Print publishers should experiment with new digital editions as well as premium offerings delivered as e-newsletters, alert services and downloadable content. And they should explore new ways to leverage digital distribution, like providing print-on-demand options that provide alternative formatting and customization. Among these areas of innovation, digital video is increasingly important in large part because of advertiser preference for video as part of brand-building investments.

The strategies that will make Middle Eastern print publishers successful in the coming years will require new capabilities, such as tracking and research to gain deeper insights into audience interests, informatics (the systemic study of information and the ways information is used by and affects people individually and socially) to manage and direct Web traffic, database management, custom content and applications development, and the ability to manage a network of partnerships. With aggressive action today to foster innovation and more aggressive cost management, GCC media companies can position themselves for an even brighter future than they already have.

Gabriel Chahine is a partner at Booz & Company

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