Mr. Magazine

“…We saw our own industry stand up and use words like “when the magazine industry goes out of business, we’re moving towards that with our digital products.” I will never forget that. And I think that that is crazy. This is the way I feel. We’re now seeing the slowdown of that kind of talk and simply accepting that magazines are a horizontal medium for some; for some they can be a vertical offshoot, but they have a place in the media world.” James G. Elliott (on whether he believes the magazine industry is slow to react to thing)…

The James G. Elliott Company, which began as a publishers’ rep some 30 years ago, has evolved into the nation’s largest national outsourced media ad sales company and full-service media solutions consultancy for print and digital publishers and organizations. Its president, James G. Elliott (Jim) and I have been friends and professional associates for years. So, when it came to taking the pulse of the buyers, sellers and marketing community in general, I knew Jim was my best resource.

For more than 30 years, he has worked on the business side of the magazine industry, offering solutions and publishing services to many, many in the media industry, across the spectrum, from B to B to consumer magazines. If it’s happening in advertising and marketing, you can bet Jim knows about it.

I spoke with Jim recently and we talked about some of the problems and some possible solutions for the world of magazines and magazine media. We also touched on his newly released third study, done with Kantar Media to understand the challenges today’s Media Planners, Buyers and Sellers face, and to discover areas where expectations are misaligned. It was a very interesting conversation. To access the study see link at the end of the interview.*

So, sit back and relax and enjoy the Mr. Magazine™ interview with James G. Elliott as we discuss the complex, but fascinating world that is the business side of magazines.

But first the sound-bites:

On what he is seeing from the advertising/marketing aspect of magazines and magazine media: From the advertiser and agency perspective you’re seeing the desire to find the ultimate answer to turning around the advertising decline that they’re experiencing at the same rate or bigger than we are. And that’s creating the search for other new and exciting things. Virtual reality is an example that I think the industry will spend a great deal of time looking at in the next couple of years. From the standpoint of media, particularly of the magazine business, I don’t think the magazine business is driving the show anymore. I think they’re kind of following, attempting to create shiny objects at the same time that lead the industry, but often are following on deaf ears, because they’re not the leaders in this process any longer.

On why he says that when the magazine industry still brings in billions of dollars: I think the magazine industry isn’t focusing, some are, but many are not focusing on what they know how to do best, which is the creation, curation and development of magazines in the best way possible.

On whether he believes that the advertising-driven business model that he created his own company around 30 years ago is dead or no longer viable: I don’t think so. I think that this business model is declining a bit at the moment, because I think the advertising market as a whole is declining at the moment, regardless of the press reports. But advertising and sponsorship will always have a place in the magazine industry and the extended magazine brand industry. So, no, I don’t see that that’s going away.

On whether he thinks the business model where advertising was 90% of the revenue of a publication is coming to an end: This is primarily a consumer-driven question and I think that you, Dr. Husni, has said for a very long time and I’ve always bought into it; it’s not magazines that are broken, it’s the magazine industry. This reliance on advertising by having contrived circulation was always flawed. And I think it’s Warren Buffet who said, “Only when the tide goes out do you discover who’s been swimming naked.” And I think that happened in the recession. You had magazines that were two million or three million circ that were really only one million or 750,000 circ, or whatever that circulation really was. So, I think that model was always flawed and it was like the real estate boom; at some point it was going to explode.

On the B to B market and it’s 100% advertising-driven model: With B to B model, I think that they needed to expand their products to enhance their magazine business, such as data basing; using better metrics to help advertisers drive sales, things like that. And charge for those metrics. In the B to B market there was an explosion of B to B publications in single sectors, way too many. There are many sectors, special interest sectors that had five to ten magazines in really what should have been a two or three brand field.

On how his own business is doing with all of the changes going on: My business is made up of two things. It’s made up of representing magazine brands, and secondly, it’s helping companies that may not want our selling services on a consulting basis. And both businesses right now are doing well.

On how he adapted to these changes and what he’s doing differently in his own business than he did ten years ago: We’ve adapted to the changes in lots of ways. One of the things that we did was to recognize that you had to actually train people; you had to teach them about the new products that were coming out. And we’ve done a fair amount of that, both internally and by bringing outside folks in to help us do that, and that was the first thing we did to adapt.

On the biggest stumbling block that’s facing his business: I think the biggest problem in my business is my potential clients understanding the buying process and actually what the environment is now, and how one must adapt to that new selling environment. Unfortunately, a lot of people who fund media companies today. Either they didn’t come out of the ad sales business, or if they came out of the ad sales business they came out of it in a different era. They came out of it when sellers were more important to the process. And the reason they were more important to the process was that they were conduits of data to the advertiser and the advertising agency.

On whether he believes the magazine industry is too slow to react to things: I’m a former advertising agency person, and if you ask me the difference between the two industries, I can actually explain best by a story. And it actually involves you, Samir. It was a story that I have never forgotten. It was about three or four years ago, you and I went to a conference and we sat together, as we often do. In that conference, it was an industry conference, not a magazine conference; there was a conversation that came up out of the second screen I think, television folks. When we were sitting and listening to them, they were embracing the television industry and talking about how they augmented that, and how that was another business that could be equally profitable, but they needed both. And then we saw our own industry stand up and use words like “when the magazine industry goes out of business, we’re moving towards that with our digital products.” I will never forget that. And I think that that is crazy.

On what he would bring back from the “good old days” if he could: I’d like to see more integrated research back into the buying process and more time spent on analysis of what really is being purchased for brands. And I don’t think it’s happening; I don’t think it’s as good as it was back a number of years ago.

On the most pleasant moment in his career: Without going into specifics, when I see people who have worked at the Elliott Company, and there are hundreds of them, that have gone on to very significant careers; that makes me really, really proud. I think that’s the best thing; that I was able to help a lot of people move on, or in many cases, stay. We have a history of people staying with us for long periods of time.

On anything else he’d like to add: If you asked me what major industry concern I have from a tactical standpoint and from a selling standpoint, I would tell you that it was the disconnect, in many ways, between buyers and sellers. I think that there is really a gap between the ways that the two process what they’re supposed to do with their jobs. The study that we just completed points out a lot of those things.

On what someone would find him doing if they showed up unexpectedly at his home one evening: Unfortunately, what I would probably be doing during the week after dinner is doing some more work. I think the requirements today on people like me are a lot harder than they used to be, there’s less time, which means that you have to end up doing more work. But for relaxation, I’m a sailor; I like to sail. I like to get out on the water on my boat.

On what keeps him up at night: What keeps me up at night is this industry moving to the next shiny object and forgetting things like where the money is, which is in the advertising and sponsorship business. I think the industry is too quick to grab onto the newest thing, thinking that that’s going to somehow solve its problems.

And now the lightly edited transcript of the Mr. Magazine™ interview with James G. Elliott, president, The James G. Elliott Company.

Samir Husni: With the current magazine and media climate, suddenly no one is just talking change; everyone is saying that “change” has left the station. What are you seeing from the advertising/marketing aspect of the industry that either gives you hope or makes you want to close shop and head home?

Jim Elliott: From the advertiser and agency perspective you’re seeing the desire to find the ultimate answer to turning around the advertising decline that they’re experiencing at the same rate or bigger than we are. And that’s creating the search for other new and exciting things. Virtual reality is an example that I think the industry will spend a great deal of time looking at in the next couple of years.

But as we know from the numbers of people that come in here with new and shiny objects, there is no shortage of them; there will be plenty of new ones in the next couple of years coming forward, all of which will attempt to have an advertising or sponsorship component to it.

From the standpoint of media, particularly of the magazine business, I don’t think the magazine business is driving the show anymore. I think they’re kind of following, attempting to create shiny objects at the same time that lead the industry, but often are following on deaf ears, because they’re not the leaders in this process any longer.

Samir Husni: Why do you say that when the magazine industry still brings in billions of dollars every year?

Jim Elliott: I think the magazine industry isn’t focusing, some are, but many are not focusing on what they know how to do best, which is the creation, curation and development of magazines in the best way possible. So many magazine companies divert energies into areas that are not going to pay out for them over time, as opposed to really saying: we’re in the magazine industry, and yes we should use online tools and online extensions to enhance our magazine brand, but those extensions aren’t going to, in the long-term, be the replacement for the magazine or magazines that they own.

Samir Husni: In one form or another, you’ve spent your entire career on the business side of the magazine industry. Are you telling me that the advertising-driven business model; the one that you actually created your own business around 30 years ago to work and sell with the business side of magazines; are you telling me that business model is dead or no longer viable?

Jim Elliott: I don’t think so. I think that this business model is declining a bit at the moment, because I think the advertising market as a whole is declining at the moment, regardless of the press reports. But advertising and sponsorship will always have a place in the magazine industry and the extended magazine brand industry. So, no, I don’t see that that’s going away.

Samir Husni: But do you think the business model where advertising was, in some cases, reaching 90% of the revenue of a publication is coming to an end?

Jim Elliott: No, I can answer your question, but first let me say, I have represented many, many products. I’ve been in B to B, in fact, we have a large B to B player now; I’ve been in consumer, we have many consumer titles here; and I’ve been in the association world. And I’ve been on the web-only world. So, I have a very broad perspective of different media types, as opposed to just being consumer magazines or just trade magazines.

That being said, this is primarily a consumer-driven question and I think that you, Dr. Husni, has said for a very long time and I’ve always bought into it; it’s not magazines that are broken, it’s the magazine industry. This reliance on advertising by having contrived circulation was always flawed. And I think it’s Warren Buffet who said, “Only when the tide goes out do you discover who’s been swimming naked.”

And I think that happened in the recession. You had magazines that were two million or three million circ that were really only one million or 750,000 circ, or whatever that circulation really was. So, I think that model was always flawed and it was like the real estate boom; at some point it was going to explode. Real estate values don’t continue to go up. I think the same thing happened here with the magazine industry. There’s a balance between circulation revenue, real audience, which is based on real audience, and the advertising business, and how that relates into the consumer magazine world.

Samir Husni: You answered my question only from the consumer side; B to B is a 100% advertising-driven business model.

Jim Elliott: That’s true. With B to B model, I think that they needed to expand their products to enhance their magazine business, such as data basing; using better metrics to help advertisers drive sales, things like that. And charge for those metrics. In the B to B market there was an explosion of B to B publications in single sectors, way too many. There are many sectors, special interest sectors that had five to ten magazines in really what should have been a two or three brand field.

I think the better brands were creating better content for their readers, and if you were to do an analysis of just the advertising revenue in the top one or two books in various B to B fields, you’d find that their performance was far better than an entire category’s performance.

Samir Husni: How is your business? With all of these changes and everything else; have you been able to ride the wave? Are you swimming against the tide or with it?

Jim Elliott: My business is made up of two things. It’s made up of representing magazine brands, and secondly, it’s helping companies that may not want our selling services on a consulting basis. And both businesses right now are doing well.

The second business, the consulting business, is doing particularly well from the standpoint of presidents of companies wanting to get a better picture outside of their organization about what’s really going on in the revenue side.

On the sales side, we haven’t experienced the kind of losses in our business that many companies have simply because we have a number of very healthy association magazines that really had a connection with their audiences. And that really had assets. So, when times became rougher they didn’t lose their advertisers at anywhere near the rate that some of the consumer titles did.

We just completed our third study of media buyers and it’s now out. But more importantly, we’ve taken the same study basically and we’ve gone to a random sample of sellers asking roughly the same questions, and it’s pretty interesting stuff.

Samir Husni: How did you adapt to the changes in your own business and what are you doing differently today than you did ten years ago?

Jim Elliott: We’ve adapted to the changes in lots of ways. One of the things that we did was to recognize that you had to actually train people; you had to teach them about the new products that were coming out. And we’ve done a fair amount of that, both internally and by bringing outside folks in to help us do that, and that was the first thing we did to adapt.

The second thing was to automate our sales processes to become contemporary with the CRM (customer relationship management) systems. The third was to get a better sense of really what we were competing with when it came to the various brands that we were representing, and not from a magazine centric standpoint, but from a total media perspective.

And there have been a lot of other things that we’ve done to adapt, but those are the fundamental, most important things we’ve done. We’ve also recognized that there’s a balance between relationship selling and transactional selling. And the way that the online business is being sold is OK for some, but not OK for all. One of the things that I believe very strongly is when you go in to sell somebody you have to figure out the way that they want to be sold, not the way that you want to sell them. And we really stress that inside our company, to really recognize what the buyer is looking for. How do they actually want you to sell them?

Samir Husni: It’s my understanding that you’re expanding the company; you’ve incorporated Ads & Ideas. Can you talk a little about that?

Jim Elliott: That was really just a mechanism for the consulting part of this business, which is growing, so that we could run that separately, either now or sometime in the future. It’s recognition that that’s a growing part of my business.

Samir Husni: What do you think is the biggest stumbling block that’s facing you, your company and the entire business as a whole, and how do you think you can get beyond that stumbling block?

Jim Elliott: I think the biggest problem in my business is my potential clients understanding the buying process and actually what the environment is now, and how one must adapt to that new selling environment. Unfortunately, a lot of people who fund media companies today. Either they didn’t come out of the ad sales business, or if they came out of the ad sales business they came out of it in a different era. They came out of it when sellers were more important to the process. And the reason they were more important to the process was that they were conduits of data to the advertiser and the advertising agency.

Today that reason for a seller is much less important. Today the seller needs to be a brand advocate. They need to be able to articulate a brand in its many facets, which include all of its electronic products; its magazines; and a very short window of a very short period of time to an advertiser or advertising agency.

The reason for that short period of time is that the responsibility of buyers has become much broader; they’re looking at a whole lot of more things than they did 20 or 30 years ago. So they have much less time by which to do it, and the necessity to communicate effectively, to get attention rapidly, not in long 45-minute meetings because it’s rare that you’ll get those kinds of meetings.

Samir Husni: Do you think the magazine industry is too slow to react? When television came into being in the early ‘60s and when TV became the big mass media, magazines were blamed that they were too slow to react.

Jim Elliott: I’m a former advertising agency person, and if you ask me the difference between the two industries, I can actually explain best by a story. And it actually involves you, Samir. It was a story that I have never forgotten. It was about three or four years ago, you and I went to a conference and we sat together, as we often do. In that conference, it was an industry conference, not a magazine conference; there was a conversation that came up out of the second screen I think, television folks.

When we were sitting and listening to them, they were embracing the television industry and talking about how they augmented that, and how that was another business that could be equally profitable, but they needed both.

And then we saw our own industry stand up and use words like “when the magazine industry goes out of business, we’re moving towards that with our digital products.” I will never forget that. And I think that that is crazy. This is the way I feel; you are one of the few people who has always said, “Wait a minute, don’t do that. What are you doing?” And I think you’re going to be proven right again. We’re now seeing the slowdown of that kind of talk and simply accepting that magazines are a horizontal medium for some; for some they can be a vertical offshoot, but they have a place in the media world.

I think some of the reasons for that is that the broadcast industry has always been more inclusive of outsiders and outside thought. They’ve always used lots of independents for lots of things; they don’t have this industry-only attitude, in my judgement. And so they were probably in a better position to adapt to new things.

Samir Husni: If you had the magic power to bring something from the past back to today’s world, what would you bring back from the “good old days?”

Jim Elliott: That’s a really good question. I think that in the old days there was much better research about magazines, television, and the integration of those things than there is today. The research is not as deep and there’s not as much looking by individual media planners into the magazines they’re buying, online that they’re buying and things like that.

When I was in the agency business, which was a very long time ago, as a media planner, I had two assistant media planners per one million dollars; two. Today, based on the Kantar-Elliott study, the average media planner has the responsibility in excess of $30 million and they work on five brands. So, the climate is very different. And to answer your question, I’d like to see more integrated research back into the buying process and more time spent on analysis of what really is being purchased for brands. And I don’t think it’s happening; I don’t think it’s as good as it was back a number of years ago.

Samir Husni: What has been the most pleasant moment for you in your career; is there a specific moment in time that you look at now and say, “Wow?”

Jim Elliott: Yes, there is actually. Without going into specifics, when I see people who have worked at the Elliott Company, and there are hundreds of them, that have gone on to very significant careers; that makes me really, really proud. I think that’s the best thing; that I was able to help a lot of people move on, or in many cases, stay. We have a history of people staying with us for long periods of time. That’s the thing that I’m going to remember best when I write my book.

Samir Husni: Is there anything else that you’d like to add?

Jim Elliott: If you asked me what major industry concern I have from a tactical standpoint and from a selling standpoint, I would tell you that it was the disconnect, in many ways, between buyers and sellers. I think that there is really a gap between the ways that the two process what they’re supposed to do with their jobs. The study that we just completed points out a lot of those things.

I’ll give you one tactical example; the average seller believes that they have half the amount of time to sell out an RFP than the average planner believes that they’re giving that seller, which is from a practical standpoint a big difference. When you take a look at the importance of personal meetings, you see that a way that personal meetings make a difference really is at the client level, more so and at a higher percent, according to the sellers. There is a lot of data that talks about this within that study. The study has just been released and we’ll be talking about it more.

If I had a magic wand I would make it a requirement that a seller work in an ad agency for a certain amount of time to really learn what it is that those folks are looking for.

Samir Husni: If I showed up at your home one evening unexpectedly, what would I find you doing; reading a magazine; reading you iPad; watching television; or something else?

Jim Elliott: Unfortunately, what I would probably be doing during the week after dinner is doing some more work. I think the requirements today on people like me are a lot harder than they used to be, there’s less time, which means that you have to end up doing more work. But for relaxation, I’m a sailor; I like to sail. I like to get out on the water on my boat. That’s what I really like to do, besides the fact that I have two freshmen that I need to get through the next four years of college. That’s my other special interest here.

Samir Husni: My typical last question; what keeps you up at night?

Jim Elliott: What keeps me up at night is this industry moving to the next shiny object and forgetting things like where the money is, which is in the advertising and sponsorship business. I think the industry is too quick to grab onto the newest thing, thinking that that’s going to somehow solve its problems.

Samir Husni: Thank you.

*Click here to see The Elliott/Kantar Media Study