We see big opportunity to increase digital revenue with analytics: Jeff Bairstow

Interview with Jeff Bairstow, Senior Executive and CFO, Time Inc.

With over 90 magazines including iconic titles such Time, Sport Illustrated and Fortune, US-headquartered Time Inc. is arguably one of the largest publishing companies in the world.

The company which has a global headcount of close to 8000, also leverages India to a great extent through its global in-house centre (GIC) in Bengaluru that employs around 500 people in areas like technology, finance and analytics. In an interview with Bibhu Ranjan Mishra, Time Inc. Senior Executive and Chief Financial Officer JEFF BAIRSTOW talks about the company’s plan to expand its Bengaluru operations and also how the NYSE-listed company is preparing itself to grow newer revenue streams banking upon the brand name of its products. Edited excerpts …
 

Does Time Inc. India largely deal with your back-end operations out of Bengaluru? 
 

It started that way like many other US corporations for supporting in back office functions like finance and technologies. But the success of any GIC depends in what are the functions you are executing out of there. I would say till we were a 200 or 250 people centre here, probably we were doing back-office type of functions. What you are seeing now and what I am interested in driving further is making sure these are the functions is deeply embedded with rest of the corporations. We are about 500 people in India now and our target is to exceed 1000 people by the end of 2016 with a mix of functions such as technology, finance and analytics. And this will make Bengaluru our third largest operations in the world after New York City and UK. 

 

What kind of analytics work do you do out of this centre? 
 

It is part of the overall bouquet of services that we leverage out of this centre. We think, there is a great deal of capability in analytics and big data here (in India) and we are leveraging this. The insights that we get from the analytics team here helps us make decisions, all the way from planning the magazines we should print, to the types of content which resonate with our readers or even the planning and management of newsstands. We have around 270 people here who do analytics and we believe that is going to be a growth area. 

 

Are you seeing a shift of readership from print to digital, out of your experience?
 

Whether it is US or even in the UK, the transition of readership from print to digital is slow. There are certain numbers of people who want to use their tablets to read magazines, largely PDF version. I think that is a process that’s evolving. If you look at our overall readership, about 10 per cent of our 33 million subscribers in the US actually look at the digital or online version of the magazines; so it’s quite disproportionate at this point looking at the overall numbers. It could be slightly less in the UK where we have a different model wherein 80 per cent of the consumption happens at the newsstands. But we are actually seeing a big shift in advertisement from print to digital and as a result, our overall print advertising is in decline. 

 

As far as digital revenue is concerned, where do you stand?
 

It’s around 20% of our overall advertising revenue. A year ago when the current management came in and that is the time when we went public, it was just under 15%. If you look at some other publications, perhaps they are more progressive than us. I would expect that we should be able to move into to 25-30% overall advertising over digital over the next few years. 

 

Do you have plans to publish any of your titles in India?
 

That is a question… We have retained an individual to take a look at all our international operations and understand why we are not there in certain markets where we probably should have been. We are certainly looking at China, East; we are looking at South America, and we are looking at extending in Europe. And since we have a presence in India, we are very interested here. So nothing to share specifically at this point, but I am hoping that this analysis will tell us that -- whether we should enter or whether we should partner …

 

So you do believe that in India, the opportunity exists?
 

I am just intrigued by the fact that there are so many people here with interest in technologies, news and the types of content we produce; so it seems like there could be an opportunity. I don’t know enough about the market place here to say where we can play (directly) or where we have to align with. But certainly, our interest here (in India) clearly has been the quality of the workforce. Since my first visit to the Bengaluru centre, I am pleasantly surprised by the enthusiasm and energy level of the people working here.

 

Do you also work with technology partners or IT services vendors in India?
 

Today, it is primarily done by our own team, but an opportunity certainly exists. We have a database of 150 million people whom we touch in some or other way like subscription. But, if we interact with them in a way, we can really mine that database, and may be in a quarter of that database, we have sufficient information to really be able to package or bundle or monetize. So we are in the process of partnering and developing technologies; we are talking to all of the usual suspects. It’s really about making a robust database and making it much more interactive in order to be able to monetize it. 

 

How do you plan to monetise that?
 

That’s not that unusual. There are multiple ways one can monetise it. For example, if you are subscribing to Horse & Hound (one of Time Inc.’s magazine titles) and you go to horse show every week, you may be buying saddles, trailers. And since we have the brand name, if we endorse those products, probably it will make more impact. Similarly, if you are interested in horse, probably you are in the luxury category and could be attracted to watches, travel kits …. The CEO of this company, Joseph A Ripp who used to work at Time some 15 years ago, but most recently he was working in private equity in area of big data. So one of the real thrust with Joseph coming back to the company has been on big data; there is a huge opportunity to unlock the value. So we see a lot of opportunities to grow the digital revenue stream with power of analytics.

 

Do you think digital will overtake print advertising in days to come?
 

We have not given a specific date, but I think the relevant question for us is that we have the print revenue stream and we have got digital. But what we are really focusing on is what we call 'adjacent revenue stream’. What I mean by that, we see a huge opportunity to leverage the brand of the magazines to use significant revenue streams, whether it’s through e-commerce, conferences, licensing or engaging with audience. We have launched a number of growth initiatives and we see that revenue stream really coming out; so you can see digital revenues and other revenues to surpass our print revenue, sometime in 2017. 

 

Do you mean Time Inc. is planning to get into e-commerce?
 

We will be part of that. Let’s take the example of InStyle magazine in the US; it’s the number one women’s style magazine. A reader buys on an average 7 items in every issue of the magazine. We don’t monetize any of that. Can I partner with someone that can give me the capability so that when they are reading online, they can hit the iPad and be given the option to buy the product in any of the online retail stores? Because, the readers now-a-days, are actually looking for that. They are looking for us to write the article; they are certainly looking for us to basically endorse the product and they are also looking from me, quite frankly, where they can buy – online or in-store or what’s the difference in pricing. And, they are going to get frustrated if I don’t do that. 
 

And our editors, a couple of years ago, used to say 'We have to separate the edit of writing a pure article and buying a product because of we marry those, we will be seen as being not ethical'. And what we need, we can satisfy both as long as we are clear and pure on our writing in these articles while at the same time allowing the readers to buy them (the products). Now, for Time magazine, it’s different. Do we endorse the things we write about – probably not? I don’t think you can write about healthcare and have a big healthcare provider or a doctor run advertisement next to it. That’s different. 
 

So you are talking about leveraging the brand power of your titles to open up newer revenue streams?
 

Today how I monetise Time magazine is through paid subscription or I do buy at the newsstand and then through the advertising. We recently had the Time 100, a list of 100 most influential people on the world. We convene them in New York City every year. Could we create a contributor network, create workshops etc -- we have not tried to do that. There are other magazines (not by Time Inc.) who put their names literally on everything. We run the most powerful women summit in US; women pay $30,000 plus to attend. We have been asked to put together seminars and training for people that want to move up and work through the barriers, and we have the right to do it. Lots of people can say that in the conference business, you should have the name and the right to play. Before taking up this job (at Time Inc.), I was running the second largest newspaper company and we had digital imprint. We could not really do those adjacent revenues. But when you have magazines like Time, Fortune, Real Simple, Sport Illustrated, these are the names that allows us to play or we put our name on something and there is a reason why people will see value.