Condé Nast CEO Bob Sauerberg told Adweek about his five-year strategy to transform the company for the future in which the company projects to generate $600 million in new revenue.
Among new priorities will be video production, creating new revenue streams from brands, such as experiences to commerce, all while boosting its data platform and B2B services.
Condé has already invested heavily in video and announced it would launch three OTT channels for Wired, GQ and Bon Appétit.
“We’re defining what short-form video really can be in this market and in our marketplaces. We see that as a continued growth area,” Sauerberg said. “We’re going to pour more gas on it, and over time it will become our predominant content format.”
Don’t expect Condé to remain the same in these next five years.
“We’re going to have to continue to drive costs out of the business,” Sauerberg said. “There will be changes as we change our company, there will be changes on how money is spent, toward the areas that are growing and less toward the areas that aren’t.”
Sauerberg chatted more extensively about his vision for the company, its financial veracity and where that leaves W, Brides and Golf Digest.
The conversation has been edited for clarity and length.
Adweek: What brought about this vision?
Bob Sauerberg: I saw last year that we were going to have to do a combination of things. I want to expand our biggest brands and I want to be in a real leader in video, experiences and B2B in the top brands that I have. I felt like that was the best way for us to create value for the company.
As I looked out five years from now, I didn’t like the trends that I saw with my business. I wanted to create a new outcome that set a very clear path for the company I wanted us to be, that is built to last. Not just to make it for the next few years. That’s what set the whole planning off.
It isn’t just that this is the place you want to be if you’re a print expert, it has to also be if you’re a producer, if you’re an engineer who creates digital products. This place has to be the place you want to be. We needed some real focus on that, and we needed to really get the company to understand that … We’ve got to find a way culturally to really come together, around one plan with one focus and one mission.
In the past, I had directional things, like we’re going to build a digital business. Now what we have here is a very specific approach, and I think our company needed it. This plan gives us a clear roadmap, clear accountabilities. We kicked it off with the company yesterday.
How was the reception?
I think it was really positive, I think people really appreciated it. Human beings love to know what they should be doing, and so I think what will happen now is that there will be a downstream in activity as our leaders go to implement this in their areas of responsibility. There will be a lot of areas that will help the company focus and execute the strategies so the implications to every employee will start playing out over the next few months.
But what we’re going to do at my level is repeat our intention, and we’re going to remain disciplined about executing this vision, these strategic choices and these initiatives. I believe when all these things happen, it makes the company grow, makes the company more profitable, makes the company a better place to work, and there are very clear outcomes that come as a result of it.
How did you come up with the vision for the company knowing that it’s not a one-size-fits-all for every brand?
That’s the beautiful part about our company. When you have strong brands and they all have a unique and special point of view, you have to respect that. When I kicked this plan off, I had the experts on the big growth areas give us their point of view of how things should work. I went to the brands and asked for their strategy work.
It focused us on things that were big enough to matter, that were unique to us and that the company and the brand had a right to win. It wasn’t like a project that was right for Glamour would be right for Vogue, because it isn’t. And it helped us get organized on creating the path to achieve, which was typically having the right talent, having the right product and having the right execution of it.
You’ve said that Brides, W and Golf Digest would go under a strategic review. Why those three titles, and how did they fit (or not) into your vision?
We had two really key criteria. They had to be financially viable and big enough to matter and they had to meaningfully impact our ambition for our growth areas. The brands that are here passed those tests and the brands that aren’t didn’t pass those tests.
But they’re really good brands, and we felt like there was real value to someone else. Golf, in particular, we looked very hard at that golf asset. There may be that we end up maintaining some level of participation. But it was a very professional process and, in many ways, pretty obvious. If I can make Vogue twice as big, the energy and the investment and the time required to do that is going to be a lot easier than trying to make W 10 times as big. That’s the choice I made.
We’ve seen Teen Vogue go from print to digital only. Why are those titles not going through the same process?
I don’t see the platform that we’re publishing content as the only driver of this. I think the platform that we’re publishing—whether it’s print, web, mobile, social, video—that’s going to constantly evolve with each brand. It’s really the aggregate of the brand. How does it deal with those two tests? The platform piece is really a function of managing the brands’ voice, the audience’s, the business model’s.
I know this is news for people, but to me, it’s not. The amount of content that’s published on these platforms is not news because it’s a natural part of managing your content against consumer demand and interest.
The media industry is constantly evolving. We even have publishers holding events to diversify revenue. Did you foresee this coming?
We bought an experience company two years ago. We launched a video business five years ago. We’ve made significant investments in acquisitions. We have a 300-person video team; we didn’t have a video team three years ago.
There’s significant investment that we’ve put against these trends, and when you see them really take off, that’s when you pour more investment into it. And that’s really what I’m doing. On one hand, I was in these businesses and I liked them. Now we’re going to do a lot more of it.
Are there any titles still in the portfolio that don’t necessarily fit your strategy?
No, we’re all set.
Meredith, after the Time acquisition, has focused on being in the lifestyle, celebrity and entertainment space, and Hearst now just appointed a president who has risen the ranks in the digital world. How do you see Condé positioning itself against those two competitors?
Fewer, broader, bigger brands, different revenue streams and focus. Culture-defining. I’m finding growth in the disruption of our markets. The video is disrupting, so I’m an aggressor. … I’m looking at the disruption of what’s happening, and I’m looking for growth areas to participate in that. That’s different than what others are doing.
You’re committed to diversifying revenue with a 50/50 mix of advertising and non-advertising. How does that compare to previous years for Condé and previous strategies?
We’re 70/30 now so it’s a 20 point shift. And that shift happens as a result of everything I’ve talked to you about. It’s a significant shift.
In your strategy, are you looking to hire for any new positions?
I’m replacing Dawn Ostroff [former president of Condé Nast Entertainment who left for Spotify], a new head of our agency that we’re recruiting for, and I’m also recruiting for a transformation agent that will help me manage this project to help implement the strategy and help us go through the natural ups and downs that come with implementing a huge project like this.
Is it possible for some revenue diversifiers that we see from one brand, such as the Allure beauty box, be implemented by other brands?
I’m expecting there to be opportunities for many of these projects to be a platform that can grow to other brands, but I haven’t even really calculated that in my plan. My 18 projects alone through 2022 will create … $600 million in new revenues. I don’t want to roll something out until I really know how to turn it into a great product and a great business.
Publishers have had to make some tough decisions to match changing industry trends. Is this a shift to reflect the changing media industry?
What isn’t different is what we want to do with the content. What is different is where we publish it and how we want to monetize it. I’m placing a great deal of time and attention into creating that monetization and that new business model for the future rather than hanging onto the business model of the past.
New ventures like these have seen a lot of success and have attracted a whole new readership. Why do you think you saw such success with it?
We had an impassioned leader. The company wants to be at the beginning of culture-defining moments; it was clear things were changing. It was a natural business that we wanted to be in. It isn’t our biggest business, but obviously it’s here and we want to incubate and build that because it … will drive culture and it will do good. If you look at the kind of businesses we want to be, it just fits into that naturally. We have such talent in Phillip Picardi, and talent drives everything.
Could their success serve as a model for other ventures you launch down the line as part of this plan?
There will be some unique things that come. Our company incubating new ideas when we see trends changing is just the natural part of our DNA. It’s something that Anna is always thinking about. She’s so connected to the culture and things that are changing around the world, that that’s the greatest part about being CEO of Condé Nast. You come to work, and I could have a launch come to my desk this afternoon that I never even thought about. And that’s what’s great. Because our talent is so special.
You weighed in on Anna’s place in the company. There have been rumors for so long. Why weigh in now that she’s staying?
I said it before and I had to say it again. … I don’t know where that all came from, but it never came from me.
This is a five-year vision, but what’s the short-term look like? The next year or so?
Our first focus is on getting our overall revenues to grow again, and we’re really close. They grew in Q2. I don’t expect they’re going to be up for this year, but it was really close. The first focus is getting that going. That’s just an important business metric. I want to see some of these growth initiatives really connecting with consumers.
Condé reportedly suffered a significant loss the year before. How are you doing now compared to previous years?
This year we’re doing a lot better than we did the year before, and we have real momentum. This plan builds the force and the action steps to maintain that momentum over time. I feel really good about that.