Over the past few weeks, I’ve received quite a few resumes from people who have, unfortunately, been let go from Conde Nast. I’ve spoken to a few of them and in addition to hearing the already well publicized stories about how ad revenue has fallen off severely, and the expense account living used to be great, I’ve also heard repeatedly that CN is cutting web budgets “because S.I. Newhouse loves magazines”.
Now imagine you are the CMO of Ford and you go before your board and tell them that last year you spent $100M online (Google, etc.) and that the calculated ROI was 30%. Your board congratulates you and asks you to consider doubling the budget to $200M. You then go on to explain that you spent another $100M on ads in magazines. The board asks you what the ROI was and you say “well, I’m not really sure because it’s very hard to track a user who looks at a piece of dead wood that was sent to them in the mail (burning fossil fuels at each step in the process)”. Your board does the obvious thing and asks you if you can’t move the magazine ad budget to the Google ad budget. And therein is the future of the magazine business. A marketer/advertiser buying a product that cannot be tracked and measured for ROI is going to soon make as much sense as taking a ship instead of a plane to get to a business meeting in London.
So coming back to those CN web budgets. Granted, most of the web products at CN are not very good in the first place and CN has not exactly been attracting the best and brightest online media minds out there (AOL on the other hand…) so on the surface, there is probably a good argument to be made in cutting the parts of the business that CN is not winning at. Leaving aside the irony of talking about scrounging for web budget dollars at a company that recently built its own building, spent $100M on a failed magazine launch, and spends how many dollars each year on photos by Annie Leibowitz or on Anna Wintour’s wardrobe, cutting web budgets in 2009 is like drilling holes in the hull of the Titanic.
It’s hard for me to envision a scenario where CN is not in a doom loop from which it never escapes. Shortly, the likes of Tim Armstrong’s AOL will be pulling the best people out of CN and educating them about how to make money in online content. They won’t have big expense accounts for lunch, junior staffers won’t be staying at four and five star hotels while travelling on business (yes, that was the CN way), and their won’t be town cars waiting to take people home after work in a city with the best public transit system in the country. There will still be professionally done content worth consuming and many of NYC’s best media minds will still be doing what they do. But they will do it at places like AOL and New York Magazine, not CN. The New York Times may yet find a way to be one of those places that produces a lot of that content. They’ve got a fantastic online product – to their credit, they’ve been trying to plug the holes in their ship, not drilling more.
