Use digital disruption to your advantage: 5 ways to grow as a regional publisher

Dr. Kurt Sabathil, CEO of Schwäbish Media, doesn’t view a new digital reality as a threat to his business. “Digitalisation keeps us flying”, he says.

July 11, 2018

A continuously increasing digital world is an inevitable fact. So why not embrace it? That seemed to be Dr. Kurt Sabathil’s uplifting and refreshing attitude as a speaker at the recent media tech conference CUE Days 2018.

A very well-prepared presentation with piles of useful and insightful data from inside of Schwäbisch Media was the basis for the 5 key strategies for “how to survive the digital disruption as a regional publisher”, which Dr. Sabathil presented to the audience. The 5 strategies and the implementation of them at Schwäbisch Media are summed up below.
 

1. Build and be a corporate brand as regional champion
Dr Sabathil stated that as a regional publisher, you don’t have the possibility of an ‘export model’ to grow your business. Geographically, you’re kind of stuck. This means that you should spend all your energy on being the best in the region - in all fields - whether it’s newspaper, digital, logistics, tv, services, etc.

“If you look at Google and Facebook, they can only do digital. We can do more than digital. We can do logistics, we can do print, we can do services. And therefore in these fields you have to be better than all the others, even Google and Facebook, in your specific region", Dr. Sabathil said.

So how does Schwäbisch Media do it better than others in its region?
Firstly, the German CCI client shows that all of its products and services are under one roof. This way, advertisers and business partners can see that cross-media activities mixed with expert regional knowledge is what to expect when doing business with Schwäbisch Media.

In relation to this cross-media focus, Schwäbisch Media also reorganized its advertising sales department. In the past, each product (print, digital, tv, magazines, etc.) had its own sales department. Now, the sales department is much more customer-centric -- organized by advertising genre and with the ability to provide full-coverage packages to advertisers across Schwäbisch Media’s many online and offline channels.

Secondly, in the pursuit of being a regional champion, it helps that Schwäbisch Media has the largest daily newspaper in the region with its 19 editions of Schwäbische Zeitung. But Schwäbisch Media doesn’t rest on its laurels. The German regional publisher wants to be able to offer its advertisers exposure to as many households as possible in its region. Unfortunately, far from all 1.3 million people in the region subscribe to Schwäbische Zeitung. Therefore, Schwäbisch Media produce several free regional and sub-local newspapers that are distributed to all non-subscribing households. This results in Schwäbisch Media reaching 90 % of the region’s population with either one publication or the other.

Thirdly, Schwäbisch Media also produce several magazines for niche-markets within the region.
 

2. Take care of your core business: newspapers
At the conference, Dr. Sabathil stated firmly: “don’t forget your core business: newspapers”. At Schwäbish Media, 70% of the business is still newspapers. And even though it is slowly declining, Dr. Sabathil underscored the importance of not exclusively investing in digital products: “You have to invest in printed newspaper, not only in digital. Because this print business will continue at least another 10-20 years. So you have to keep it strong. You shouldn’t only use it as a cash cow and make it weak. Don’t just take out cash, also invest cash”.

How does Schwäbische invest in print?
Over the past nine years, Schwäbisch Media has invested in a new and more modern design for its newspapers, which has been carried out in seven steps. But the most significant investment that the CUE Days audience noticed and tweeted the most about was that the German company hasn’t cut down in editorial staff. Since 2008, Schwäbisch Media has actually increased its number of employees by 28% ranging from local editors and video journalists to trainees and cross-media specialists.

What are the results of these investments?
The average circulation loss for German newspapers from 2008-2017 was almost -19%. Schwäbisch Media, however, only lost less than -9% in the same period. Moreover, the average ad revenue lost for German newspapers from 2008-2017 was a whopping -40,3%. But Schwäbisch Media ‘only’ had a decrease of -27,3% in its ad revenue.
 

3. Develop your personnel
Dr. Sabathil acknowledges that it can be hard to recruit talented employees to work in an industry that for some has a reputation of ‘dying’. But he gladly spends resources on staff care and employer branding to be attractive for new and current employees. A completely new and modern office building, an open space concept, and informal communication areas are just some of the latest staff care initiatives.

Schwäbisch Media especially wants to appeal to the younger portion of the workforce because, as Dr. Sabathil says; you have to have young people in your organization to know what young people want to read and consume.
 

4. Use the digitalisation to streamline, automate, and enhance your internal processes
Dr. Sabathil sees the digital disruption as a positive opportunity to optimize his business by streamlining, automating and enhancing internal processes. But when investing in IT, it is imperative to invest in something future-proof. But how does Dr. Sabathil define a future-proof IT infrastructure?

“You have to invest in IT, and you have to think more simple and invest in flexible systems. Because the market requirements are changing quite fast, and in the future, they will change even faster. So if your IT infrastructure is not able to adjust to the new requirements, you will be gone”, he stated.

Dr. Sabathil presented several cool and quite tangible examples of Schwäbisch Media’s latest use of big data and Artificial Intelligence (AI). He presented one of the examples under the headline ‘From Big Data to Smart Data’.

Instead of only using big data for reporting, planning and data mining, like the company has done in the past, Schwäbisch Media now also wants to do predictive analytics. Therefore, Schwäbisch Media made a churn possibility model. Based on 60 different criterias, the model can calculate how likely every single subscriber is to unsubscribe (churn) during the next 6 months. The results of the first round of testing the churn model speak for themselves.

“Normally, we only know with a 2% probability if someone is churning. But with the model, we got a group where we could see there was a 64% probability that the subscribers would be churning in the next 6 months. So we could use this model for churn prevention effectiveness. And then we made an experiment: One control group, we did nothing with for six months. 20% of them churned. The other group, we did visits to them, talked with them, gave them incentives for staying as a subscriber - and only 8% churned”, Dr. Sabathil said.

Other AI initiatives that Schwäbisch Media have implemented or is experimenting with include automatic article scoring, writing bots, chatbots, and automated personalisation of content.
 

5. Grow with new digital products and services
The final key strategy you need to survive the digital disruption, according to Dr. Sabathil, is quite simple: “You need more digital products and services”.

Schwäbisch Media has both produced a lot of new digital products in the news sphere, such as news apps, multimedia storytelling, digital leaflets, and a video portal for young people. But the company have also built up many digital services like a tourism portal, digital agency, cross-media agency, content agency for corporate communication, call centre agency, and a personnel agency.

So the company has now become much more than a news publisher. And with these services, Schwäbisch Media is also helping its customers to digitally transform, which is a vital part of Dr. Sabathil’s mission with going into those kind of businesses. Because, as he says; “If we don’t do it, Google will do it… And then we will lose our customers”.


 

This article is part of a series of stories from CUE Days 2018, which we will be posting over the next few months. The stories will give you tangible learnings from the many presentations by both CCI & Escenic employees and users.
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