In a shift, Conde Nast integrates more of US and international arm

Condé Nast this week formed a new creative agency that sells advertisers nontraditional ad services like events and influencer marketing and on a global scale. Back in the summer, the company merged its U.S. and U.K. editorial teams for Condé Nast Traveler; and changed its leadership structure to reflect collaboration between its U.S. and international product and tech teams.

The company has acknowledged there are more examples of collaboration to come between the bigger but money-losing U.S. base and its leaner, faster-growing London-based international arm — to some, a realization of the longtime inside joke in the U.S. that the “overlords from Europe are taking over.”

None of these moves are ever painted as cost-saving measures, but the reality is, the U.S. publishing house is scrambling to erase $120 million in losses last year. It’s made dramatic staff cuts and replaced longtime editors with more junior (cheaper) ones. Sharing editorial content can help by reducing the need for two top, highly paid editors and other duplicative work. You don’t need two reviews of a luxury hotel, which is what was happening. There are separate sales staffs, but the integration makes it easier to execute cross-market ad buys. The travel subject particularly lends itself to content-sharing, but it’s widely expected that Traveler will serve a model for centralizing functions across other titles. Already, Condé Nast International centralized its September fashion show coverage out of London.

Sharing content is made easier by a single content management system called Copilot that the company has begun rolling out across its titles. Condé Nast culture has been to let its editors operate independently, but that could change.

In the past, European markets tended to be newsstand sales-driven, and media diets were more localized, which made the case for highly localized print editions. As digital breaks down barriers to access to content and becomes a bigger share of the company’s revenue (it’s now about 50-50 print-digital), the burden for each glossy magazine to be distinct and superior to the competition becomes lighter.

“Travel is travel; with some nuance, fashion is fashion,” said an insider. “For Condé Nast to have these individual experiences that layer on these inefficiencies doesn’t make sense.”

Global ad deals, while still uncommon, are becoming less so. Publishing on a single CMS also makes it easier for advertisers to buy across markets, where Condé Nast has a big opportunity, said Wenda Millard, vice chairman of MediaLink.

“There are many times when a message crosses borders, and in fashion and beauty, that’s particularly true,” she said. “They’re global brands whose brand image is consistent across the globe. Since they’re Condé Nast’s core categories, it makes sense they would move in that direction.”

The significance for a company like Condé Nast tilting toward London is more than just financial. The U.S. arm has lost some of its top executives and editorial firepower in recent years while it’s the international president Wolfgang Blau who’s been making the press rounds, including a New York Times closeup, and who is still launching magazines; the latest, Hong Kong Vogue, is set to come in 2019. Blau reports to Jonathan Newhouse, a scion of the Newhouse family that runs the parent company Advance and who has been pegged as a suitable candidate to run the whole show.

“This is where the center of gravity for Condé Nast is going to reside,” said Peter Kreisky, chairman of the Kreisky Media Consultancy. “This may be a trial to see if you can reset the center of gravity to be in London.”

There are limits to the international takeover narrative. The businesses have all sorts of differences, in size, audience, how they work with advertisers, privacy regulations. Advertisers more often than not buy locally. Global ad buys are “creative-intensive,” said Steve Horowitz, president of Ziff Davis. “We’re doing a lot of custom content; it lives well outside the banner.”

From the buyer side, group buys have the potential to find cost efficiencies, but it’s hard to service buys that span multiple markets and there are limits to how much an advertiser can take advantage of the publisher’s various editorial brands, which differ by market, said Veron Agustin, business director, GNC, at Starcom.

Also, there needs to be a balance to avoid ending up with a homogenized magazine product. At Hearst Magazines, past president David Carey recently said he saw a point where 15 percent of some sites’ editorial content was shared, with fully 85 percent being local.

“The risk is you’re not going to be able to capture all the economic gains you thought you were going to capture because of the need to localize content,” Kreisky said. “You may end up spending just as much.”

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