The tech media giant IDG may be on the cusp of change, with Goldman Sachs shopping it to prospective buyers two years after the death of founder Patrick McGovern; but meanwhile Michael Friedenberg, CEO of IDG Communications isn't sitting around twiddling his thumbs. In a recent interview, Friedenberg talks about how IDG is evolving its product and customer relationships in the face of continuous change in digital publishing.
IDG Communications, which publishes PC World and Computerworld, among scores of other titles, is one of three divisions of $3.75 billion IDG Incorporated, the privately held international tech media and tech investing company that had 13,200 employees in 2014. Besides IDG Communications is IDG Ventures which is a combination of venture funds and partners who invest internationally and IDC which runs a market research and market intelligence business. Although the company doesn’t discuss the relative sizes of the divisions, those who are familiar with the company believe that IDG Communications and IDC are each about $1 billion in revenues and the venture arm is the remainder.
For sale?
Friedenberg is most interested in talking about the operational issues of "growth" and "relevance" and not the existential issue of the company’s future ownership. Since McGovern's death, IDG's ownership has moved through the McGovern estate to benefit the McGovern Foundation. The company retained Goldman Sachs “to explore strategic options” says Friedenberg, objecting to a question about the company "being in play."
A source who is familiar with the situation but who asked to remain unidentified, says that despite the careful language about “options,” the company is most definitely looking for a buyer. “In fact, the objective would be to sell all the divisions sold as one unit, as stock, rather than selling the assets separately, probably because of the tax benefits” for the family foundation. This person says that IDG has been global for most of its history -- ahead of many other companies in the industry -- and this makes it especially attractive to the current M&A market. Even if the company was sold as one piece, the new owner would likely break up the pieces. “Most outsiders think that IDG should be in at least three pieces, even if IDG people truly believe this will be a mistake” because of the synergies among the divisions and properties.
Reorg to more centralization
According to the company, IDG Communications owns about 180 publications and properties, produced in 24 languages in 97 countries. comScore ranked it as the top technology publisher worldwide in February 2016 -- counted by desktop uniques. (See the chart below for a list of the top fourteen.) This includes PC World that has a worldwide consumer audience of 37 million and Computerworld reaches 12 million IT manager reader/users.
Freidenberg says that IDG's structure and infrastructure changes over the last 18 months are important and have already been effective in increasing profit; while declining to mention the base of comparison, he says that IDG Communications’ EBITDA grew 166% in 2015 compared to 2014.
“I think one of the biggest changes that we’ve made as a company is becoming less decentralized. Historically, with IDG for 52 years, we’ve been pretty much a decentralized company, because that local flair was necessary when you were living within a print landscape.” He continues, “Now, with the Internet and digital, it’s less about geography. It’s more about language. We’ve been moving really, really fast in creating centralized platforms that allow us to deliver speed, scale and consistency of capability. We’re not centralized and we’re not decentralized --we’re rather interdependent.
Freidenberg says the company remains locally run at the country level for sales and editorial but that there are three “core” areas of centralization which are:
- Ad technology 'stack' which unites the company-wide technology together, “where we’re now understanding how to monetize our worldwide inventory pool in a real-time environment.”
- Marketing services capabilities are shared throughout the company. “We’re globalized so programs that used to just be built in the US, or just built in Germany, can now be expanded globally for ease of use with our customers.
- 'Demand generation' capabilities that build and nurture prospect and customer relationships for the long term “through a centralized hub called IDG Connect that delivers and sells our demand-gen programs.”
With this combination of centralized functions, “the goal is to remove the international complexity to deliver on the marketing goals that our advertisers are looking to deliver.” The reorganization and refinements, says Friedenberg, let IDG “deliver a deeper engagement with our reader which for our advertiser is all about accelerating the intent to buy by the individual.”
To help drive the awareness of this reorganization, the company launched its first company-wide branding effort to focus away from its brands to its worldwide footprint.
Mike Friedenberg, CEO IDG Communications. Photo courtesy of the company
New products and the competition
Friedenberg describes sales processes and ad solutions which are new to IDG, but are similar to standard ones in the media industry. (For example, it has been reported that Ziff Davis, publisher of PC World's competor PCmag.com, has purchased or built capabilities that make Ziff Davis operate more like an ad platform than a media company.) Friedenberg, without mentioning the competitive environment, does in fact explain how ad functionality has been instrumental in IDG's growth in the last 18 months.
Native. IDG started offering native or content advertising in both articles and video in August 2015. Friedenberg says that this option has been even more important with the mobile web. “The advertisers welcome the opportunity to be woven within the article page,” which offers “contextual alignment and deeper engagement” than standard ad units. IDG’s product offering is through Nativo, a widely used vendor.
Account-based products. “IDG has the ability to identify purchasing behavior within a specific account or business, and then find the individuals that are involved in that purchase decision,” explains Friedenberg. The company watches what individuals are reading, and “based on the content that they’re actually reading, we can tell what stage of the purchase process that they’re in. Then we begin to nurture that reader through awareness, consideration and then finally purchase.”
Demand generation through the product 'IDG Connect'. Friedenberg reports that the demand generation business grew 21% in FY15 versus 5% growth in FY14. “As advertisers are looking to accelerate the purchase process, it’s getting very popular to sell SQL" or sales qualified leads in addition to the more traditional MQL or marketing qualified leads.
Commercial content or “com-tent.” On the B2C side, com-tent is similar to affiliate sales. “Last year,” says Friedenberg, “ IDG referred over one $1 billion of sold products to the likes of Amazon.com, Inc. or Alibaba or other third parties. We’re doing it through commercial content, where we’re writing content that we know is going to be important to our readers when they’re making a purchase decision, and then aligning links or other additional information next to that editorial, so if they’re ready to buy something, that’s at their disposal right away.”
Ruth Stevens, President of eMarketing Strategy, a business-to-business marketing consultancy, said in an interview that she is not concerned that IDG is not offering unique advertising solutions. She says that IDG “is a brand still really strong and well respected in the field and is playing in the single most active b2b sector—tech. Their tradition of bringing tech buyers to brands has persisted even through the demise of print and how the internet has changed buying behavior.” IDG’s ad tech products, she thinks can take advantage of the rich data that now exist because buyers do so much research on line. “It’s all about performance,” she says, "and if IDG can continue to supply high quality audiences who buy, then they will continue to succeed.”
B2B and B2C, but no must-haves
Combining business-to-business media properties with business-to-consumer properties is relatively rare in a content company. For example, Conde Nast’s parent, Advance, sold or closed its B2B properties in the Fairchild division, with Women’s Wear Daily going to Penske Media in 2014. Besides IDG, Bloomberg and its BusinessWeek property is the most prominent company pulling this off successfully.
But where others see conflicts, Friedenberg sees synergy. He says that “B2C trends are now pouring over to the B2B area. From a reader perspective, I think it’s incredibly beneficial and quite productive having a B2C editorial engine in place, because we’re able to see those incredible trends that are coming into play, like security, like mobile, like personalization of technology, like the smart home and how that’s now moving into the B2B space.”
Friedenberg explains that topics are similar, the audience could be the same, and the ad sales uses the same basic infrastructure. Traditionally, he says that IDG had premium brands serving unique audiences. Although the context where the ads appear is valued, audiences trumps brand. “In the modern media world, where data is being so important, the beauty is to have a globalized ad stack that contains all that data and insight. I would say [that having B2c and B2B] actually plays to our advantage, because with that incremental scale, you’re getting the incremental data that is very valuable for us.”
B2B media is most successful when it has “must have” data and information. IDG is doing the best with what they have -- centralization and data enhancements of its reader and users – but this is closer to “nice to have” rather than mission critical data for its customers.
IDG Operating Statistics Reported by Friedenberg and an IDG spokesman
Although IDG's private company status has made hard numbers difficult to find and even harder to verify, here are a few the company has shared through the interview and follow up emails:
Traffic and uniques
- “IDG reach is 44.3 million uniques in the US based on Multiplatform [mobile + desktop] data” in February 2016
- IDG reach worldwide is 230 million [desktop only] via the “unduplicated reach across our owned/operated properties and the IDG TechNetwork Ad Network” in Feburary 2016. It is up from 158.7 million worldwide in January 2016. The growth was not organic, but came from adding partners
- IDG, without the network, has 198 million uniques world wide, and was #1 in a tech pub comparison, according to comScore. (For the competitors, see the last chart in the story.)
- Mobile traffic: “50-60% in some brands”
- Number of cookies “we are collecting on a monthly basis” is 61 million
- IDG's data base contains “over 44 million users”
- 1.6 Billion impressions per month is the average available inventory from owned and operated and partner sites
Dollars and growth
- $3.75 billion in revenue in 2014
- “100% digital in the U.S. and nearly 90% of our worldwide revenue comes from digital”
- "Operating Profit increased 166% from FY14 to FY15. We are only in Q2 of FY16 so we can't accurately state annual Operating Profit growth for this current fiscal."
- The demand generation business "grew 21% in FY15 versus 5% growth in FY14.... Annual growth for this year can’t be accurately stated as we are still in the current fiscal."
- The demand generation business also had "profit margins increase 3 points. Profit overall increased about 25%" between 2014 and 2015
- "IDG produces and manages over 700 technology events per year" having grown about 10% and equally balanced between U.S. and International events
- Events represent "13% percent of revenue"
