Much to the consternation of many at 4 Times Square Mckinsey are on the way in to participate in a root and branch strategic review of the business.
It will not be an enormous surprise if the focus of Mckinsey’s work is about finding costs that can be removed from the operation which are likely to be measured in whole publications (vertical slicing) and consolidation of sales teams (surely) rather than the editorial operating budgets of the most famous properties (the shared pain of horizontal slicing). Whichever way they slice, and slice they well it’s pretty certain that the prescribed road to salvation will be about lowering costs rather than raising revenues.
This of course is the alternate approach to a strategic review – how do we make more money? In the current climate that’s tricky, increasing ad rates against declining advertiser revenues and circulations is a challenge yet the symbiotics between the fashion business, retailers and Conde Nast is as tight as can be.
The problem is that Conde Nast sells exposure in a world increasingly focused on performance which means that the cause and effectiveness of what they do is a hard donkey to pin a tail on and this is no time for what some painfully refer to as ‘faith based marketing’. So the challenge becomes how does Conde Nast find a new business partnership with marketers and their brands? The new partnership (like all partnerships) has to involve exchanging value and sharing risk. Conde Nast has plenty to exchange. It’s potential to build events, retail brand experiences, and contribute content both on and off line is enormous. These things are hard to scale and hard to sell and they involve blurry lines between church and state but these are not normal times. For the advertisers the requirement will be to work hard to establish how they can incentivize Conde Nast for improving their sales and margins make them a really motivated partner.
I wonder if Mckinsey is the partner you turn to if increasing revenue through innovative partnership is your goal? I think the answer maybe no.
Will Si Newhouse ever say of Mckinsey “yes, they are bitches, but they are our bitches.’