View from the top: The rise and future growth plans of Hearst UK’s D2C business

Hearst is one of the oldest and most successful media businesses in the UK. Speaking during the closing session of the FIPP D2C Summit in June, Reid Holland, Chief Consumer Revenue Officer, Hearst Europe, UK, outlined the main areas where the brand has taken significant steps to alter and refine its business model in relation to D2C.

Growth areas: subscriptions, D2C, print

Holland began by saying that the development of new products and channels is a very important area for Hearst UK. In the past few months alone, it has extended its collaboration with healthcare electronics company Philips and developed its health and wellness offerings, subsequently reporting a 27 per cent increase in subscription revenue generated by its three health and wellness brands.

“Subscriptions and D2C have been a real success story for us,” said Holland. “If I go back five years, they made up maybe less than a third of all consumer revenues. This year, we’re confident in those areas being in excess of 50 per cent of our consumer business.”

The legacy of the business is magazines, but Holland thinks there is room to push further. “About 25 per cent of our revenues in 2021 are coming from products (like events, beauty boxes, holiday boxes) and channels (like Readly or Apple News+) that weren’t part of our business five years ago,” he said. 

This has eased some of the pressure on the core magazine business, he added – but rather than detracting from its success, it has made space for it to expand: “It’s fabulous to be able to say this, that after all this time, our print magazine business – from a circulation perspective – is going to have its best year of any of the last 10.”

From generalists to specialists

Holland’s explanation for these successes is, in part, due to Hearst UK’s brands moving from being more like generalists to specialists. “Five years ago, subscription managers would have worked on a few brands and would have worked across the whole subscriptions programme,” he explained. 

With our brands, it would be criminal if scaling up weren’t part of our ambition.

Reid Holland

“Jump to today, and we’ve built teams of experts that work across an individual aspect of our programme: pricing and forecasting specialists, digital marketing specialists, e-commerce optimisation people, and our CRM team. Even within that, we have specialists in data growth, email marketing, engagement and experience.

“We’re in a matrix within a matrix within a matrix,” he added. “Teams are no longer teams within their little silo – that idea is dead. As a leader you have to be able to influence people who aren’t directly in your team, and as a team member you have to be able to work under people who aren’t your direct boss. 

“And this is scalable: with our brands, it would be criminal if scaling up weren’t part of our ambition. And having made the progress we’ve made, I think we’ve got every chance.”

Pandemic boost is ongoing 

“Sales were just astonishing in the first phase of the lockdown,” said Holland, a trend seen across much of the industry as a whole. “Some of our brands were 300 per cent up, year on year, as a result of the pandemic and increased demand.” 

Overall, demand has remained incredibly high, leading to a boom in Hearst UK’s acquisition business. “New customers have retained better than in previous years as well. They’re now entering their third or second possible ‘churn point’, and we’re seeing about a 15 per cent improvement compared to normal times.”

Online events success

Hearst UK was known, prior to Covid-19, for its big-ticket live events business. Holland was positive about the switch to online. “The team pivoted quickly to virtual and had a big learning curve – they did brilliantly.

“And I don’t think virtual is going to go away. Live, in-person events will come back, but I don’t expect virtual to disappear.”

There’s no need to choose one form of revenue over another.

Reid Holland

The art of the possible 

While Hearst UK’s successes are built on its print magazine business, Holland believes the real opportunity lies beyond that. “Live experiences, deals, newsletters – and of course, the magazine product itself. There are lots of routes to go down,” he said. 

“Research plays a big part in that. It’s the art of the possible – providing something that’s better than our minimum viable product. No one really knows what that is, but we have to believe we’ve got some strong value layers that have been validated with consumers. The technology, the UX has to work. And then we have to have plenty of headroom for development – to know what we’re working towards all the time.”

One of the issues is getting caught in a “loop of perfection”, said Holland. “The risk with that is that you never go live. On the flip side, you could go out too early, when the product isn’t polished. It’s finding a balance between speed to market and quality of the product.”

Getting closer to the customer

Hearst UK’s new initiatives aim to always get them closer to the customer, Holland explained. One example is travel products. “These are curated, exclusive, branded holiday products. Good Housekeeping can take you to Norfolk with Delia Smith. We’re not a tour operator but partnering to deliver brand-relevant, high quality, expensive experiences.”

D2C is certainly part of the strategic vision: “If we have an ambition to make the direct-to-customer our main revenue stream, I think we need a mindset shift,” said Holland. “I suppose I’m talking about new KPIs, coming down from the top, then adopted by the majority of the company. Moving from being product-centric to customer-centric, moving from anonymous, massive audiences to highly segmented, known customers – these are major transitions.

“There’s no need to choose one form of revenue over another at the moment. We’re not pushing in any particular direction. It’s not ‘at the expense of’, it’s ‘in addition to’.”

You can watch the full conversation with FIPP President and CEO James Hewes, including extra Q&A content, below:

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