Time Inc. CEO: 'I hadn't even gone to the MySpace website before we bought the company' - 'but its a pretty good website'
Speaking to Business Insider at the Cannes Lions advertising festival last week, Time Inc. CEO Joe Ripp joked: "There were a lot of chuckles about that."
He added: "Quite frankly, I hadn't even gone to the MySpace website before we bought the company, but after going there, it's a pretty good website, and music is pretty interesting."
Time Inc. - which owns more than 90 media brands including Time Magazine, Sports Illustrated, and Fortune - wasn't buying MySpace in order to resurrect the social network. It was all about the data assets.
Ripp said: "The whole point of MySpace is it gave you permission to reach 1.2 billion people. You combine that with the permissions Time Inc. has from its audiences: we reach 250 million adults in the US. We basically reach 80% of the adults anyone is trying to reach with the permissions that we have to reach them and track them and follow them, so MySpace has really been all about permissions."
That said, Ripp thinks there is a gap for music content online.
"We need to look at it. I don't have a plan for it yet. I've been focusing mostly on the integration of Viant. I've been focusing on mostly what to do with the data out of Xumo [the Viant and Panasonic-owned over-the-top TV video platform that collects data from 13 million smart TVs] and the TV targeting data that comes from television, and the third conversation will be what to do about MySpace," Ripp said.
The integration of Viant has been "excellent" and has moved Time Inc's sell to advertising to sounding very much like Facebook: "People-based targeting," which was decked all around Time Inc.'s stand on the beach at Cannes. Ripp says only Facebook, Google, and now Time Inc. can make that kind of claim - but even Facebook and Google don't have the TV data.
"When [Viant founders Tim and Chris Vanderhook] were at Viant, they couldn't get to the CEO of a major beauty company. When they are part of Time Inc., they can. We have been able to take their message to many more senior people. Time Inc. is given the data quality credibility, the program capability in ways that they, they were very successful before, but now they are more successful," Ripp said.
How successful? Ripp didn't provide numbers and wouldn't confirm how much Time Inc. paid for Viant, but said: "Viant is actually a very good deal. We got buy-in at a very attractive price and it is now, with us, growing much faster than even they thought it would. It was very attractive and our investors are really starting to recognize that."
Time Inc. "the magazine company" was a "destructive definition"
Ripp said: "In the past, Time Inc. had limited the size and scale of its audiences because we were defined as 'the magazine company' and that, in part, was a very destructive definition because it limited ourselves primarily to print. By thinking of ourselves as a content company, we now distribute on social, on video, on digital - our digital audience is up 83% in the last two years - and it's because we redefined ourselves by not only focusing on print. Print is still very effective, we now know it's very effective as an advertising vehicle. It's still an important part of our business, but it doesn't mean we have to ignore all these other parts. It's not one or the other."
Time Inc reported a 5.4% decline in annual revenue to $3.1 billion in 2015. Print and "other" advertising revenues decreased 10% from the prior year to $1.32 billion. Digital advertising revenue rose 11% year-on-year to $331 million.
One simple way Time Inc. is becoming more of a digital business is by encouraging its reporters to take a film crew with them or use their iPhones to shoot video every time they are meeting someone interesting.
A fun example: When Time Magazine shot its cover of Donald Trump sitting in his office with a bald eagle, it also published the now-famous outtake video, showing the bird flapping around the room and attacking the presidential candidate.
Ripp said: "That video was hilarious and in the past it never would have been displayed anywhere. It would have been something that just the people who went to the shoot saw. So what I've said to people is: really engage with celebrities at that special moment, engage with politicians, thought leaders, constantly engage with them, just take a video of it because that's very compelling content that most people don't have access to."
Time Inc. published around 40,000 videos this year and new mobile units that are "much more engaging and a lot more fun," in a bid to break away from the swathe "annoying" advertising that consumers are increasingly blocking.
No material negative impact from ad blocking so far
Ripp said Time Inc. hasn't seen a negative impact from ad blocking so far, but that it is using technology to detect how much of its audience have ad blockers switched on. Time Inc's ad blocking rates are lower than those Ripp has read about, he said, which he assumed might be due to the quality of its content, and that the audiences for some of its titles are a little older.
The company is currently experimenting with its response to the ad blockers: Sometimes blocking content from people with ad blockers switched on, while other times its websites simply ask ad blocker users to switch them off.
Ripp said: "The reality is that quality content costs money. We spend over half a billion dollars a year creating content, so we need to find a monetization strategy for that. If ad blocking becomes so extensive that we can no longer make money on the content that's being published for free online, we simply won't publish content for free online and the rest of the world will watch '5 Ways To Feed Your Gerbil' and we'll see how that works out."
We asked Ripp whether - given worries such as ad blocking, ad fraud, and measurement discrepancies - there might be a correction in the print advertising market and that dollars from digital might end up flowing back to magazines.
He thinks advertisers have to start questioning their media mix. The average tenure of a chief marketing officer of a chief marketing officer is just 44 months, according to executive search consultancy Spencer Stuart, which Ripp believes is due to marketers chasing "big shiny objects."
Ripp, who was the vice chairman of AOL in the early 2000s and CFO of Time Warner in the late 1990s, said:
"They've been chasing these things that generate huge traffic, huge buzz around the next big thing, and then we find out it doesn't work, it doesn't engage, it doesn't convey messages, it doesn't absorb, and it's not absorbed because it's just an annoying thing on the side of the screen ... I left the industry for 14 years and I came back to it, and I think the industry forgot branding. It forgot a lot of the top of the funnel.
"You know, you don't always buy a car because you saw an ad for BMW. It doesn't work that way, there's branding that goes on for years and years before you make those choices. I think, all too often, advertising is being thrown int a direct response box - and not all advertising is direct response. I think advertising is now starting to realize that and it's starting to get all the detail and realizing that brands have been losing their value."
There are some "ridiculous" valuations out there
An area where Ripp wants to see a decrease in value is the valuation of internet businesses, some of which he believes are at "ridiculous" multiples of revenue, having "never made a nickel".
Ripp said: "I remember when I first came back, I had a woman in my office. She had $17 million of revenue and she had been at it for seven years, $2 million of losses, and she told me she wouldn't go for less than $200 million for her company. I laughed at her. I said: 'Well you need to find the person who's willing to do that because you haven't found that here.' That makes no sense to me, but that's how people think. There are these values out there that are just insane. I was a CFO, I know what value is and I know how to calculate it."
As for the types of companies Ripp does think might add value to Time Inc., he said he is interested in native content product and more ad tech.
Ripp said: "The good news is, when I first started out two years ago, anything that had the word 'digital' on it was ridiculously over-priced. People are now coming to realize that you do actually need to make money one day and that losing money for your entire career as a business isn't actually a way to generate value."