When Troy Young came to Hearst in 2013 from Say Media, he was faced with the challenge of building the magazine division’s digital arm, a task that entailed disrupting the foundation of the business and also bruising the egos of the editors who helped build the publisher’s reputation.
But Young, a decisive and, some would say headstrong, executive, didn’t pay much attention. He created a new digital team for each magazine, with the editors of those sites reporting up to him, not the editors in chief of each title, which ruffled feathers. The president of Hearst Digital Media also unified the business side and helped develop a shared content platform, putting Hearst ahead of some of its biggest legacy publishing rivals.
Fast-forward four years, and Young is now seen less as a supercilious disruptor and more as a digital visionary. Standing in Hearst’s unfinished 26,000-square-foot video and multimedia production studio, which is housed in the building next door to Hearst Tower on 57th Street in Manhattan, Young sidesteps wires and errant materials as he explains what the Gensler-designed space will look like when it is finished in late September. His vision is for short-form video to be a driving force of Hearst’s business — hardly an original idea given the industry’s pivot to video for advertising dollars — and the new space is emblematic of that goal.
But within minutes of speaking with Young, it is clear that the executive thinks about media deeply and how the landscape is changing. Here, he lays out his vision for Hearst, the challenges of building a brand on Snapchat and what the magazine industry will look like in the next few years.
WWD: How has the digital landscape changed in the years you’ve been at Hearst, and where do you see it going?
Troy Young: There have been waves of digital development. What’s so remarkable and difficult about our time is that the two pillars of media are in what seems to be a constant state of evolution or disruption, and that’s distribution and content. The early transition of lifestyle magazine media was, we need to create a web site to create subscriptions. Then web sites became discreet entities taking traffic from Yahoo and other portals, and then there was the rise of search, and then there was the rise of social. These are all fundamental distribution shifts. Then there was the notion of distributed content where publishers start distributing entire content experiences to other environments. Then there was the rise of video, which was in itself a distributed medium and came along with an entirely new vocabulary and content creation because there’s nothing more different from typing than making video. I think that those twin structural shifts — that is, the movement to video and the shift to distributed content experiences — are the two that will define many years of media for these types of companies.
WWD: You said “the rise of video” — are we still in that moment?
T.Y.: A thousand percent. Think about it. I was talking to Nick Bell [vice president of content at Snap Inc.] yesterday at breakfast, and I think he put a point on it, which is, Snapchat has roughly more intelligence around real-time video consumption than anybody on the planet. They are applying a lot of machine learning to what’s in video. If you look at the evolution of their tools, it used to be a static image and like a video that you could literally draw a line on top of it. Today, you can isolate characters, you can add a dancing hotdog, you can change the way you look. I think that this notion of the individual as creator and editor through a phone is only going to evolve. The tools will evolve and the sophistication of the audience will evolve and the sophistication of the creator — to the point where the editor will by necessity be comfortable in documenting the world with video.
WWD: Does that mean print is dead?
T.Y.: No, not at all. Mediums don’t die, they become more specific in their purpose and they persist for a very long time. I think what’s very important about media is that we don’t let one type of media and one orthodoxy define the next. When you are transitioning a media company, you take what’s great at that organization, that media brand and its history and its relationship with consumers, but when you shift the medium, you have to pay attention to what the new medium requires.
WWD: When you joined Hearst, you separated the print editors from the digital editors in order to build scale online. Do they ever become one again or will there be more of an overlap between both sides?
T.Y.: That concerns me a lot less than being excellent at the medium, so I don’t know. I think that what we were trying to do is make a shift from months to moments, challenge long-held orthodoxies about the kind of content we created and how we created it, but more importantly, create a group of people from content to advertising, operations, technology, product, audience development that could focus on what it took to build that medium with the consumer and build advertising around it and compete with people that were doing it in a focused way — and get scale. These businesses are historically very fragmented. You have 20 brands. They all have their own go-to-market approach and you have the added complexity of those brands being rendered globally. So they are very fragmented businesses. When I got here, we literally had 100 ad products. We had many, many ad vendors supporting our brands, multiple content approaches, and then if you look at that around the world, there was an intense complexity and the problem with that is, it prevents you from driving real innovation. Real innovation requires the investment of a single organization across a lot of sources of revenue and points of light. It meant that smaller countries in smaller areas couldn’t get the investment they needed to move ahead, and it also meant that our advertisers that wanted to access a broader set of properties were met with real complexity because everything was different everywhere. What we’re trying to do around the world is to simplify and get the benefits of scale. I think that will be really important as the industry consolidates.
WWD: On Twitter, Hearst shares stories across various titles such as Cosmopolitan, Elle, Esquire and Marie Claire. Is that sameness of voice helpful in brand-building?
T.Y.: I think you’re looking for them [the shared stories]. There are very few people who engage in that particular use case, which is moving across multiple titles.
WWD: If you follow Cosmo on Twitter, don’t you follow Elle, you follow Marie Claire…
T.Y.: I don’t think there’s any reason to believe that that’s a natural use case. You may for sure.
WWD: What I’m trying to get at is how do you differentiate the [digital] voice of a Cosmo, a Marie Claire and an Elle?
T.Y.: I think they are massively differentiated. They all have very independent, thoughtful editors that run them, but I think you don’t try to differentiate on a commodity news story. When someone discovers that a cow looks like Gene Simmons and you’re trading on that basic news of the day, that’s part of the flow of a modern digital media group. That is not what defines a media brand.
WWD: What is the voice of a magazine digitally?
T.Y.: I think you want to be part of a conversation that your readers are in all the time. I think that the medium is more personal and it is certainly defined more by news. Voice has never been more important. I think the topic is intensely important to lifestyle magazines and I think that when a 21-year-old woman is trying to understand what’s going on with the world and dealing with the anxiety of our modern existence, Cosmo plays an important role in aspects of that conversation, and I think they always have, and may perhaps in a smaller way in print, taken on issues. I think we have translated that into a world where we can comment on something in real time. The foundation of Cosmo is still relationships.
WWD: A lot of the originally reported stories still come from the print side but not always. Are you investing in those stories in digital?
T.Y.: I don’t think that we’re making investment decision across digital to print those ways. You’ve seen us push into original reporting and features for the last 18 months. At first we solved for velocity, then we started investing in quality and depth.
WWD: Let’s talk branded content. Does the bulk of digital’s revenue come from that?
T.Y.: We’ve worked really hard to diversify our revenue base. We sell advertising. We sell content and we sell products. A big percentage of our business is creating content with and for clients…that’s the branded content business.
I can’t help but broaden this to a comment on where the industry is at because I think the industry is almost in crisis, and I don’t mean lifestyle media, I mean, the media. The industry loves trade-able advertising assets that are very simple and that’s why television was so successful. But we’ve trained a generation to hate advertising, so the Netflix generation is not interested in interrupted video advertising. It will be really hard to steer them back to that. Now, that industry will still pull in tons of money on network television and cable and others and live will be very important, but my kids are not accustomed to watching ads on entertainment, and so I think that marketers’ choices are limited.
On the other side, the transactional currency of the Internet has been display ads, and display ads are much maligned in the industry. Content has become really important because it’s seen as a way to get to the consumer and a way that has some utility for the consumer. If you create great content in the spirit of editorial, and it understands service…then it can be incredibly successful. When we’ve spoken before, your earlier questions on what is editorial’s involvement and how are you creating branded content — well now, the whole industry creates branded content. Now, it’s about is it great—does it help the consumer? And, show me that it works and how is it moving products? I think that’s where the industry is at, finding the “click” in branded content.
WWD: I would think the real crisis in media is that editors have to do branded content and they aren’t creating pure editorial anymore.
T.Y.: I don’t think it’s about whether editors are creating it. What I think you want is the editors helping shape it in a way that it fits comfortably in the brand envelope and that the editors are representing the interest of the consumer. Also, you really have to differentiate between news and lifestyle media. In lifestyle media, it’s much easier because marketing in our world has always been about positioning products in different ways.
WWD: When can Hearst say, we get more revenue from digital than from print?
T.Y.: Every print-based media business on the planet is looking for an inflection point in digital. [We see the inflection point] in the next five years.
WWD: You have a partnership with Snapchat for Sweet. What have been some of the challenges in terms of growing a new brand?
T.Y.: I think it takes a long time to create a media brand. You want to create media brands when there are disruption points in the distribution environment because those are new ways to get in front of people. Sweet reaches a couple million people a day, which is a big audience. I really like where it is because it is designed for a young woman but it doesn’t feel really girly. It’s market-oriented and really service-y and fun and it is an easy place for a young person to spend time. We are going to continue to refine the editorial thesis for Sweet, but it also helped us build a way stronger relationship with Snapchat because we jointly own it. We are really good with partnerships and they are not easy because that partnership involved two very strong points of view around content having to agree on something.
T.Y.: The difference between four or five years ago and now is that the substrate of e-commerce is way more developed now and consumers buy much more readily online. Early on, I think people were trying to understand what it meant to be an inventory holder, a taker of credit risk, a distributor and a seller. Today we can do what we’re good at, which is influence the consumer with great market content and help them make a purchase decision and get out of the way for the rest of the transaction. Amazon has made commerce like water, and it’s basically a shopping API [application programming interface] for the Internet. We can take our understanding of search, of content, of data from our consumer, and our data from Amazon, and we can be the storefront for a lot of consumers. I think that’s really powerful because you can take 8 to 30 percent of the transaction.
WWD: What’s the revenue picture like for e-commerce here?
T.Y.: Year-over-year in June it is up 263 percent. We will double it this year and we will double it next year.
WWD: Are you involved in any of the investment decisions for Hearst and if so, what makes a good digital investment?
T.Y.: [Nods]. I think that Hearst is a very shrewd and pragmatic acquirer and investor of businesses. We generally buy very high-quality assets. We look at them first as businesses — do they create free cash? And are there great entrepreneurs behind them and are they great brands? I think we’re relatively unsentimental about future promises and very focused on whether they are going to be great businesses.
WWD: A lot of celebrities want to launch media brands, but so few are successful. Why?
T.Y.: I think that a lot of celebrities want to be in the media business, but the media business is a business. If their social footprint and influence is a starting point to create a media business, that’s a good thing. At some point, they have to professionalize the creation of content and the selling of advertising and/or subscriptions in the way that a professional media business would. My counsel to celebrities about making that transition is just to be really wide-eyed as to what it takes to go from having a lot of followers on Instagram to having a media brand, and what it takes to sustain a media business…it can’t just be how fabulous you are.
WWD: Everyone is creating video. Is there too much?
T.Y.: I think that’s a good question. I’ll give you something to think about. The great thing about text is that it is scannable. It’s efficient to pick up the idea out of an article very quickly, whereas video says the time is controlled by the video. I think one insight Snapchat had with their tap-to-skip mechanism is that they’ve made video scannable. You can move through a Snapchat show by just tapping it. That serves a modern consumer, who wants to be in control. You’re going to see more visual communication, but it’s going to be controlled by the consumer on a mobile phone.
WWD: Hearst and other publishers have tried to translate their brands on TV but haven’t been successful. Why?
T.Y.: I think making the shift from a magazine media brand to a cable network is very, very difficult. I think if you look at the emerging platforms or the establishment in content creation around Amazon, Netflix, Hulu — now Apple is getting in the game — that that as well as a very well financed cable ecosystem and network television means that television entertainment is insanely competitive and getting more competitive. I think the place for us to play right now is in a new form of video-driven media consumption, and that’s service video, i.e., how to cook something, how to transform your look, how to do something, and I think it’s in short-form entertainment…about 10 minutes. I don’t think you’re going to see us say we need a cable network and we need to start competing with Netflix.
WWD: Where is media going?
T.Y.: Running a modern media enterprise in terms of sophisticated technical platforms underlying the business, running those across a global network, working with big advertisers to meet their needs to connect content and transactions in multiple markets and creating content across all these platforms and building relationships with these platforms is a scale business. Subscale players will really struggle to get all of those pieces right. That combined with all of the structural changes in print will force a lot of midsized publishers to look for new partnerships and homes. What you’re going to see is a tremendous amount of consolidation.
WWD: Are any of the tech companies buying the media companies?
T.Y.: I see consolidation happening with the pureplay media companies and it won’t be a single company, it will be a few of them, but the midsized players will look for new homes. You’re already seeing it.
WWD: What do you do in your free time?
T.Y.: I love mechanical things that I can tinker with…anything that has some utility like a bicycle and an old espresso machine, but it’s also beautiful and mechanical, I love. The big knock on me when I was little was that I would rabidly take apart everything in the house and less enthusiastically put it back together. Now what I’m doing is spending my life trying to put things back together.
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