RBI chief exec Mark Kelsey on how data revived profits

The journalism industry of 2007 was a very different land to the one we live in today.

Most old-media giants of that far-off era are still reeling from the disruptive effects of ubiquitous broadband and smartphones as well as an economic downturn which is far from over.

Those still wondering how to make the changes necessary to survive might do well to take a look at Reed Business Information.

Six years ago the business publishing giant was turning over £900m a year, but its profit margin was declining and parent company Reed Elsevier wanted to offload it.

It went on the market in February 2008, but when the global financial meltdown hit at the end of that year it became apparent that the business was going nowhere.

Five years on, RBI chief executive Mark Kelsey tells Press Gazette that growing profit margins mean it is “extremely unlikely” that parent company Elsevier will put his division on the market again.

In 2009, earnings were down 18 per cent year on year to £891m and profits down 34 per cent to £89m (an all-time low profit margin of 10 per cent).

Last year, turnover was down to £663m, but adjusted operating profit was up to £119m (a margin of 18 per cent). In the last interim figures the margin was up to a record 19 per cent.

RBI has achieved the turnaround by refocusing around a handful of key brands and on paid-for data and subscription services. All those titles which didn’t fit in with the new strategy were sold off.

In 2008 RBI published 200 magazines across 14 countries. Since then there have been 36 sales representing 60 per cent of the 2008 revenue base including the likes of Variety, Computer Weekly and Travel Weekly.

Staff numbers are down from 8,200 to 4,000. RBI says that in 2007, print advertising accounted for 39 per cent of its income. Today that figure is down to 12 per cent while paid-for content accounts for 77 per cent of income (versus 45 per cent in 2007).

With subscription renewal rates for data services said to be 90 per cent upwards, it is easy to see why this makes for a more stable business model than relying on advertising.

Kelsey was a 27-year veteran at RBI when he took over as chief executive in 2010 and set his focus around “online data services”.

He takes the example of one of RBI’s oldest brands, Flight International, to illustrate how the transformation of the business has been managed.

In 1997, Flight launched its first paid-for online data service. In 2006 its website was relaunched, and print newsletters were moved online, and in 2010 more data services were launched.

The current site, Flightglobal.com, attracts some 1m unique users a month , around 200,000 of whom are registered. There is a metered paywall, encouraging the most frequent readers (around 50,000) to take out subscriptions to the site and magazine.

But the main business case for the site, and for the magazine, is as a way of driving some 15,000 subscribers to the data services (which typically cost more than £1,000 a year).

Nearly all the surviving RBI titles – such as Estates Gazette, Farmers Weekly and Xpert HR – have similar business models with online data services at the heart of the proposition.

Those that have gone were not seen as being suitable for this data-led model.

Kelsey (above) says: “In the mid-1990s we looked at our magazines and starting with the paid-for titles, spent a lot of research time with customers looking at data and information they were taking in.

“Property was the first one [Estates Gazette]. We launched EGi in 1996. Our magazines were touching on some of this data. We realised if we built a team of data collectors we could do all of this.

“The key is spending time with your key customers in the market. Understanding what data fits into their role.

“Take aviation. We track 200,000 planes, we know the configuration, when the next service is due, what their engines are worth.

“There are 500 individual database fields and 100 people on Flight building these databases. It is a big investment which touches on our magazines and goes much further.

“We tried in the computer market and it failed. A lot of consultancies were giving away free reports in the computer market and they weren’t used to paying for this.”

In addition to the sell-offs there have been some major acquisitions by RBI which have been seen as complimenting this data-led approach for some of the surviving brands.

So there has been CBI China (for the ICIS chemical industry information service), Accuity for Bankers Almanac and Ascend (for Flightglobal).

No further major sell-offs are now planned.

Kelsey says: “The portfolio work is now complete. We want to create value from organic growth and make selective acquisitions and selective disposals as any other company would.”

RBI is a much smaller company than it once was. Will it ever again scale the heights that it reached before the big sell-off began?

“In November 2011 we spent $530m on Accuity… We are looking at acquisitions which build on our momentum…

“Size isn’t the most important thing, quality is the most important thing.”

Amid all this talk of data and “right-sizing”, as Kelsey puts it, how important is journalism to RBI these days?

“At Flight and Estates Gazette it pays a critical role in lead generation…At Farmers Weekly, subscriptions to the magazine are still going up.”

What about the wider economic picture? Is RBI’s success evidence of green shoots in the wider UK economy?

“RBI is now a very global business. Revenue from the UK accounts for 30 per cent of the revenue. We are strong in America, the Far East and China. The UK economy is still quite tough for us.”

And how does he see the future of business to business journalism?

“You have quality data services at the heart and the magazine and online content being a key part of that marketing mix.”

Finally, does Kelsey have any advice for publishers who are perhaps strong editorially, but still reliant on advertising?

“The first half of the transformation is that you have to make money from your users. If you are relying on advertising you are going to find it hard in the long term.

“If you are delivering quality products, and are confident in your users to pay for them – a range of products conferences, magazines, events, exhibitions, online data services – that is the way of the future. It’s all about revenue from your users.”