Recent research from FOLIO’s eMedia reality check offers some insights as to why media companies have been so dramatically affected by this recession. Underfunded and understaffed, the online initiatives of many publishers were too nascent to pick up the slack when the bottom fell out of print. Some of the numbers are outright disturbing:

• 58% of media companies surveyed had less than $500K in online revenue
• 51% spent less than $100K on Web technologies
• 57% spent less than $100K on personnel dedicated to eMedia

By failing to adequately invest in their online infrastructure, digital skills training and eMedia personnel, media companies left themselves vulnerable to the industry’s dramatic change because they didn’t have products available that could command the same type of price points that print has over the years. FOLIO’s research shows that executives thought they could ride the momentum behind online marketing from 2003 until 2007 by simply setting up a skeleton crew and some basic Web offerings.

Fool me once, shame on you.  Fool me twice, shame on me.

This year, it is imperative that executives learn from their mistakes and begin budgeting for smart and significant investments in their eMedia businesses. As you enter the 2010 budgeting cycle (you may already be knee deep in it), it’s time to take some bold steps with your business model. That means avoiding certain publishing traditions and embracing some new thinking.

Ditch across-the-board top line and bottom line targets

You know this drill. “This year, our goal is for x% growth in revenue and y% growth in EBITDA … you figure out how to get there.” If you follow this model of budgeting, you’ll ensure that your resources aren’t allocated appropriately and you’ll be cutting costs by April of 2010. Instead, use research reports like those available at IbisWorld.com to help gauge your customers’ growth potential for 2010 through 2012. IbisWorld offers recession updates for all industries.

Identify the markets with one- and three-year potential and allocate resources accordingly. Build a version of your budget accordingly, identify gaps between your financial plan and your budget, and go back to your publishers with market growth potential and ask for launch / new product ideas.

Forget about silver bullets

Stop me if this sounds familiar: “This is the year of paid content. ... Everyone should submit a paid content component to their budget. ... If every one of our readers just gave us $1 ..." Executives pursuing silver bullets this year will end up looking like Don Quxiote running full tilt into a windmill. This is one of the more complex recessions of our lifetime. One or two broad ideas won’t pull a company back from the brink. Execution will.

Smart executives will look to invest in ambidextrous technologies that can be used to execute multiple strategies. 
 

• Search technologies can be used to augment a lead-generation-based directory or to augment a subscription-based offering (archived content or database-driven sites).
• Subscription management systems can be used to capture registration data for lead generation or to power your e-commerce system. Investing in core technologies that are flexible enough to support the individual business strategies will pay far greater dividends
• Content management systems that improve ad targeting by using semantic/behavioral data, facilitate the repackaging of content for sale from your Web site, or grow traffic via search engine optimization driven by semantic tagging.

The 2010 budgeting cycle is the most important investment evaluation of the decade. So, we’re starting a blog dedicated to it, called Road to Recovery. We’ll be covering the following topics to help publishers make smart and significant investments in their online business: 

• Business Evaluation
  • Competitive Analysis
  • Market Analysis (readers and advertisers)
  • Benchmarking
• Business Models
  • Paid Content
  • Marketing Solutions
• Technology
  • CapEx Budgeting
  • ROI
  • Content Management Systems
  • E-commerce and Subscription Management Systems
  • Ad Serving
  • Email Marketing
  • Lead Generation and Marketing Automation
• Personnel
  • Training
  • Hiring
  • Metrics
  • Compensation / Commission

Let us know what your information needs are for the 2010 budgeting season by leaving a comment below, and we’ll incorporate your feedback into our content plans.