What you need to know:

• Jane Huxley has been fixing the tired, old magazine publishing playground of Australian and German media moguls. Are Media, now owned by private equity outfit Mercury Capital, has the magazine spines of Kerry Packer's once untouchable ACP Magazines; Kerry Stokes and Rupert Murdoch's escapades with Pac Mags and the last owner, the German-domiciled international magazine empire of the Bauer family. 
• All of them sidestepped an inevitable, painful and expensive enterprise and publishing tech transformation.
• Huxley says it has taken 2.5 years to unwind with little, tangible product development or innovation to show - although that's about to up-end.
• With five content management systems merging into one, new digital asset management and CRM stacks, the tech work is almost complete.
• Now for the people side: Print journos will power Are's commerce ambitions, per Huxley, if the firm can get them all upskilled. That's now underway.
• Meanwhile, first marketplaces are live, more are coming fast – and the margins are fat.

Furious purpose

“It’s been incredibly slow and incredibly fast,” says Jane Huxley of two and a half years at the helm of Are Media. But she’s wasted little time in ripping out the old tech and installing the new – and sees payback on the horizon after “reverse engineering” US established and start-up models to make next model publishing pay. “We were late to the dance,” per Huxley. “But we are making up time by learning from others.”

Prior to Bauer’s ANZ acquisition by Mercury Capital in 2020, Huxley says chronic underinvestment had left the business stumbling over systemic clutter.

Technology overlap and process bloat following previous mergers meant “we were just generating massive inefficiency,” per Huxley, “and that was not going to hold up”.

While private equity has a reputation for sweating assets, Huxley says the opposite is true – so far at least.

“What I saw when I got here was a lot of underinvestment for many, many, many, years. It was a little frustrating having to go back and fix all of that. Mercury has invested a lot of money in this company since taking it over. It’s not visible to the naked eye, but it had to be done,” the former Spotify, Pandora and Fairfax Digital boss told Mi3.

“We had to put in a new ERP, a new CRM, a new digital asset manager, we have had to reset all of our consumer websites from five CMS into one. We had to review a lot of the processes in the company, particularly around workflows and how we utilise technology. We've had to reassess all of our technology investments,” says Huxley. “It’s been a huge technology transformation.”

Ship happens

Huxley’s first meeting with the head of IT summarises the state of the ship she’d just agreed to captain.

“I said to the IT guy, ‘have you got a map, a topography of the systems? He said ‘no CEO has ever asked for that’. I said ‘I need to see how the business runs from a technology perspective. How does it work? What's redundant, what's becoming redundant, what's licensed, what's fit for the future’.”

Over several hours, they mapped it out together.

“He said, ‘I can’t believe I’ve got a CEO that speaks like this.’ I said ‘this business is a technology reset first and foremost. So we can continue to have these incredible brands and content for the next 100 years. That's the job’.”

Which is why Mercury hired a CEO with a tech background – Huxley spent 16 years with Microsoft prior to Fairfax – rather than traditional publishing.

“They knew this was the reset that needed to happen. A lot of this business was not broken, but a lot of the fundamentals needed to be reset and invested in. So working with the board, that was really the first two years,” says Huxley. “To the [external] human eye, it’s like ‘what is she doing?’ … But I'm now able to see the fruits. They are just starting to click-in. As I said to the team, the ship is moving, she's pulled out of the port and we’ve set the course,” says Huxley.

“The job for the next two years is actually steering her on course to where we need to go. That’s a different job from what I've been doing in the last two and a half years and I'm hoping that it's a damn sight more exciting than tinkering around in the mud and the foundations of the company.”

Print money

Are Media has now standardised on Wordpress, because its vast pool of plug-ins means agility, critical “when audiences at the moment are seemingly moving on a whim”.

Huxley says there’s six to nine months to complete the transition, but the rebuild is a cornerstone of content commerce – Are’s next big growth bet.

“We will always need an ecosystem around advertising. But at the same time, a lot of our growth will come from content commerce … [i.e.] marketplace, affiliate, and lead generation,” says Huxley. “What will start to get interesting is where we make the choices between those two, or how they coexist.”

She thinks advertising and commerce are complimentary. Whereas the ads business is volume driven – more eyeballs equals more money, “the content commerce business is more nuanced than that,” says Huxley. “I can drive 80 per cent of the revenue in that space from a very small subset of page views.”

In a bid to scale commerce, Huxley’s running the rule over which AI tools can deliver back-linking volume at speed and whether to outsource. Either way, she thinks Mercury’s big tech and commerce bets are about to pay off.

But despite spending most of her time on a total digital overhaul, Huxley predicts print will remain Are’s revenue workhorse for the foreseeable. Which is why the next phase of transformation is harnessing the engine room of that operation – its print journalists – to power commerce growth.

Revenue reshape

“Magazines are not going away. They will be a core part of our business in five years’ time. By 2027 we will still be generating a very big piece of the profit from our print business,” says Huxley.

“We’ve had four quarters of increased readership,” says Huxley. She admits it’s not across the board, but fashion, beauty and homes are all powering and “entertainment is on fire”, despite “the economy being in the toilet.”

“It’s been happening consistently for four quarters, it’s not just a trend. So in the next five years, the historical shape of our business – primarily driven by the circulation model, the ads model and the subs model in that order – will have a similar shape. But the percentages will be a more even bell curve,” says Huxley. “Print is still going to be really important, ads will be really important but we will also start to see growth across content commerce, social in particular, and also sort of the custom commercial work that we're doing.”

Today, the 'circs' business – that is, people actually paying to read printed magazines – is still circa 70 per cent of Are's revenues. For the younger set, think of it as an analogue Netflix subscription. 

“It’s the vast majority of revenues,” per Huxley. “That will continue but we will see these other channels uptick as well. The game is, as circulation revenues decline, can we grow the green shoots fast enough? That’s what the tech strategy is: We've got to grow those green shoots faster than the decline. Are we there? Not this year. Are we going to get there next year? That's the plan.”

Omnichannel journos

Hence launching a digital academy to train journos to drive commerce – by doing what they normally do.

“To do this transformation, we needed to bring the people with us that had always been creating for print … We knew that if we could bring them with us, that we would be able to move to omnichannel faster than just hiring,” says Huxley. “We need to invest in our people to ensure that they have the capacity and the tools to be able to become omnichannel journalists.”

The academy upskills journalists from ideation, through distribution, analytics and execution across channels – and the first of Are’s cohorts have just been through the program.

“I know that if we invest in those people that will pay off in commercial terms for me next year,” says Huxley. “Will 100 per cent of them become omnichannel? No, they won't, but I still have an obligation to skill them. At the end of it, there might be a percentage of them that say ‘I'm print in my heart’. I go, ‘Cheers mate, awesome, because I've got a print business that's going to be a healthy, vibrant business for the next five years’,” she adds. “But we also know that a large percentage of them will start to become true omnichannel content creators, and that's where the benefit will come.

“So that’s the strategy: technology first, and then the workforce planning module over the top, which will carry us over the next couple of years.”

Marketplace makeover

Huxley has mapped out eleven business models, including events and experiential, and claims only one – circulation – is in structural decline.

Advertising, while tough across the board, is cyclical, per Huxley. When the current cycle ends, she thinks the “cheese will have moved … we're seeing it moving more to direct, we're seeing it move to more full funnel”, but there will still be cheese, or ad revenues, for the taking.

Marketplaces are the next push – where curation, says Huxley, will be key.

“Marketplace is based on the Hard to Find technology that we acquired last year because of the ability to drive a far greater margin in our business [by not hiving it off to third parties],” says Huxley.

The firm’s first marketplace launch – shop.yourhomeandgarden.co.nz, ‘see inside this Christchurch home with breathtaking views' – has been live in New Zealand for two months.

“We launched with a highly curated set of vendors from the editorial team – and it works across all of our print, digital and social assets, to move customers to purchase the products that we are recommending,” says Huxley. “It's done in conjunction with our normal editorial work. It's not one or the other. You've got to maintain that authenticity and trust with the customer. So that's an editorial balance that they need to achieve.”

Is it working?

“Yes, it is. Did it work immediately? God no. We've learned a lot. It's been like drinking how-to-do-an-ecommerce-store firehose muck. But we've now got a model that works. And by the end of Q1 next year, you will see our first two brands in Australia – Home Beautiful and Australian Women’s Weekly – with their own shop fronts.”

Amazon antidote?

While marketplaces have surged over the post-pandemic years, Huxley says Are has no delusions of rivalling the mass players.

In a world of scale, she suggests aggregated niche marketplaces can win by harnessing editorial expertise – especially those that can tap the “small artisan, local companies” that she says are currently driving “most success” in New Zealand.

“It is absolutely a niche marketplace. Why? Because nobody styles an interior like [Belle editor] Tanya Buchanan does. Nobody styles a rental like [Home Beautiful editor] Elle Lovelock … These editorial influences are critical,” says Huxley.

“Our marketplaces will curate beautiful things for your home or your apartment or your kitchen or whatever it is, and they'll be curated by editorial people who are paid to tell you not only what is relevant right now, but what's coming down the path.”

Which is also a protection mechanism, per Huxley, because “AI is never going to be able to do that.”

Profit, distribution

Huxley says she would “never say never” to owning distribution, i.e. physical warehousing and logistics. But that is major investment – and for now, the marketplaces are “100 per cent drop ship” models.

Either way, the marketplace margins are good.

“We're still discussing what the right level is, but it is a significantly bigger commission than an affiliate business,” says Huxley.

So what’s the overall upside target?

Huxley won’t say.

“What I need to do is arbitrage the commission across the whole content commerce portfolio – that's how we make our own margin growth,” she says.

“But it's a much bigger commission than affiliate.”