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Architectural Digest: Marrying All Platforms As One & Putting Audience First With The Nuptials – The Mr. Magazine™ Interview With Giulio Capua, Publisher & Chief Revenue Officer, Architectural Digest.

November 11, 2015

“It’s fascinating, the last thing that we feel in our brand here is that print is a difficult sell or that print is dying. I think that AD lives in a very unique place in the marketplace in that the subject matter is an extremely tactile one. It is still a product that our reader demographic wants to consume as a printed product.” Giulio Capua

Unknown Architectural Digest has been the authority on design for over 90 years, having published its first issue in 1920. And while those early editions may not have held the same international design-savvy and beautiful interiors that today’s magazine offers, it was still a pictorial of residences that included not only interiors and exteriors, but also floor plans, a guide for people who wanted to know the latest trends and information on design. And it’s stayed true to its DNA and has matured beautifully over the years.

Today the magazine has grown into a luxury brand that offers its readers the same informational trends and topics, with a 21st century outlook on design and content. Its partnerships are unique and well-blended with the magazine’s discerning eye and give the audience exactly what they’re looking for when it comes to decorating tips and renovation makeovers for their homes.

Giulio Capua is the Publisher and Chief Revenue Office of Architectural Digest, a position he has held since February 2007. Under his stewardship, since 2009 the magazine has experienced four consecutive years of sustained advertising page and revenue growth, and was named to the 2012 Advertising Age A-List.

Giulio continues to oversee the digital evolution of Architectural Digest, including the rapid growth of archdigest.com. In 2013, the brand launched AD DesignFile, a top online destination for design inspiration, and continues to expand its digital partnerships, content, and video offerings.

Before joining AD, Giulio served as Vice President and Publisher of Gourmet and prior to Gourmet he was Associate Publisher at GQ. To say that Giulio knows a little about magazines and magazine media, especially the brands at Condè Nast, would definitely be an understatement.

I spoke with Giulio recently and we talked about his vision for AD and how he planned on achieving that vision through a continuation of their beautiful print product and by expanding their digital presence to an even stronger component. The recent relaunching of AD’s website was one step in that direction. And we discussed the special partnerships and unique relationships he tries to form with each of his ad clients. It was an extremely interesting conversation and one I know you’ll enjoy as much as I did. So, without any further ado from me, I hope you enjoy the Mr. Magazine™ interview with Giulio Capua, Publisher & CRO, Architectural Digest.

But first, the sound-bites:

Giulio Capua

Giulio Capua

On the shift when he moved from Gourmet to Architectural Digest: I think that was a fascinating time for everyone in media business and particularly as it related to Gourmet. We were coming off of the best year in the history of the magazine. And then boom, as often happens in companies, we got the call from the CEO about changes the company was going to make. And he told me that he’d really like for me to go and run another company – Architectural Digest. And then of course, you’re hit with a recession the likes of which, certainly in my career, you’ve never seen before. It was an interesting storm. I was dealing with that and I was dealing with the typical transition that occurs when new leadership comes in, which was some people wanting to move with the old leader, some wanting to stay; you’re evaluating your team now in the context of a business climate where you have to make very different decisions about what you can and can’t afford.

On whether his degree in finance and marketing helped him through the storms of the recession or rather his experience at magazines like GQ and Gourmet did instead:
I think all of the above. The harsh reality of our business is that even though I have a degree in finance, I could never be in the leagues of working with the financials and options on how we restructure. You have to have a really great finance person on your team to do that, but I think I’ve gained great understanding of what the option team presents to me, so I could probably pick it up pretty quickly. But what got me through that time period more than anything was the experience I had; the executives in the company that were around me and my team. So, it’s the people above you; the people who work with you day-to-day in the trenches and all of the experience that you’ve garnered over the years.

On the moment when he felt they were out of the storm and back on the right track:
That’s a great question. I think there were so many stops and starts. Between 2009 and 2010, we started to feel it. But what would happen, particularly for the housing market, was they would get a couple of months where business was good and then literally the bottom would fall out again. So, it was an erratic recovery. I can tell you though without question that this year (2015) was the first year where I could say in my endemic business there’s been sort of a universal consistency to it.

On the expansions at Architectural Digest and whether or not they could have happened without the print component in the picture:
Absolutely not. It’s fascinating, the last thing that we feel in our brand here is that print is a difficult sell or that print is dying. I think that AD lives in a very unique place in the marketplace in that the subject matter is an extremely tactile one. It is still a product that our reader demographic wants to consume as a printed product.

On the digital platform and digital editions:
And I think the real question that’s out there now is what the future of the digital edition is? Is that really the place for the future or is the notion of having original content out there the way to go? And we’re all sort of struggling with that. And I think editors are going through this process where you have to think about your brand a little bit differently in the digital space and be willing to take a few more licenses with the things that you may want to test and try. The beauty of the digital content is that we know immediately what content is sticking and what content isn’t. And we feel like with that type of information you can map a strategy that could lead you to a different understanding of what your brand might be digitally versus what it is in print.

On what one might find him doing in the evenings – iPad versus printed magazine: (Laughs) It depends on the evening. If it’s a Friday evening it’s usually a glass of wine and everything is shut down and I’m sitting with my family. But I am absolutely a print junkie. I love print and I read, not just my magazine, but I love other magazines as well; I love fashion and sports magazines. But I think the thing that I’m continually comfortable doing is consuming content on my phone. For example, restaurant content I’ll look at on my phone, but I still pull out my Gourmet cookbook when I’m cooking certain recipes because I just love it and I’m so personally connected to that brand.

On anything else he’d like to add: Yes, one thing that I would like to add, and I think this is important for your students to understand as well, is that the thing that’s been the most refreshing for me is sort of watching your team embrace the way the marketplace has changed and really become marketers. We attack our clients’ business almost as a consultant and my team has produced over 115 pages of content this year. Those are scenarios where we’re working hand-in-hand with the client and you sort of transcend the relationship of media vendor and become a marketing partner.

On what motivates him to get out of bed in the morning: I’m blessed, truly I am. I love my job. I have the incredible privilege of working in a privately-held company that has incredible brands and whose clients are from so many diverse industries. I have clients from the automotive industry, the home industry, the luxury industry and the list goes on. And there are really, really smart people running those businesses. Every day is a new challenge. And the other thing that really gets me up and that I love is my team. When you get the opportunity to work and hire really smart people and empower them and watch them grow, there’s nothing better than that.

On what keeps him up at night:
Continuing to grow and develop our digital business so we can be sure that we can keep pace and keep the brand at this market-meeting position. Also, making sure that we’re doing enough to fortify alternate revenue streams, primarily digital, for the business long-term is important to me, and helping my 12-year-old to pass middle school. (Laughs)

And now the lightly edited transcript of the Mr. Magazine™ conversation with Giulio Capua, Publisher & Chief Revenue Officer, Architectural Digest.

Samir Husni: You took over Architectural Digest in 2007 and then everything went south with the digital explosion, but a year later you were able to turn things around. And now, for the last six years that you’ve been there you’ve seen nothing but growth, in terms of advertising pages and revenue. Can you describe that shift when you moved from Gourmet to Architectural Digest?

AD November cover Giulio Capua: I think that was a fascinating time for everyone in media business and particularly as it related to Gourmet. We were coming off of the best year in the history of the magazine. We had a television series on PBS that had been nominated for an Emmy Award and I had this magical relationship with my editor-in-chief, Ruth Reichl. She was just an amazing partner and we were firing on all cylinders and then boom, as often happens in companies, we got the call from the CEO about changes the company was going to make. And he told me that he’d really like for me to go and run another company – Architectural Digest.

But AD was a brand that I had great reverence for; I can’t say that I really had a strong understanding of the design business. I knew the part of AD that lived in the luxury space, but the design business to me, and the importance that AD has to the design industry, was something that I really didn’t understand.

And then of course, you’re hit with a recession the likes of which, certainly in my career, you’ve never seen before. There was the first Gulf War, but I was a young salesperson then and you felt it, but you really weren’t looking at it from a business leader’s standpoint. But that recession when it hit was like no other.

And to us our advertising volume is 50% what we call endemic. So, that would be anything that you renovate, decorate or build a high-end home with. For the most part it’s five or six categories within that 50% and they’re small businesses and they stick exclusively to print. And their cash flow is critical to their day-to-day existence.

So, when the business went over a cliff like it did, business just stopped. For some people who had projects in the pipeline, they saw those come to fruition because they were started and they were almost paid for, but for the most part, construction, building and renovations ground to a halt.

And the same thing was going on with the other 50% of our volume, which was luxury lifestyle. And those categories are automotive, travel, luxury, which categorizes jewelry, watches and fashion, technology and finance. Those are the five or six categories in luxury lifestyle. And they were all faced with the same challenges, budgets being cut back and that sort of thing. And I think at the time that we walked something like 42% of our volume over the course of that year. It was a really interesting challenge.

You know, Architectural Digest sat in this very important place because we still had a very profitable consumer business, meaning consumers were paying on average $22 – $24 for a subscription. And that’s very impactful on the bottom line. This is a title that was selling 12 issues for $8. Not that we could fall back on that, but it helped to sort of look at the business in a way that could show us how to navigate through the bottom and stay a relevant resource for our partners. And also look at the way we were doing business differently and move forward.

So, yes, it was an interesting storm. I was dealing with that and I was dealing with the typical transition that occurs when new leadership comes in, which was some people wanting to move with the old leader, some wanting to stay; you’re evaluating your team now in the context of a business climate where you have to make very different decisions about what you can and can’t afford.

I like to say that it was for sure an amazing learning experience, but I don’t necessarily want to go through it again. (Laughs)

Samir Husni: Did your degree in finance and marketing then become a great asset in your role as publisher and chief revenue officer at Architectural Digest or maybe instead, the experience you gained from your years at GQ and Gourmet helped you to navigate that perfect storm?

Giulio Capua: I think all of the above. The harsh reality of our business is that even though I have a degree in finance, I could never be in the leagues of working with the financials and options on how we restructure. You have to have a really great finance person on your team to do that, but I think I’ve gained great understanding of what the option team presents to me, so I could probably pick it up pretty quickly.

But what got me through that time period more than anything was the experience I had; the executives in the company that were around me and my team. So, it’s the people above you; the people who work with you day-to-day in the trenches and all of the experience that you’ve garnered over the years.

And I think a lot of it was also the readership experience that you have to show, both in terms of how you’re talking to your clients and your team. This was a time period where we had to really underscore, particularly to our endemic advertising base, again those small businesses that rely so heavily on Architectural Digest and other brands in that space; we had to underscore the fact that we were with them and we were going to figure out how to get through it together. And that was a tough time.

And the biggest transformation that also happened during that time was as the economy started to recover you had this parallel path happening in the world with this huge technology change. It wasn’t that we went into the recession and then when we started to build back up the media dynamic was the same; the media dynamic was completely transformed by the evolution of the digital space, primarily with mobile phones, tablets and social media.

So, suddenly coming out of the recession your clients weren’t faced with getting back a little bit more of their marketing budget and going right back to what they were doing before; it was an entirely different ballgame, with all of the many options. So they had to see how that tied in with their marketing dollars and then how that money was to be allocated.

Samir Husni: When was the moment you felt that you were out of the storm and back on the right track?

Giulio Capua: That’s a great question. I think there were so many stops and starts. Between 2009 and 2010, we started to feel it. But what would happen, particularly for the housing market, was they would get a couple of months where business was good and then literally the bottom would fall out again. So, it was an erratic recovery.

If you think about someone who’s running a business that’s really reliant on cash flow, their ability to set a plan for the year and stick to it, and I don’t mean just a marketing plan; I mean an overall business plan, such as what they were going to shoot for next year and really lay all of their targets out against that, their ability to do that was tough. So, we had a lot of month-to-month and a lot of stops and starts.

I think you saw that also in the luxury environment as well. It really wasn’t until I would say when we hit the end of 2012, we sort of felt like we could predict a year ahead. And we pretty much stuck to it.

I can tell you though without question that this year was the first year where I could say in my endemic business there’s been sort of a universal consistency to it. There’s a variety of categories in those businesses. There’s appliance, which operates in much larger channels, and their business has been really strong for two or three years. But these companies that are making very high-end fabric and lighting and selling to the design people; I think they’ve had a variety of experiences over the last couple of years.

In the broader marketing channels this was a very challenging year for luxury, primarily because of China Cooling and the strengthening of the dollar. So people who are selling Swiss watches and French luxury goods, even though their sales in the States in the last couple of years were flying, a good percentage of those sales was tourists shopping in America. And when that cools off; you know they had a real lucky year this year and now they’re all hoping that the next eight weeks are going to pull them out.

Samir Husni: You mentioned 2012, which was the year that you were once again named to the Advertising Age’s A-List, so I think the industry is watching you and the magazine. And you’ve expanded. You started the Architectural Digest’s Design File and the AD 360, and there’s a lot of, I don’t want to call them “native advertising” because you actually call them advertising and they’re labeled advertisement in the magazine. So, taking all of that into consideration, what role does the printed magazine play in this expansion and could it have happened without the print component?

Giulio Capua: Absolutely not. It’s fascinating, the last thing that we feel in our brand here is that print is a difficult sell or that print is dying. I think that AD lives in a very unique place in the marketplace in that the subject matter is an extremely tactile one. It is still a product that our reader demographic wants to consume as a printed product. And for the smaller advertisers they know immediately if their advertising is working. They let me know right away too, because we are typically their single largest expense on their marketing budget. So we really have to work very closely to make sure the program we give them meets the objectives going in, but they’ll know if the rug that they put in that ad is getting traction with the design community.

And then on the flip side, with our corporate advertisers, my biggest challenge to growing my business over the last two years has been having a companion digital product that meets the criteria that they’re looking for. There are certain times where you have to be at a certain traffic level on your site to appear in comScore measurements. If you’re not on comScore, when a digital agency is delivering a target, you’re site might not even pop up if you’re not at the minimum threshold.

So, what we’ve really been trying to do over the course of the last year and a half is re-platform our site, which we just did in September, it’s moved off of a rickety foundation to a more stable one that is universal to every platform, meaning web, tablet and phone. Universal also meaning how easy is the system for the editorial team to produce once and produce frequently and have the content be optimized for all of those screens.

But then also it was put into the kind of platform that allowed us to then build an editorial team that could meet the demands of a digital business. And what that means is we are producing original content at a very ramped-up scale on a daily basis; we’re producing 10-15 pieces of original web content a day. And with that comes the ability to grow your traffic and with growing traffic comes the ability to have a more scaled positon for your partners because in many ways if I could help them check the digital box, it would give me more print.

Samir Husni: And that scale on the digital side is so important, but it’s like when I interviewed Bob Garfield and we talked about trash advertising. We can build scale, there are so many ways to get scale, but is it the scale that you really want?

Giulio Capua: And there lies the big challenge. And when I say scale; I don’t think any of us think that AD is going to be this massive site. We need to be a premium digital destination for people who want design-industry news and want to use our imagery to garner inspiration for projects. And I think there’s an audience there for it that we just haven’t really tapped yet.

It’s amazing, we all live in our own little bubble and I’ve walked into many meetings at agencies where we’re doing a group presentation and two or three of the planning people at the table don’t even know our brand. It’s never crossed their radar screen. What that tells me is for another generation their experience with our brand may need to be digital at first and then later they may become subscribers.

But the one thing that we do know is that not a lot of our web users are readers of the magazine. Yet demographically they look relatively similar, they’re younger, but the income and the sensibility is the same. So I think that if we continue to build that content base we can develop a digital complement to the brand that will allow us to continue to bring the marketplace the complete offer.

Samir Husni: I’m hearing that more and more and yet when it comes to the practice, people are confused as to how to do it. I hear some say they may have only 8% duplication between the print and digital reader. And yet we’re struggling. But I am seeing a lot of changes taking place. We’re no longer dumping print content on a digital platform and proclaiming that’s a digital edition.

Architectural Digest-1 Giulio Capua: And I think the real question that’s out there now is what the future of the digital edition is? Is that really the place for the future or is the notion of having original content out there the way to go? And we’re all sort of struggling with that.

And I think editors are going through this process where you have to think about your brand a little bit differently in the digital space and be willing to take a few more licenses with the things that you may want to test and try. The beauty of the digital content is that we know immediately what content is sticking and what content isn’t. And we feel like with that type of information you can map a strategy that could lead you to a different understanding of what your brand might be digitally versus what it is in print.

And for something like AD, I don’t think it’s far afield or that it’s going to be dramatically different. But I believe the web is about service. There’s a service element that we can bring to our user that you probably wouldn’t see in the monthly magazine. Not because the editors don’t want to do it, but because they’re limited with that package every month.

And there’s also a level of reporting that we can do that you just simply can’t do in a monthly magazine any longer because of the lead time. And that’s extremely exciting and it opens up for the team a whole new opportunity to develop their content strategy in a way and test it. Take your brand for a test drive and see what it could be.

Samir Husni: If I surprise you one evening and knock on your door for a visit, do I catch you with an iPad in your hand or a printed magazine or watching TV, or simply having a glass of wine with everything shut down?

Giulio Capua: (Laughs) It depends on the evening. If it’s a Friday evening it’s usually a glass of wine and everything is shut down and I’m sitting with my family. But I am absolutely a print junkie. I love print and I read, not just my magazine, but I love other magazines as well; I love fashion and sports magazines.

But I think the thing that I’m continually comfortable doing is consuming content on my phone. For example, restaurant content I’ll look at on my phone, but I still pull out my Gourmet cookbook when I’m cooking certain recipes because I just love it and I’m so personally connected to that brand. I have probably seven or eight issues that sit in my kitchen because in those issues there are recipes that I know my family loves and that I love. And even though I can almost do them by rote, I still like to pull them out to look at the pictures and experience it as we packaged it at that moment.

Samir Husni: Is there anything else that you’d like to add?

Giulio Capua: Yes, one thing that I would like to add, and I think this is important for your students to understand as well, is that the thing that’s been the most refreshing for me is sort of watching your team embrace the way the marketplace has changed and really become marketers. We attack our clients’ business almost as a consultant and my team has produced over 115 pages of content this year. Those are scenarios where we’re working hand-in-hand with the client and you sort of transcend the relationship of media vendor and become a marketing partner.

For example, we’re in our second year of a five-city tour with Cadillac called “Driven by Design.” For Cadillac they really wanted to vision that brand as a luxury brand, not a luxury car, but a luxury brand. And part of the consumer profile that really pops is obviously, design is extremely important. And when they were launching one of their vehicles, the Escalade, which was last year, they really wanted us to partner with them on curating this five-city tour where we would garner access to unique spaces that were architecture-significant, program it, meaning have an interesting architect or designer there to talk about what was special about the space and work hand-in-hand with their events agency to create the tour. So the idea was, over the course of the day or morning, 70 to 100 people would be driven or drive their vehicle to these different spots where they would have some sort of interesting architectural experience.

This was an extremely successful program, both for them and for us, but when you think about that partnership; I don’t think many people out there would ever dream this was something that people on a magazine staff actually do. (Laughs) So, we literally had two staff members dedicated to this program all year because five cities, usually three or four stops per city, then you have to locate the city and program each experience and it’s really very rewarding, but it can be involved.

That type of marketing partnership is something that really brings you close to your clients and helps you understand their goals.

Samir Husni: I’ve noticed all of these AD 360 pages; it’s a very good example to show the marriage of print and digital and journalism and marketing altogether, the merger of all of these entities.

Giulio Capua: Thank you.

Samir Husni: What motivates you to get out of bed in the morning?

Giulio Capua: I’m blessed, truly I am. I love my job. I have the incredible privilege of working in a privately-held company that has incredible brands and whose clients are from so many diverse industries. I have clients from the automotive industry, the home industry, the luxury industry and the list goes on. And there are really, really smart people running those businesses. Every day is a new challenge.

And the other thing that really gets me up and that I love is my team. When you get the opportunity to work and hire really smart people and empower them and watch them grow, there’s nothing better than that. And we all work really hard at AD and we love being with each other. There are times when we all put our heads down; a good group of us worked two weekends in a row. And I’m not going to lie to you; when you’re not getting home on a Sunday and you’ve been working all week, you’re tired, but at the end of the day I think we all look at each other and think: we’re doing great work; we’re working really hard and we really enjoy each other’s company.

To me that’s the most important thing. I could not imagine waking up every day having to go to a job that you don’t like. That’s the one thing that I said to students when I spoke to them; it might take them awhile to find that job, particularly at their young age, and they might have to think about what motivates them and be a contributor also.

I have seven or eight millennials on my staff and none of them fit the mold of the privileged kid that doesn’t want to work hard. They’re all interesting, hardworking, smart and curious, and we love to promote that. There’s nothing better than seeing that. You walk into a room and see, making a presentation, that one young person who is going to challenge you and ask you questions and I think that’s really great. I love that.

Samir Husni: When you were in college, did you ever dream that this would be what you’d be doing in your career?

Giulio Capua: I don’t know. I was in a program at Ithaca College where a good portion of your senior class would work in a group, and at that time it was structured sort of like an ad agency, and you had a case study and you had to develop a campaign. And then we had to present that in competition and in our particular group we made it all the way to the national competition and placed third.

We were working as a team the entire year. There were a lot of personalities; you had to understand a little bit about how to agree and disagree, fight, get to a common goal and then ultimately rally around the creation of the campaign. That was a really good taste of management and work-culture.

And I also worked at the college newspaper, so I did have a sense of what it felt like to publish something, sell advertising and create content. Did I know that it would carry me here? Absolutely not; I had no clue. (Laughs) I remember putting on my wall at home all of the rejection notices that I had gotten from big ad agencies about jobs. That was my first love, to work in an ad agency.

And then I ended up landing a job as a sales representative for an independent web firm and they had all of these obscure trade magazines. But the two guys that owned it really taught me what it was like to sell and to run your own business. That gave me great experience. A couple of years later I ended up at General Media and then Condè Nast in 1990.

Samir Husni: My typical last question; what keeps you up at night?

Giulio Capua: Continuing to grow and develop our digital business so we can be sure that we can keep pace and keep the brand at this market-meeting position. Also, making sure that we’re doing enough to fortify alternate revenue streams, primarily digital, for the business long-term is important to me, and helping my 12-year-old to pass middle school. (Laughs)

Samir Husni: Thank you.

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