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Active Interest Media (AIM): Halfway Through 2017 & Going Strong Through The Rest Of The Year With A Unique Business Model That Propels Its Success – The Mr. Magazine™ Interview With Andy Clurman, President & CEO…

July 11, 2017

“This has been a really important year for us, because we’ve hit what we’re calling the “inflection” point. Inflection point is where we’ve been building these new businesses to drive the business organically, not just by making acquisitions. And scaling these new businesses at a rate that will more than offset any ongoing decline in print revenues.” Andy Clurman

“I think fundamentally digital businesses are not the same as the magazine media business. We all have social media and you could say a magazine audience might be, from a community standpoint, like the original social media, but Facebook’s business model and Google’s business model are pretty radically different than the traditional magazine business model. So, it wasn’t a natural progression that if you’re in the magazine media business, you should have, would have figured all of that out.” Andy Clurman

The traditional business model for magazine media can be a bit difficult to implement in these times of digital, mobile and video technologies. And while print is the most significant “technology” of them all, the business model our forefathers set up for it may or may not be the most advantageous for the magazine industry today.

Enter Active Interest Media and its president and CEO, Andy Clurman. Mr. Magazine™ has been saying for years that the magazine media business doesn’t have a magazine problem, it has a business model problem, and Andy agreed with me. And he should understand that better than some, because his company AIM has found a unique community-driven niche that fits them to a perfect T.

I spoke with Andy recently and we talked about the communities and demographics that Active Interest Media lives in. And about the different levels of that same vertical well the company keeps drilling within, striking gold almost each and every time. When you put your audience first, and you know that audience like you know the back of your hand, it stands to reason that those subtly different layers of consumer need you’re delving into should pull up golden success. And it has and still is.

So, I hope that you enjoy this “in depth” interview with a man who would like to be known as an innovator and an important contributor to his company’s success (something Mr. Magazine™ doesn’t think he has anything to worry about), the president & CEO of AIM, Andy Clurman.

But first, the sound-bites:

On what he would say to his audience if he were giving an elevator pitch today about Active Interest Media: This has been a really important year for us, because we’ve hit what we’re calling the “inflection” point. Inflection point is where we’ve been building these new businesses to drive the business organically, not just by making acquisitions. And scaling these new businesses at a rate that will more than offset any ongoing decline in print revenues.

On why he thinks it has taken legacy media quite a bit of time to see some success going from print to digital: I think fundamentally digital businesses are not the same as the magazine media business. We all have social media and you could say a magazine audience might be, from a community standpoint, like the original social media, but Facebook’s business model and Google’s business model are pretty radically different than the traditional magazine business model. So, it wasn’t a natural progression that if you’re in the magazine media business, you should have, would have figured all of that out.

On whether he agrees with the Mr. Magazine™ statement that we don’t have a magazine problem, we have a magazine business model problem: I absolutely agree with that. We have lots of magazines, if you look at them in isolation, across the 50-some brands we have, that are really possible, healthy, sustainable businesses, albeit, you can’t project them on their traditional business model, that they’re going to grow three to five percent per year. And if they’re not growing, you’re going out of business slowly, because inevitably your costs will keep rising and if your revenues don’t rise, you’re going to be losing altitude.

On why he thinks the magazine industry isn’t freeing itself from the traditional business model: I think we are. Every time I talk to people at other companies, whether it’s an IMAG company or an MPA company, large or small, I’m always amazed by the innovation and inventiveness of those people. And people from the outside might look at this as a business that’s slow to change, but I think that perception is because of the scale of the traditional business model and how big a ship it is to move if you’ve got a large scale business. We don’t have a large scale business, so for us it’s a lot easier for us to move to that inflection point I described.

On whether he thinks the magazine industry can ever escape that traditional model, or does he believe it’s still working: I don’t think it’s escaping as much as it’s evolving. Where print advertising became multiplatform advertising a long time ago, we now have multiple channels and multiplatform advertising, which in many cases has become a full suite of marketing services. I think we keep advancing and changing what advertising means to be a much broader set of media assets and services. And so, again, it’s just a matter of can you scale that up? Our mission would be to transform our ad business into one that is at least, if not 50 percent; the majority would be driven by a more strategic products and services relationship with our marketers.

On what’s next for him and for AIM: We recently closed on another acquisition, and we’ll be announcing that soon. We’re basically taking the things that are working really well for us and looking at what might be the next adjacent frontier either geographically or expanding further into the audience with more services.

On their most recent acquisition: A year and a half ago we bought the World Series of Team Roping, which is the single, largest and richest rodeo event in the world. And that’s been wildly successful, so we’re buying the company that does all of the handicapping, like the PGA of Golf for team roping, because to compete you have to have a handicap.

On why AIM’s investors haven’t flipped the company yet: We did sell our boat show business, and that was a very successful outcome. I think because they’ve looked at the trajectory that we’ve had post-2009, and the growth that we’ve had, even without the boat shows; what we’ve been doing year over year, and what we expect to do, and what we did last year, and the plan we have for the year after and for the next couple of years. We just finished a very in depth, long-range plan, which we call our “Value Creation Plan.” They’re not venture capital, they’re private equity. They’ve seen the value of their investment increase every year, so they want to stick around and get the benefit of that.

On whether AIM plans to get into the voice-activated business, such as Siri and Alexa: (Laughs) We’re pretty fixated on the communities that we operate in and where they’re going. It’s what I was talking about earlier; how can we serve them? We’re probably not as forward-looking, in terms of mega-trends on media and media models. We sort of leave that to the big guys to figure out.

On anything else he’d like to add: By virtue of selling one of our big assets, we’re in a rare moment where we’re sitting around thinking how can we go farther faster, and should we be doubling-down on investments we’ve made and see if we can scale things at a faster rate. It’s challenging, but a good position to be in.

On what he would have tattooed upon his brain that would be there forever and no one could ever forget about him: I’d like to be thought of as an innovator and someone who’s been a great contributor to the growth of these fantastic communities, sports, hobbies, and these interests. I hope that I’ve helped them to evolve, and that I’ve evolved our company and our communities in a very innovative way.

And now the lightly edited transcript of the Mr. Magazine™ interview with Andy Clurman, president and CEO, Active Interest Media.

Samir Husni: If you were going to give an elevator pitch about Active Interest Media today, what would you say to your audience?

Andy Clurman: This has been a really important year for us, because we’ve hit what we’re calling the “inflection” point. Inflection point is where we’ve been building these new businesses to drive the business organically, not just by making acquisitions. And scaling these new businesses at a rate that will more than offset any ongoing decline in print revenues.

And we hit that point in Q-4 2016, and continue to ramp that up in Q-1 and through Q-2. So, the combination of really four major things, which fall into that category for us, which is our video; AIM’s Studio business, where we do a lot of work for hire; a lot of marketing and services work; our branded content and television, and we’ve doubled that in the fourth quarter and doubled that in the first half of this year from previous levels. Our marketing and services business, which we call “Catapult,” similarly, we doubled that in the fourth quarter and doubled that in the first half as well.

And then all of our online education, which we launched, at this point, probably a year and a half ago, had some early success and saw that double in 2016, and we’re about 50 percent ahead of ‘16 in the first half of 2017. So, those things are adding a lot of revenue and a lot of good momentum there.

We continue to grow all of our memberships, things we’ve talked about before, like our USRider® Roadside Assistance program and our Yoga Benefits program for yoga teachers and fitness trainers.

And then, just our core digital ad revenues, which had been growing, I’d say, at single digit rates in previous years; we’re off to a really fast start. We’ve put all of our websites on one common CMS platform that’s allowed us to track the audience and package it, and deconstruct it for buyers. So, we’re tracking almost 20 percent ahead of last year on digital ad revenues.

Just a lot of really good stuff, which all of those things combined really help us to broaden and diversify our revenues coming from consumers for content in the form of video and online education, and diversify our revenues from marketers in the form of marketing services. Everything seems to be working. You never declare victory in the early stages of transforming a business, but we’re super excited about what we’re seeing and about what we’re doing.

Samir Husni: Why do you think that we’re seeing a lot of bloggers and TV networks; you name it, launching print magazines, such as Meredith’s The Magnolia Journal and Hearst’s The Pioneer Woman? And Condé Nast is bringing Goop with Gwyneth Paltrow. Why does it seem that legacy media hasn’t been as successful doing the reverse business, going from print to digital? It has taken so much time, and now finally after 10 or 15 years, we’re starting to see some of that success. Do you think it was driven by the decline in print advertising or was it driven by the needs of the customers?

Andy Clurman: I think a few things are going on; one, certainly when you look way back when the print business was pretty fat and happy and the margins were pretty strong; the level of urgency wasn’t there, so that created some inertia, for one. The first movers in digital, particularly the large scale ones, ended up carving out a lot of market share.

And number two; I think fundamentally digital businesses are not the same as the magazine media business. We all have social media and you could say a magazine audience might be, from a community standpoint, like the original social media, but Facebook’s business model and Google’s business model are pretty radically different than the traditional magazine business model. So, it wasn’t a natural progression that if you’re in the magazine media business, you should have, would have figured all of that out. We’re not heavily vested in technologists and software development and the things that the people who broke those businesses had as their core focus.

Then there was a lot of fixation on trying to apply our old business model, or I should say, our existing business model to digital, which is aggregate an audience and then sell advertising against it, or if you can both aggregate an audience and sell access to your content, and sell advertising; that’s the magazine business model. And people have had success doing that, but not at a scale that is transformative for many companies, with some exceptions. That’s the second thing.

And then the third thing is there are magazines that have been around for 100+ years; you have many first editions yourself, I know.

Samir Husni: (Laughs)

Andy Clurman: We own some that have been around for decades and decades, but consumers change, generations change, tastes change and interests change; some products may have outlived their moment, and so there are opportunities for new products. You mentioned The Magnolia Journal and The Pioneer Woman; we launched Anglers Journal, which I know you’ve seen, a couple of years ago, and it’s not a large scale Hearst launch, but for us every aspect of that magazine has been growing organically: the newsstand, the subscriptions, the advertising. We did launch a television show around it; we wanted to have more than just a magazine, and I think that’s helped a lot. It’s a new product and a new take on fishing and fishing culture, fishing photography, art, literature, and it has found an audience.

We’ve spent a lot of time trying to modernize legacy magazine brands and some of them have been able to navigate that and make that leap, and some of them haven’t. There are lots of examples that you know from eons ago: Look magazine and Life magazine, and all of those.

Samir Husni: One of my statements that I’ve used over the years is that we don’t have a magazine problem, we have a magazine business model problem. Do you agree with that statement?

Andy Clurman: I absolutely agree with that. We have lots of magazines, if you look at them in isolation, across the 50-some brands we have, that are really possible, healthy, sustainable businesses, albeit, you can’t project them on their traditional business model, that they’re going to grow three to five percent per year. And if they’re not growing, you’re going out of business slowly, because inevitably your costs will keep rising and if your revenues don’t rise, you’re going to be losing altitude.

We’ve all studied and talked about all of the brain sciences and ROI studies on magazines and how they work, so there’s no question that they work for an audience and they work for marketers, but the traditional business model is not a growth model, so we have to find a growth model.

Samir Husni: The magazine industry probably has some of the smartest people on the face of the earth, so why do you think they are so grounded with this traditional business model and aren’t freeing themselves from it?

Andy Clurman: I think we are. Every time I talk to people at other companies, whether it’s an IMAG company or an MPA company, large or small, I’m always amazed by the innovation and inventiveness of those people.

And people from the outside might look at this as a business that’s slow to change, but I think that perception is because of the scale of the traditional business model and how big a ship it is to move if you’ve got a large scale business. We don’t have a large scale business, so for us it’s a lot easier for us to move to that inflection point I described.

Where a Hearst or a Condé Nast or Time Inc., they’ve got so much of their revenue vested in print advertising and print subscriptions, probably newsstands are less these days, so the scale that they have to invent and sustain has to be pretty big to transform their business into a new model. I know everyone is working on it feverishly.

Samir Husni: True. It’s only when you hear that there’s a decline in advertising, then suddenly you hear that the industry needs to be more consumer-centric. And then the minute the market shapes up a little bit, we go back to the advertising and rate cards and selling subscriptions for $1. We forget about actually being consumer-centric.

Andy Clurman: I think sometimes that debate sort of devolves into some question of which is more virtuous; is relying on the consumer more virtuous than relying on the advertiser? But magazines do a lot for marketers when it comes to selling their products for them and helping to build their brands.

So, if you have a business model that is based on advertising and it works for the advertisers, I think it’s no less virtuous than something that’s based purely on the consumer. Given the whims of the advertising market are such that you end up with a more concentrated business if it’s centered on advertising, because you’re getting money from fewer people than if you have a business distributed across millions of consumers who are paying just a little bit. And if you lose one of those it’s not the end of the world, whereas if you lose a Procter & Gamble, that could ruin your year.

Samir Husni: After all of these years, and with the influx of digital and everything else that’s taking place, do you think we can escape that model or is it still working? It’s as you said, what if one magazine dies; it’s not the end of print or the marketplace, because 10 more will take its place.

Andy Clurman: I don’t think it’s escaping as much as it’s evolving. Where print advertising became multiplatform advertising a long time ago, we now have multiple channels and multiplatform advertising, which in many cases has become a full suite of marketing services. I think we keep advancing and changing what advertising means to be a much broader set of media assets and services.

And so, again, it’s just a matter of can you scale that up? Our mission would be to transform our ad business into one that is at least, if not 50 percent; the majority would be driven by a more strategic products and services relationship with our marketers. It’s a lot more interesting, a lot more fun and a lot more gratifying. When you’re at the table as a full partner with a marketer, reviewing the results of your work and seeing that you’ve helped launch a brand and help to build a successful business and you’re a full partner in that, it’s far more gratifying than selling someone a page or a banner or a campaign and just hoping they come back again.

Samir Husni: What’s next for you and for AIM?

Andy Clurman: We recently closed on another acquisition, and we’ll be announcing that soon. We’re basically taking the things that are working really well for us and looking at what might be the next adjacent frontier either geographically or expanding further into the audience with more services. For example, we were launching a joint venture in China; we have a fitness business that we bought a year ago, which is the largest association of fitness trainers and convention for fitness trainers in the U.S. and we’re doing a joint venture to launch that exact thing in China, because they have an emerging health crisis with billions of unhealthy people and they’re really motivated to bring fitness to the populations. So, that’s a natural for us.

We also have another one keyed up in another country to be named later, so we have a very successful business model that’s based on events and membership and education with a very targeted group of fitness trainers and we’re going to expand that geographically.

Samir Husni: And what is the acquisition you recently closed on?

Andy Clurman: A year and a half ago we bought the World Series of Team Roping, which is the single, largest and richest rodeo event in the world. And that’s been wildly successful, so we’re buying the company that does all of the handicapping, like the PGA of Golf for team roping, because to compete you have to have a handicap. It’s a sport that people play for money, so the handicaps are critical; you can’t compete and enter an event without one.

So, we’re basically buying the business that does all of the handicapping. It’s essentially a data business that takes all of the results in real time and crunches them together to keep people’s handicaps. So, that will effectively have the easy go-to membership and data source for that. It’s kind of small and little-known, but an incredibly loyal and lucrative industry.

We’re also expanding our insurance program that we have for fitness trainers and yoga teachers, adding horse, health and mortality insurance to a lot of the horse membership programs that we have. So, it’s like we keep drilling down deeper and deeper and finding more levels of what our customers are already buying and what they still need. And that makes sense for us and is complementary to our brands and our skillsets. And we have the ability through our video platforms to promote, which gives us an unfair advantage over other people.

Samir Husni: A question I’ve heard asked is why the investors at AIM haven’t flipped the company over yet? Do you have any comment on that?

Andy Clurman: We did sell our boat show business, and that was a very successful outcome. I think because they’ve looked at the trajectory that we’ve had post-2009, and the growth that we’ve had, even without the boat shows; what we’ve been doing year over year, and what we expect to do, and what we did last year, and the plan we have for the year after and for the next couple of years. We just finished a very in depth, long-range plan, which we call our “Value Creation Plan.” They’re not venture capital, they’re private equity. They’ve seen the value of their investment increase every year, so they want to stick around and get the benefit of that.

Samir Husni: When I interviewed Michael Clinton and I asked him what was next; we have video, but what’s next? And he answered: voice. That everyone was scrambling now to see how they can become a part of Siri and Alexa and Echo. Any thoughts on that? Are you planning to get into the voice-activated business?

Andy Clurman: (Laughs) We’re pretty fixated on the communities that we operate in and where they’re going. It’s what I was talking about earlier; how can we serve them? We’re probably not as forward-looking, in terms of mega-trends on media and media models. We sort of leave that to the big guys to figure out. And if it flows down to a level that we feel comfortable with, or we see that it’s something that’s a big deal in the markets we’re in, then we’ll pay attention to it. But that’s not remotely on our radar, in terms of what our business plan is.

Samir Husni: Yes, when I think of AIM, I think of communities and community-driven media, whether that’s sports, horses, yoga or something else. It’s like you said, you’re drilling deep into the vertical well.

Andy Clurman: A good long time ago we kind of broadened the definition of what our business is and could be. Some people would say “stick to your core business,” and this is our core business. Broadening the definition of the core business to whatever makes sense to serve the audience, and that’s complementary to our brands and our skills, that’s what we’re interested in.

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

Andy Clurman: By virtue of selling one of our big assets, we’re in a rare moment where we’re sitting around thinking how can we go farther faster, and should we be doubling-down on investments we’ve made and see if we can scale things at a faster rate. It’s challenging, but a good position to be in.

Samir Husni: My new typical last question; if you could have one thing tattooed upon your brain that no one would ever forget about you, what would it be?

Andy Clurman: I’d like to be thought of as an innovator and someone who’s been a great contributor to the growth of these fantastic communities, sports, hobbies, and these interests. I hope that I’ve helped them to evolve, and that I’ve evolved our company and our communities in a very innovative way.

Samir Husni: Thank you.

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