WAN-IFRA is starting a series of case studies of digital transformation at media companies, to be published as reports in the coming year. This is an edited transcript of an interview conducted for the first report in the series.
WAN-IFRA: What are your long-term goals for Aller Media Finland? How do you envisage the company in five or ten years?
Pauli Aalto-Setälä: We have transformed ourselves from a magazine company to a diversified business group with a data agency and marketing companies, but we are still also in the media business with our weekly magazines. So we are quite different than we were seven years ago when we started this transformation. And in five to ten years, I strongly believe that we will have even more digital platforms. The overall trend is toward platforms and technology, and we are building more meeting points where people can connect and be informed and entertained. I believe in a platform-based scenario for the future of our company.
Could you describe your progress toward that future?
Seiska [an entertainment title] is the biggest weekly magazine in Finland. It is going in a very digital direction and we have built a new mobile platform for entertainment here in Finland.
For years we saw the weeklies’ business decline, but last year we had the first year when our weeklies actually grew; both revenue and EBITDA were bigger than they had been. And all the B2B businesses involved with our weekly’s website are growing rapidly. They are now making millions. They used to make a couple of thousands five years ago.
In our marketing businesses, we aim to be the lead agency for brands, because we believe the knowledge we have built up is the best available, as are our prices and variety of services.
– Pauli Aalto-Setälä, CEO of Aller Media Finland
Nowadays you can even buy a Facebook advertisement from our companies – Facebook and we are not such big enemies in that area.
The third area is the data business. We are gathering more and more GDPR-approved data from companies and customers, and tracking users, in a legally-approved fashion, of course.
The data enables more effective marketing, since messages can be communicated at the right time and via the right channel.
What percentage of your total revenue comes from digital operations as opposed to print?
At Aller Media Finland it’s 40 percent, and at Aller Norway it’s even higher. They bought the second-largest tabloid in the country, Dagbladet, which is one of the brightest digital media cases in the Nordic countries. So these two countries are today very digital and I think that will grow. However, the print products we still have are doing fine. They are not collapsing, and they are not declining any more, so we are investing more to keep our audiences happy – with print as well.
How much do you hope digital will contribute in five years’ time?
I think growth is slowing in that regard, because we are doing a lot of publishing for external clients, brands. We build the whole content platform for them, which consists of both mobile and print. So the print aspect is there, and I am not aiming to change that. To answer your question, in five years digital might reach about 50 percent of total revenue, but probably not much more.
How do you attract and keep talented digital people on your staff – developers and the like?
That is a very important question, because success depends so heavily on employees – their knowledge, their abilities. We work hard to find the right people and keep them. The only good thing about those big GAFA [Google/Amazon/Facebook/Apple] companies, those digital monopolies, is that people usually work for only two years in those companies before leaving. We try to keep them a bit longer by creating a culture that is attractive to them.
It’s important that people are autonomous – that they manage themselves to a large degree, and that they are really accountable. We have learned how to give power to the employees so they are more like independent actors who work for different managers depending on the tasks they are executing.
We aim for a collaborative culture rather than a hierarchical one; that is the best way to keep people.
The 220 employees of Aller Media Finland work on the sixth and seventh floors of a modern building in Helsinki.
But we have to accept the fact that the most talented people do not stay with a company as long as they used to. So we are happy if we can keep top talent for, say, four years – although that timespan seems to get a little bit shorter every year! Then, if we don’t have the kind of job at Aller in Finland or Sweden or Denmark that they need to move into to advance themselves, we let them go.
It was a difficult realization initially, but it is very important that there is a lot of flexibility and new people coming in, and then we let people build their careers at other companies.
In Finland we don’t have large Google or Facebook organizations, so our major competitors for digital personnel are game companies such as Rovio, major banks, and Finnair.
My biggest challenge is to build a culture at our company that makes it an attractive place to work.
– Pauli Aalto-Setälä
How about alternative revenue sources – areas outside publishing, outside media altogether, where you can apply your resources and expertise to generate income?
Our media business is still strong and we are proud of that, but in every country we have other assets as well.
At one point we set ourselves the goal of deriving 40 percent of our revenue from new business areas within five years’ time. At the group level we have made a big push into marketing services. All told we have acquired 15 marketing agencies.
In Denmark we are a major provider of travel services. Some time ago we realized that the information in our database of weekly and monthly magazine subscribers could be readily repurposed to help meet people’s travel needs. So seven years ago we evaluated the market for travel services, acquired a major agency, and started to use our media outlets to market services.
At Aller in Denmark today, travel brings in more revenue than publishing does. So that’s one of those new directions we have chosen very successfully.
In Finland we don’t have an events business, but in Norway and Denmark we do. They are nice examples of new business areas, using in-house skill sets and databases. They’re doing fine, but they are not really major revenue sources.
In Finland we built up our data capabilities massively and created an independent company called Data Refinery, which sells its services to external companies, including other media companies. Those data skills are one reason our weeklies are doing extremely well – we have an excellent understanding of our readers’ behavior.
But I have made mistakes too. Our biggest failed attempt to create a new revenue stream involved producing hard (alcoholic) cider.
At the group level we were challenged to start new business ventures, and we in the Finnish company thought we could make better cider than those already on the market. That was seven years ago.
From the business point of view it was a complete failure; we lost a substantial amount of money, in the six-figure range.
We didn’t have the skill sets needed to grow an alcoholic beverage business, and we won’t do that kind of thing again. But for us it was a very important step to take.
It demonstrated that we can make some mistakes, but we will still survive, close them down, and start something new.
– Pauli Aalto-Setälä
For me it is a very important thing to remember, because I have worked for media for almost 30 years, including in the role of editor-in-chief, and the culture makes it very difficult to admit mistakes or to admit that you don’t know something.
So the failed cider venture served to reduce the fear of failure, you mean?
Exactly. It is very easy to say it’s okay to fail, but in practice, it is very difficult to handle the shame and so on. Now, I’m proud of that mistake. To everyone who asks who was responsible for that decision, I say I was the one. If I can admit my own foolishness, then I can expect my people to do that too.
For more about digital transformation at Aller Media Finland, read our interview with Director of Media Business Elina Schüller.