Struggling companies often do better when they focus on their core brand.
There are good reasons to have many different brands. A broad portfolio lets you target different customers with unique brands. It also reduces risk; if one brand gets into trouble the other brands can help offset the declines.
The problem is that managing a big brand portfolio is difficult; each brand requires marketing investment and attention. Brands don’t thrive when you neglect them.
When an organization is having financial troubles, a large portfolio can be a major strategic issue. There is not much money for investment so some brands get neglected or, even worse, all the brands get little support.
This is why companies that get into trouble often prune brands and focus on the core. When McDonald’s stumbled, for example, the company ditched Chipotle and Boston Market and many other brands. General Motors made pruning the portfolio a key part of its turnaround plan. P&G rebounded under CEO A.G. Lafley by focusing on the big brands that mattered.
The New York Times Corporation is making a similar move. Last week the company announced that it was rebranding the International Herald-Tribune. The century-old paper would now be known as the International New York Times.
A week earlier, the New York Times announced it was seeking a buyer for The Boston Globe.
Last August, the New York Times sold the About Group, which includes About.com.
The New York Times Corporation, once a collection of media brands, will soon have just one main brand, the New York Times.
This makes perfect sense for two reasons. First, the company is struggling. The stock trades at less than $10 a share, down from over $45 a share back in 2004. Revenue is falling steadily. Profits have been inconsistent; the company made $160 million in 2012 but lost $40 million in 2011. With limited resources, the New York Times has to focus on the brand that matters; there just isn’t money or time to spend on other brands.
Second, the New York Times is a strong brand; it has high awareness and a loyal following. Readers value the product. The challenge is to turn this into financial returns. Perhaps the most encouraging sign in recent years is that readership held up better than expected when the paper eliminated free internet access and started asking people to pay.
The New York Times Corporation will succeed if it can ensure that the New York Times brand emerges as the most respected and trusted source of information and perspective in the world.
The other brands in the portfolio were distractions; the New York Times is making a smart bet.
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This week I am off to Colorado for an advisory board meeting (and some skiing). I then head to Germany to teach in the Kellogg-WHU Executive MBA program. That is always entertaining; the class is a mix of students from Europe, Asia and the Middle East which makes for some interesting discussions about branding and marketing strategy.
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A great posting – To my mind, its about what you DO with the brands and not just how many you have int he portfolio. A non-activated brand in 2013 is either dead, or at the very least, on life support. In an era of rampant commoditization accelerated by the web, non-activated brands cease to be relevant to their target consumers.
Reblogged this on Brandlife.
[…] Betting on the New York Times. […]
You make excellent points, Tim.
1. Every brand needs nurturing and attention and support.
2. Too many priorities can be a life-threatening distraction when the entire system is under stress.
But we all know how difficult it is to really face the strategic music when your business fundamentals are changing, and to rationalize brands that the organization has invested in emotionally. Credit the NYT for leadership and focus–two all-too-rare commodities in business. Those are the reasons to bet on the company.
The Times not only is getting and keeping a sharp focus on the brand, they seem to have gotten good value for the assets they sold. Other (less-focused) brandholders should bear that in mind. Divest thoughtfully.