Monday, August 10, 2009

Deer in the Headlights: Enterprise Publishers Confront Fallout from Earnings

I've been making the rounds lately amongst many of the major enterprise publishers, and while there are some bright spots here and there in their outlook and aggressiveness in challenging markets, I am afraid that the challenges to their earnings in a tough economy are taking their toll on many of them. The good news is that aggressive cost-cutting has been able to hold up earnings at many enterprise publishers, including the recent earnings report by Thomson Reuters indicating that profits have doubled in the wake of their cost-cutting after the acquisition of Reuters. But at Thomson Reuters and many other enterprise publishers, including Reed Elsevier, the top line of revenue growth continues to look challenging for the next year or so at minimum. Traditional forms of enterprise investment in subscription information services are down, while investments in new and innovative approaches to information services are being metered out judiciously by major vendors in the midst of continuing cost control pressures.

While a certain amount of down-time from investments in growth after cutbacks is understandable, I am increasingly concerned that many enterprise publishers may be ill-prepared to manage a comeback to healthy sales as the economic outlook begins to brighten. The challenges to their revenues are the result of their enterprise customers having to manage the same sort of economic shocks, a situation that has left many open questions as to how these enterprises will respond to the need for improved information services once they recognize their own need to re-invest in growth. Typically it's the individual business units in an enterprise that are the first to recognize the need for investing in more and better information services in a recovering marketplace, followed by a second wave of new cost controls that shift increased spending to more centralized information budgets. But with more enterprise workers using a wider variety of technologies to serve their own information needs, it's not clear that the second-wave bounce for information subscriptions will have much upside this time around.

This argues for a much more sophisticated understanding of how people in a variety of enterprise work roles see themselves as information purchasers today. Many of the questions that need to be answered about this more dispersed and complex map of potential buyers and purchase influencers are beyond the typical hypothesis-testing that traditional market research tends to focus on in preparation for a new product lifecycle. Simple, quantifiable answers to questions about markets are important when you are focused on a specific marketing goal. But as these deer-in-the-headlights clients start to wake up, being more certain about who to speak to in a sales situation for both product needs and budgets can mean the difference between making incremental changes to products that may be ill-positioned for this new market map of purchasers and knowing when to invest deeply and rapidly in new products and services to meet their needs.

The narrative research techniques that we're pioneering with our clients seem to be very well-devised for cutting through the chaos of changing markets and making sense of complex behaviors and motivations that influence people's quest for order and action. Being able to filter unbiased stories that people tell about key complex behaviors and activities such as content purchasing, use and budgeting enables you to understand both how different extremes of possible behaviors and attitudes relate to specific types of people in a sales situation, but also allows you to drill down to the specific stories that people are telling about those situations very specifically. The techniques also allow you to identify and explore "weak signals," outlying groupings of people who have similar overall attitudes but perhaps very different stories from one another that lead to those groupings. You can to explore the "forest" of complex human behaviors associated with enterprise content buying and use prior to testing out specific responses to those behaviors.

In other words, the best way to invest in testing out ideas for new products and services may be to have better objective observation of complex behaviors before you form specific ideas to test out in a deeper way. How do you do this cost-effectively when your own budget for research has gone "deer-in-the-headlights?" Well, we think that our New Rules of Engagement: Re-Tooling Information Sales and Marketing for the New Economy subscription study may be the key for many major enterprise publishers getting in touch with enterprise workers dealing with the shocks affecting their own organizations. Primary subscribers will bet insights into stories from hundreds of enterprise workers on key topics affecting their content purchasing and use and workshops that will help them to interpret research results and to apply them to their own organizations. With "New Rules" available for your 2010 planning sessions, you'll have a far better chance of trying out the right ideas for your markets more rapidly as the economy recovers.

I hope that you do give "New Rules" a look and to consider how your organization can benefit from understanding purchasing patterns for enterprise content in a whole new light. With revenue growth at a premium, we hope that this cost-effective investment in basic understanding of your markets -and the potential gaps that may exist in your own staff's understanding of them - will help to accelerate your revenue growth sooner rather than later.
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