Bangalore: Technology media, research and events company International Data Group (IDG) has about 300 magazines and 450 websites related to technology. Research and forecast firm IDC is part of the group as is the venture capital firm IDG Ventures.
Confident posture: McGovern says the company usually invests a 10-15% stake in a firm and takes only minority interest. Hemant Mishra / Mint
In 2008, the privately held IDG had revenue of $3.2 billion (Rs15,168 crore) and about 14,000 employees. The path traversed by IDG is one which other traditional print media houses will be looking to follow in the future. In 2002, about 86% of the company’s revenue came from print. Today about half the revenue comes from online sources, 37% from print and the rest from events.
On a visit to India, IDG chairman Patrick J. McGovern, 71, talked about the state of the technology media industry and venture capital investments. Edited excerpts:
What is happening in the technology publishing industry given all the turmoil in the tech sector?
From the buyers’ side, obviously, there have been restrictions on their (IT) budgets. But companies need to increase productivity even as they reduce staff. So companies are investing in technology. From the industry side there has been a slump in sales and they have gone from long-range thinking about marketing to short-range thinking of immediate sales. Instead of brand and image advertising, which pays off over three-five years, they have cut back on that and increased on lead generation and sales-related advertising. We have seen 40% growth on lead generation advertising and flat growth on display advertising. Since our audience is very aware we generate a lot of white papers and webcasts from detailed feedback which enables us to sell leads generated at double what we used to do earlier.
Tough times actually demand better and more accurate information. People are ready to pay for it.
Some of the print publication are breaking even or even losing 4-5%. Well, however, we have transitioned our company in the last eight years from majority of revenues coming from print to today where 50% of our revenues are Web-based and 37% from print and 13% from events. We are shifting more towards the high profit and high margin web business.
Will we see more of your publications completely moving to Web? Also, is the road traversed by IDG the path other print companies across the world will have to follow?
If you are in the business-to-business information category, or say job support or trade information the time value is usually high and the interest is to get the information as immediately as possible. So that type of information will move to the Web. We have in several instances stopped the print title and kept the online. When we started doing it first for one of our major publications with 200,000 weekly circulation, there were apprehensions. When we did stop, people came to us on the Web. It also gave them more features and functions as well as huge audience participation. Our revenue grew and was more than what the print title used to get. The best part was that in print only mode we had negative 3% margin and we went to 37% profit margin in the online only (mode).
So there is very good life after print because of the higher margins. Any time dependent information will move online to the mobile Internet. (However), there will be strong print businesses such as monthly magazines which talk about aspirational aspects such as travel, food, clothing where people have emotional experiences and is not time dependent.
You have a large venture capital arm. Given the current turmoil in the market has it become much more easy to pick good companies?
Turmoil means that companies are more receptive to newer ideas and better transaction values. There is less competition as when stock market collapses, pension funds and other investors have less money to give to private equity players. Also companies have tighter discipline on their spend. In India we have invested about around $80 million in nine companies. On Tuesday we announced another new fund which will be double the size of the current one (of $150 million) as we see interesting opportunities. We think the returns are going to be excellent.
Since you have a venture investment arm as well as a large media empire how do you ensure that editorial integrity is maintained?
The way we evaluate our editors and their bonuses are paid is based solely on the satisfaction of their audiences. We have 190 venture investments in Asia alone. Our journalists are very independent. We have never had any problem with any bias (in our reporting). We usually invest a 10-15% stake in a company and have only minority interest.
What about IDG media’s growth in India?
We are present in 95 countries and till 2004 law prevented us to make an investment with majority control. We had a late start but (are) pleased with the growth here.
We have very big events business here... India is one of the few markets where print is doing well and (has) relatively low Internet access. Computerworld is a major brand as is GamePro. We intend to launch them as websites and if there is enough demand a print edition too.