Shortlist Media: Mike Soutar & Tim Ewington
The team behind the UK’s largest circulation men’s magazine tell Growing Business why giving your product away can be highly lucrative
It wasn’t long ago we saw the introduction of media tycoon Rupert Murdoch’s online pay wall for News International’s newspaper The Times. Elsewhere in publishing, however, a group of guys eschewing consumer cash for their work are making a pretty penny. In just under three years, Shortlist Media, which produces Shortlist, the most widely circulated men’s magazine in the country, has not only clinched over 30% of market share, but also secured that elusive publishing industry prize: commercial success. So does this mean Murdoch’s no longer the savviest man in publishing? As most publishers struggle to stay in the black, and advertising spend continues to plummet, Shortlist Media is boldly carving out a niche in periodicals. Its high-quality, free editorial content, which is distributed mainly through a nationwide network of merchandisers who hand them out to commuters once a week, has secured the loyalty of both the reader and, more importantly, the advertiser. It also won Innovative Business of the Year at Growing Business’ recent Fast Growth Business Awards. Given the recent demise of News Corporation’s free sheet The London Paper and Associated Newspaper’s London Lite in an increasingly congested market for high-street hand-outs, Shortlist’s rapid ascent is all the more remarkable. Led by chief executive Mike Soutar, the former editorial director of international publishing giant IPC, the senior management team reads like a who’s who of the periodicals industry. Between them, they’ve worked on some of the biggest titles in the men’s market – FHM, Men’s Health and Nuts, to name a few. “It was a great training ground,” says Tim Ewington, the company’s strategy director. “We were all given a chance to practice for a few years. What we learned was distilled and is now done here in an incredibly compacted way. Although, things happen more quickly now. There’s no more: ‘It’s going to take a few months while we talk to the Americans about it.'”
Work began on the Shortlist proposition back in 2006. In a bid to get away from corporate life, Soutar and Ewington set up publishing consultancy Crash Test Media. The company, which is still trading albeit on a far more modest basis, worked with a range of international clients advising on product launches and development, mostly in the consumer magazines sector. “The consultancy was a way of nurturing some very leftfield, creative ideas that were probably too unorthodox for traditional media companies,” says Soutar. “The first one we really focused on was the idea that eventually became Shortlist. It was at that point that we brought the rest of the team together.” The men’s newsstand market has been steadily declining over the past decade. Soutar and co were eager to determine whether this was linked to growing detachment from the magazine as a format, or just distaste for the existing content on offer. The laddism of the 1990s had faded, but the sector was still saturated with titles aimed at teens, where bare female flesh occupied the majority of page real estate. “It was an interesting time,” says editorial director Phil Hilton. “That kind of content was a massive turn-off for affluent men in their late twenties and early thirties, and they’d walked away from the newsstand leaving this massive Shortlist-shaped hole.”
A whole generation had grown up with the internet, expecting high-quality content for free. By targeting this audience, who had abandoned the newsstand, and going directly to them, they took a compelling proposition to advertisers. “Our whole model is different from a historic print business,” explains Ewington. “If you start with an enormous structure like a newspaper group, losing £30m to £40m every year, and try to fix that, it’s just too hard. Murdoch has certainly got a problem on his hands. We think free magazines are going to play a really important role in the future. We’ve built a business structured to work in tough times – and there will always be recessions.” Despite the editorial confidence of the team, Shortlist still went through a lengthy research and development process before launch. Content ideas were tested on focus groups over a three-month period, and the feedback fed into the initial Shortlist launch product. It was during this research period that the team began to put together a proposition, including a prototype, for investors. Through the team’s contacts, there was enough interest in the venture to fuel a four-week pitching schedule. This resulted in a £4m seed round from a group of investors (who also all invested in the second 2009 round), including hedge fund GLG, French Connection founder Stephen Marks, film producer Matthew Vaughn and the man who eventually took on the role of Shortlist Media chairman, Sir David Arculus.
A long-established acquaintance of Soutar’s, Arculus is credited with transforming Emap from a small regional publisher into one of the biggest media companies in the UK. He was also chairman of the IPC Group, chaired the government’s Better Regulation Task Force while heading up telecoms company O2, and brings the “helicopter view” to Shortlist Media, according to Hilton. “He’s got extraordinary experience of operating media businesses of all shapes and sizes,” explains Soutar. “He’s more tech savvy than men half his age and has that brilliant quality of being as enthusiastic as someone who’s just started out in their career.” Shortlist’s seed round provided the working capital to get the magazine launched and to reach breakeven point. Managing director Karl Marsden had built up strong relationships with media buyers over a 15-year career, which Soutar recognises as the driving force behind Shortlist Media’s impressive momentum in securing their commercial partnerships. With the level of experience contained within the team, producing the magazine and securing a revenue stream was always going to play second fiddle to the mammoth task of actually getting it distributed. It was the one element none of the team had done before, and provided a significant logistical mountain to climb. The solution was to manage a network of third-party merchandisers. In each region, Shortlist Media employed merchandising sub-contractors, a haulage team to deliver the magazines and a warehouse facility. Just over 60% of copies are distributed by hand, with the rest directly delivered to retail and transport locations, such as banks, shops and airports. “It’s quite a traditional distribution network,” says Soutar. “The difference is we’re coordinating 500 merchandisers up and down the country, ensuring they’re in specific places at certain times of the week.” Soutar admits there were teething problems. It was six months before every part of the chain was solid and they could all sleep at night. The team all took part in the distribution chain at ground level during the early days, and even now, all new members of staff are expected to spend time with the merchandisers handing out magazines. “It’s a very direct way of understanding what your target audience thinks and exactly who they are,” says Soutar. “I’ve worked in magazines for a long time, but until Shortlist, seeing someone read something I’d written happened about once a year. Now every week is a like a focus group.” The established distribution network forms the basis for Shortlist Media’s stronghold. Not only did it enable the fast roll-out of women’s magazine Stylist, Shortlist’s sister title, but it has allowed the first magazine to achieve an audited circulation of 513,000. This equates to over 30% of the market, outperforming FHM (231,000) and GQ (120,000). Ewington is also keen to point out Shortlist’s circulation is larger than The Times, which just tops 500,000. Stylist, which has a circulation of 411,000, had always been on the cards, but the immediate success of its older brother made it much easier to attract readers and commercial relationships. In fact, ad spend is coming far more quickly and is even evolving the company’s revenue streams, claims Marsden. “When we launched, we had no track record to draw advertisers in, so the quickest way to get that was to use media agencies,” he explains. “It takes far too long to gather enough direct clients to generate significant revenue. Fashion and beauty are such huge categories, the clients are far more involved in magazine title selection.” Stylist has allowed the company to build strong direct client relationships, which are now having a ripple effect on Shortlist. “What we’ve done is turn the traditional publishing model on its head,” says Soutar. “We’ve changed the way consumers look at magazines and the way advertisers get hold of a very hard-to-reach audience. We’ve also made the publishing industry think again about using hybrid models to distribute content to their audience. And commercially, we’ve been very successful.” Shortlist magazine was profitable within two years, and were it not for the launch of Stylist, the company would have been too. However, with the second magazine growing at a much faster rate, the team are incredibly confident about the year ahead and will achieve “well in excess of” £10m turnover. The biggest danger the company faces now, according to Soutar, is to avoid becoming blinded by the sheer number of opportunities to pursue. The main focus is currently on digital content and the team are working on a “couple of clear ideas” for the year ahead. Soutar is also tentatively considering the launch of an overseas title. “The UK is a very progressive, competitive marketplace,” he says. “It’s like bootcamp for magazine ideas, because there are more titles per capita than anywhere else in the world. To succeed you need to create a compelling proposition for the audience, and we feel we’ve pioneered a new form of publishing and will soon be ready to make our first steps in exporting those brands to other markets.”