What McKinsey Will Tell Conde Nast

Embattled publishing company Conde Nast has hired McKinsey & Co. to help the publisher look at its options as its advertising revenue shrinks at a alarming rates. According to MediaPost the goal of retaining the consulting firm is to evaluate the company from top to bottom. “This is a considerable and complicated task, forcing us to rethink the way we do business in many instances and incorporate efficiencies in every step of our process,” CEO Chuck Townsend said.

Whether Conde Nast takes the advice, these are some of the things McKinsey is likely to say.

The New Yorker is not a weekly magazine. It may be published weekly, but it will only run about 1,200 ad pages this year. It is in a class of large national weeklies including Time, Newsweek, and The Economist, that are suffering from 20% to 40% attrition in their ad volume so far in 2009. Through its July 20 issue, The New Yorker’s ad pages are off 28%. A great deal of its content is not time sensitive as it is in newsweeklies. It is time for the publication to become fortnightly.

Wired is an online magazine with a failing print edition. Wired’s ad pages are down 44% through its August issue. The content of the publication makes it a perfect online product. According to online audience measurement firm Compete, Wired.com had 6.4 million unique visitors in June. PC Magazine killed its print edition. It’s time for Wired to do the same.

Conde Nast needs to be more successful online. The major portals the company has created–Style.com, Epicurious.com, and Concierge.com–all have small online presences. Compete shows Epicurious with less than 1.8 million unique visitors in June. Style.com had 675,000 for the same month. Concierge had 430,000. Even if those numbers are off by a factor of five times, they are much too small. With marketing revenue moving online and out of print, Conde Nast is well behind most other large publishers in exploiting the internet by using its premium content.

Finally, some of the brands are going to have to be closed. Gourmet ad pages are down 43% through the first eight months of the year. Stablemate Bon Appetite is doing better. Architectural Digest ad pages are off 49% for the same period. Spending on luxury homes and decor may not come back for years.

Conde Nast is going to have to be rebuilt around a few core brands: Vogue, Glamour, Allure, GQ, Vanity Fair, Bon Appetite, and The New Yorker as well as their online counterparts. That will require far fewer people which means substantial staff cuts.

Douglas A. McIntyre