In your opinion, how did Alma Media succeed in 2014?
The year was characterised by two different forces. Firstly, as the economy in Finland continued to be weak, the development of Finnish printed media business was poor. Good digital growth did not fully compensate for the decline in printed media. Secondly, our business outside Finland grew better than expected and its profitability remained excellent.
Due to the economic recession and weakened macroeconomic forecasts, in 2014 we sought cost savings by streamlining our operations, processes and organisation. The streamlining efforts and good digital development efficiently dampened the negative effect of the weak operating environment and declining demand on our performance.
To what extent did Alma Media achieve its financial targets in 2014?
Our long-term financial target of 15 per cent return on equity was not achieved in the prevailing market conditions. However, our digital business grew 12 per cent, which is rather satisfactory. Last year, digital products and services accounted for 32 per cent of Group revenue.
In your opinion, what were Alma Media’s most important development steps in 2014?
We continued to develop and increase our international recruitment business by merging Alma Media’s recruitment operations in different countries under one company. Alma Career started operations at the beginning of 2014. The company, which we own jointly with Monster Worldwide Inc, expanded our digital recruitment business into countries in which we were not present before, namely Hungary and Poland.
I am particularly glad that the strong growth of Alma Media’s digital business continued in 2014. In the third quarter, our digital advertising sales exceeded printed media advertising sales. In the whole year 2014 advertising sales from digital and printed media were on par.
In publishing operations, one of the highlights of the year was the establishment of Lännen Media. In my opinion, the agreement signed by Alma Media and five other Finnish newspaper publishers on journalistic collaboration and the establishment of Lännen Media Oy is a significant step towards ensuring the quality of regional publishing operations and the cost-efficiency of business. The collaboration has resulted in the regional papers benefiting from a significant amount of new content to be utilised in both the print newspaper and paid online services.
How has the operating environment changed during the year?
Unfortunately, the general economic situation has not improved in Finland and the rest of Europe. In 2014, consumer demand was weak, due to consumers’ declining purchasing power. This had a particularly strong impact on the sales and marketing investments of retail and specialty trade, both important for newspaper advertising sales.
As consumers’ patterns of media use are increasingly characterised by digitisation, advertisers are at an accelerating rate investing in online stores and digital marketing channels. Digitisation has led to globalisation of the market, and we are now facing a new type of competitive situation: we have to compete for the attention of Finnish consumers with the largest American players in the media field, such as Google and Facebook.
However, Alma Media is well established in the new competitive field, and the company has the resources for continued success.
Many media companies invest heavily in the IT development, for purposes such as more efficient use of consumer data in business. Can this development be seen in Alma Media?
Media companies are increasingly developing their business towards the IT industry, and technical development plays a strong role in our daily work. The use of so-called intelligent data will be one of our most important areas of development in the next few years. We build consumer data by analysing our content and our services for advertisers, and we develop our advertising and content sales.
Systems for data analysis and the use of data are already in daily use at editorial offices. Minute by minute, we analyse consumers’ moves in online services and modify the content to serve consumers in the best possible way. Our media sales also use technology developed for the analysis and management of advertising. With these tools, we can target advertising in accordance with customers’ needs. At the same time, of course, we keep consumers’ privacy protection strictly in mind.
What were the key issues in 2014 in terms of corporate responsibility?
Last year, Alma Media continued its own activities and co-operation to mitigate the environmental impacts of the media sector, develop the competence of its employees and reduce youth unemployment. Corporate responsibility activities particularly highlighted the effects of journalism on society, responsible management of consumer data and the local social responsibility of journalism.
Recently, the role of freedom of speech in society has become a strongly debated issue in Finland and around the world after the terrorist attack on the French weekly. The attempt to suppress freedom of speech with violence and terrorist activity has been widely condemned around the world.
At the same time, in Finland, we also have to consider the existence and working conditions of a pluralistic and free press from a wider perspective. The general instability of the economy has challenged Finnish media companies and will, at worst, deplete our diverse media landscape. Without a functional, wide-ranging, pluralistic high-quality media, democracy cannot exist. Alma Media wants to prevent such development by improving our media to respond to consumers’ needs even better—without compromising the quality of the content. In addition, responsible collection, use and storage of consumer data is always essentially important for Alma Media’s business.
What are Alma Media’s sources of growth in 2015 and in the near future?
In the next few years, the majority of growth in Alma Media will come from digital media—through existing brands and new products and services, both in Finland and internationally. In addition to digital service business, in the near future we will develop our delivery and printing services. We will invest in information services and various consumer and lifestyle services, and we will continue to increase our international recruitment business. Our balance sheet position has improved according to plan. This makes it possible for us to make use of suitable investment opportunities, when the time comes.
The operating environment will continue to be very challenging. Alma Media must be alert in reading weak signals and adapt its operations accordingly. In a time of transformational changes in the media industry, Alma Media is supported by a strong strategy and a clear direction towards a digital future. All of Alma Media’s business units will continue to focus their resources on digital business and invest strongly in developing their digital expertise.
I want to thank our customers, employees, investors and partners for the past year. Alma Media is in a good position to develop its operations and serve its stakeholders even better, also in the future.