Scott Jamieson Talks About Building Annex Business Media

NOTE: We recorded this episode a couple of weeks ago. In between recording and publishing, Scott Jamieson, who was the COO, became the CEO and executed an innovative transaction. In phase one, 50% of the company is now owned by senior management, with the second half intended to be owned by the employees in an upcoming phase. You can read about that here.

Jacob Cohen Donnelly: Since you’ve joined the AMO Slack, you’ve been one of our most active members, and so I’ve had the pleasure of really getting to know Annex. For the rest of the audience, tell us what Annex Business Media is and the history of how you wound up as its COO.

Scott Jamieson: Annex Business Media is Canada’s largest B2B media company. We’re a bit off the radar south of the border. We have 60 brands in markets that span manufacturing, construction, public safety, resources, agriculture is one of our big verticals. We have 160 employees. We do everything from all the digital in-house, a lot of our own IT technical support. We also print our own magazines, which makes us an anomaly in this day and age. I don’t recommend anyone get into the printing business, but we’re in it and it works just fine for us.

My involvement at Annex started 20 years ago when the magazines that I was a partner of, three forestry magazines, were bought by Annex Business Media. I came along for the ride and I’ve worked with Annex over the last 20 years to build up the event portfolio, to modernize our audience development department, to work in the marketing side, to pretty much just get my hands into everything. About five years ago, just before COVID, which was great, I was made COO of the company by our two owners, we’re privately held, and I’ve been COO ever since.

Jacob: Obviously, you came over in a deal. Talk to me about how Annex Business Media has grown through M&A and what sorts of deals you’ve made in your time there.

Scott: The name Annex is because that’s how we intended to start growing when the company was founded about 27 years ago through Annexing other B2B companies in Canada. The Canadian B2B scene is still very fragmented. We are the largest player by a good margin in terms of the number of titles, but we’re only about eight or nine percent of the market, so it’s still very fragmented. That was an opportunity, still is an opportunity for us.

The company was originally founded after the sale of some community newspapers and the owners took some of that money to found the B2B arm and quickly started acquiring magazines. We were among the first that they acquired our three magazines. Since then, we’ve done a lot of one-offs or onesies and twosies. We’ve had a couple of big acquisitions. In 2010, we acquired seven or eight magazines from a company called CLB Media, which stands for Canadian Law Book.

In 2015 we bought a lot of the remnants of the former Rogers Business Media Empire, basically doubling the size of our company in 2015, both in terms of staff but also in terms of revenue. Since then, we’ve done a lot of, again, acquiring one to three magazines where they’re a nice fit with our current markets or where we just see somebody really struggling with a brand that we think we can really add a lot to. I would say we are typically opportunistic acquirers. We don’t chase a lot of deals.

Jacob: Why don’t we just jump right into the core of the business. You talk about print. Digital is a big part of the business. You have a number of events. You have a full suite of capabilities. If you had to break down Annex’s revenue by category, print, digital, where would you do that?

Scott: We’re in a state of flux. In 2019, over 65% of our revenue was still in print. That’s changed dramatically in the last five years and quite deliberately. Frankly, the pandemic helped us to do that because people ran away from print in 2020 and didn’t come back. We got very lucky there in some sense. Currently, just under 40% is print advertising and just over 35% is digital. Around 15% would be events, and that’s our most rapidly growing part of the business.

Then we have an assortment of other things that would include a small e-commerce business. We do a lot of book distribution for some of our verticals because we have obviously free marketing access to them. Chiefly in our firefighting and public safety, that’s where most of that happens. That’s maybe about 5% of the business. We still do commercial printing, as I mentioned. That’s maybe 3% to 4% of our business. Then we have a bucket that I would call other that would include things like marketing services, content marketing, which we just actually launched into at the beginning of last year. That’s another growth area for the business is that other bucket.

Jacob: Holistically, what is the revenue for Annex and is the business profitable?

Scott: We’re a privately held company with two owners, so I won’t get into the actual revenue. Is it profitable? Yes, we have very strong margins. Our margins are now 20% stronger than they were in 2019. That shift in revenue meant– actually, the drop in print revenue led to greater revenue, but also much nicer margins. We are, like a lot of companies, under a bit of stress with inflation the last couple of years, where we’re trying to keep up with things like wages, the cost of paper, because of course we still do print now.

Both of those things are easing off right now, and so we expect to get back into a position where when we’re growing our revenue, we’re also quite actively growing the bottom line. That’s been a little challenging in the last two years. Still every year better than the last, but it makes me cry a little bit when I see how much revenue we add to the top line and how little of it hits the bottom around, again, mostly wage pressures.

Jacob: Let’s talk actually for just a moment about print, because you’re not the first person I’ve heard talk about how the cost of paper has had a big impact. Before inflation rose, what were you spending on paper? Then when inflation was at its peak, what were you spending on paper? Just to give us a barometer of just how big of an impact this is.

Scott: At one point from, let’s say, the fall of 2021 to the summer of 2022, our paper costs, and keep in mind we buy in bulk because we’re a printer, right? Our paper costs had gone up 160%. That happened throughout the year. Our fiscal starts November 1st, we had budgeted a typical 5% increase, and everything went south very quickly. We responded very quickly by managing frequency, by managing page count, those sorts of things. We did that aggressively in our budgets for fiscal 2023.

It hasn’t gone back to the original levels, but it’s maybe 30% above the benchmark of 2021 now. It’s really receded, because a lot of magazines did exactly what we did, and the demand for paper really fell off. On the commercial printing side, we lost quite a few customers, actually, who just went bankrupt, because they were already marginal. As a lot of consumer magazines, we have a lot of cultural magazines in Canada, because there’s a fair amount of government support for that. A lot of those operate in margins of below 5%, where they just couldn’t make it.

Jacob: Do you view print as a business that you are managing its decline, or is it an area of growth, even while the digital business and the events business grows faster?

Scott: Managing its decline would be an aggressive way to put it, but it’s not a growth sector in the business. For instance, this year, after our first quarter, print is down 4% versus last year. That’s pretty much standard now, somewhere between 2% and 4% a year. That’s been ongoing since the Great Recession of 2008, 2009. It drops at that somewhere between 2% to 5% every year. Then you have something very dramatic happen, like COVID, and then you lose 20%. That 20% never comes back. You now have a new base, which you have that slow decline.

I would call it a slow manageable decline. It creates a challenge of running two separate business models. We’re not alone in that. Obviously, you’ve talked to somebody from Endeavor. They would tell you the same story. It’s challenging, or a lot of global media. Anyone who’s still got markets that are heavy to print, you’re running two businesses. You’re always trying to shift resources away from the declining side to the growing side at the right pace. We do have to consider that, let’s say 39% of our revenue is in print advertising. That’s a substantial piece of business that we just can’t watch dramatically drop.

Our goal is to get that to about a 20% level over the next three to five years. When I say it’s our goal, we don’t actually have to do much. It’s going to happen. We just have to make sure we’re placing it with similar margins as we go. I think it’ll stabilize around there as a premium product. It is still very popular with our advertisers. Ironically, even the ones that don’t use print always want to know if their story will be in print.

If they’re using a PR agency, the PR agency doesn’t really care if you put it online so much. They want it in print. That same client working with that PR agency will not spend a dime in print. There’s a little bit of a disconnect there. We are seeing the decline slow a little bit. I think because of that, people are saying, “Okay, well, the digital side is very, very busy. It’s cluttered. We know what happens when we put a print ad and we know that it’s got that unique spot that anyone opening that magazine will see.” It is something we manage as a shift in the business.

Jacob: I guess jumping ahead to one of my questions, is the primary reason that companies still opt to advertise in print products primarily for the viewability? I know that the ad is there. I can see it when I open that magazine. Is that why they’re doing that?

Scott: Yes, there’s some of that. When people, let’s say a large advertiser in our ag sector, and these are big, big clients, they’ll pull out of print for a year, and then all of a sudden, their reps in the field will say there’s an impact, and it’s not a good impact. People are asking questions like, “What are you guys doing? You’re not marketing anything anymore?” They go, “Yes, well, we’re doing all this programmatic,” whatever it is, and they do a lot of that with us. We’re okay with that. Then the people in the fields will say, “Yes, it’s not really working,” and so we’ll get a shift back.

Some of it is trial and error. Some of it is the nature of our markets. We have some very, very niche markets where the marketing people are traditional. Marketing is 1 of 15 jobs that they have. They’re small to medium enterprises, and for them it’s just part of their mix, and they’ll diminish it some years, but they don’t totally get out of it. I think we are protected in a way that larger verticals are not, and so our decline, if you want to call it that, will be much more measured. Then we have some markets, it’s a combination of the market, and I would say principally the sales rep, who is just very, very good at arguing the case for print, where our print is growing, and it’s growing double digits. It’s not an all or nothing scenario.

Jacob: You mentioned that the pandemic resulted in a 20% drop in print revenue. Talk to me about this transition that you’ve had to push the company through in these past few years from still heavily print to now much more on digital and events.

Scott: It’s part of a larger push to innovation that, frankly, the pandemic really was an accelerator of. It got rid of the argument of why we’re doing this. We’re doing this because we need to pay the bills, because the print, frankly, it’s just not coming in. It allowed us to do things. We launched our first virtual event from having never done one to our own custom-built platform in less than five weeks, and then a very profitable one.

We had great success with virtual events. We still have good success with virtual events in some of our remote markets. It really pushed our webinar business. It went from very little with a couple of markets that had some decent webinars to just a big piece of our business. That has plateaued in the last year, but it’s not going down, and it’s still a very good margin. It was really this need for innovation that spurred the rest of it.

Also, there was a pull from the market. “Okay, we don’t have a trade show. How are we going to get to our customers?” You had to invent new things for them, or it forced what I would call the more legacy sales reps to say, “Okay, well, we’re going to sell you a webinar. I don’t even know what it is. I don’t know how to do it, but I’m going to sell you one, or we’re going to get you in this virtual event.” That, I think, was a big help to drive the new business sectors forward. We always had them, but maybe the buy-in from the reps was not as strong.

Jacob: I guess it’s an interesting question, because I’ve talked to a number of other operators who do print and digital. For you, do you expect your sellers to know how to sell both print and digital, or do you split your sales teams based off of the products that they’re selling?

Scott: Our sales teams are exclusively focused on markets, not products. They sell everything. They sell events. They sell all the different digital products, right up to our more complicated lead driver, lead driver plus programmatic type campaigns, our content campaigns, that sort of thing, marketing services, even some print contracts. They sell everything, but we have subject matter experts that can come into a phone call or a Zoom and help them through it, or to help them before the meeting or after the meeting. They don’t have to know everything. They just have to know what’s in their toolbox.

Jacob: When you are assigning goals for these sales teams, are you telling them that you want them to hit certain print versus certain digital numbers, or is it just a raw, revenue target?

Scott: They have targets based on the prior year. They will have components in there, like events and digital, you name it. What we really want them to do is have that conversation with the marketers and see what it is that they need and go in that direction. We’re not trying to skew that conversation. These are debates that we had way back in the introduction to digital in the ’90s. Should you incentivize sales reps to sell the things they don’t understand by giving them maybe double the commission on a digital sale?

We quickly found out that didn’t work very well because at the time, the digital wasn’t worth nearly as much as the print. Even a double, it wasn’t enough. Also, you didn’t want them leading the client down a road that the client wasn’t comfortable with. We’ve never done that. What we do have, though, is when we launch something new, like our content studio, we will build goals outside of the budget that have separate compensation around driving that new piece of business because we’ve invested in some staff and resources there. We don’t want to just sit for five years and wait for it to happen organically. We will do that. We’ll do sales contests, other things to move people in a certain direction.

Jacob: All right, I want to keep digging in with people because, again, this is a media business and it’s like people is the business. With so many different brands, what does the team look like? Let’s use, I think this is probably like the industry’s favorite publication that you own, which is Manure Magazine. You immediately laugh because the second we see this, we all just zero in on it. Does Manure Magazine stand on its own? Does it have its own sales team and its own editorial team and its own ops teams? Or is it all shared services? How do you think about the allocation of those resources?

Scott: In the center of everything are our brand teams. We’ve got six core values and our top one is always own it. We want these brand teams to run those magazines as if it was their own little business. That’s great. Manure Manager, it’s not just Manure Magazine, you have to manage it, it’s Manure Manager, which by the way, is one of our few publications that most of its circulation is in the USA. Manure Manager, that team would have an editor and a salesperson. It’s not a large brand. That editor and that salesperson will also work on another magazine each, usually the same magazine.

They’re running a business, much like the business I used to run with two small magazines. They focus on that. Circling them are all this constellation of shared services, support. It’s like running a small magazine like I used to do, but with as much support as you need, as long as you can justify it. There’s a digital team, there’s an events team, there’s of course finance, there is a videographer, there’s a webinar specialist who can even host webinars for you. There’s just all the audience development, of course, all these services that they can access and all this expertise that they can access.

They will also go to joint sales meetings with all the other salespeople or joint editorial meetings. We have an annual sales day, editorial day that they get to participate in. A lot of knowledge sharing. We have an innovation day every second year that includes all of those brand teams plus the support side. That’s the kind of ecosystem that we have. Our small magazines can do things that their competitors who are maybe independents could not even dream of.

For instance, we run the North American Manure Expo, which is a live show where they spray manure and they eject manure and all kinds of things. It’s a big undertaking. It’s a live show that moves from state to state every year outside. That little team of two can run that successfully and profitably because they have the support of the rest of the company to do that.

Jacob: Then when you’re looking at one of these very small publications, how are you assessing whether it is profitable on a contribution margin perspective? At what point do you go, “This is just not working?”

Scott: The first part of the question, every magazine has its own unique P&L and we budget from the bottom up using those P&L. At the beginning of the year, if they present a budget that’s not going to make any money, then that’s when we start to have that conversation. “Okay, this happened this year and it happened last year. Why are we still doing this?” Sometimes that creates a sense of urgency where all of a sudden, some ideas come out and it gets that publication new life. That happens in the majority of times. Once in a while, we have to shut a magazine down or sell it to somebody maybe who’s in the sector, who’s an enthusiast and would run it at break even and be happy with that. In my 20 years there, we’ve done that four times where we sold one or shut them down.

We have allocations and allocations can be a fool’s game. You can allocate things many different ways. You can have timesheets people have to labor over and if you hire three people to manage– we don’t do any of that, but we do have allocations based on what we think the services are required to run those magazines.

If for instance, Manure Manager wants to have an event, then we sit down with the event team and we figure out what that is going to cost us internally. Then that creates a revenue target that reaches our 50%. For events, our minimum margin is 50% ROR. We look at that and go, “Okay, is this going to meet that?” If it doesn’t meet in the first year, fine, what’s the plan to get there? Everything is done with the bottom line in mind. We don’t chase revenue. I have no interest in revenue. It’s really all about what hits the bottom line.

Jacob: Can you talk about subscriptions? I know you have a print business, but I’m not sure if those are print subscriptions or if it’s free distribution magazines. Talk about how Annex has operated with a subscription business if it has.

Scott: As a B2B company, we follow the typical North American model of controlled qualified circulation. Very few people are paying for it. About 2% of our revenue is subscriptions, so we’re not going to get rich off it. It’s nice. We make more audience revenue from our events and paid webinars than we do off subscriptions, and we think that’s where we’re going to grow audience revenue, not through subscriptions.

We’ve tried subscriptions like other North American B2B. It’s a rough go. People are used to getting these magazines for free, and if they don’t get ours for free, they get a competitor’s for free. When you go to Europe, it drives you crazy. Of course, they never went down the rabbit hole. We went with just, “Let’s just give away the magazine. It’s a form of advertising.” They always had that subscription model built in, but it doesn’t seem to work here, and we’ve had some German companies buy some Canadian magazines and try to build it, thinking that it works in Germany, it’ll work here, and it’s never worked here.

Jacob: Let’s move over then to the digital ad business. What sort of ad products are you taking to market? What is the portfolio that you have?

Scott: We still do really, really well with good old display, advertising, branding, like you were talking about in your newsletter this morning. We still do quite well in that in all of our markets. On that front, we’ve built a lot of what I would call high-impact branding. We have a wallpaper unit that goes down both rails of the website that is quite successful. We have a top billboard, which is a large piece of real estate right at the top, even above the leaderboards. We have an inter-scroller that, as people scroll, reveals itself, it’s a nice, large, high-impact unit. We use our CDP for some modal ads, some pop-up modal ads that work really well as well.

That’s still a big piece of our business, and then our e-newsletter would be equally as large a piece of revenue for us, and it’s a big focus for us. Honestly, I saw what Industry Dive was doing and said, “Why in the world are we not doing that? We’re in the newsletter business long before Sean was.” That, to me, just got stuck under my craw. We’re really focusing on that. We’ve got a task force on that to improve engagement, but also train the sales reps on how to sell the full margin. That’s a big piece.

The things we’re working on are a little bit different for some unique clients. We do white-labeled, third-party programmatic. We don’t do a lot of it. It’s never our first choice because so much of that money goes to someone not Annex. It’s available there. We do a lead gen programs called Lead Driver and Lead Driver Plus that are doing very well. They’re high revenue model business. These things are the equivalent of four or five full-page advertising if you want to get equivalent of what it’s worth. We’re doing very well on those. We have a owned audience version and a programmatic version of those.

Webinars are still, as I said, a really good piece of business for us. We’re now starting to charge audience, which adds more revenue to it. We’re having some success there. Virtual events, which we actually captured that on our event revenue, but it’s obviously a digital product. Those are all doing very well. When we look forward, we do have all the technology that we can start to capture audience intent and start to market that as a product.

The challenge that we have is our markets are so much smaller than what you would see in the States that segmenting becomes difficult. You end up with really, really small audiences. You start with a niche audience and then you segment that. When I say niche, Canadian niche audience might only be 2,000 e-news to begin with. How do you segment that and still charge something meaningful? We are doing that. We’re moving down that road. The question we’re faced with right now is are we going to build that ourselves or are we going to partner with somebody? Because there are other companies that do that for you. We’re looking at both of those options right now.

[music]

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Jacob: I want to spend a little time talking about Lead Driver and Lead Driver Plus, mostly because I remember when I learned about this, I was just blown away by the visual of just how many potential touch points there are. Walk us through what that is and how these products work and go as deep as you want.

Scott: Yes. In its most simple term, Lead Driver is a trickle marketing campaign. We have been doing those for a long time. We just didn’t have the technology to automate it. That was an issue. It all starts with the audience. We meet with a client and we build the audience. That could be in one brand or it could be across all of our brands. We can segment it any way we want. We build that audience. The size of the audience will determine how much they’re going to pay for it. Then we build up a campaign that would include an initial e-blast. It’s all with content. Of course, content is the key part of this. It’s content marketing and its basis.

You have the first e-blast that goes out. We have a second one that goes out. It’s an A-B test. We send it to the people who didn’t open the first one with different subject line and different heading and that sort of thing. We actually get a good response on that. Then there’s an additional two e-blasts that will go out after that for the people who’ve responded to give them more information. You’re nurturing these leads. You’re educating them a little bit more. At the same time, there’s a Facebook component of it. We bring in our e-newsletter because we have some sponsored content components to that we also will use.

All of this will come together on a landing page where the content resides and we can gate it if the client would like or we don’t gate it. That’s a conversation we have to have with the client because they have to understand if you gate it, it’s fewer but better. Some people aren’t that happy with it or they’re happy with it when you first talk about it and they’re not happy with it when they have to explain to their boss that they spent $12,000 for 15 leads. That’s Lead Driver.

Lead Driver Plus does the same thing, but we work with our third-party white-labeled programmatic partner and we build on an omni-channel element to it that includes geo-targeting, that includes social media programmatic, 100,000 impressions on just standard programmatic, basically retargeting an audience extension. This all comes with very detailed reporting and scored leads.

Jacob: You’re talking about multiple touch points, multiple pieces of content. How do you think about pricing a product like Lead Driver when it has so many touch points? Is it per piece? Is it just one big packet? How do you think about the pricing of that?

Scott: When we first did it, we just said, “Okay, how much do we charge for an e-blast? Okay, we’re doing two.” That’s the basis. It can’t be less than that. Then, okay, we have our e-newsletter piece, there’s a cost to that. The social stuff is easy because we have to pay for it. It’s paid social. Then we add a 15% or 20% agency fee on top of that. Then there’s just the work involved. You have to figure out, “Okay, we’re going to let score leads. We’re going to have multiple meetings.” You figure the base of what all these combined products are worth and then add the time marked up of the people involved and go to market and see how it does.

I usually try to encourage people to do all of that and then add like another 10% because we tend to go out cheap. That’s just media. That’s what we do. We get pushback sometimes, but what we find is when you come up with these new products, it’s the same with an event. Nobody tries to negotiate the cost of a gold sponsorship in an event down, but they will always try to negotiate the cost of a full-page ad down or a banner on your website. It’s innate in that. What we find with these things is you come up with a price, it’s either way too much money for them and that conversation ends and you move on to something else, or they go, “Yes, let’s try it.” It’s honestly that simple.

When you do something with the programmatic side, of course, you have to add on the money we pay to our partners and then mark that up, of course, as well. The CPMs that we’re charging, for instance, for programmatic are ridiculously high compared to what you would get if you just went to a digital agency. People are happy to pay it because they know we’re building that audience through our first party data. They’re getting results from it that they’re not seeing when they’re paying the $8 CPM.

Jacob: Now, you mentioned at the top of the episode that you have moved into more of a content business as well. On your website, you’ve got Amplify, right? That’s your custom content studio. Can you talk about why this business is so important to Annex as it continues to grow and how it works with each individual brand?

Scott: We saw this coming in the States a long time before it happened here. That’s one of the curses we have. We’ll go down to a lot of the events in the States and people are doing something. It was, “Oh, we can do that in Canada.” We come back, the market’s just not ready for it here. It’s just it is always a few years behind. We have to accept that. We’ve been trying the content piece for a few years with some success, and we tried to buy a content studio at one time and it didn’t work out for a number of reasons.

We didn’t jump into it with both feet until last year. That’s because we started to see a little more traction with our customers here. We talked to a lot of people in the states who had done it before so we could try to avoid some of the pitfalls and just to get a sense of how long is it going to take, how patient do we have to be? It took a lot of people a long time to build their content studios out. They’re more established now.

It’s important to us because, again, every year we’re going to lose four to five percent of our print. A big part of my job is every year I figure, “Okay, where’s the next two million dollars coming from?” That’s not print. It’s not just going to be selling a couple more banners. We have to create a new business line. For us, this is a new business line. We have obviously a lot of expertise in it, like every other B2B company in terms of content.

To run it, we promoted somebody internally, who was one of our better editors of technical content, but also very personable, can handle a meeting with clients. She’s just doing an amazing job. We are seeing some significant traction. It started making money in the third or fourth month so we’ve never had to really invest in it. To me, it’s going to be another piece of business as big as events in five years from now. That’s the real importance of it.

As far as how it works in the brand level, the biggest thing is getting the advertising reps to understand what it is and to be comfortable talking to their clients about it. What we’re doing right now is this person that’s the project manager is in on a lot of client calls. That’s just a lot of what’s happening. We do lunch and learns with the reps. We just did one last week. We talk about specific products.

One of the things we’ve done is create products like a lead driver, because a big push for the lead driver was, “Let’s make a product that’s easy for people to sell.” It’s all included. You have to do that if your reps are going to sell everything. We’ve productized content, if you will. We have a lot of education on our sales reps. That is the biggest hurdle and the biggest opportunity for growth. Last year we had about five reps really, really do well. This year we need to have 10 and so on.

Jacob: As you think about the studio, do you look at its revenue or its profits as each individual piece of content has to make money on the production of that content or do you look at it as, “I’ll make the money up on the distribution of the content.”

Scott: No, it’s a stand-alone. The content has to make money. Again, another thing I spoke with Sean Griffey at the Industry Dive about, because they bought a great content studio and then built that out and they’ve done a nice job. At the beginning, we’re going to make most of our money in distribution. That’s been the case because a lot of this content ends out as a lead driver. That’s a big-ticket item.

Down the road, what we want to do to diversify our revenue stream is to be that marketing services support arm, an external part of a marketing team, and we’ve got some success at that and we can really see how that works and how that would really help us. It might lead to distribution or it might not, but we don’t count on making that money.

One of the approaches we’ve taken, because everyone’s interested in it and they talk about it and they maybe even buy a program but then nothing happens, is we sell credits now. You get four credits in Amplify or eight credits in Amplify. You pay up front and then we figure out how you’re going to spend it. We found that when you do that, people are way more motivated to figure out how to spend it because they’ve already paid you. That’s actually working quite well for us. That is, again, another lesson learned from the trenches is, “Okay, it’s great to sell all this stuff, but if it never gets executed, we’re not going to get paid.”

Jacob: On the event side, is it predominantly exhibitor led events or is it predominantly ticket revenue events? How are these events making money?

Scott: Most of our events are content-led. We’re not in the big trade show business. It was already saturated in Canada and not doing very well. With some few exceptions around construction or trucking, it just wasn’t really doing that well. Our route has always been, we know content. That’s where we can do things the other event companies can’t do. In the past, we would help them make their content and maybe get the show guide out of the deal or something. That’s not a great deal for us. We decided to do that ourselves.

Most of them are small to mid-size conferences with associated exhibits that are usually 10 by 10s or tabletops. We don’t have that many events where you’ve got your 40 by 40s and 20 by 20s. That’s about 80% of our business. Audiences anywhere from 100 to 500 people. These are really niche. We have some events where the audience is less than 50 people and they do just fine. Those are usually around very high capital technology where one customer is worth a lot.

We do have some large events, and for us a large event would be maybe 14, 1500 people attending and that’s where you have your 20 by 20s and your 40 by 40s, but we only have a handful of those, four or five and two of them are held in the States because the market’s big enough there for us to do that. That’s sort of the events that we have. We also do a lot of awards. Industry awards do really well for us. You charge people for nominations, you charge sponsors and then you charge the winners for tables. As long as you get your costs right, it’s not a bad business and it’s really good for the brand.

Jacob: Let’s talk for a minute about technology. If I visit one of Annex’s many brands, each site looks pretty similar. You talked about how you have the wallpaper ads and the columns of the site. They all look very similar. Can you talk me through the technology stack of Annex and how you have operationalized some of these individual websites?

Scott: You’re exactly right. They look exactly the same. We follow the Ford Model T philosophy. You can have any color you want as long as it’s black. It can drive some more creative editors a bit crazy, but the only way you can survive on the niches we have is if you really template and optimize. Every website is modular and is built on the same platform. If we change a website, we change one thing. It’s changed 60 times or 70 times, depending on how many websites are built off that. Our e-newsletters are the same. Our magazines, we have five designs. That’s it. All these things are modular. Brands can take things out, put things in. They’re not recreating the wheel. We don’t have six-hour cover meetings every time a magazine goes to press. We just can’t afford to. It doesn’t make sense in our environment.

The tech stack behind all of that, we use the full Omeda stack, everything. We used to have a separate CDP and a separate audience. We were spending more time fixing the pipelines between everything than we were making money. We made the conscious decision to do everything Omeda. That’s the CDP, that’s the marketing automation, that’s all the audience, everything, the clerical audience side of it, you name it. It’s been a great move for us. We’re actually spending less money now that way than we were in the past, significantly less money, but more importantly, all the silos now are down across the company because it was a finger pointing mess before when things wouldn’t work.

That’s been a good addition, but there’s some things that Omeda doesn’t do well and I’m going to get in trouble for saying this for my Omeda friends, but like the reporting is not very good. We built our own reporting, automated reporting system for digital advertising off of Domo, which is a business intelligence much like Looker or something like that. It’s working extremely well. We have built our own internal e-news building software called eBuilder, and I don’t like to do that, but we couldn’t find what we needed off the shelf. We’re now building up the ad side of that.

What eBuilder does is basically dramatically simplify the editor’s process and our ad people’s process when you assemble e-news, because you can imagine how many of these we send out in any given day. The ad builder side, the dream is that it’ll be fully self-serve for the client. Right now, we’re just starting it and what we’re going to focus on is inventory control, because right now, embarrassing enough, we use spreadsheets for that. Inventory control, as well as scheduling, which is now two manuals. That’s on the e-product side, I would say.

Then our CRM Salesforce. It’s very exciting. We’re automating our expense reports this month, which sounds like, “Who cares? We’re in the media business. What do we care about that?” Well, we do a lot of expense reports and it’s a really big source of friction between different departments. We’re just saying, “It’s nothing. It’s $10,000 a year. Let’s just automate it and take that source of friction away.” We’re really looking down the road at automation of everything that we can do. Take the manual out as much as possible so we can focus on making money and efficiencies because the nature of our business is we have to be very, very efficient. We cannot have processes that take a long time, times 60 magazines. It’ll just kill you.

Jacob: You mentioned reporting for a second, and it’s ironic, Omeda will be the sponsor of this episode and so it’s going to be very amazing-

Scott: Sorry guys.

Jacob: You mentioned reporting for a second. I think there is a trend, and we’ve talked about this, I think, in the AMO Slack of B2B media companies need to get a lot better. All media companies need to get a lot better on the reporting they provide their clients. Talk to me about what the reporting looks like when you work with clients. Are they logging into a dashboard? What are they getting out of this?

Scott: One of the reasons why we enhanced our reporting is we actually held a client focus group and it was a love fest. “I love working with Annex. Everything’s amazing. Our reps are amazing. Everything’s great. Audience is amazing.” We said, “Well, there’s got to go be something wrong.” To a person, they all said reporting. It’s like, “Okay, we get the message.” This was about three, four years ago.

What they get now, we have an automated system. Every week on a Wednesday, the reports get pushed out. We don’t have the opportunity for clients to log in and get their own reports. From what we’ve seen, that’s a very small percentage of agency clients that want that functionality, but that is the end goal. That’s where we are going to get. For now, they get pushed out to account coordinators, which are basically sales assistants, would be in another company. The rep is supposed to then send a report with a note to the client.

That’s quite deliberate. We could make it easier, but what we don’t want are reports going to clients without a conversation. We think that that’s an excellent opportunity for building that relationship. Explaining, “Hey, did this? Did you know that the average click-through rate is X?” Because we have all that intelligence because of Omeda. We have all the benchmarks.

I know that doesn’t happen as much as it should, but it will get sent out to the client. I would say more than half of our clients don’t want to see reports. The smaller markets, they’re not interested in it. We buy a top leaderboard in the e-news every week. We know people see it. People talk to us about it, but I don’t need to see how many people clicked on it. We honestly don’t care. We have to be careful we’re not sending stuff out to people who don’t care. There’s a balance there.

On your comment about, yes, the ability to have a self-serve portal is important. It’s out there now. There are people you can buy that from, but we just don’t like either the systems or the suppliers, and I’m not going to name any names, or they just don’t do exactly what we want it to do. That’s part of our ad builder. That’s the end goal is to get basic to the point where if you’re a client, and this will still only be a minority of clients, but you might want to order your ad online without talking to anybody. You want to send your material in, again, without talking to anybody. It runs, and you can go in and get a report or automatically it’s sent to you, again, without talking to anybody.

We know there’s going to be, I’m going to say, 20% of our clients who would really like that. We are going to build that, and then we see where it goes from there. Every time we do something like that, if it’s 20% fewer reports that have to be handled by an AC or a salesperson, great, because now we’re more efficient. We just know that probably 80% of our clients are not going to want to do that. They’re going to see that as work, currently anyways.

Jacob: If you look forward three to five years, where do you see the business?

Scott: That whole client facing, making us so much easier to deal with is going to be a big part of it. We’re already, I think, quite easy to deal with. We have a concept that we blatantly stole out of a restaurant in New York called Unreasonable Hospitality that we aspire to. This is all part of that. I think we have to be very easy to deal with because there’s so many options out there. We can’t create a lot of friction. If somebody wants self-serve, we’ll give them self-serve.

I think we want to have a little more functionality around reading audience intent and enacting on that. Keeping in mind that our audiences are smaller and we’re not the New York Times or we’re not Forbes. There’s a limit to what we can do. There is technology out there around next best action. I believe it’s called that sort of thing. We have to get better especially in our larger markets. Then again, we will be an automated business. If we don’t have to touch it, we’re not going to touch it. If we want to keep our margins where they are and they’re quite good, we just have to get significantly better at automating processes.

We’re actually pretty good at it now, but there are so many. I still look at it and drive me crazy when I see how many people touch a $500 ad? How many people do you want to touch a $500 ad? You can’t have many. One is probably too many. We have to get much better at that. We’re very bullish on B2B media, especially in our case, the niche B2B media, because the threats that you see everywhere are much harder to penetrate our moat of manure managers. Who else is going to talk about manure managing? Who wants to? I don’t want to even. We just do it.

Jacob: You unfortunately have to talk about it every time one of us decides to bring it up with you.

Scott: Which is pretty much every time I go to a show in the States somebody brings it up.

Jacob: We love our niches. You are privately held. You have grown through annexing other B2B media companies. Do you envision many more acquisitions to make Annex larger? At what point does Annex decide to put itself on the block?

Scott: In terms of efficiency of scale, we’re there. Adding another five magazines isn’t going to make any difference. What makes a difference is if we take a magazine that’s really not making a lot of money in its independent environment, we add it into what we do, and all of a sudden there’s margin. That’s what we’re going to continue to look for is opportunities like that. Defensive opportunities where we feel there’s a poorly run magazine out there, but if it was run well, it might be a risk to us. Then we will go out and try to acquire that. That’s probably one of the only times that we’ll do that.

Yes, we will continue to grow. We also launch magazines. It’s getting harder to launch for some reason the last few years. We had a great track record for about five years. Our last two were tough. I think in some cases, these were too niche or niches that didn’t have supplier lines yet. You have to have somebody who’s spending a lot of money to create a B2B brand. I think we’ll continue to grow that way.

We have not done an acquisition in about two years now. We’ve been trying. We’ve been having meetings. We’ve been getting quite far down the pipeline. There are a lot of independents out there right now with unreasonable expectations of what their business is worth, because frankly, most of them are 100% or 90% print. Every time I acquire one of those, I go a step backwards in where I want to be. I know Endeavor, I’ve heard Chris talk about this before as well. It’s like, it’s a great opportunity, but it’s going in the wrong direction. We will do that, but it doesn’t thrill me.

As far as us being on the block, I don’t know who’s going to buy us in Canada. We’ve been approached by some private family equity. We’re having a hard time finding somebody we believe will actually run the business properly. Our owners are really interested in the legacy of the business. They don’t just want to sell it for the right price. It’s got to go be the right price for somebody who’s going to move forward in the business in a way that we believe in, our values, our vision. That’s tough. You have no right to ask anybody that if they’re giving you the money.

It’s on the radar. Right now, our owners are not involved in the business at all. It’s not really tough for them. We just run it. When they need money, they go to the annex ATM. It’s not a bad position to be in. We have no debt. We have a lot of flexibility in what we do. Typically, when we’re making acquisitions in the smaller scale, it’s all just bought out of operating profit. Not a stretch there.

At some point, there has to be a succession plan. Look, there has to be a succession plan for the business in the next five years. That’s a big part of what I’m trying to figure out and have been for the last three years. At some point, there has to be a succession plan for me. Those are the two things in the next five years that are on our radar.

Jacob: I want to end with the same two questions that I ask every operator that comes on the show. First, what is a mistake that you have made in your career that you wish you hadn’t and what did you learn from it?

Scott: I don’t know if there’s a mistake that I wish I hadn’t because I think we all get to where you are today through success and mistakes. I’m pretty happy with where I am. I don’t know if I want to jinx that by changing something. There’s one thing that everyone is, “You wake up in the middle of the night thinking, why did they do that?” The one thing that happened, it’s a stupid thing, but back when I owned my own magazine with partners, we had the opportunity to launch a large forestry trade show. We would have done really well. We had all the relationships. We didn’t know trade shows and we didn’t have any other support. Obviously, it’s just four of us trying to run this business.

We got very close. Then the two owners who were a bit older and they were a little more risk averse, and we didn’t do it. Then the next year, a pure event company came in and made a killing doing it. We ended up doing the show guide. Great, we made a lot of money in the show guide, but we should have had the whole thing. That is one of the impetuses for me when I went to Annex to say, “Okay, we need to launch a trade show division because we’re just giving this stuff away. It’s nice to be the show guide, but–” I would say that’s the biggest one that bothers me.

Jacob: What is some advice that you would give operators looking to grow their media businesses?

Scott: I would give the same advice that Chris Ferrell gave around culture, but he gave it already. I can’t do that. Plus, people mistake us at shows all the time. I don’t want to make it even more complicated. I’m going to go with the next best thing for me anyways, is focus on your leadership team, your top leadership team. That’s going to drive the business.

You as an individual are only going to do so much. This varies depending on the size of your company, obviously. My leadership team, I’ve got eight people in addition to me that are the executive team and they make my life so easy. You’ve got to focus on building that and growing that, developing that bench strength, mentoring, whatever you want to call it, so that you can step out of the day-to-day and do more of the long-term vision. They execute the vision, help create the vision.

At Annex, we have that, and then we have another level below that, so the director manager level and that’s also key because those people are going to be your value ambassadors to the rest of the company, your behavior ambassadors and make sure everyone’s growing in the same direction and is excited about it. If you don’t have their buy-in on where you’re trying to go, they can and will just move you in the opposite direction.

On both of those levels, you have to be ruthless. If you have the wrong person in place who you don’t think is fully on board, you need to get them out as soon as possible. You’re not doing yourselves any favor. That needs to be very, very deliberate about building that bench strength. You can see it when you go to some of the events, the companies that have that team. You’re just talking to them, you know, “Chris is telling me one thing and I talked to somebody else at Endeavor and they’re telling me the exact same thing.” I say, “Okay. They got this dialed in. They’ve figured it out.” That’s where you need to be.