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Japan|Future Business Model Envisaged by Nicolas Floquet, CEO of Hearst Fujingaho

Aug 30, 2018.Manabu TakamuraTokyo, JP
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Photo: Toshiyuki Imae

Nippon Shuppan Hanbai, the leading Japanese publishing agency, has reported its first red-ink business results since its founding in 1949. As this episode makes the publishing business slump in Japan even more conspicuous, Hearst Fujingaho Company, the publisher of Elle Japon, 25ans, Fujingaho and Harper’s Bazaar among other publications, sets itself clearly apart from other publishers by reporting a profit in “all its businesses” for last year. The company’s founding business was Fujingaho, a magazine inaugurated by Doppo Kunikida in 1905. It was acquired by Hearst based in New York City as one of the largest U.S. media conglomerates in 2011 which became a rare international publisher that blends Japanese and American/European cultures.
Two primary sources of the company’s high earning capability are thanks to the brand powers of Elle and other globally well-known magazines published and its editorial strength that is trusted by leading luxury brands. Nicolas Floquet, appointed CEO of the company on April 27 this year, plans to strengthen these powers even further, while accelerating the implementation of the company’s digital strategy as well as its customer relationship management (CRM) strategy.
As many publishers are forced to change their business operations for survival, Hearst Fujingaho was one of the first to provide content for various non-print platforms, transforming itself from a conventional publisher to a digital publisher that publishes magazines as well. The company has also launched a voice content service that supports Google Assistant and Amazon Alexa, along with a engaging social contribution programs designed to support women. We talked to Floquet, the company’s new CEO with “One Hearst” as the keyword.

What kind of a publisher is Hearst Fujingaho as you see it?
First of all, perhaps I should say that it “was once a publisher.” When I joined the company 14 years ago, it was purely a publisher with 99% of its revenues from the print media. But already at the time I was certain that we would enter a digital era in the near future. So in 2006, Yves Bougon, my predecessor, the COO at the time and I developed a strategy centered completely on digital businesses and announced it internally and externally.
The print media are very important as a platform, but as devices with which readers come in direct contact multiply, we provide our content via various platforms accordingly. We are increasing our touch points by doing so. Promotional events and e-commerce are two of them. This year we have entered the voice content service market, too. Distributing content through every medium—that’s our 360º strategy. So now, I consider Hearst Fujingaho a “digital publisher that publishes magazines as well” or a “multimedia company.”

As a multimedia company, then, what sorts of companies are your competitors?
Among magazines, our competitors are clear. Because our media are segment leaders, it’s very easy to see who our competitors are. When it comes to digital media, however, it’s not easy to identify who exactly are our competitors. In terms of ads, such large platforms as Google and Facebook would be our competition, but Instagram, for instance, is both a competitor and partner. Of all social media, Hearst of America is strengthening its ties with Instagram. This sort of relationship never existed before; it makes me feel that we live in a strange world.

Hearst Fujingaho signed a sales tie-up agreement with Kodansha in 2015. In that sense, Kodansha, too, is another competitor and partner for you, is it not?
You are right. There were two reasons for the agreement. One was to take advantage of Kodansha’s powerful retail infrastructure to thereby establish an organization for efficient delivery of our quality content to more readers. And the other was to create synergy—in revitalizing bookstore sales, for example, through joint campaigns. The tie-up also allowed us to concentrate on a few issues of ours that existed in growing our digital business. Since our resources were limited, we wanted to create synergy by leaving retail sales to a partner strong in that area. The tie-up relationship with Kodansha remains very successful.

Shortly after you became CEO, you carried out a reorganization and renamed the Commerce Division the CRM Division. Was that because you intend to accelerate your CRM strategy along with your digital strategy?
I indicated the spirit of accelerating our CRM strategy even further by changing the division name. First of all, there were two goals when I launched the Elle Shop in 2009. One was to establish a new pillar of revenues in the digital field. The Elle website already had very heavy traffic, but I wanted to generate revenues in another way added to ads. And that was the e-commerce business using the Elle brand. The other goal was to maximize the data business. To make our e-commerce a success, too, CRM is extremely important. The Elle Shop began producing earnings four years ago; it is becoming stable and entering the next stage. We have customer data; by analyzing them to see customers’ purchase histories and preferences, we can anticipate future needs and even propose new products. So as you can see, to provide advertisers with media space while at the same time being able to provide them with events and analysis results will be an extremely large strength of ours.

Are you considering to increase the number in your media?
Yes, of course. That’s a natural thing for us to do in order to get ahead. We launched Women’s Health in May last year and will launch Carine Roitfeld’s CR Fashion Book in October. There are various options, including launching a brand ourselves or introducing the Japanese version of a brand established in the States/Europe. In any event, we have been launching one or two media per year and I think that we will keep a similar pace in the future.

In Japan, there have been increasing cases of discontinuing publications as a means to improve publishers’ financial conditions.
All our businesses are profitable. So we have no such worries. I want to develop business segments that are new to our company in the future.

Do you ever feel a tendency among advertisers to drop magazines?
Many of our advertisers are luxury brands. I don’t think that in Japan a lot of those brands are breaking away from magazines yet. The situation may be different in other segments, but for luxury brands the print media are still very much a strong platform. Hearst Fujingaho itself had experienced magazine media growth every year until last year, and I think that magazines still remain strong. Of course, we get a lot of questions about and requests for digital support from advertisers, but I don’t think they are dropping magazines generally. Interestingly, the more digital support we offer or suggest, needs for real-life events grow. Accordingly, the number of events has been growing constantly since 4 to 5 years ago.

Your magazine ad sales have been stable, and that is one of your strengths, is it not?
Brand powers and editing strength—they have been our unchanged strengths.

Your corporate citizenship efforts are also energetic.
Elle Women in Society, an event program designed to root for working women, is in its 5th year now. In June this year, we launched our Elle Solidarite Mode Japan in Japan. This is a project to support working women by providing opportunities of fashion education.
Compared to the West, corporate citizenship in Japan may be slightly behind. We believe that companies are responsible for that as well. So we provide opportunities to explain bit by bit to our readers via our media why these programs are important. I think that we can employ different viewpoints and methods in our expressions depending on the media used, and I want to make it an even deeper project. We had a lot of different topics worldwide last year; we want to continue communicating our positive messages.

What about the media business interests you most? What about it is the most worthwhile for you?
I feel that media is truly an important business. In many ways, we don’t deal with “ordinary products.” It is extremely exciting to deal with the sort of media that are packed with very unique content. I also feel heavily responsible in that such media influence many people, and this makes the business worthwhile. Furthermore, our staffs are passionate about their jobs. People of a wide diversity of profiles—some are fashion buffs, others love food, designs or kimono—gather together at the same company and engage in their work with passion. And I’m extremely happy about that.

Representative Director & CEO Nicolas Floquet
Floquet completed an MBA at Connecticut State University in 1995 and came to Japan in 2002 to work for an apparel company. He joined Hachette Fujingaho (now Hearst Fujingaho) in 2004. After serving as CFO, he moved into managing director in March 2007, and is mainly involved in general management, with a focus on e-commerce and advertising. In 2018, he became representative director & CEO of Hearst Fujingaho Co., Ltd. and Hearst Digital Japan Co., Ltd.

  • Manabu Takamura

    Minimal Inc. President/SEVENTIE TWO Publishing Director

    When we were interviewing, they were recruiting 17 new employees all in the digital territory position. This is one reason why President Nicolas Floquet's strategy is to strengthen the digital related team and steadily transform it into a digital publisher. GAFA has already undertook various initiatives with four companies: Google, Amazon, Facebook, and Apple; while benchmarking the American strongholds in order to completely branch off and strengthen its digital strategy from other publishers.