Conde Nast Chief Tom Wallace

Twenty Questions with Conde Nast Chief Tom Wallace

Thomas J. Wallace is Editorial Director of Conde Nast Publications, responsible for overseeing eighteen (Allure, Bon Appetit, Brides, Cookie, Conde Nast Portfolio, Conde Nast Traveler, Details, Domino, Elegant Bride, Glamour, GQ, Gourmet, House & Garden, Jane, Lucky, Modern Bride, Self and Wired) of the twenty-eight magazines published by America’s second largest publisher, according to overall advertising pages.

Prior to attaining his current post, Wallace was Editor-in-Chief of Conde Nast Traveler. During his tenure the magazine won two National Magazine Awards, including one for General Excellence. He also supervised public television series Conde Nast Traveler: Insider’s Guide. Before joining Conde Nast, Wallace held editorial positions at The New York Times, Newsday, and the Stamford Advocate.

This is the latest in an ongoing series of question-and-answer sessions between Rory O’Connor and leading American media executives. Previous conversations have featured CNN chief Jonathan Klein, Fox News head John Moody, Time magazine Managing Editor Richard Stengel, and others.

•What are your top three challenges at Conde Nast?

Well, first of all, taking these big and beautiful magazines into the Internet era…(pauses, smiles) can that be all three?

•Was the company late in adopting and adapting to the Internet?

Were we late to the Internet? I don’t really think so – we were just careful. Don’t forget that what this place is all about is really clear: making and selling the best possible magazines we can. So there are lots of reasons to move to the Internet – but the number one reason here was to gain circulation for our magazines. In 2005, for example, we — like many others in the industry — were faced with the problem of declining circulation.

•Why?

For one thing, because so much about the American population is different than when the old print circulation systems were originally set up. People don’t get their mail in the same way as they used to; they don’t answer the telephone the way they used to; they aren’t even home at the times they used to be. So much has changed… In the past, we would attempt to boost circulation through such traditional means as direct mail. Using direct mail is a relatively expensive and not very targeted way to attract new readers drawn from a massive, undifferentiated pool. Only a small percentage of those targeted actually sign up as new readers, and the retention rate of readers acquired in that manner is usually not high — which means that you have to go out the next year and every year and repeat that costly process.

But in using the Internet to gain circulation, the entire process is quite different. For example, if we look at Self and the Self.com web site – which right now is our number one magazine site — we can see what I mean. At Self.com, we were able to generate 115,000 new subscriptions in one year. The cost of acquiring these new readers was far less than if we had to resort to direct mail, because they were simply coming to the site and signing up. Moreover, they were self-selecting. As opposed to those acquired by a broad direct mail appeal, these were people who were already interested in the magazine and what it offered them. Since they are self-selecting, the retention rate is much higher than those acquired through direct mail. And since they were web-savvy, they also tended to be younger– on average six years younger, in fact.

•So what’s the bottom line?

It means that by switching to the Net and not using direct mail to gain circulation, we were able to save about half the cost of the solicitation and transaction, while at the same time retaining more new subscribers and lowering our demographic, with the additional benefit that their youth and longer lifespan meant they were likely on average to stay with us for a longer period. So Self succeeded in attracting and retaining new and younger subscribers at a much lower cost than previously. And gaining subscribers, as I said, is the primary purpose of our magazine web sites – as distinct from our ‘destination’ sites (operated by CondeNet, the Internet unit of Conde Nast publications) such as Style.Com or Epicurious.com, which attract far greater numbers and are ad-supported, We of course do see some ad revenue from the magazine sites, but the traffic is not so high that it is at present a significant revenue stream. But again, that’s not the purpose of those sites.

•How has the Net changed your culture? Is it a shock of sorts?

Yes, in a big way. Getting back to circulation, for example, the magazine editors were never that involved previously. That’s completely different now. It used to be that an editor would see a direct mail piece when the circulation department — now called Consumer Marketing — would have it ready to go out. This would happen a couple of times a year, and you as the editor would never have a very good idea of what worked or what didn’t. That’s all very different now that we use the Internet as a key to consumer marketing – and that’s all very new to our editors.

So is the technology. Video, for example, is clearly where the Internet is heading, and we’re going to have to go along with that as well. But speaking as someone who edited a magazine for years, and was largely concerned with text and still images –what do we as magazine editors know about video? But we’ll all have to learn.

So is it a culture shock? Absolutely yes – but there’s still no doubt that the Internet is nothing but a good thing for magazines and the magazine business.

•One media observer recently said print publications must “figure out what they’re really good at and why they exist” now that the reasons they thrived in past don’t work anymore. What is Conde Nast really good at? Why does it exist?

Building and buying magazines is our corporate mission and value. That won’t change anytime soon.

•Many outlets have begun incorporating user-generated content. What will Conde Nast do about UGC in the near future?

Our CondeNet operation is doing more of this at present – check out the teen girl site flip.com, for example — but UGC is already happening on some of the magazine sites, as we experiment with what works and what doesn’t and try to develop a user-friendly site. So we plan to see more and more of this sort of content in the future.

•Conde Nast is a large but privately held company. It’s often said you have an audience of one – namely, Si Newhouse. True? If so, what’s that like? Tell us a little about the retiring, mysterious Mr. Newhouse…

Being privately held is extremely important for us. We do what we want to do without worrying about the stock price or the next quarter. Many public companies face pressures to move that price up a tick or two. It’s not enough that they are running successful, profitable businesses — they are faced with constant pressure to take measures that might draw them away from their core business, to build or acquire new businesses to appease the stock market. But here it’s clear: we are in the magazine business, we’re getting ever larger and more profitable — shouldn’t we obviously concentrate on growing that business?

Si Newhouse is mysterious — but certainly not retiring! And he is truly easy to work for and with. He’s all business – clear and committed and predictable and demanding…also very transparent. I always know what he wants and where things stand. He’s also arguably the most knowledgeable guy in the magazine publishing — and indisputably the most successful.

So this is a great organization to work for. Conde Nast has grown, for example, from four magazines in 1954 to twenty-eight today. It used to be you knew everyone who worked here; now there are 4500 employees and satellite offices in a dozen places. So size has changed this place a lot, but all the growth has been in middle management and below. The top management team is still small and constant. Here on the 11th floor we have a lot of contact… Si’s office is just on the other side of that wall (gestures) and he pops in frequently. I see Chuck Townsend a lot, Richard Beckman… all top flight people who’ve been doing what they do successfully for a long time.

• What about Vogue editor Anna Wintour? ‘The Devil Wears Prada’ saw Meryl Streep channeling a cartoon version of her. What’s she really like?

I spent a week with her in Milan recently at the fashion shows, watching her interact with all sorts of people. Here’s what I can tell you about Anna: she’s very competitive — all Conde Nast editors are — but she is also very easy to like, and a very decent person.

Look – this is a woman who needs a bodyguard. She’s actually been attacked on the street. But she is really very supportive of people in her field. She’s like a den mother to the people who are the creative engines of the industry. I know that doesn’t square with her popular image, but that’s been my personal experience. She’s a highly focused and shrewd magazine editor with a loyal staff – unlike the film portrayal…

•In an era of cutbacks and closures, you continue to roll out new magazines, like the forthcoming business publication Portfolio. How and why? Why do some launches work, and others fail? Cargo, one of your shopping magazines, didn’t work and was killed; another, Lucky, was luckier, it seems…

Why don’t some magazines work? I can’t answer that in the abstract. In 2005, we asked if Cargo would work for Conde Nast. Even though the company has an enormous amount of patience and we tried to fix it, the changes simply made it more costly. So then we asked ourselves if we wanted to throw good money after bad, and the answer was we didn’t. So we closed it.

•What about Portfolio, your new business magazine – it’s been called ‘the last of the multimillion dollar magazine launches,’ and rumored to have cost $100 million. Why do it? After all, with the Internet stealing readers and advertising in dramatic fashion, the overall number of magazine launches last year was down nearly twenty per cent.

As I said before, we’re in the magazine business. We simply try to make magazines better than anyone else. We exist because we largely succeed at that. We compete and we seem to be winning. It’s all about quality – and that comes from the top here. Sure, Si has the resources to dabble in other things, other media –- but he doesn’t. Portfolio is an expensive game…

•One hundred million dollars?

(Smiles in response) It’s an expensive but lucrative field. We estimate Portfolio will have a minimum circulation of 700,000 and 1400 ad pages — at the low end. That’s a good business.

•What if any new and alternative media do you follow regularly?

Well, I get RSS feeds from places like Media Bistro, for example. Plus CondeNet people are constantly telling me about web sites I’ve never even heard of…It’s all new and very interesting to me, because now I have a context to explore new media in. I ask myself, “Can we do that? Should we? Should we build it or buy it?”

•You successfully edited Conde Nast Traveler for years. Now you oversee many different publications. How is it different? How have you changed as a manager?

Personally I haven’t had to change very much. It was very confusing at first – there’s no manual for this job – and I didn’t know the players, etc. I felt like I was entering conversations here on the 11th floor in the middle.

But now I’ve been here long enough that I’ve heard the beginning of those conversations, and figured out what the game is –- although there was a moment at first when I didn’t know what they expected me to be. But I didn’t need to take any anger management classes, and I haven’t developed any new neuroses!

In addition, having been a magazine editor shapes how I approach and interact with our current editors. The rule of thumb here is that the editors run the magazines. So I imagine myself driving somewhere with each editor – but I’m the passenger. As a passenger, I have a lot more time to think, plus I have my old map, and both hands free in case of an emergency.

•Both your predecessors – Alexander Lieberman and James Truman – had fairly long tenures. How has the job changed?

I worked with both Alex and James for years. Each was operating at vastly different moments in the company’s history. Alex built the size of the magazines and the company; James continued the growth, plus he built the systems necessary to manage it. As for me – with the growth continuing and the management structures in place, the Internet is the unique card I’ve been dealt. So the job is different now in a fundamental way.