Post-restructuring, Rev Asia aims for No 1 spot in ‘social news’
By Goh Thean Eu August 5, 2015
- Expects sponsored content to be largest revenue contributor by year-end
- Revenue still down, but looking at organic and inorganic strategies to grow
AFTER making the tough decision to shut down several lines of business, Malaysia’s Rev Asia Holdings Sdn Bhd has embarked on a three-year roadmap that it says will transform it into one of the largest digital media companies in the region.
Rev Asia was born from the merger of select assets of Catcha Media Bhd with Says Sdn Bhd, the owner of Says.com. It launched to much fanfare in 2013, saying the merged entity would change the digital advertising game in South-East Asia.
But December 2014 saw the company, listed on the ACE Market of Bursa Malaysia, discontinued the operations of various titles – including premium magazines like Stuff, Prestige, Mint, and Clive – after its publishing business saw a slide in revenue.
The culls included layoffs, reducing its staff strength from more than 80 people to approximately 50.
It also ended its partnership with HCK Media Sdn Bhd, which had involved reselling and operating all advertising inventory across HCK Media's digital assets.
“We weren’t focused ... there was no focus. So, we had to restructure our business focus, ” Rev Asia managing director Voon Tze Khay told Digital News Asia (DNA) in Petaling Jaya recently.
With the painful restructuring now behind it, Rev Asia handles two main portals – Says.com and OhBulan!, a social entertainment site.
It still operates Business Insider in Malaysia, Singapore and Indonesia, but at a smaller scale. It does not have a dedicated editorial team like it used to.
To complement its content portals, Rev Asia has a content distribution arm. It operates 8share.com via REV Social MY Sdn Bhd, which functions like a private rewards club for social media users, allowing users to get cash every month by sharing content on their social network accounts.
It also has Klips, a sub-product of Says.com, an online movie community portal where users connect to read, curate, review, rate and share their favourite movies.
It still has print presence via Juice, a free monthly street culture and nightlife magazine in Malaysia with a circulation of 38,000 copies; and Hanger, a fashion magazine published twice a year.
But the company is not out of the woods yet, with the financial performance of parent company Rev Asia Bhd (Rev Asia Group) still taking a hit. Based on Rev Asia Group's recent annual report, it owns a 70% stake in Rev Asia.
For the first quarter ended March 31, 2015, Rev Asia Group’s revenue fell by 36% to RM3.79 million, against RM5.91 million in the first quarter of last year. The group registered a net loss of RM164,000 versus a net profit of RM2.49 million in the same period last year.
[RM1 = US$0.27]
The decline in revenue was mainly driven by the lack of revenue contribution from the print businesses it had closed, while the group's net loss was partly driven corporate expenses.
Business is good!
Despite the decline in revenue, Voon (pic) remained optimistic.
“If you look at the businesses and products that we have today, and compare these businesses and products against the same period a year ago, you will see an improvement in revenue of more than 50%,” he declared.
“This is a further testament that we made the right decision to restructure the company,” he added.
A look at its social media's business performance in the first quarter [on Bursa Malaysia] showed that the segment registered a 42% growth in revenue at RM2.93 million. The social media business's bottom-line also more than quadrupled to RM453,000 in the first quarter, compared against RM97,000 a year ago.
One of the main reasons its current portfolio of products was able to register such growth is its increasing focus on sponsored content.
From April 2014 to April 2015, the company managed to double its revenue contribution from sponsored content.
In terms of unique users, Voon said that based on comScore data, Says.com now has over 600,000 while OhBulan! has about 300,000 – versus approximately 300,000 users for Says.com and about 150,000 users for OhBulan! in April last year.
Today, Rev Asia generates its revenue from four pillars: Content distribution (via 8share) contributes 40% of its revenue; sponsored content contributes 30%; online display ads contribute above 10%; and print ads above 10%.
However, that ratio will change by the end of this year, with sponsored content expected to be the largest revenue contributor, according to Voon.
“It’s getting very saturated right now,” he said, referring to traditional banner advertising.
“It is a business where premium publishers – who are continuing to sell at a very premium price based on duration and impressions – are seeing a decline in sales, simply because they are being overtaken by bigger players coming in with programmatic buying,” he added.
(Sponsored) content is king
Voon is hedging Rev Asia’s bets on sponsored content revenue based on his belief that consumers will always appreciate good content.
“We see content as a very important piece of the advertising business journey because consumers, when they go online, don’t seek out advertisements. They seek out good content, whether it is content shared by their friends or content they seek out themselves.
“We believe that good content, whether it is sponsored or not, will eventually find its way around to social media users,” he said. “In short, content is king.”
There is also the synergy between its content distribution arm and its sponsored content business. For example, if an airline wants to create a campaign to grow sales for its Kuala Lumpur-Perth route, it will work with Rev Asia to come up with sponsored content to boost awareness.
“What we can do is to come up with an article on the ‘top 10 fun things you can do in Perth for less than A$50’ on says.com, and then we can use 8share to distribute the content,” said Voon.
No 1 social news network in Malaysia
Despite his optimism, Voon stressed that the company should not feel complacent and would need to continue to evolve, grow and expand over the near- to medium-term.
“Over the next 16-24 months, our vision is to become Malaysia’s No 1 digital social news network. We are confident that with plans in the pipeline, we can achieve our goals,” he said.
Voon said Rev Asia will be looking at both organic and inorganic (mergers and acquisition) strategies to achieve this goal.
“We are looking at both options – to grow the existing team and talent pool, and also to acquire when the opportunity arises,” he said.
“We hope to be able to close at least one deal over the next 12 months,” he added.
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