Hearst is unveiling the beta version of Manilla, a free personal account management service that lets consumers organize their bills, finances, travel rewards programs and, yes, magazine subscriptions, in one online spot. The company, named for “manila folders,” will be headed by George Kliavkoff. While “billing and account management” might initially sound like an odd choice for a media company to get into, it does show how Hearst and other publishers are realizing that with the old models crumbling, areas that even lightly touch on existing businesses, like advertising and subscriptions, are pointing the way to new ones.
As CEO of Manilla, Kliavkoff will give up the title of EVP and Deputy Group Head of Hearst Entertainment & Syndication, a post he took when he left his role of chief digital officer of NBC Universal (NSDQ: CMCSA) back in Nov. 2008.
Manilla does seem like leap for Kliavkoff, who was considered one of the main executives who conceived and developed Hulu. But he began developing the idea shortly after arriving at Hearst in March 2009.
The genesis of Manilla began during brainstorming sessions among Kliavkoff and his team, who now also includes former Dish marketing exec Jessica Insalaco as CMO. “We talked about what areas are the most inefficient and the ones most ripe for disruption,” Kliavkoff said. “That’s where we started the idea of tackling junk mail. Essentially, we’re challenging the US Postal Service’s business.”
In terms of measuring the space, businesses spend about $30- $35 billion a year in the U.S. mailing nearly 48 billion account notices, statements, offers and bills to their customers every year, Kliavkoff said citing USPS’ stats. Despite trying for more than a decade to convert customers to paperless systems, just 11 percent of customers have opted to go paperless, InfoTrends Research.
So the premise behind Manilla is that if they can get customers to go paperless, they’ll get paid. Plus, they’ll be able to sell advertising and promotions — which ties it all back to the magazine business. Furthermore, it’s not too dissimilar from what Hearst has already been doing with another subsidiary, CDS Global, a customer relationship management company that handles magazine subscriptions and renewals for Hearst and other major publishers.
For the launch, Citi Cards and Comcast will be the first companies to try out Manilla as a marketing platform.
The inclusion of marketing at Manilla’s debut carries both the enormous potential and the risks that faces the startup.
Aware that Hearst was launching Manilla publicly today, Doxo CEO Steve Shivers reached out to discuss the challenges it faces. Doxo launched last year and also offers to organize consumers’ billing accounts. “It’s understandable that other businesses would get into this space,” Shivers said. “Today, Hearst is the single largest subscription enrollment company. If they had a site to manage their magazine subscriptions, no one would care. But if they can use that to get people to pitch their magazine subscriptions, that makes sense for them. But I don’t think that’s what the businesses they serve want. They’re going to be beholden to that agenda of ads and promotions.”
Still, for many clients, the prospect of Hearst’s large reach and the promise of promotional space might be attractive. But the success of Manilla will rest on whether it can appeal to consumers and prove to be a better alternative to paper. Time (NYSE: TWX) will tell.
Going over the site’s offerings over the weekend, it is easy to see the appeal — it’s uncluttered and it does allow one sign-on to access your bank account, utilities, cable bill (cable companies don’t like to be lumped into the utilities category) and other payments. Even the ad placements are fairly unobtrusive and match with what page your on. For example, if you’re on your personal banking page, you’ll probably get a promotional ad for that bank (or a house ad, if your bank isn’t a Manilla partner.
But even more than ads, Kliavkoff said that security is the main focus right now and will be. “We can’t afford to have anything go wrong with security, so that is the most important thing to us right now,” he said. “One of the reasons that the amount of people who have gone paperless is so low, is that they’re concerned about security. That’s the first thing we have to prove.”
In terms of the business itself, Hearst is the 100 percent owner of Manilla, but down the road, other investors could come in. Kliavkoff wouldn’t discuss future plans, but the door seems open, at least down the road to having additional hands in the business.
As for deciding to disrupt the US Postal Service as opposed to a more traditional media format like TV, newspapers, magazines, Kliavkoff described his new job as “a natural extension of what I’ve done” and a natural for what Hearst has been doing, especially in light of last year’s acquisition of digital marketing firm iCrossing. “This is what the media business does these days, it’s not just about publishing magazines, the role has become a lot larger than that,” he said.