Otava’s
Star Moments 2020

The global coronavirus pandemic cast a shadow over 2020, changing how we live and work. In spite of the challenges, Otava held on to its position as a major Finnish publisher under pressure from international competition.

We managed to maintain contact with customers in all our business areas by customising and creating new products and services while adapting to our new daily reality. Otava’s financial performance was excellent.

This was a tremendous achievement in a world gripped by a new virus. At the same time, the economic climate and freedom of speech weakened, the geopolitical mood tightened and both fake news and conspiracy theories spread.

In Finland, the outlook for the economy weakened as well, and the transformation of education gained momentum due to the introduction of free upper secondary education. In addition, we are facing an even tougher challenge from digitalisation and international competition in the media sector.

Employees have played the most important role in Otava’s success. Otava’s employees are flexible and willing to change – they have an excellent attitude to their work and great team spirit. Otava’s corporate culture came into its own during this exceptional period.

Employees have played the most important role in Otava’s success.

HENRIK EHRNROOTH

Otava has a high-quality and customer-focused publication programme in general literature. The book industry is going strongly digital. Otava thus launched the Digital First publication programme, in which works are published only as audiobooks and e-books.

Although people stayed in more and shopped at our bookstores less frequently due to coronavirus restrictions, their single purchase amounts were larger. A book is a thoughtful purchase. Suomalainen Kirjakauppa also has an effective webstore platform and overhauled customer loyalty programme. We ventured into a new business area with the launch of Suomalainen Plus, an e-book and audiobook service specially designed for mobile devices.

The need for reliable journalism has grown. Our media business tracked the actions and needs of readers and online visitors, and modified content accordingly. Otavamedia’s online and print media performed better than the rest of the market. We tested a new kind of collaboration in the spring, when Tekniikan Maailma started a daily live news show focusing on the coronavirus.

Otava Marketplaces’ Nettiauto.com demonstrated its effectiveness as the coronavirus boosted trade in used cars.

Otava was also helped by projects kicked off before the pandemic, such as its brand revamp focusing on Finnishness and the work of the Learning Vision working group. Otava has a valuable mission in ensuring that the Finnish school system, teachers and students continue to be more successful than those of other countries.

277.7

Meur

Otava’s net sales

The changeover to a team organisation and new or modernised premises have also played an important role in Otava’s success. They have flattened hierarchy, improved cooperation and accelerated the development of new products and services.

These overhauls were put to the test by the pandemic – and they proved their worth. I would argue that Otava’s result would not be significantly better without the pandemic.

 We should think about what we should do in a new way to ensure our success going forward.

Teamwork and cooperation within the Group will help us to harness digitalisation to get onto a growth track.

A strong corporate culture and skilled employees will take Otava forward.

Henrik Ehrnrooth
Chairman of the Board of Directors

Year 2020 was exceptional due to the coronavirus pandemic. Many things changed.  However, it’s still difficult to predict which of those changes will be permanent.

The year was overshadowed by concerns about the health and wellbeing of our loved ones and ourselves. Fundamental values have become important once again.

As in the rest of the world, coronavirus restrictions reduced consumption in Finland, and also changed consumption habits and channels. The use of digital content and services saw substantial growth.

Otava’s financial performance in 2020 was excellent. Content is the core of Otava’s operations. The crisis showed that there is demand for reliable and high-quality content in exceptional circumstances, too. Furthermore, efficiency measures were successfully implemented in response to the pandemic throughout the Group.

The book industry is still going strongly digital. In general literature, sales of e-books and audiobooks have continued to surge.

As part of its long-term strategy, Otava Publishing Company acquired Karisto in early 2020 and Atena Kustannus Ltd at the beginning of October. The acquisitions are aimed at generating growth. For Otava, it is important to ensure that the book business remains vital in Finland and that the market has real competition and alternatives.

Finland took a great digital leap forward when schools shifted over to remote teaching on a short schedule. Otava Learning provided its digital products for free in the spring – and the number of users of the services almost doubled. History was made in the autumn when the number of digital upper secondary school textbooks ordered at the beginning of the year exceeded the number of printed copies for the first time.

In retail, sales declined in brick-and-mortar stores, which had shorter opening hours as customer numbers declined by a fifth. The average purchase was higher than in previous years, and the stores focused on service quality.

The decline in sales by the stores was compensated for by surging growth in online sales on our modernised and scalable webstore platform.

In the media business, the visitor numbers and page loads of all the major sites saw growth. Otavamedia has also performed significantly better in online media sales than the rest of the industry. The coronavirus posed greater challenges to print media sales. The greatest slump in the history of the Finnish advertising market was seen in the second quarter of 2020. In spite of this, we outperformed the rest of the market.

Changes in consumption methods and business cycles were evident in the operations of Otava Marketplaces. The focus of operations was shifted to the development and sale of products aligned with future core business.

31.6

Meur

Otava’s EBITA

In mid-March, Otava changed over to remote work in all tasks in which this was possible. We worked all year by combining on-location and remote work. Employees quickly adopted the new working methods in exemplary fashion. 

I would like to thank Otava personnel for their good work and flexibility during this exceptional period.

As a thank you for the good result, employees will be paid incentives of EUR 2.4 million (including social contributions).  

Alexander Lindholm
CEO, Otava Ltd

Read more about Financial Statement:

Digital publishing is continuing to grow

The book industry is still going strongly digital. At Otava Publishing Company Ltd, that is evident particularly in the growing popularity of e-books and audiobooks. In general literature, digital publishing has grown to account for almost one-quarter of net sales.

The pandemic contributed to the accelerating pace of digitalisation by changing how people spend their time and their consumption habits. The pandemic increased the use of electronic products and services in Finland as well.  In children’s books, sales of audiobooks rose by over 100 per cent in 2020.

The digital business area – the Virta team – was bolstered with added resources both through recruitment and the development of its operating model.

The coronavirus has also affected the values of consumers – and some of those changes will most likely be here to stay. One of the impacts of the pandemic is that sales of printed books rose for the first time in many years. People rediscovered the value of spending time with their family and reading.

In addition, the short run production model adopted at the Otava printing facility in 2019 bolstered both Otava’s competitiveness in the market for printed books and its earnings potential.  Book printing operations fared well during the pandemic year.

“People rediscovered reading.” The pandemic changed people’s values, supporting family time and reading.”

PASI VAINIO, MANAGING DIRECTOR OF OTAVA PUBLISHING COMPANY LTD

Due to the pandemic, Finns now have a greater appreciation for Finnishness and locally produced goods and services. Otava has taken this into account in book marketing as well.

The acquisitions of Karisto in February and Atena Kustannus in October were carried out in line with Otava’s strategy of pursuing growth by acquiring publishing expertise that rounds out its publication programme.

Both Atena and Karisto will continue their publishing operations under their own name and publication programme, and with their existing staff. Otava seeks to nurture the vitality of the Finnish book industry to ensure the availability of a wide selection of options in the market.

Otava’s books were successful in 2020 in terms of both sales and quality: Barack Obama’s A Promised Land was the year’s number one bestseller in the printed books category.

The year’s top bestseller was Carl-Johan Forssén’s The Rabbit Who Wants to Fall Asleep, above all thanks to its success as an audiobook.

The top bestseller in 2020 was Carl-Johan Forssén’s The Rabbit Who Wants to Fall Asleep, above all thanks to its success as an audiobook.

Atena Kustannus’s Kielletyt Leikit (Forbidden Games) by Marko Tikka and Seija-Leena Nevala won the Finlandia Prize for non-fiction.

Anne Vuori-Kemilä’s Mustaa jäätä (Black Ice), published by Karisto, was shortlisted for the Finlandia Prize for fiction.

The nominees for the Finlandia Junior Literature Prize were Tatu ja Patu – kovaa menoa kiskoilla (Tatu and Patu: Tremendous Train Trip) by Aino Havukainen and Sami Toivonen as well as Otus Opus (Zoology Poetry) by Laura Ruohonen, Erika Kallasmaa and Petri Kumela.

In late autumn 2020, Otava Learning started its transformation process to ensure customer-focused operations in a market that is going strongly digital.

In 2021-2022, Otava Learning will bolster its operational capabilities by means such as shifting over to a team organisation model and developing management and coaching-focused supervisory work. This calls for boldness and the ability for renewal.

Otava Learning defined a new learning vision in 2020: Enabler of lifelong learning. One of the key tasks has been to prepare for free secondary schooling and the changes this ushers in.

The company has been able to serve its customers seamlessly in an environment that is going strongly digital and as user numbers grow.

The learning vision will guide Otava’s operations in the years ahead during its transformation process in an operating environment that is undergoing dramatic changes. 

Multichannel and data-driven customer service

The coronavirus pandemic accelerated several development trends that had already been evident in the retail sector. One of the greatest of these is digitalisation. In 2020, digital purchasing gained ground rapidly.

The acceleration of changes in purchasing behaviour and the digitalisation of learning in particular were also visible in the bookstore business. In 2020, sales were down in Suomalainen Kirjakauppa’s brick-and-mortar stores, which had shorter opening hours due to the pandemic.

Suomalainen Kirjakauppa reacted immediately to the impacts of the pandemic by means such as renegotiating store lease agreements and scaling staff resources in line with shopper numbers. These adjustment efforts were successful.

Customer volumes at the brick-and-mortar stores were down by a fifth. However, the average purchase and conversion rate were higher than in previous years, and the stores focused on service quality.

Customers were looking for fun things to do during their greater leisure time.

Strong growth in online sales compensated for lower in-store sales.

The decline in sales by the stores was compensated for by surging growth in online sales on our modernised and scalable webstore platform.

Thanks to different delivery options – such as reserve and pick up, home delivery, and click and collect – and the new Plus streaming service, Suomalainen Kirjakauppa now offers an even more multichannel shopping experience.

“By harnessing customer data, Suomalainen Kirjakauppa is well-poised to provide even more personalised service to customers.”

MINNA KOKKA, MANAGING DIRECTOR OF SUOMALAINEN KIRJAKAUPPA LTD

Suomalainen Kirjakauppa collects user-specific data on the basis of in-store purchases, use of the online store and Suomalainen Plus usage data. With this user-specific data, we can make recommendations tailored to the interests of each customer from our range.

Data can be utilised in all of Suomalainen’s channels – customers can be provided with genuinely relevant, customised book recommendations, instead of the same old things.

Going forward, Suomalainen is well-poised to provide more personalised service to customers on the basis of data.

The company took a new step towards more personalised service in February 2020 with the launch of the Suomalainen Plus e-book and audiobook service.

The service combines new book formats, a new sales channel and a loyal customer app.

Suomalainen Plus provides accurate, individualised and book-specific usage data. We use the data to improve customer retention, optimise the selection, and develop service and the customer experience. The Suomalainen Plus service can also provide data that the rest of the Group can use to develop more engaging content.

Unlike other streaming services, Suomalainen Plus is a key loyal customer app that enables the company to provide many targeted offers to Plus users. In addition, the service will feature diverse content such as digital magazines and podcasts.

We intend to grow Suomalainen Plus profitably in a competitive market, focusing especially on serving Suomalainen customers.

We also harnessed digitalisation in new ways in book marketing.

Due to the pandemic, writer visits and events had to be cancelled. These have traditionally served as important meetings between writers and readers. Due to these exceptional times, Suomalainen Kirjakauppa proactively thought about new ways of generating visibility for books and authors. We rolled out two concepts: Suomalainen Kirjakauppa’s Kirjakahvila (Book Cafe) virtual hangout and the Äänessä kirjailija (The Author Speaks) video series.

Suomalainen Kirjakauppa’s top three bestsellers in 2020 were Barack Obama’s A Promised Land, Enni Mustonen’s Pukija (Dresser) and Anni Kytömäki’s Margarita. The top three audiobooks on Suomalainen Plus were Antti Holma’s Kaikki elämästä(ni) (All About My Life), Elina Backman’s Kun kuningas kuolee (When a King Dies) and Michelle Obama’s Becoming.

Visitor records broken on Otavamedia’s online media

The Media business area anticipated moving into new premises at Tripla in Pasila at the beginning of 2020. The move took place in February, one media family and unit at a time.

These modern premises facilitate collaborative work. However, employees only had a few weeks to enjoy them before the pandemic turned Otavamedia’s day-to-day operations upside down. Employees shifted over to remote work in mid-March. In summer, a hybrid model was introduced, combining remote and office work. 

In the media sector, the impacts of the coronavirus pandemic were particularly evident in advertising: the Finnish advertising market was hit by an all-time slump in the second quarter, down 27 per cent. 

Otavamedia took rapid action in response to the pandemic. Its adjustment measures were successful. Performance in both consumer and media sales outperformed the forecasts made in spring 2020.

Performance in both consumer and media sales outperformed the forecasts made in spring 2020.

The greatest successes were achieved online. The visitor numbers and page views of all eight major sites broke previous records.

In 2020, Otavamedia also performed better than its competitors in online advertising.

During the pandemic, there has been an even greater need for high-quality content and reliable journalism. Readers wanted both entertainment and factual information.

The media families kept track of not only the pandemic, but also the movements and moods of readers and online visitors, and adapted their content accordingly.

We also tested out a new kind of collaboration: TM-live, a daily news show about the coronavirus pandemic, was unveiled in April. TM-live was a joint project of Tekniikan Maailma and Otavamedia OMA that ran until June.

Otavamedia’s high-quality content won many prizes, including wins in three categories in the Finnish Periodical Publishers’ Association’s Edit competition. 

Changes are shaking up the market. The world has changed permanently – and this calls for new ways of doing things.

Otavamedia’s strategy is to bolster its position as Finland’s leading player in the magazine market.

“Otavamedia’s strategy is to bolster its position as Finland’s leading player in the magazine market.”

TIMO KOPRA, MANAGING DIRECTOR OF OTAVAMEDIA LTD

We will achieve this by producing and offering the best content in Finland to well-defined target groups. For this reason, Otavamedia is focusing on three tasks:

First, to be more agile. The mindset, willingness and ability to learn new things and change our operations in cooperation with our partners are important in the midst of the accelerating changes ongoing in the competitive environment.

It is also important to improve the customer experience by utilising data. This will keep the quality of our content commercially competitive, relevant and interesting to readers and online visitors.

Third, Otavamedia will accelerate its digital business alongside print content. Otavamedia must take a proactive approach to expanding its target groups in both sales and marketing of print and digital content, and to provide B2C and B2B customers with a media environment in which media solutions based on customer needs work in line with their objectives.

A focus on core products in Marketplaces  

Otava Marketplaces started 2020 with a merger. SL-Mediat and Ampparit Oy were merged into Nettix and three profit centres were set up: Marketplaces (Nettix), Professional Media (SL-mediat) and News Services (Ampparit). Otava Marketplaces operates under the name of Nettix Oy.

It moved into modern new premises in Tripla in February. Employees could enjoy the new premises for a few weeks before shifting over to remote work.  

 The coronavirus pandemic impacted on Nettix’s business as well – the changes were rapid.

A substantial share of Nettix’s net sales are generated through media sales in the advertising market. As the advertising sector is heavily tied to business cycles and among the first to be impacted by changes, Nettix also had to initiate adjustment measures in the spring due to the pandemic. For instance, we revised our service offering. 

Changes in consumption habits due to the pandemic were evident in services such as Nettimökki, which saw growth in 2020 and became Finland’s most popular website for renting a holiday cabin.

Our operations focused on products closely linked to our core business. In addition, we carried out a reorganisation and fine-tuned job descriptions.

The net sales of Marketplaces were down 3 per cent in 2020, but profitability improved thanks to the adjustment measures and the operating result amounted to EUR 9.8 million, representing 42.5 per cent of net sales.

Marketplaces overhauled its operating methods in autumn 2020. Part of these changes concerned the physical working environment, while some affected ways of working.

Changes in consumption habits due to the pandemic were evident in services such as Nettimökki, which saw growth in 2020 and became Finland’s most popular website for renting a holiday cabin. 

Due to travel restrictions, interest in domestic tourism rose substantially in summer 2020, and it is likely that this change will remain partly permanent.

About 300,000 users visit Nettix’s Nettiauto service every day. Visitors who come directly to the site account for about half of all traffic. This indicates its top-of-mind status among consumers: Finns know Nettiauto and are in the habit of visiting the site when they think about replacing their car.

In addition to growth in visitor numbers, trading in cars through Nettiauto was strong in spite of the exceptional year. Two record-breaking months were seen in the summer, when more than 140,000 cars changed owners in July-August, growth of 7.2 per cent year-on-year.

“We will continue to develop the Nettiauto service so that we can help people to make these kinds of purchases that are important in their daily lives as smoothly as possible and at the right price.”

JAAKKO HAAPAKANGAS, DIRECTOR OF NETTIX LTD

The Nettiauto service commemorated its 20th anniversary in the autumn. Nettiauto also reached another important milestone: it was recognised as the world’s second most popular vehicle marketplace in relation to population (see the 2020 Automotive Annual report published by AIM Group on 18 September).

In Finland, Nettiauto is the clear market leader.

The Nettiauto service will be developed further so that Nettix can help people make these kinds of purchases that are important in their daily lives as smoothly as possible and at the right price. Its mission is to keep providing a platform that enables easy and reliable transactions.

      

Otava is a 100% Finnish company

We want to leave the world in good shape for the next generations.All of Otava’s book business operations are in the hands of the company, from publishing to sales, and all of the related work is carried out in Finland.

Thanks to this, most of the added value remains in Finland, as compared to products printed in China, the Baltic countries or continental Europe. This includes printing costs, logistics and employment effects.  

We have truly harnessed the benefits of local Finnish production and sought operating methods that enable us to meet the demand for books both smarter and faster.

Otava is the 60th largest taxpayer in Finland, even though we rank 200th in terms of size.

Otava saves resources and nature

Digital printing technology enables the company to produce smaller print runs than with traditional offset printing technology.

This cuts down on waste. We can reduce our inventory risk because we do not have to take a chance on publishing large print runs for cost reasons – instead, we rapidly print copies to meet demand while keeping costs in line. At the same time, this reduces the environmental impacts of product disposal.

When the printing press and logistics partner operate on the same premises, the products can go straight into the distribution channels without the need for intermediate storage facilities – this reduces transport and its emissions. 

The amount of book packaging material has decreased in relation to volume.

Multi-location work and self-management skills

In March 2020, Otava acted fast in response to the threat the pandemic posed to the health of employees. About half of the Group’s personnel shifted over to working remotely in mid-March.

Necessity was the mother of invention. In these exceptional times, people throughout the Group came up with new ways of working – and even new products.

Otava is a diversified Group in which people work in different kinds of positions – not all employees can work remotely.

Remote work is not possible at Suomalainen Kirjakauppa’s bookstores and the Otava book printing facility – infection control had to be ensured at the workplace to protect employee health. For instance, shifts at the book printing facility were separated, with a pause between each shift. This prevented congestion in the locker room and around the employee time clock.  

A hybrid model was introduced after the summer holidays – part of the employees could work on the premises on some days if they wished. Limits were set for the maximum number of persons permitted in work, meeting and social facilities.

In these exceptional times, people throughout the Group came up with new ways of working – and even new products.

When the coronavirus figures took a turn for the worse again, Otava employees shifted back to working remotely when possible.  

In the latter half of 2020, Otava turned its eyes to the future and started thinking about the ways in which the pandemic has changed the nature of work and how employees will perform their tasks going forward. 

Otava can only achieve its objectives with skilled employees. The important thing is to develop work together: this gives employees a greater sense of control and more opportunities to influence their own work.

In late 2020, we started drafting personal plans for employees concerning whether they should keep working remotely or would they work more effectively at their own workstation on company premises.

The current job descriptions of employees are reviewed. Based on this, a personal plan is drafted for each employee on whether they should mainly keep working remotely or at a personal workstation.

Job descriptions and tasks must be clear so that employees can take a self-directed approach to their own work. At the same time, the self-management skills of employees are emphasised.  Personal plans will be drafted in the different business areas.