CUSTOM PUBLISHING GROWS UP

By Published on .

Most Popular

Chances are you won't find the first issue of Crunch magazine on newsstands; the new glossy sold out soon after its launch. But if you've been anywhere near any of the chichi gym's 18 outlets, you've probably heard talk of the publication, which launched last December and hit newsstands in March. The 230-page, 150,000-circulation semiannual arrived with all the fanfare of a big budget magazine and even landed on the fashion gliteratti's “in� lists. About the only thing that was not played up about its launch is that Crunch is a custom magazine published for the Crunch chain of fitness centers.

Billed as the “almost-nothing-to-do-with-fitness� fitness magazine, Crunch proved fit as a marketing tool. The magazine is distributed to members at Crunch fitness centers in New York, Los Angeles, Boston, San Francisco and Miami. It's also available on various airlines, and for sale at newsstands for $4.99. And like traditional magazines, Crunch is packed with ads. But amidst all the talk of fashion and sex, you'll find its most important asset — the underlying message that Crunch is the “in� fitness club to join.

Welcome to the new generation of custom publishing. These magazines, which blend content with commerce, are morphing from a simple feel-good consumer-retention tool into a sophisticated means of acquiring new clients. The latest fashioning has the look and feel of Vogue or Cosmo, but unlike other titles found on the newsstand, their reason for being is to tout a specific corporate backer. For instance, Sony published Sony Style, sold on newsstands to talk up its electronics and, music recordings. Ikea produced Space, to push its sense of style and design in home furnishings. Cisco launched IQ, to promote its technology and products. And a host of other retailers, manufacturers and service providers, from Home Depot and Costco to General Electric, have gotten in on the act, creating their own custom publications filled with how-to advice and tips on using their stores and products more effectively.

“Custom magazines have become something of a corporate stamp of approval,� says Samir Husni, professor of journalism at the University of Mississippi and author of the annual Samir Husni's Guide to New Consumer Magazines. “It's the service aspect that makes all of this so important.�

In fact, the editorial quality of some of these custom magazines has risen to such heights that the category is going through somewhat of a reclassification. Magazines that carry independent editorial adjacent to product listings are commonly referred to as magalogs. And publications that are backed by one corporate sponsor, but are designed to be separate profit centers, now fall under the heading of contract publishing. Magazines that accept outside advertising and are sold on the newsstand often fall into this category.

This burst of new magazines that seemingly blur the lines between traditional and custom publishing are flourishing while their mainstream brethren are struggling in the worst advertising recession in decades. Advertisers have slashed ad budgets but have maintained or increased marketing budgets that fuel custom magazines. According to Publications Management, an industry report produced by custom publishing firm McMurry, companies now spend upward of $2.4 billion publishing custom titles, targeted at clients and employees, to push their brands and their products. Much of that content is produced in-house, but a rapidly growing percentage of custom titles are being farmed out to firms like McMurry and Fluent Communications, and to publishing companies like Hearst, CMP and others. In fact, 1 in 13 custom publications is now outsourced, Publications Management reported. And from 2000 to 2001, that market grew 13.1 percent; in 1999 alone, it rose 34.5 percent.

Corporate America is shelling out big bucks on these publications: The average business spent about $500,000 a year on newsletters and magazines in 2001, but some 9 percent of those surveyed spent more than $1 million. Despite a 50 percent drop in the number of companies spending such massive amounts between 2000 and 2001, the ranks of companies spending $500,000 or less have swelled with hundreds of new entrants, according to Publications Management.

This windfall is in stark contrast to previous recessions, when custom content was traditionally the first to get chopped, notes Chris McMurry, president of McMurry Publishing and editor of Publications Management. The most recent economic downturn has actually sparked an increase in spending on the tailored marketing vehicles.

Indeed, 100 out of 250 companies surveyed by Publications Management said they intend to increase spending on custom publishing efforts this year. Says Husni: “The more difficult the economic climate, the more likely companies are to want to put out tailored messages. They're a double whammy — they let you combine advertising with a clear message with a service to their customers.�

In other words, despite their expense, custom magazines are more efficient at reaching the right people and at building a unique relationship with those people in the process. Almost all custom publications are intended to reach existing clients and to cultivate relationships with them in a way few marketing tools can. But now that some titles are targeting new clients, the proposition becomes all the more tantalizing. As the editorial content has grown more and more sophisticated, so too has the design of most custom magazines; they now look and feel exactly like their commercial counterparts. Because of this, the magazines can now attract new sources of revenue that offset production and distribution costs while also lending a certain cachet. For example, Crunch and Sony Style, titles that are sold on newsstands, are far more likely to be taken seriously than magazines that are handed out for free at your local home improvement store.

Readers will often find articles written by professional journalists on topics that may or may not be directly related to the brand the company is marketing. And the best among them try to engage readers without making a hard sell, pushing the essence of the brand instead of trying to seal a deal. “The idea behind custom publishing is to reward the customer,� explains Simon Kelly, president of Seattle-based Fluent Communications. “If it does its job properly, the magazine will engage the reader and reinforce the value of the brand of the company.�

Still, for all the buzz about custom magazines these days, the idea is far from new. Airlines have stuffed seatbacks with in-flight glossies for decades, offering articles and news relevant to their routes. In the U.K., where custom publishing is a well-entrenched business, 7 of the top 10 magazines, in terms of circulation, fall in that category. Yet what's made custom magazines more prominent is outsourcing.

The Custom Publishing Council, the two-year-old arm of the Magazine Publishers of America, now has representatives from more than 30 firms specializing in such publications, each with a staff of editors, marketers and freelancers. Many of those firms are now owned by ad agencies such as Interpublic Group and WPP, which have taken to building comprehensive marketing efforts incorporating custom magazines. And publishers from Time Inc. to Hachette Filipacchi Magazines have joined the fray, offering their editorial and publishing background to advertisers looking for more.

Custom publishing actually includes a wide array of communications vehicles beyond magazines, such as newsletters and Web sites, developed for internal and external audiences. (More than half of all custom publications in 2001 were newsletters, while magazines accounted for 24 percent of the market and Internet content made up to 17 percent.) Yet magazines receive far more attention because they have a higher profile and require a more significant expenditure, Kelly notes. They offer a tactile connection and a resonance not possible with the Web while costing as much as an ad campaign.

On average, says Mike Hurley, director and publisher at Hearst Custom Publishing, a large-circulation custom magazine can run $3 to $4 per copy, with the cost inversely related to circulation. More than half the custom magazines on the market are published 3 to 5 times a year, while almost a quarter are published over 11 or more times annually. And the average circulation is about 18,000, with some 6 percent having circulation above 100,000.

With circulation numbers like those, custom publishers have also woken up to the opportunity to sell ads in their pages, making it even easier to launch new titles. Cisco's IQ, for example, includes ads from consultants such as computer services company Cap Gemini Ernst & Young and luxury goods like Roger Dubuis watches.

Yet while Crunch proved you can, in fact, use outside advertising to pay for the magazine outright, advertising typically offsets only part of the cost. Fluent's Kelly notes that no more than 25 percent to 30 percent of pages should be dedicated to advertising, and that even then, ads will offset only 20 percent to 40 percent of the publishing costs. Yet that could further add to the legitimacy of the magazine, he reasons. “[Advertising] can reinforce the notion that it's a magazine, not a catalog,� says Kelly.

Lest they think they can stuff their custom magazines with advertising and pay nothing to produce them, however, publishers must take great care in choosing the right advertisers and advertisements. In essence, custom publishers are entrusting their brands to their advertisers, much as mainstream magazines do. But considering the expense in publishing a magazine, the marginal cost of advertising must be weighed against the effects on the brand, Hurley emphasizes.

If custom magazines are becoming just like mainstream magazines, then why all the fuss? It all comes down to the mailing list used to distribute them. Companies generally know the customers who've bought their products, thanks to the rise of customer relationship management (CRM) and all the data gathered on buyers during the product life cycle. As a result, they have a solid sense of the audience's tastes, likes and dislikes, and can easily translate that into content that's tailored to them. It's no surprise, then, that custom magazines are particularly well suited as customer retention vehicles but rather inefficient as direct marketing tools.

“There's a symbiosis happening between the evolution of CRM and the way companies develop relationships,� says Kelly. “We can segment customers to a degree of one today, but the customer doesn't want only one way to communicate with a company, but rather wants a dialogue.�

Yet for all their promise, custom magazines present two major challenges for the magazine business as a whole. First, they threaten to siphon off money from advertising budgets. According to Publications Management, publishing budgets at major companies rose to 13 percent of the total spent on marketing, communications and advertising in 2001 from an average of 11 percent in 2000 — even as advertising budgets were shrinking. Inevitably, that will translate into less advertising dollars, some industry watchers note. Publishers like Hearst, which put out both mainstream and custom magazines, insist the effect need not be detrimental. “I don't see any real erosion in advertising business,� says Hurley. “These things can coexist, and it doesn't come down to either doing a magazine or running ads.�

The other challenge, and a crucial question for publishers, is what these marketing efforts mean to the Chinese wall between editorial and marketing found at most magazines. Chances are you won't find content that disparages a company's products in a custom magazine, nor will you find articles that recommend a competitor's products. And, Husni notes, sometimes it's difficult to tell when a magazine is actually a custom magazine. “My problem is when advertisers try to disguise themselves [in magazines],� says Husni. “They shouldn't try to hide themselves, or else they're wasting their money.�

But the issues surrounding journalistic integrity are implicit, publishers stress. And increasingly savvy readers know to spot a pitch within a story. “Let's not kid ourselves, consumers aren't stupid. They know when you're trying to sell them something, and they know it's not unabashed journalism,� notes Kelly. “If [the magazine] meets your needs, it will be a more effective way of selling.�

PROJECTED CHANGE IN PUBLISHING BUDGETS

Of the 250 companies surveyed by Publications Management in 2001, 33 percent of the larger companies (those with more than $1 billion in revenue) expect their publications to increase their budgets, compared with 45 percent of the smaller companies (those with less than $ 1 billion in revenue) that expect to spend more.

COMPANIES >$1 BILLION COMPANIES <$1 BILLION
Increase 33% 45%
Decrease 14% 10%
Stay the same 53% 45%
Source: www.publicationsmanagement.com, 2001 annual survey of 250 companies

SPENDING AS PART OF THE MEDIA MIX

The publishing budget represents a significant portion of the money spent by companies on marketing, communications and advertising. In 2001, publications represented 13.2 percent of the media mix, versus 11.1 percent in 2000.

2001 2000
0% to 5% 50% 52%
6% to 10% 21% 24%
11% to 20% 8% 7%
21% to 30% 5% 4%
31% to 50% 9% 5%
51% to 75% 3% 5%
76% to 100% 2% 0%
Average percent of budget 13.2% 11.1%
Source: www.publicationsmanagement.com, 2001 annual survey of 250 companies

ANNUAL FREQUENCY

The increase in the use of the Internet for publications, and the ease in which publications can be created and distributed over the Internet, had a large impact on the average frequency of publications. In 2001, the average frequency was 45 percent greater, moving from 6.4 times per year in 2000 to 9.3 times per year in 2001.

2001 2000 1999
1 to 2 times 11% 13% 11%
3 to 5 times 52% 41% 39%
6 to 9 times 14% 18% 16%
10+ times 23% 28% 35%
Average frequency 9.3 6.4 6.3
Source: Source: www.publicationsmanagement.com, 2001 annual survey of 250 companies
In this article: