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The return of reader research

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Challenged by slashed budgets and Internet competitors, traditional research companies are once again attracting publishers 
The ever-widening use of the Internet has changed the business for third-party readership companies that specialize in b-to-b print publishing, raising some questions about research quality. At the same time, advertisers and ad agencies are demanding more accountability and measurability for their print advertising dollars, especially as they use more Internet advertising and online programs that provide significantly more data on users and their behaviors.

The best-known third-party readership research houses in b-to-b-including Readex, Harvey Research, Starch Communications and Erdos & Morgan-have ridden the post-Internet bubble downturn along with their publishing clients, and they’ve been seeing an uptick in business over the past year as print advertising has come back.

Even with the recovery, however, some things may never be the same for reader research in b-to-b publishing.

Research has changed

First, e-mail has become the preferred method for reader research. Second, the large, established, independent research companies must battle for business against leaner newcomers using inexpensive and easy-to-use software as well as the Internet. Finally, some of the budget lines for third-party research that were slashed in the early 2000s may never come back, especially for studies that don’t directly support advertising and marketing efforts.

“In the late 1990s, people couldn’t spend money fast enough,” said Bill McBride, president of Harvey Research. “Then, with the downturn, our business dipped 35% between 2001 and 2003 as the magazines cut back. The industry has been gradually recovering over the past year and a half, and I think the spending on research has returned faster because of the pressure advertisers are putting on publishers for greater accountability.”

“When publishers are looking to make cuts, third-party research is one of the first items to go-and the last to come back,” said Nicholas Ferrari, CEO of Erdos & Morgan. He said he is seeing revenue growth this year, following a big falloff from 2001 to 2004.

At five years old, Litchfield Research is one of the newer companies in the ad readership field. According to president Tim Britt, “We do see an increase in the number of magazines saying, `We have to do something extra because our advertisers want more actionable, usable information.’ “

“We’ve been hearing for years that print publishing is going away,” said Steve Blom, director of sales and marketing at Readex Inc. “But I don’t see it happening.” He observed that advertisers and agencies are desperate for information as they are put under more scrutiny than ever to quantify the value of print advertising.

“From a research perspective, though, what the prospective advertiser wants from a publisher today is not that different from many years ago,” Blom continued. “Advertisers want research that establishes to their satisfaction that the audience of the publication is the one they want, and they want convincing evidence that the publication is being read.”

Publishers have a wide range of choices when it comes to readership research vendors. (See Readership companies at a glance, page 17.) Readership studies are available in many flavors, including:

 Subscriber studies or reader profiles that provide data on audience demographics, company size and purchasing authority, as well as how those readers interact with one or multiple publications.

 Ad readership studies that collect feedback from readers about particular advertisements running in particular publications.

 Syndicated studies that include multiple publications in a given field, which are typically purchased by multiple advertisers or ad agencies as well as the publications themselves;

 Custom research for advertising, marketing, editorial or circulation purposes.

Starch, Readex and Harvey-dating back to 1923, 1947 and 1953, respectively-are best known for their ad readership studies, which is where the majority of b-to-b publisher spending goes, according to McBride.

Questions of methodology

While the use of e-mail for reader surveys provides huge advantages in speed and cost compared with postal mail, some readership company leaders are concerned about the validity of these studies because few b-to-b publishers have e-mail addresses for more than half their readers.

“Over the past five years, we’ve definitely seen a migration to gathering data online,” Blom said. “It’s still a challenge for some publishers to get good e-mail addresses, and I think that will continue to be an issue.”

“The average range [for e-mail addresses] is probably 20% to 50%,” said Ferrari, adding that when a researcher is starting with just a fraction of a publication’s readership, there’s no way of knowing if that subset really mirrors the total circulation. The e-mail list might skew, for example, toward younger readers, readers who have less purchasing authority or readers who are working with larger companies than your overall reader base.

Harvey Research’s McBride said the typical b-to-b publisher has e-mails for 35% to 40% of its universe. “We tell our clients we are happy to do Internet research,” McBride said. Harvey likes to have e-mail addresses for at least half the audience to be surveyed, “so we can say we picked from the majority, at least,” he said.

Rhonda McGee, director of research for the Boston division of Reed Business Information, oversees eight publications and is one of those publishers with e-mail addresses for about half that collective circulation. “All of our studies were done with paper and mailing six years ago. Now, it’s 99% e-mail,” she said.

Because e-mail surveys are so much cheaper to distribute than paper surveys sent through the mail, McGee said, researchers can send a survey to a much larger sample in the first place and thus offset some of the concerns about the e-mail addresses a publisher lacks.

Trimmed budgets

Readership company executives also expressed concern about trimmed research budgets.

Ferrari said budget-conscious publishers are pushing readership firms to cut corners in other ways that may not be good for the long-term health of their publications. For example, he said, more publishers than ever before are asking for so-called “all-inclusive” readership studies-a single survey designed to bring back information for editorial, circulation and sales. Ferrari sees such all-inclusive studies as “comparing apples and oranges, and even crossing the lines of church and state.”

Overall, budgets for third-party readership studies have recently skewed more than ever before toward advertising research, where revenue can offset the cost, Ferrari said. When editorial and circulation surveys are done, they are more likely to be done via e-mail, with in-house resources.

Publishers agree that e-mail allows them to conduct more informal reader surveys, for sales and circulation purposes as well as editorial. But they are not sure these surveys are replacing readership studies that would previously have been conducted by a third party. Publications may simply be communicating more regularly with readers.

In fact, there are some signs that editorial readership surveys are coming back. Felicia Aronov, publisher of CMP Media’s Insurance & Technology, said she had just overseen the first editorial readership study done in the 14 years she has been with the publication.

“It was long overdue to get feedback from our readership and to gain insight into buying trends and analysis,” Aronov said. “We also wanted to obtain feedback on the publication’s relevance to the industry, our readers’ job functions and how much they value the publication.” (For more on how publishers are using research data, see “Proving print ads’ ROI,” page 24.)

New competitors

Another research quality issue that bubbles up from the Internet is the rise of many new research companies that may or may not apply the strictest standards. While the cost of paper, printing, mailing, business-reply accounts, tabulation and analysts deterred newcomers in the past, off-the-shelf software makes such surveys cheap and easy no.

“More and more research is done out of a garage, and there’s a real risk that kind of research will erode the credibility of the whole industry,” McBride said. He added that he has worked with his peers “to try to police ourselves as an industry.”

American Business Media’s Research Committee has been part of that effort, publishing a Code of Professional Research Ethics and Practices in 2002 and recently releasing a set of guidelines called “Considerations When Conducting and Evaluating Online Research.” Both documents are available on the ABM Web site (www.americanbusinessmedia.com).

“When a publication is not using a well-known [reader research] company, it raises a question, `Why not?’ “ said Gary Rubin, chief publishing officer and group publisher, Society for Human Resource Management. “Anything you can do to distinguish yourself is worth doing. If you’re selling editorial quality as part of your brand, then doing a readership study with a reputable and respected company is a natural extension of your persona.”

A brand-name research company “absolutely helps,” agreed Kevin Vermeulen, VP-group publisher, ALM. “Ad agencies want to see a source they know is credible.”

When Tim Tobeck, VP-group publisher of PennWell’s Oil & Gas Journal, wanted an independent research company for a major, in-depth subscriber study, he looked “at three or four readership companies, including some of the major brands,” he said. “I was more interested in using a company with credibility and experience in b-to-b than in the name.”

Readex’s Blom would like to see publishers take much greater advantage of the readership studies they are already doing.

“I know salespeople have a million things to do, but it’s really worthwhile for them to understand the research and to learn how to use it to consult with advertisers,” he said. “The message we would like to see salespeople convey is this: We want your advertising to work with our audience, so we want to spend time going over this ad readership data with you.”

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