5 steps mags must take-now

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Jon Stewart was not the first to say print sits at the "children's table." Here's Jack Kliger, last November: "Magazines aren't seated at the main table when clients are carving up their budgets. We don't get the entree; we end up fighting for the scraps."

Those words from Mr. Kliger, president-CEO at Hachette Filipacchi Media U.S. and incoming chairman of the Magazine Publishers of America, tell just part of the story. He could have added that the key metric on which magazines are sold-paid circulation-has been devalued by a series of circulation scandals. It even looks increasingly irrelevant as marketers seek engagement metrics. He might also have pointed out that publishers have struggled to increase ad rates for four years running.

Despite a raft of committees and co-ventures that have convened to solve the problems, the challenges facing attendees of this week's American Magazine Conference look disconcertingly familiar. At stake is more than $35 billion in advertising and circulation revenue, and if magazines are to protect this, let alone grow it, they need sweeping changes. Here are five things they must do-and fast.

1. RETHINK RATE BASE

That ancient and very American frame for pricing-the average paid circulation that magazines guarantee to advertisers-may have outlived its usefulness. Many argue it now hurts the business. Both sellers and buyers must move beyond this outmoded metric.

"America is the only country in the world that has a rate-base system," said Stephen Colvin, president-CEO at Dennis Publishing. "It obviously came about because advertisers way back when did not want to wait for the ABC audits to come through over a year later and wanted some kind of assurance on what the circulation would be in upcoming issues."

But emphasizing rate base today guarantees that magazines undersell engagement, the nascent metric that magazines want to promote most. "It's an old idea that is not really relevant any more today," said Didier Guerin, president-CEO at Media Convergence Asia Pacific and a former Hachette executive. "It doesn't reflect the value of magazines, which is special because of their relationship with their audiences."

And relying so fundamentally on rate base pressures circulation managers to meet numbers-Ebsco Consumer Marketing Services anyone?-instead of collecting those readers most likely to engage with their titles and ads.

Imagine a model in which rate base was not the coin of the realm. Publishers might not be stuck defending their sponsored subscription programs, public-place copies and all the other circulation tools now under scrutiny from the audit bureau, media buyers and, apparently, a U.S. attorney.

Circulation could even resume its position as a moneymaker, rather than merely the means to an ad rate. "Having no rate base or downgrading its importance has the potential for a publisher to create better revenue from circulation," said Mr. Colvin. "Just being motivated to optimize newsstand sales on an issue-by-issue basis should lead to better circulation economics. Remember, the newsstand isn't just important for newsstand sales but also for blow-in card subscriptions, the best subs a publisher can get."

Envisioning and adopting a different model, one in which perhaps prices were set according to recent audience figures, is not something that publishers could likely impose by fiat. It would require persuading ad buyers to give up the comfort of doing business the usual way, said Michael A. Clinton, exec VP-chief marketing officer and publishing director at Hearst Magazines. "Many magazines would love to be bought on audience," he said. "There's got to be innovation on both sides of the house."

2. REPORT FASTER, REDUCE LEAD TIMES

Outside magazines' log cabin, Nielsen Media Research delivers TV ratings overnight. Online advertisers can see results in real time. They can even swap one creative execution for another almost as soon as they decide to.

When media swirls essentially constantly and we consume it more than we sleep, advertisers need nearly constant information just to keep up. Magazines make them wait for months.

Granted, it was the industry-standard arbiter of magazines' power, the Audit Bureau of Circulations, that uncovered the misstatements of Gruner & Jahr USA. That now-departed publisher claimed YM had achieved average newsstand sales of 594,000 for the second half of 2001, but its ABC audit slashed that figure by almost 200,000 copies.

It's a happy story, as frauds go, except for this: G&J was caught at the end of 2002, about a year after its false report. Unaudited publishers' statements to the bureau typically arrive only twice a year; they are usually subject to audit just once a year.

"If we are ever to get to a serious discussion of advertising return on investment, with magazines fully a part of that discussion, we're going to have to be faster in terms of getting to market and reading our audience," said Mr. Kliger. "We want to get into the discussion of audience measurement that's timely and relevant."

The buy side could not agree more. "It would be good to have the results of the audits sooner," said Beth Fidoten, senior VP-director of print services at Initiative, whose clients include big paper-and-ink advertisers, such as AOL and Bayer.

So what's the hold up? The Audit Bureau defends its methodical pace, pointing out among other things that most retailers can't tell which issue of a given magazine they have just sold, if they even know which magazine it was. Preliminary publishers' reports would probably contain more errors than later ones, which could drag down the reputation of the bureau as a whole. Nor is rushing through audits any way to ensure sound findings.

Because accuracy is more or less the bureau's entire point, it's easy to see how speed becomes peripheral.

But there are, happily, companies like McPheters & Co., which is almost ready to roll out Readership.com, an online service that promises to provide near-real-time information on magazine audiences by issue, reader engagement and both single-copy and subscription distribution.

"Print has this real opportunity if it can provide the data advertisers want," said Rebecca McPheters, president. "We're going to do something that is going to show, week in and week out, how print audiences accumulate."

Readership.com was developed with the cooperation of Conde Nast Publications, Time Inc., Hachette, Meredith, Parade, Gemstar-TV Guide and Starcom USA.

"It is absolutely heading in the right direction," said Jack Griffin, president of the Meredith publishing group. "Whether it's that initiative that ultimately endures or another one, it deserves enormous credit."

There are other comers too. ABC rival BPA Worldwide finishes most audits six months after publishers' statements arrive. Better yet, BPA is trying to develop a system that will allow publishers to provide top-line circulation data on a monthly or even weekly basis.

Then there is the aggravating slug known as lead times, after which it is technically too late to buy space in a monthly magazine or swap one execution for another.

3. ENDEAR YOURSELF TO THE PAYING CUSTOMERS

Good marketers spend all day thinking about how to accommodate their customers, not emulate David Spade screaming "No!" in those Capital One commercials.

The long lead times are worse than a hassle. They discourage agency executives who are used to doing business on demand, said Jay Burzon, the longtime sales-side executive who semi-retired in 2000 to open the Coachsultancy. Too often media buyers say, `"I can't plan print; it takes too long,"' he said.

The truth, said Mr. Burzon and others, is that publishers can shrink lead times. Some advertisers would probably take advantage by waiting until the last minute to place orders. But the benefits should outweigh that downside.

Nina Link, president-CEO of the Magazine Publishers of America, said the time is growing ripe: "There have been a lot of discussions. We have a cross-discipline committee called the `immediacy committee.' The good news is we're not as bad as some of the perception. But there's a real opportunity to shorten that further."

While discussions continue at the Immediacy Committee (established 2003), however, other media have an opportunity to eat magazines' breakfast, lunch and dinner.

4. BE A BRAND, NOT A BOOK

"The analogy I make is, are you selling news or are you selling paper?" said Andrew Swinand, group client leader at Starcom USA. "In a world of immersive content with multiple screens and digital you risk becoming stagnant and irrelevant. Consumers are engaging in immersive brands."

Some multimedia empires have sprouted from the spines of magazines. Dennis Publishing, which has already ventured into package goods like hair dye, has described plans to build a chain of Maxim lounges across the country, where it will host Maxim promotional events and serve after-work and late-night crowds of drinkers.

Even Sporting News, which goes back to 1886, plans to develop a chain of Sporting News-branded restaurants inside Holiday Inn Select hotels. This Old House and Real Simple, among others, have branched into multiple platforms and successful merchandising.

King of them all, perhaps, is Playboy, which has systematically colonized clubs, Web sites, cable TV, cellphone screens and consumer goods. "One of the great strengths of good magazines, and therefore one of the great opportunities strategically for good publishing companies, is that they have all the benefits of a true brand," said Christie Hefner, chairwoman-CEO at Playboy Enterprises. "The ability to represent a lifestyle or an attitude about life can at least potentially allow them to cross media lines and even into consumer products."

The benefit for the industry shines at least as brightly as the prize for any daring magazine. To the extent that magazines continue to claim-and demonstrate-that engagement is their competitive advantage, properties built on magazine brands may enjoy some of that engagement halo.

You don't have to open a club (or build around a TV property as ESPN has so successfully done). Don't forget the inexplicably under-leveraged Internet, where many publishers have slapped cover photos, subscription offers and not much more.

"If you're not paying attention to that as a publisher then you're losing another very vital consumer touch point," said Kevin C. O'Malley, VP-publisher at Esquire. "You're just not giving your brand a chance to live in another medium in a way that's meaningful. And it can."

Jack Hanrahan, senior VP-print at OMD, said publishers have to recognize and maximize the complementary attributes of the Web and their magazines. "It is important that the industry learns more about the effects of digital advertising, the different functions that digital serves, and how digital and print can work powerfully together," he said. "There's the immediacy of digital, the texture that magazines provide and the targeting they both provide."

The elixir of the two in fact reinforces the strength magazines claim today, even as they and advertisers alike struggle to define it: engagement. Newsweek's Web site, for example, includes options like "blog this" and "rate this story."

Jack Haire, exec VP at Time Inc., described the moment neatly. "Now we have an opportunity for real dialogue," he said. "That's a real positive because we're in a bit of a cycle where we're lumped into traditional media and we need to be creative."

5. GET YOUR MIND OUT OF THE GHETTO

It remains too common for sales reps to pit Men's Health against Men's Journal, Teen Vogue against CosmoGirl, Us Weekly against In Touch Weekly.

That dynamic will never evaporate completely because advertisers like it that way. They play one magazine against another to grind out lower prices, free pages and more "added value." But the easiest way for magazines to add revenue is to take it from other media rather than each other-requiring a mind-set that sees magazines as part of a marketing mix, not a ghetto, as Mr. Kliger is fond of calling it.

A sizable opportunity presents itself if that mind-set can be changed, said Thomas O. Ryder, chairman-CEO of The Reader's Digest Association and the outgoing MPA chairman. "I said two years ago when I took the [MPA] job that I thought television was in the most vulnerable position I had seen in my almost 40 years in the business. Two years later I think I understated that."

As broadcast networks have charged more and more for audiences that are large but getting smaller and smaller, advertisers have sought more efficient ways to make their marks. That has fed the phenomenal ad revenue growth for the Internet.

It may require a cultural shift to pound the drum of magazines' superiority in so many dimensions, rather than hammer home only the strength of this title or that one. But it has to be done because advertisers do not yet view magazines as new media, leadership venues or the most efficient places to seed their messages.

"We've made huge strides in selling the industry," Mr. Ryder said. "We made a real effort to sell our medium and position it against other media and to lessen internecine warfare. There's lot more to be done."

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