In just five years Real Simple has gone from a much-doubted startup to one of Time Inc.'s most profitable titles. Now it's attempting a bigger leap: from magazine to multifaceted brand and marketer of home products.
The title, which has estimated revenue of over $200 million, has struck a deal with retail giant Target to sell a line of cleaning tools through its stores, and the first Real Simple products will be on the shelves by early February. It is also about to launch a new weekly public-TV series and XM Satellite Radio segments called "Real Simple Solutions." And more home products are in the pipeline. If such ventures are successful, Time Inc. estimates revenue will triple in the next five years.
Welcome to 21st century publishing, in which a successful magazine is not just a title with a few sinewy brand extensions, but is conceived and managed as a brand.
"Most everybody that's going into business today with some kind of a media-related brand is thinking extension almost from the outset," said Bill Murphy, senior VP-business development, Meredith Publishing Group. "They realize having a one-trick pony, in a world where the message has to get across in so many venues, is limiting."
Of course, Meredith's Better Homes & Gardens has stamped its brand on special-interest newsstand titles, home accessories, over 300 book titles now in stores, holiday decoration lines and a nicely sticky Web site with video. A few of the other border-crossers include Playboy, Meredith's American Baby, Elle from Hachette Filipacchi Media U.S. and Hearst's Cosmopolitan and Seventeen.
But Real Simple's expansion has unfolded at an unusually high speed, particularly for a brand without a driving personality like Martha, Oprah or Rachael Ray. Its success may be a model that others follow.
"It takes as much energy to launch a little narrow idea as it does to launch a big idea," said Ann Moore, chairwoman-CEO, Time Inc., of Real Simple. "To really move the metrics, and we're measured on growth year-over-year, we had to aim for the top 10 in profitability."
Mission at the center
To do that, Time Inc. conceived Real Simple differently than most launches. "It didn't start as a magazine," said Robin Domeniconi, president and publisher. Though the public first saw the Real Simple name on the top of a magazine, Ms. Domeniconi and her team had, from the start, envisioned it via a chart that placed the mission at the center, surrounded by circles representing print, TV, digital and licensing platforms.
"There is no question that in order to succeed today you have got to build a brand," Ms. Domeniconi said, calling the alternative leaving money on the table. "The heart that's pumping is this mission, not a magazine."
But doesn't the initial expense make this a risky proposition? Not necessarily, said Ms. Domeniconi. The Real Simple line of brooms, mops, notepads, organizers and index-card wheels that are headed for Target, for example, are made by licensing companies that pay Real Simple for the privilege.
The public TV show, to be called "Real Simple" and launched Jan. 7, will break even off the bat with $5 million in total sponsorship money from The Container Store, TIAA-CREF, Aveeno and L'Oreal, though it hopes to turn a profit later. XM Satellite Radio will produce and play Real Simple's 60-second segments on its "Take Five" women's channel and others for free, considering it welcome content.
Kristin van Ogtrop, managing editor, has to devote significant time to non-magazine duties like overseeing the hiring of key players on the TV show, approving script ideas and working with creative teams from licensees. A team of about 10 work exclusively on development of products beyond the magazine. And practically every member of the 140 or so employees employed at Real Simple have contributed to one or another of its extensions.
Time Inc. was bullish, if a touch vague, about the expected returns. Ms. Domeniconi could double the magazine's revenue in the next five years, said Ms. Moore, maybe triple it if the other platforms pay off. Advertising Age recently estimated Real Simple's total 2004 revenue at $208 million.
Nearly every cent Time Inc. collects from the Real Simple unit today comes from the magazine itself. If consumers buy into related retail and television offerings over the next five or 10 years, some estimated, the magazine's share of the revenue could drop to 70% of the total.
"Over the next five years, the magazine will continue to be the chief breadwinner of the Real Simple franchise," Ms. Domeniconi said, "but give us another five years and we're talking about a way of life, so who knows?"
The big question
Whether all the growth will continue to look easy, or be done this quickly, remains a big question.
"None of this stuff happens unless it's natural," said Mr. Murphy, the Meredith executive. "It's like any other brand. Diet Coke doesn't happen unless Coke is a great brand. When you have a great franchise and the franchise connects with people, it grows organically."
Dennis Publishing, owner of Maxim magazine and others, has been trying to egg along that kind of growth along, most famously with its Maxim-branded hair dye. Current offerings include Maxim Living products like ready-to-assemble furniture, duvets and barware. Maxim-branded lounges are scheduled to open in 2007.
"Maxim is a lifestyle," said Barry Pincus, director of brand development, Dennis, and a former CFO at Martha Stewart Living Omnimedia. "Part of it is expanding the lifestyle, part of it is generating revenue and part of it is service."
There are clearly risks and obstacles. "Hearst, with Seventeen and Cosmopolitan, has a larger staff than I do," Mr. Pincus said. "I tap into the creative resources of Dennis Publishing. That's an internal challenge."
External challenges include the chance of fatally diluting the brand.
"We are going to be very careful not to overextend ourselves," Mr. Pincus said. "We want to maintain being an authority."
Seth M. Siegel, co-chairman for licensing, Beanstalk Group, added that advertisers can be lukewarm or worse on the concept. "The magazine gives them a credential or imprimatur of appropriateness for that category, and once the magazine is licensing its own name in a category competitive with advertisers, advertisers feel much less comfortable being there," he said.