Reining In Magazine Sprawl
Times have changed for Country Sampler. Launched in 1984 in the basement of Mark Nickel, then a managing editor at a Chicago-based publishing company, Country Sampler began as an alternative for mom-and-pop craft shops that couldn't afford to advertise in the dominant magazines at that time;Country Living and Country Home. The magazine (described as a "magalogue";part magazine, part catalog) found a popular niche by showcasing crafts in actual room settings, similar to the way shelter titles depict home furnishings.
Country Sampler grew rapidly, thanks to a loyal reader base. "It was a fun ride back then," says president Margaret Borst, who joined the magazine as managing editor. "It kind of just took off as we showed it at crafts shows. We sold subscriptions but didn't do direct mail. More often than not we forgot to send out renewals and we would get letters from little old ladies saying ï¾‘you forgot to send a renewal, here's my $12.' It was a very different environment."
Spin-off titles such as Victorian Sampler, Country Sampler West and Cross Stitch Sampler expanded the franchise. Country Sampler became a success on the newsstand, boasting sell-through of 60 percent, and by the early nineties, generating average paid circulation of over 500,000. In 1999, Emmis Communications purchased the franchise.
Today, the Country Sampler group is contending with the dramatic market shifts the entire magazine industry is experiencing, particularly consolidation of newsstand, which makes up 50 percent of Country Sampler's revenue, which is flat and between $10 million to $12 million. While still a major newsstand force, Country Sampler's circulation is now around 300,000. The franchise has sold off or folded many of its spin-offs. Borst, who is now publisher and chief operating officer, in addition to being president, faces the challenge of repositioning the franchise to face the new marketplace realities.
It's a recurring theme with consumer publishers, as evidenced by Folio:'s second annual Consumer CEO Survey [page 40]. Overall, newsstand sales are flat as a revenue stream in 2006 versus 2005, while only 9 percent of publishers that generate more than $10 million in revenue per year said newsstand was the fastest growing part of their businesses. Country Sampler, like many of its peers, is coping with a broken newsstand model while turning to new opportunities, particularly online. "She's been pretty proactive in morphing her magazine into an interactive e-commerce business," says Clay Hall, CEO of Loveland, Colorado-based crafts publisher Aspire Media.
According to the survey, 77 percent of companies under $10 million in revenue per year expect new advertisers to be responsible for a revenue increase this year, while only 57 percent of companies with more than $10 million in revenue expect new advertisers to carry the load. Instead, 68 percent of publishers doing more than $10 million per year expect the Internet to be their primary revenue driver. For Country Sampler, the online opportunity is very real but more long term. Here, Borst speaks to the company's opportunities.
Folio: Newsstand distribution is one of primary revenue streams for Country Sampler. What are the challenges you're facing there?
Borst: In rankings from ABC, on a per issue basis, we're number 55 on newsstand sales. We're a pretty big newsstand title. Although we sell advertising, and everything in the back of the book counts as ad/edit ratio, the advertising doesn't even pay for the printing cost. It's always been a circulation-driven model. Fifty percent of our revenue is newsstand, and the biggest impact on us has been consolidation. A lot of our most profitable areas were cut out.
Other magazines are also facing the fact that when one agency bought out another, records were transferred with hugely varying degrees of accuracy. Nine times out of ten little information transferred. If you sold well in a certain marketplace, that information didn't necessarily transfer to the new owner of that market. It's a continual problem and because we're so dependent on newsstand, we've looked for efficiencies rather than flooding the market with product. It's much less controllable than it was when there were more wholesalers. A lot of big chains have a lot of say over what they get. There are hold codes put on that require you to put X amount of product into their chain or forbid you from putting products into their chains. We used to work with agencies around the country but now you have to deal with four or five big guys that want you to work centrally from their areas;but in many cases they have not worked very effectively. The newsstand industry itself, in my opinion, is broken.
Folio: Are there any strategies that you've adopted that can at least begin to address these issues?
Borst: We try to find specialized promotions. In our April/May issue, we ran a story on Charlie Daniels' house, and we managed to get displays in the Grand Ole Opry. They've never sold magazines there other than country music magazines. We've worked with Wal-Mart on special promotions where we've bound CDs to newsstand copies. We've done whatever we can to get special displays but ones that aren't just about paying X dollars to be in a pocket. We try to be a little more creative about it. My circulation people quarterbacked a program two years ago with a joint pocket where three different publishers got together with Christmas issues. You can be creative in a lot of little areas but it's very difficult to move the big players.
Folio: How much effect does that have on the bottom line?
Borst: We do have to invest more but we try to be conservative about it. It definitely impacts the sales but there's a lot of work involved and generally it's a very targeted promotion. You might be able to do a CD program, which we did in Country Marketplace, in which we had a 26 percent lift in Wal-Mart for copies sold. But that's only a portion of the distribution and only one issue out of the year. Our future plans include trying to work more with chains on promotions that are targeted.
Folio: What's the average sell-through overall?
Borst: We're in the thirties.
Folio: What sort of investment are you making in marketing?
Borst: We do direct mail but our model relies on ultimately being profitable. Our subscriptions are $18.96 for six issues. If you look out there there's a lot of people saying ï¾‘12 issues for $12!' That's definitely a challenge for us. But we get our subscriptions. If we do a special promotion we'll have a subscription offer attached to it. We do mass renewal programs. I wish we could do more than we do but we do what we can.
Folio: Can you talk about your strategy for managing costs? For a lot of publishers, costs have taken a significant jump compared to recent years. Is that something you're seeing and if so, how do you manage it?
Borst: We've cut back our grade of paper over the years because paper has gotten so expensive. We've reduced the trim size on our magazine. Our principal costs are paper and printing. We're doing co-mingling of mail and a lot of things with mailing programs so we can maximize discounts. Postage is another huge cost.
Folio: What areas are you looking to for growth?
Borst: We are in the middle of a research project on readership of Country Sampler. We've done MRI for sales and marketing and we've done a lot of informal studies with readers but now we've hired a big firm to do it. When we talk to readers, we hear "we love it, we love it," but we want to grow it and we need to know what direction to take. We expanded our horizons to ask them about things we haven't covered before and what they want to see in the magazine.
We're also making a major investment in our Web site. Our magazine, which is bimonthly, only touches our reader every other month. We have to find a way to have a much stronger, daily relationship with readers. We want to develop that through our Web site by offering additional content and creating a club kind of atmosphere. It will also be an e-commerce site. We want to make it so Country Sampler is a daily word for them so they're looking forward to the next issue. That's our biggest challenge as an industry. I don't think we're so arrogant that we can be just a magazine, but I don't think magazines will go away. A magazine is something beautiful and tactile that readers will never give up, but as an industry we're challenged for their attention.
Folio: I realize it's early but what sort of return in what sort of time frame are you hoping to see from the Internet?
Borst: It's going to be five years before we have a really strong return on it. Some of the things we have to sort out are capabilities of these small businesses to participate and whether we need to take a stronger role. We were never a middle man before. Our Web site was put together on a shoestring and kind of patched together to do something it wasn't intended to do. It's going to take time and investment, and we need a strategic plan to build a robust site to drive traffic. But the first thing we need to do is develop the editorial portion of the site and the interest of the customers to visit the site as part of their daily lives. I don't think it's impossible that years down the road the Internet will drive the magazine.
Folio: How is overall revenue performing?
Borst: We've had some changes. We did close down one publication this year so our gross revenues are down because of that. We have always tended to be more of a bottom-line company than a top-line revenue company. Revenue could be stronger than it is but I'm hopeful for growth over the next year.
Folio: You've experienced Country Sampler as a startup and now as part of a large company. What's been the biggest difference? How has that affected your own job as an executive?
Borst: As a start-up, we often flew by the seat of our pants. In general, that meant more freedom to try things but less organization (i.e., rarely a P&L or staffing plan). We didn't accept that we needed to do something a certain way just because everyone else did. Overall it was exciting but riskier, and we were lucky that the success of Country Sampler itself overshadowed some big mistakes we made along the way.
In a large company, decisions are sometimes made for the "common good" that aren't necessarily to the best advantage of an individual entity or product. Conversely, the larger company provides stability and the ability to negotiate better contracts. As an executive in a larger company, my role has political undertones that were never there in the early days.