No mistake about it, ad revenues are flat for the majority of the magazine industry. And if publishers don’t have diverse revenue streams to offset print’s modest performance, a significant revenue shortfall for, say, first quarter, will have a dramatic impact on the rest of the year’s performance. If this has happened to you, the trick is to not cut expenses too deeply and protect the brand at all costs. Cutting brand-related expenses to offset a short-term revenue loss will be difficult to pull out of in the long run. Here are some suggestions from a cross-section of magazine publishers on how to survive, or at least make a real impact on, a significant revenue drop in quarter one.

Ted Bahr
President, BZ Media

We would look at the entire budget and try to ratchet down expenses across the board. We would hold off on hiring, look at increasing the percentage of digital distribution, reduce but not eliminate travel, and cut freelance. Last year we had a situation where our show revenues were behind relative to the year before and it forced us to take a hard look and eventually release someone who had come aboard at a high salary and was becoming an increasingly problematic employee. Then the shows bounced back so we had a doubly positive outcome.

In addition to the print or digital choice a subscriber makes when they sign up, they can also choose "both." But if we need to, we can go back to them and say, "We are switching you to digital only unless you respond to this e-mail saying you still want print."

Tom Martin
VP manufacturing and IT, Cygnus Business Media

Watch your folios, watch your percentages. Those are simple things. But you’ve got to put out a quality book, whether it be content, look, or paper.

So we’ll look at the overall content-versus-ad-structure percentage base. Adjust it more to the 50-50 basis than ever before. The benefits of the folio ratio is the fact that if you ran a 120-page book and you were sitting at 60-40 that means you’d run 72 pages of editorial and 48 pages of ads. Now if you only run 48 pages of editorial and 48 pages of ads, you only run a 96-page book. So you’re going to save 20 to 24 pages, that’s all content/postage/paper dollars, saving all the costs on the eliminated editorial pages.

We’ll probably look at digital copies versus printed copies. Again, at the moment, unless you have a good percentage of your book going digital, it really doesn’t pay. Any book that runs a digital version today is probably sitting in the $800-$1,200 per month structure to do it on an 80-page book. So you better have a certain percentage of your circulation paying for the pure costs of that alone, because of the upfront costs. Depending on the amount of digital copies you have out in the marketplace, it doesn’t pay unless you’re already covering those costs up-front. You might end up with more of a cost structure and no ROI on digital versions.

The biggest things, though, are co-palletizing and co-mailing. But that being said, you’ve still got to take certain steps. At Cygnus, with 1.7 million pieces of moving every month, we can never get above 500,000 pieces a month on a co-mailing basis because of the various sizes of the magazines. The co-mailer won’t take you unless you have the magazine set up correctly. We’re looking at standard magazines, off-size standards, polybags and sitma wrapping.

What you get out of co-mailing and co-palletizing is, according to some print companies, five cents per piece. I’m not so sure that’s true. Depending on how the co-mailing is set up and what they charge you for, I think three cents is probably a very good number to get per piece on co-mailing. So if we co-mail 500,000 pieces per month, that means we’re going to save $15,000 dollars a month and $180,000 per year.

Lastly, your sales and marketing people must build revenue. The pressure is on revenue and not on operations, because no matter what you cut, you can never make up the money you save in operations to offset the revenue goal that you missed elsewhere.

Mike Peterson
Publisher, Lake Magazine

You can either go get more business or you can look into your financials and see what you can bleed by 10 percent, for example. If you’re living at a 52 percent advertising ratio, it’s amazing that for every percent or two that you move the ad ratio up, you have dollars that trickle down to the bottom line. You can cut back on editorial costs and paper. There are a lot of variables in the financial model that will benefit from tightening the ad-edit ratio a little bit.

But it’s still important to stay true to the brand. If your magazine is heavily dependent on, say, real estate, you’re going to get hit. Is this a 20-year hit? No. Is it going to be for a year or two? Yes. But you don’t want to negatively impact the sense of the brand. Be careful on any adjustments downward in the editorial product and the quality of the written word or photography. The reader remains the most important person.

Identify another personality component to the brand. Real estate is down for us. But there’s a sense of culture and philanthropy in what we do in the magazine. We’re working with local banks to do cultural and artistic kinds of events, and they’re underwriting a lot of it. And we’ve not just made up the real estate loss, we’ve picked up so much other business that we’ll be up 5 percent in June.

Andy Hersam
VP/Publishing director, Runner’s World

If you find yourself in a situation where you have to cut, the three things you need to protect are edit, sales and circ marketing. The first place I would turn to is manufacturing in two places: Paper: Can you source the same or better type of sheet that you’re currently running on at a reduced price? The other side of it is printing, and that’s less renegotiating contracts and more making sure edit and ads are meeting deadlines and you’re not seeing significant press overages.

Look at promotions, too. Generally that’s parties, sales aids, and merchandising. While they’re all brand builders, they’re somewhat non-essential.

Another is T&E, but with a keen eye on not affecting the sales pillar, meaning that you’re not cutting so much that it’s keeping salespeople from face-to-face meetings. You’re just managing it far more wisely than in flush times.

If you’re down a key sales position, sometimes it’s not so bad for the ad director to cover a salesperson’s territory for a little bit, just to get a better sense of what’s going on in the marketplace and save some money at the same time. But the danger of sitting on an open headcount is corporate thinks that you don’t care about filling it, and then they pluck it. In tough times, you want as many people on the street as possible.

Instead of hiring an additional rep, lease one. Get an experienced, well-connected outside rep to cover a particular category. Without any extra significant expense, you’ve got an extra head out there promoting the brand.

Creating New Revenue with Content Marketing and Native Advertising
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