I recently had the pleasure of sharing a panel with some of the sharpest minds in the digital advertising space. We gathered at this year's Advertising Week to discuss performanceâhow we define it as tools change and our industry shifts. Most importantly, how do we achieve it as an industry?
These may seem like straightforward questions with obvious answers, but we're often dealing with different stakeholders, varying metrics, and disparate data utilization methods. Our panel, titled "Performance Is The New Black" actually concluded that there is no uniform definition of success. There are, however, best practices that publishers, agencies and marketers should follow in order to describe the performance of a given campaign or specific ad. Focus on objectives first, tactics later
The very first thing publishers, agencies and marketers need to do is come to a consensus on the objective of a given campaign. The second thing to keep in mind, as reinforced by Amanda McAllister, Head of Global Marketing for MSN, is to never lose sight of the objective. Once all stakeholders are clear on what hill they are trying to take, then they can figure out how to take that hill.
Flashy tactics are great, but they're not an end in themselves. Launching an app for the sake of having one or because Starbucks or Macy's did it does not offer that focus. Any campaign needs an agreed-upon set of key performance indicators, and shiny tools and technologies like apps, programmatic buys and native content should be assessed based on their contribution to achievement of those KPIs.
Don't be afraid to experiment
Some went so far as to say we should invest in failure. The beauty of digital advertising is its flexibility. We shouldn't be afraid to embrace (smart) experimental ideas as part of a new campaign as long as vigilant oversight and a solid Plan B are part of the strategy. As Jade Watts of MediaHub put it, "It's ok to fail as long as you fail fast and course-correct even faster."
Tried-and-true tactics are great, but if you never have a hiccup, you're probably not doing everything you can to push boundaries and achieve the greatest success. And by not at least taking educated forays into burgeoning fields such as programmatic - which is set to account for $20 billion in ad spends annually by 2016âyou're not only limiting possibilities for success, but risk being left behind as the industry changes.
Keep the consumer in your sights
Dazzling CPMs and CPAs are great, but we shouldn't lose sight of our collective goal, which is winning over the end-user. If publishers and advertisers aren't framing advertising content in a way that is appealing and relevant to the consumer, we won't ultimately succeed. This is why we're seeing more in the industry turn to native advertising-if done right, it's ultimately oriented for the end-user but will also deliver the performance the marketer is seeking. Successful publishers, agencies, and brands are going beyond the conventions of digital advertising to deliver conversions while at the same time offering memorable creative content.
The October 17, 2014 issue of Entertainment Weekly, featuring a graphically intense, black and white photograph of Michael Keaton in a preview of the Birdman movie, is one of the coolest and most iconic magazine covers of the past year. Photographer Art Streiber, design director Tim Leong, photography director Lisa Berman and lettering artist Geoff McFetridge have created a perfectly balanced cover that has a cutting-edge, contemporary flavor, while harkening back to the classic EW black and white covers of the early 1990s, which still resonate with many of the magazine's fans. And it's a cover that perfectly balances the demands of newsstand presence, reader engagement, and social media virality.
This is the latest signifier that there is an editorial and visual renaissance happening as the magazine approaches its 25-year anniversary. New editor-in-chief Matt Bean spearheads the brand. And he and newish design director Leong work under editorial director and former EW editor Jess Cagle.
As an early design director at Entertainment Weekly (I was there from 1994-96), I have a deep appreciation for the challenges and limitations of the magazine's cover design. A recent forum sponsored by the Society of Publication Designers at the SVA Theatre in New York City highlighted perfectly the changes to the magazine over the past 25 years. The event featured all of the magazine's past and current design directors and a great deal of dynamic work from the visual history of EW was presented. In the early days of the magazine, covers tended to be very spare, with minimal cover lines, and bold, graphic, iconic black and white photographic imagery. Actors like Al Pacino and Jack Nicholson were presented in stark, simple contexts. As the magazine increased in popularity, and as newsstand sales became more important, and more challenging, black and white photography was cut, and the covers became more graphically complex. The result was action-packed covers that were highly effective, very commercial, but somewhat lacking in a higher artistic achievement. This is not meant as a criticism of any of the EW design directors, since I include most of my own covers in this category.
There have been, of course, some highly-memorable EW covers over the years, including the 2003 Dixie Chicks cover, which was ranked in a recent ASME collection of the best magazine covers of all time, and the unforgettable 2008 Jon Stewart/Stephen Colbert parody of the famous Barack and Michelle Obama fist bump New Yorker cover. At its heart, EW is an entertainment newsweekly, and its covers generally have a sense of immediacy and response to current entertainment news and trends. Many times the imperative to present actors in character drives the image creation (see their countless superheroes in costume or Simpsons covers for great examples of this). That makes for crowd-pleasing images that aren't necessarily as artful as what appears on the cover of Vanity Fair, Esquire or New York magazine.
The essence of EW, to me, was that it always reflected the smart fan's take on movies, TV, books, music, and other forms of entertainment. It acknowledged the validity of its readers' obsessions. They were nerds before being a nerd was cool. Now that nerd-dom is having its day, EW has gone back to its roots in many ways, with complicated and obsessive graphics and charts, cool page presentations and lots of visual "winks" at the readers.
The Keaton cover is right in this sweet spot, with its hand-lettered cover typography that feels exactly like something I would have done on my notebooks in high school. Check out the scary, wavy type on the word LOSERS in the top right of the page, and the flock of birds above the logo. The type is funky and ragged, almost amateurish, but it strikes just the right tone. It has a sense of fanatic appreciation, and it doesn't overwhelm the photograph. I love the raw, almost punkish aesthetic of it as much as I love the stylish and intense quality of the cover photograph. The only color on the cover is the bold red logo, which enhances the classic feel. There are no drop shadows, 3D type or other computer-generated graphics that would make this cover feel dated in a few years. It's timeless. Twenty-five years from now when EW has its 50th anniversary gathering of design directors, it will still feel completely modern and contemporary.
It's heartening for me to see EW feel so essential and vibrant after all this time, especially after the many predictions of the magazine's death over the course of its lifetime. Tim Leong and his team have been creating a powerful series of covers over the past few months, including memorable images of Key & Peele and Michonne from "The Walking Dead" that show a keen understanding of the ways a cover must relate to audiences across multiple platforms. These are covers that delight, provoke, entertainment, and also sell, although that term has a much different and more diverse meaning that it did 20 years ago when I was creating at EW. This is a magazine that is about delighting its audience and validating their cultural obsessions, whether it's for Star Trek, Harry Potter, The Simpsons or Breaking Bad. This cover makes good on its brand promise brilliantly, and still looks like a poster that I'd like to put up on my wall. You can't ask for more than that from a magazine cover.
U.S. newsstand distributors, unlike our printers and subscription agencies, have very little to do with the ongoing transition of publishers to a primarily digital environment.
From an international perspective, the distributor has an important role to play in that transition, according to Anne-Marie Couderc, president of French national distributor Presstalis. At Distripress 2014, the international conference of the magazine press, held in Cannes in the last week of September, Couderc provided her vision of the print and digital future. Print and digital must complement one another, and print distributors have an important role to play in that relationship.
It begins with the optimization of services already provided, she says, which includes managing complex logistics, data and financial flows. Distributors also have a role in the global distribution of both print and digital products.
Presstalis is responsible for 80 percent of print distribution. The five trends she flagged in the French market reflect those in the North America:
1. The collapse of newsstand sales2. The collapse of multi media products3. The crisis in ad sales4. The strain on the retail market as a channel of sale5. Changes in consumer habits
In France, as here, magazine sales down, and the Internet is seen as a major driver of the trend.
Couderc says publishers and distributors need to rethink their businesses in response. Steps would include changing the publisher economic model, rethinking the publishing landscape and redefining roles. Realistically, sales will continue to fall, publishers will capitalize on their core brands through their digital divisions, and the economic model of digital still needs to be defined.
So what can the distributor do to participate? Presstalis suggests using digital to boost print media sales on the newsstand and offering digital services to publishers. The company also works with publishers to design and distribute digital applications; it collects information on pricing and promotions and offers it to publishers; and it offers a digital-to-store application. The role of the distributor includes working with their suppliers to pool resources and means, and to provide a cross-media research unit for print, media campaigns and online buzz.
Presstalis' has introduced a popular app, Zeens, which customizes magazine offerings and provides push notifications based on the interests of the customers and available updates by magazine category. To date, 80,000 people have downloaded the app.
In this partnership model, the publishers' role is to make a digital offering a part of all their editorial content, by creating robust brands in print and digital, and by promoting across all networks. The distributor participates by managing across both print and digital platforms, expanding applications from mobile to store, and stimulating both physical and virtual networks.
From the perspective of this print distributor, digital is no longer a threat to the print publisher. It is a key to success.
There's no point in an endless recap of the details: we all know that publishers and their supply chain partners have had a long rough haul in 2014, and I think we are all hoping for a better 2015.
In the midst of all the wreckage there have also been heroes, and now seems a good moment to tip our hats to the good things that publishers and their industry partners have brought to the industry and to one another.
So hats off to Barnes and Noble for reaching out to publishers for special partnerships and working on a publisher-by-publisher basis to maximize sales and find creative solutions.
Hats off to Curtis Circulation for supporting their employees. In this day and age when so much is disposable, including people, there are still companies that respect their employees and the work they do, even as necessary changes are made and jobs come to an end. "I get that when a big wholesale agency goes under, some of the distribution people that worked in that agency have to go with it," said a former Curtis employee. "But Curtis treated us well, and I give them a lot of credit for it."
Hats off to Books a Million, for supporting independent publishers in creating special displays and distribution, even in cases where promotions dollars are limited.
Hats off to those publishers who, in the midst of the year we've had, managed to increase sales, efficiency, and cover price all at once. The Old Farmer's Almanac, at 223 years old North America's oldest continuously-published periodical, is one publication that managed to do just that in 2014; and with their "refriger-nation" predictive meme going viral, 2015 promises to be even better.
Hats off to Exceptional Women in Publishing (EWIP) for their recently-launched initiative to partner with publishers to recognize their exceptional women; and hats off to the Folio, for honoring the women who are movers and shakers in the magazine business; and to all the women to whom they will present awards on October 2nd.
Established print media brands are facing unprecedented pressures to innovate and reinvent themselves; failure to do so may mean these institutions will become future HBS case studies (and not the good kind).
In real dollars terms, Newspapers are generating the same amount of advertising dollars as they did in 1950 (having lost more than $45B in print advertising). That's not to say they aren't innovating, in fact, they've created $5B in new revenue through digital advertising. But the need to innovate faster is a real necessity.
The challenge is how to innovate at the speed of the digital economy when our systems, employees and processes are all set-up for a print production cycle (think days, weeks or months). In my experience it begins with adopting a simple operating philosophy centered around one word -"iterate."
Whatever you do, don't try to come up with THE solution, but rather set up an iterative innovation around the notion of advancing the cause, rather than solving the big problem. Too often, I walk into a room where the team is discussing all the reasons why they shouldn't do something, rather than focusing on just doing it, breaking it down and managing through the next steps. My experience has shown me that if you want to move more quickly, the way to do so is through lots of smaller steps rather than trying something monumental.
Often, in product development, this begins by building a simple prototype of the idea. Nothing sophisticated or grandiose, just something visual that everyone can understand and latch on to and build upon.
AP Mobile started with this prototype approach. It began in a room of technology and business naysayers ("we tried mobile before and it failed"), and disbelievers ("the industry will never work together"). We "ignored" them and pressed on building a simple prototype of the product in a few weeks. We then flew out to Apple and demonstrated this prototype and left with developer keys in hand and a few months later the team was standing on stage with Steve Jobs introducing the first iPhone app for the news industry. A company that had never had a B2C presence, today, has tens of millions of subscribers getting breaking news directly through the AP Mobile app.
Innovation in publishing is hard to do and a constant uphill battle. But if your battle charge is "Iterate or Die", you'll find yourself winning battle after battle and eventually the tides of the war will change for the better.
One of the most exciting series of magazine covers at the moment has come courtesy of Time Out New York. TONY has always had energetic covers, but its latest batch, created by new-ish art director Chris Deacon, are exceptional and rank among my favorite of 2014.
Deacon, who did excellent work in the UK at ShortList, NME, and Metropolitan, took over the art director role at TONY in June. The past few years the magazine's covers tended to be cluttered, noisy, and clichĂ©d, although they certainly had some graphic impact. But the new look directed by Deacon has been bold and fresh, with simple, bright, poster-like visuals. The covers are a constant treat to look at, surprising, vibrant and very modernÂŹ-a perfect reflection of New York City.
Case in point: the latest September 13, 2014 cover, which features a giant melting blue popsicle, with the words "SUMMER'S LAST HURRAH" printed on the stick like the little messages you see when you finish off your melting icy sweet in the park. It's a brilliant visual, and the photography by Stephen Meierding captures the moment perfectly. It jumps off the newsstand (they got my $4.99), and it stands in sharp contrast to just about everything around it. Whether TONY is showing film director John Waters on a hot pink background, or a #SAVENYC hashtag over stark white, these covers are powerful and imaginative. TONY is obviously working with a limited budget, but it doesn't show. Everything is smartly conceived and crisply executed.
The magazine's secondary coverlines have been greatly diminished compared with previous issues. A lot of people buy it because they're visiting the city and want to find out what's going on. For the rest, I imagine that the main image and headline are the selling points. It seems like the present team is doubling down on that idea, which has freed up more space for Deacon's bold graphic concepts. Part of the power of this current cover is that there's white space around the image, and the tagline to the main headline, "61 things to do before the season melts away" is nicely tucked into the corner with a subtle size that doesn't conflict with the image and cover concept.
One of the great mysteries to me is the TONY logo, which has remained untouched since the magazine launched in the early 1990s. The logo is drawn from TONY's London parent magazine, where the words Time Out originally spread full width across the top of the cover. At some point in the unfortunate magazine design world of the 1980s, the logo was condensed to half its width. The bad typographic results have lived on into the 21st Century. I quite like the black, white, and red color scheme and the way the logo reads out of any kind of visual background. And while my colleague says that the crude logo has "endearing charm," I think it's begging for an update, or at least a redrawing. Â
When it comes down to it, I'm very fannish about both the current Time Out New York cover and previous covers by Deacon. In a way, it reminds me of the work that Richard Turley did at Bloomberg Businessweek over the past few years. Not so much in style, although there is a similar brashness and immediacy to the work, but more so that these covers reflect a true love and passion for graphic design and magazine making. Deacon and his editors are engaging in a very rare (these days) and exciting visual conversation with their readers that is smart and highly contemporary. It's very inspiring to see this kind of energy, and they deserve a lot of support and congratulations for their effort!
David Plotz, EIC of Slate until earlier this summer, has a few suggestions in case you think you've hit the wall with monetization.
Not all of them are for everyoneâa bunch require scale ("Ad network ads") and/or serious investments ("Conferences"); a few depend on the content you produce ("Higher end specialized product"); and some are just weird ("Cruises for readers")âbut it's a good starting point for anyone looking around for ideas.
Plotz on revenue
Digital advertising spend will hit nearly $140 billion this year. And as is typically the case with any industry growing rapidly, new innovations drive growth. In digital advertising, the rise of programmatic, in particular, has become a key innovation that continues to shape today's digital advertising-scape.
According to a recent study conducted by my company, Purch, where we surveyed high-level U.S. marketer and agency advertising decision makers spending $1 million or more on digital advertising, 78 percent confirmed their use of programmatic across campaigns. Yet, while programmatic has been widely embraced, views on its uses and benefits displayed by agencies, advertisers, and publishers are not necessarily at a consensus. Programmatic Measurement
The importance of good metrics cannot be underscored enough when it comes understanding the effectiveness of a strategy and which of its underlying components do and do not work. But to what end do advertisers employ programmatic campaigns and how is their success measured?
According to our study, a vast majority of respondents (75 percent) say they measure their programmatic campaigns based on sales/conversion rates. This is sensible given the constant push for ROI. However, programmatic advertisers also included brand lift (51 percent) and reach (23 percent) among their top evaluation metrics, as well. Meaning that programmatic is being used and can be deployed to fulfill various advertising needs effectively.
Choosing the Right Partner
When it comes to choosing a programmatic provider, advertisers are also split. While a majority of those surveyed have used agency trading desks (65 percent) and demand side platforms (61 percent) to purchase programmatic, the preferred programmatic providers are publishers (36 percent). They're followed by trading desks (23 percent), and DSPs (21 percent). This is obviously beneficial as advertisers can deal directly with suppliers, cutting out both the middle man as well as the uncertainty that comes with not knowing exactly where the ads you have purchased will actually be displayed.
The important criteria for choosing a premium programmatic (preferred or private auction deals negotiated with a publisher) partner is also viewed quite differently, with respondents citing audience insight and data (91 percent), ease of use (90 percent), credible metrics (87 percent), and transparency (87 percent) as some of the most important factors.
Agencies and Marketers Weigh-in on Premium Programmatic
Our research also revealed that while agencies and marketers are both engaging more and more in premium programmatic sector, they are doing so for different reasons and benefits. For example, while agencies are more drawn to premium programmatic by the increased efficiencies involved with purchasing premium inventory (46 percent) and the removal of the "middle man" from the process (34 percent), marketers, on the other hand, cited less audience targeting waste (45 percent), and the reduction of advertising costs (38 percent) as the most attractive benefits of premium programmatic. However, although agencies and marketers did offer contrasting views on the most attractive outcomes of premium programmatic, a similar percentage of agency members and marketers surveyed cited more accurate audience targeting (28 percent versus 26 percent) as one of the most attractive premium programmatic benefits for them.
Premium Programmatic's Biggest Obstacles
While growth has been astronomical, and the promise of premium programmatic is quite high, advertisers, agencies, and marketers alike are also cognizant of several challenges that still exist within the space. A lack of premium inventory (54 percent) and inadequate targeting to preferred editorial brands and audiences (37 percent) are among the biggest bumps in the road for premium programmatic. Our research also showed that a at least a quarter of advertisers are mindful and weary of a lack of human interaction (30 percent) and transparency (25 percent) that exists, meaning there is certainly room for growth (advertising fraud has become a huge buzz phrase, lately, exacerbating the transparency and lack of human interaction issues).
In the end, programmatic is exploding in adoption and spend. However, we have yet to reach maturity or complete consensus on optimal use cases and benefits. That will come with time, as the market continues to sign on. In the meantime, though, we have a good sense of the possible direction and can execute accordingly.
Trying to get orders around the holidays is nothing new and if you have not already planned and designed your holiday insert cards, itâs not too late, but you need to act fast. I know, we're only at the tail end of summer and insert cards are âold hat,â but they reach your audience in every issue and thatâs half the battle. Here are some things to consider, and a few to avoid:1. Use four colors. Itâs the holidays, donât turn yourself into the insert card scrooge! Consider using an oversize, postage-paid reply card to get even more orders from one donor. Yes it will cost more in postage, but itâs the holidays. In a 5.5â x 7.5â reply card you could get three new subsâand possibly a renewal if you feel really creative. Also, you will need to use different stock from the usual 4.25â x by 6â cardâthe USPS insists!2. Keep the âholidayâ copy generic. Mentioning an actual holiday could cause a problem, unless you are in a market where a specific holiday is pertinent. 3. Your copy needs to concentrate on giving a gift rather than selling the publication. These insert cards are aimed at existing readers, although pointing out the fine points of your publication is not a bad idea.4. Donât go âfancy fontâ crazy. You are selling a product, not inviting people to a party. But a little whimsy can be employed if you think your market is whimsicalâmost publications have a little whimsy, but many donât know it.5. The holidays fall at the end of the year, tell people you will send a gift card in December and start the subscription with the January issue if you can. This means you can run your card in your October and November issues, and possibly December as well. Just make sure the gift card arrives before the first issue, otherwise confusion will reign, customer service calls will increase and you run the risk of upsetting the gift giver because the gift recipient has been inconvenienced.6. Allow people to order online. You can make them pay upfront, otherwise offer to bill the donor as this will help increase response. Some advise not to send the gift announcements and first issue until the subscriptions have been paid. I would say send the announcements and the issues as detailed above. I doubt there would be many people who would not pay their invoice knowing their kindness has already been announced.
I love the current trend towards independently published magazines. There's a great energy and passion in the movement, whether the publications cover food, fashion, music or art. Not so with their cover design though. To my eye, several trendy mags tend to be archly cool and distant, lacking the eye-popping quality that great covers embody. So many indie magazine covers look sleepy and dull, like the tabletop art books they emulate. Fortunately, there's Wax Poetics, whose covers are brilliant splashes of imagery, that resemble old-fashioned LPs filled with engaging brightness and poster-like impact.
Case in point: the latest cover, issue #59. It features a photo by Jonathan Mannion of Aaliyah, the young R&B singer and actress who tragically died in a plane crash in 2001 at the age of 22. Creative director Freddy Anzures treats each cover as a graphic work of art, with minimal cover lines (in this case just Aaliyah's name) and simple typography. As with all Wax Poetics issues, there's so much goodness that they need two covers. Like a classic LP, you can flip the A-side over and there's a second cover on the back, this one featuring contemporary R&B singer Kelela (photographed by Yev Kazannik). That's a standard Wax Poetics format, and it's so effective that sometimes the back cover is better than the front. In this case they even put the issue's coverlines on the back instead of the front!
I'm a little biased when it comes to Wax Poetics, because it's one of my favorite magazines. The content mix of old school funk and R&B, jazz, Latin, blue-eyed soul and contemporary hip hop is right in my cultural sweet spot, and it doesn't hurt that the magazine is filled with vintage LP covers and labels and lots of back-in-the-day photographs. The covers work as brilliant graphic statements, and they blow up on social media. Awhile back I posted a cover featuring RZA of the Wu-Tang Clan on my Tumblr page, and it quickly became the most "liked" and reposted item I've ever featured.
What I really like about this Aaliyah cover so much is that it's simple, graphic, and iconic. It's also designed to engage its audience on every possible platform. This is a classic case of a magazine developing a cover format that not only works on an issue-to-issue basis, but also fits into a visual branding that defines the publication's identity. It's also a great example of how a low-budget magazine can use vintage stock photography to create a contemporary and modern-looking cover format.
There's a complete collection of every Wax Poetics cover stretching back to #1 on their website here.
No discussion of a Wax Poetics cover is complete without talking about its very distinctive and unusual logo. I'll admit that my old-school sensibilities were unsettled when the magazine ditched its old, all lowercase sans serif vintage jazz LP-style logo several years ago for an illustrative and more stylized approach. It's taken me a couple years to come around to appreciating the uniqueness of the new logo, with its resonance of LPs and recording tape. Apparently the editors and creative director are so sure of their branding and audience loyalty that they're comfortable not having the actual title of the magazine in the logo. I don't know anyone who refers to Wax Poetics as WP, but the logo is smart and stylish, reflecting the mix of old school and contemporary cutting edge that defines its editorial voice.
And it's that classic and modern mix that really makes this Wax Poetics cover so wonderful. It is vibrant, iconic, bold and simple, which makes it one of the brand's most memorable covers of the year.
Experts on the issue of Internet privacy seem to agree on one point: It doesnât exist. We are told that there is virtually nothing about any of us that cannot be learned with a click of a mouse. I recently got an email alert from a data security company warning me to improve my levels of security by enabling two-factor password reset, and by supporting self service password reset for my audience members. The reason for this was, of course, a security breach. A Russian hacker group has amassed over 4.5 billion stolen personal records, according to the alert.Â Knowing just how much of our information a Russian teenage boy can get access to makes the recent Landsâ End/GQ contretemps all the more puzzling.Landsâ End, according to a New York Times report, set up a partnership with CondĂ© Nast, to provide free magazines to its best customers. On the face of it, itâs a great idea. The customer gets a gift from the catalog merchant, the merchant gets credit for appreciating its customers, and CondĂ© Nast gets its magazines out in front of a new potential buyer. Win/win/win.Somewhere along the line, something went wrong. Conservative religious families, who had bought uniforms for their children to wear to a Christian private school, were in an uproar when the aptly (if coincidentally) named âPlay with Fireâ issue arrived in their mailboxes. It featured a topless woman as the cover model.A few of my publisher friends called to pass this bit on to me. They all thought it knee-slappingly funny. So, in fact, do I. However, as one commented, âIn the age of big data, we should be able to do better than that. It shouldnât take much to figure out that a conservative clothing retailer and a racy cover image donât mix.â
You might have noticed that high priced "book-a-zine" products, carrying the brand name of well-recognized publications, are appearing more frequently on the newsstand. Their sales increases have been heralded as a bright spot on the otherwise dour newsstand scene.
I hate to throw cold water on this party, but they could actually be having a negative effect on overall newsstand performance. Perhaps, even more importantly, it now appears that the book-a-zine cover pricing experience may have translated into an over exuberance for increasing the cover price of regular frequency publications.
Seven Underlying Newsstand Market "Truths"
As background for this discussion, I've listed a set of what I'll call "newsstand market truths." These are not carved in stone, but they're a set of benchmarks to help guide publishers and circulators when making cover pricing and newsstand-only product (book-a-zine) decisions.
They're not meant to restrict innovation, but they can help publishers set efficient newsstand strategies and guard against over optimistic cover price assumptions and flawed newsstand-only product decisions. At their own peril, publishers have historically ignored these "truths."
Book-a-Zines May Be Biting the Hand that Feeds Them
Most of the best selling book-a-zines carry the brand of regular frequency publications. In fact a great majority of them are published by the seven leading newsstand publishing companies: Time. Inc, American Media, Wenner, Meredith, Bauer, Hearst and CondĂ© Nast.
Book-a-zine sales performance, because of their symbiotic relationship with the parent publication, often has an inverse affect on their regular frequency parent. The zero-sum nature of the market and the prospect for cannibalization are continuously in play. The effect can potentially be more severe if the book-a-zine is carrying the brand of one of the top 20 newsstand publications (which many do). Then, its effect may extend beyond the parent publication to include the category and even the market as a whole.
Proliferating and Disruptive - It's increasingly evident that book-a-zines are subsuming prime locations on checkout racks, replacing regular frequency publications.
Recently, I visited my local supermarket (16 checkout lanes). On the checkout rack, I found 41 different book-a-zines on display with cover prices ranging from $9.99 to 14.99: Time (10), Life (9), BH&G (5), People (4), US Weekly (4) and one each for National Geographic, Rolling Stone, Sports Illustrated,Â TV Guide, Cooking Light, Southern Living, Vogue and Vanity Fair.
Time. Inc is, by far, the major player in the book-a-zine arena. In my small survey, they published 27 of the 41 titles, while Meredith and Wenner (five each), CondĂ© Nast, National Geographic and TV Guide (one or two each) combined to publish the balance.
These results are confirmed by Magnet and AAM data. In the first half of 2013, Time. Inc sales of non-audited publications exceeded the entire combined non-audited publication sales of the other Big 7 publishers. Plus, they were the only publisher whose sales of non-audited publications rose during this period.
I probably shouldn't have been, but I was amazed at the extent to which book-a-zines have infiltrated the checkout lanes and how they disrupt display. Their sheer numbers and seemingly endless on-sale periods make it very difficult to properly dress the racks. The result, at least in the store I visited, was a messy disorganized display, which made it hard to identify regular frequency publications.
Cannibalizing Sales of Weekly Celebrity Publications
The limited sales data that is available supports the cannibalization effect of book-a-zines. Its effect is likely to be most severe among the six audited weekly celebrity titles because many of them are book-a-zine "parents." Their sales (shown below in â000's), over the last two years, are compared to the newsstand sales of all audited publications, less the six celebrity titles.
Unit sales of these six weekly celebrity titles declined 24.8 percent over the last two years. This compares to the unit sales of all other audited titles (less celebrity title sales), which declined 19.8 percent over the same period. This significant differential (5 percentage points) can, at least partially, be attributed to the cannibalizing effect of book-a-zines.
In the zero-sum newsstand market there is seldom a free lunch. This is true for book-a-zines. Their increased sales have not come without disrupting the sales of a host of other publications.
Cover Price Sensitivity Divide: Book-a-Zines and Regular Frequency Publications
The newsstand market for regular frequency publications has always been acutely price sensitive. That sensitivity has grown in recent years as publishers have chosen to maintain paid circ levels in the face of rapidly declining single copy circ. They have replaced the "lost" single copy circ with low priced subscriptions (i.e. partnership, verified, sponsored, combination, award sources) and replica circ, which now offers a legitimate single copy alternative. The expanded use of "alternative" subscription circ sources and replica circ have conspired to reduce newsstand demand, and in the process exacerbated newsstand cover price sensitivity.
This experience contrasts with book-a-zines. They are newsstand-only products, which are not encumbered by large subscription bases, circ level considerations or myriad low priced subscription promotions, like their regular frequency parents. Their cover pricing elasticity, therefore, is much greater. This is confirmed by rising book-a-zine sales, in a depressed market, even though they're being sold at prices three times higher than regular frequency publications.
Newsstand Market "Truth" #7 (continued) - Cover pricing elasticity between regular frequency publications and book-a-zines should never be confused. One is rather elastic the other remains extraordinarily inelastic.
Recklessly Testing the Bounds of Market Cover Price Sensitivity
The industry's cover pricing over-exuberance, which seems to be fueled by the apparent success of book-a-zines, reached a new peak several months ago when six of the industry's eleven best selling titlesâPeople (#1), US (#2), National Enquirer (#4), Star (#6), Globe (#7) and OK! (#11)âincreased their cover prices $1 (25 percent) to $4.99
This occurred with very little fanfare, but its implications are stunning. These six publications, from three publishers (Time. Inc, American Media and Wenner), represented more than a quarter (28.9 percent) of the unit sales for all audited publications in 2H 2013.
Look at it this way: a 25 percent cover price increase for these six publications is the equivalent of raising the cover price of all audited publications by 7.3 percent.
If there is a significant sales falloff, and there nearly always is when major publications with declining sales substantially raise cover price ("Truth #5), its effect will reverberate across the entire market.
If, for example, the combined unit sales declines for these six publications were relatively small, say 10 percent (over and above anticipated industry sales attrition, which has averaged 10% the last several years), this would result in a 3.0 percent incremental decline in total sales of audited publications. If the falloff were unitary (equal to the 25 percent price increase), which is certainly not beyond the realm of imagination, the incremental unit sales decline of all audited titles would be 7.5 percent. This means, as a result of raising cover prices on these six titles, that the annual sales slide of all audited publications could accelerate to 13, 14 or even as high as 18 percent.
Raising cover price prices on a quorum of major publications has placed the industry in uncharted territory. The invitable sales declines could have broad and unintended channel consequences.
Declining Sales of Major Weekly Titles: Broader Market Implications
Publishers and wholesalers should never lose sight of the fact that the newsstand is a "best seller" driven market, led by its nine major weekly frequency publications: People, US, Woman's World, In Touch, National Enquirer, Star, Life & Style, Globe, and OK!. It's their broad appeal and weekly frequency that attract the impulse-driven newsstand buyer. These nine titles give the newsstand its cache and freshness. They carry the newsstand load, accounting for nearly half of all unit sales of audited publications in the second half of 2013.
The problem the last several years, is the sales of major weekly publications are declining at a faster rate than other audited publications. As we've shown, the proliferation of book-a-zines may have contributed to this sales decline. Now, there's the very real prospect of further sales erosion due to the aggressive cover pricing of six major weekly publications.
Book-a-zines hogging checkout lanes and high priced major weekly publications present a concern for publishers because nothing (certainly not book-a-zines) can adequately replace the sales loss of the industry's bedrock regular frequency best-sellers.
It's Hard to Buck the "Truths"
The newsstand market has been roiled by thunderous changes that have precipitated sales declines averaging above 10 percent annually for five years. Adding to the channel misery is the implosion of one the industry's major wholesalers, Source Interlink Distribution. This has placed unexpected economic hardships on all the channel participants and has certainly lessened confidence in the prospect for correcting the channel difficulties.
But through it all, the newsstand "truths" tend to prevail. We're witnessing the zero-sum and cannibalization effects of book-a-zine expansion. Now, we're in the midst of a cover price increase experiment that's testing the bounds of normal cover price elasticity. There's a place for book-a-zines on the newsstand and opportunities for strategically raising cover prices. However, in these instances, witness the scale of these changes, publishers have apparently disregarded the "truths".
The result: the best-seller foundation of the newsstand is being endangered.
How Did This Happen?
The "blame" for book-a-zine proliferation lies primarily with Time Inc. As indicated previously, they're the undisputed kings of book-a-zines. They were able to achieve this lofty perch because only they, among the top newsstand publishers, have sufficient clout to influence display placement and the brand recognition necessary to give these products newsstand appeal. But in so doing they may have soured the checkout environment for regular frequency publicationsâtheir own, as well as others.
The exuberant cover pricing situation also finds Time Inc. at the forefront. By increasing the cover price of market leader,Â People, they may have inadvertently encouraged Wenner (US) and American Media (National Enquirer, Star, Globe, OK!) to follow suit. Bauer, the only other publisher with major newsstand weekly titles (Woman's World, In Touch, Life & Style), has held the line on cover pricing, as have Meredith, Hearst, CondĂ© Nast, the other publishers of Top 20 newsstand publications.
Time Inc. Must Lead in Initiating Channel Reform
Book-a-zine proliferation and over exuberant cover pricing could cynically be viewed as quick revenue fix opportunities for the cash strapped publishers involved. But, of course, these things are only a part of the larger problems plaguing the newsstand channel. However, in a real sense, they are representative of publisher's "go-it-alone" newsstand strategies that have historically hindered newsstand channel reform.
Realistically, it's only the major publishers, acting cooperatively, that have the power to initiate the reform necessary to save the newsstand channel. After all, it's not the medium- and small-sized publishers that produce book-a-zines, that are displayed at checkout or whose cover price increases can sway the entire market. Saving the market rests squarely on the shoulders of the industry's seven major publishers.
But, as the industry has painfully discovered, it's been extremely difficult for this group to work cooperatively for the good of the channel. I now believe that Time Inc. (and only Time Inc.), among its publishing peers, has the power, influence and incentive to form and lead a cooperative publisher newsstand reform effort.
If these seven publishers can't get together to initiate meaningful channel reform, I'm afraid the broad-based newsstand market that publishers enjoy today may be lost forever.