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Patrick Hainault

Keep an Eye on What You’re Marketing, Not What You’re Becoming

Patrick Hainault Audience Development - 11/02/2010-09:40 AM

This fall, the MPA, the trade organization that once was the Magazine Publishers of America, took an early jumpstart on the surefire newsstand trope by changing its focus and logo, dropping “magazine” from its name, pushing it to its tagline, and essentially stating that the M, the P and the A no longer mean anything.

Short of using a symbol akin to that of The Artist Formerly Known as Prince, I don’t think the MPA could have devised a better update. The insiders-only acronym, followed by the vaguely inclusive tagline, perfectly reflects the state of the industry the association represents.

Yes, it has gotten that head-spinning out there. While most magazine marketers are (hopefully) clear on what they are trying to do, an industry observer would have a tough time finding a common theme.

After a couple of lean years, business model variations are exploding.

Some are aggregating well-targeted audiences for advertisers to reach, while others are chasing the highest possible volume of eyeballs. Some are focused on selling content, while others devise advertising “solutions.” Some use their publications as lead generation for a pyramid of goods and services, while others create communities.  And some still simply sell magazines.

Without joining the tortured—and mostly pointless—musings of what a magazine is and is not, audience developers and consumer marketers really ought to stop and take stock of what it is that they are selling—and against what competition.

To be sure, we’ve always known that we’re competing against television, newspapers, Web sites and other mainstream content providers. But when the offerings and platforms start to multiply, the competitive set expands too.

Increasingly, our newsstand copies find themselves competing with gum packs and water bottles—for share of wallet and share of retail space. And the oft-reviled verified copies no longer only compete with each other; they are getting crushed by smart phones and text messaging.

Peter Drucker, the father of modern management, famously wrote: “Because the purpose of any business is to create a customer, the business has two—and only two—basic functions: innovation and marketing. Marketing and Innovation produce results, all the rest are costs.”

This provocative viewpoint ought to make marketers feel good about themselves, especially as direct-to-consumer marketing slowly continues to acquire luster. But it’s not the entire story. As the industry continues to fragment through various reinvention attempts, there’s a risk that customers too will be a touch disoriented about what to expect from magazine media.

Until recently, the transactions, and resulting relationships, were as clear as those of ordering a Happy Meal. A customer places an order, receives a magazine within a few weeks, and then decides about renewal a year later.

That straightforward relationship is no longer a given and customers can’t be quite sure of what it is that’s being offered to them. X issues of a pub? The joining of a community? Cash for convenience on something I could get for free?

Absent a uniform, predictable relationship, deciding to enter a “commercial relationship” with media providers takes a little more deliberation—and that definitely hurts demand.

Patrick Hainault

What Outsourcing Circulation Really Means

Patrick Hainault Audience Development - 09/14/2009-09:55 AM

News that management consultants were descending upon Condé Nast’s offices kicked up an entertaining mix of blog and comment paranoia and schadenfreude, mostly having to do with perks—perceived or actual—and with headcounts.

Of course, circulators jumped on the opportunity to rekindle with one of their favorite bogeymen: The specter of outsourcing.

Between audience development colleagues, debates on the topic typically revolve around whether it is wise for a publishing company to pursue that route. I don’t have a particularly strong opinion on the question—mostly because I think the best answer is a great cop-out: It depends.

What ought to be of greater interest, however, is getting ahead of how things might evolve if audience development departments were to follow the same path as those of functions that were once integral parts of publishing outfits, such as actual printing, fulfillment, customer service and, increasingly, marketing copywriting and design.

The first few, because of their reliance on expensive and ever-evolving equipment, have come to be dominated by a handful of large, ultra-competitive, and seemingly low-margin providers. Copywriters and designers, on the other hand, fall squarely in the realm of knowledge workers, the creative class. They are mostly made up of small, highly-specialized firms with business models focused on task-specific engagements.

These types of workers are exactly what Fast Company famously heralded in the late nineties: Citizens of Free Agent Nation. They are creative or knowledge workers who often operate from home, always leverage communication technology, spread risk by taking on various clients, accept full responsibility for their output and livelihood and, at least for the successful ones, wouldn’t change their situation for any (fast-disappearing) matching 401K in the world—though one imagines health-insurance envy sometimes kicks in.

Outsourcing Doesn't End There

For audience development professionals, this type of arrangement is easy to envision, particularly if we consider how technology and training have changed in the past few years. Setting training aside for now, let us consider technology. It is now child’s play to set up powerful, secure and affordable connections that enable one to be in touch with both critical data and key stakeholders. And people are getting increasingly adept at working with remote, temporary teams.

At Mansueto Ventures, for instance, we have a key marketing manager operating from Madrid, a team of consultants helping with newsstand out of New Jersey, and an on-call online project manager with whom I speak several times a week, but have only met two or three times in person.

And the “outsourcing” doesn’t end there. We must also add the team handling increasingly involved fulfillment and operations projects out of Iowa (led by someone based out of North Carolina); the production consultants who bid out and see through our printed marketing materials; the other North Carolina woman whom I have never met, and who looks after the finer points of our subscription model; the myriad agents who would like nothing more than to be partners rather than vendors; and the bullpen of designers and copywriters on whom we count to keep breathing new energy into our marketing efforts.

What Does Outsourcing Circ Mean?

From this standpoint, what does the concept of “outsourcing circulation” actually mean? Most tasks have already been entrusted into the hands of folks who are probably better at them than we can ever dream to be. What’s left is a mixture of high-level strategy and mundane but essential coordination tasks, with the latter, again, increasingly facilitated by communication technologies.

So while, in any industry, technology creates a fertile environment for outsourcing discrete tasks, magazine publishers’ shrinking ability to hire and train new talent creates a different dynamic. To be sure, in the past several years, more consumer marketing jobs have been shed than created. On top of that, there are fewer and fewer companies willing to spring for interns or to create structures that count on bringing in untrained talent and slowly, methodically foster their development—and contribution.

This means that, over time, there will be fewer and fewer multi-taskers able to speak fulfillment, navigate ABC arcana, understand what makes publishers happy, grasp the implications of lifetime value and live by the mantra of “test, test, test.”

In fact, there will likely be far fewer such specimen available for hire than there will be management consultants. Not to get too ahead of ourselves but, right now, I’m sure there’s a few far-sighted go-getters who are very interested in learning how McKinsey goes about setting its rates.

Patrick Hainault

A Mexican Standoff at the Newsstand

Patrick Hainault Audience Development - 04/13/2009-09:07 AM

The moment I heard of the flare-up between newsstand distributors, wholesalers and publishers, whereby one party demanded higher fees or else, another stumped for status quo or else, and the other just made a lot of noise, I was reminded of Reservoir Dogs, the gory Tarantino crime caper famous for, among other scenes, its “Mexican standoff” ending.

That’s the classic spaghetti western situation in which each character has a gun pointed at another character’s head, forming a literal deadlock and ensuring that, should anyone pull the trigger, all die.

One characteristic of a Mexican standoff is that it can only emerge if all players are focused exclusively on each other with no thought spared for exogenous items such as law enforcement, the clock, passer-bys or, in the case of magazine sellers, customers.

To those in the standoff, such concerns are potentially lethal distractions.
And that’s why the Mexican standoff is such a potent allegory for self-centered oblivion, especially if you take into account that a major precondition to such a standoff is the participants’ inclination to ignore all but their own gun’s aim.

Washing Hands

Which leads me to wonder: How many industries have such a hold on their customers that they can ignore them and continue to thrive? We know how that went for the music industry, stand aghast at how it’s turning out for American banks and car makers, and have an inkling of how it might end for cable.

So with everyone in the single-copy supply chain focused on his or her own immediate interests, all are willing to gamble with the customers’ happiness, washing their hands of their role in the ultimate outcome. “Not my fault if people can’t get their hands on their favorite magazine. The other guy is showing tremendous bad faith.” This will be cold comfort should retailers choose to replace magazines with frozen yogurt or, worse yet, if readers begin to feel they can live with the alternatives to what they would have liked to purchase, but couldn’t find on the shelves.

The industry that can’t find a way to start serving new customers before “four to eight weeks” has thus outdone itself: Whether you’ll be served has devolved to “maybe, maybe not.”

Now that the conflagration is smoldering out, having claimed a major wholesaler in the process, it may be tempting to take a deep breath and pronounce the damage minimal, the whole episode an anomaly. Thanks to heroic efforts by some people in the field, a degree of normalcy was restored relatively quickly, and only a small fraction of customers were frustrated for only a short time.

But this won’t wash away the fact that key industry players were willing to take bets that impacted customers. Although minimum long-term damage may have been done this time (unless of course you are one of the 2,500 laid off Anderson News employees), the parties’ willingness to even take this kind of bet is distressing. If you know what’s good for you, you never bet on your lifeblood.

Admittedly, from the perspective of a publishing company with subscription-heavy titles, it’s easy to claim the high moral ground and advocate that customers must always come first. However, it’s also clear to me that it takes neither courage, nor creativity to reach for one’s gun whenever conflict arises.

With all that’s threatening the magazine publishing industry, couldn’t the players who hold the most influence show that they deserve it and display stewardship as opposed to machismo? Serious negotiating is never easy, but it can’t be done productively if the parties are only concerned with preserving their own piece of the pie and give no consideration to tactics that make everyone a winner—or at least prevent system-wide losses.

Now is Our Chance

In the past few years, several level-headed solutions have been proposed, including reevaluating how many titles should be offered at newsstands, rethinking how payment flows ought to be structured and investing in 21st century information technology. With the latest conflict having resolved nothing, wouldn’t now be the time to launch a pilot program or two?

Everybody knows that the channel’s current equilibrium is unsustainable and that reverting to status quo can only lead to a recurrence of flare-ups like the one we just experienced; this is tantamount to saying we are comfortable continuing on a course that’s detrimental to our customers.

In most movies, likely out of distaste for unhappy endings, directors typically find creative ways to resolve Mexican standoffs. In Reservoir Dogs, Tarantino chose to let events run their course. Let’s just say that there will never be a “Reservoir Dogs II”—at least not with the same cast.