Custom Shops Take On More Traditional Roles
Why some traditional print publishers are choosing to outsource to custom media
That some publishers would turn to a one-stop custom shop is no surprise, particularly if they lack resources and expertise in media. But now, associations, trades and brands that have for years produced in-house print products are turning to custom media companies. “Headcount is rolling,” says Joe Pulizzi, founder of custom publishing house Junta42, meaning that custom companies may be a boon for those looking to save on personnel but still need to get projects off the ground.
Custom media pricing can range from an eight-page newsletter at $30,000 and a 70-page print magazine with Web site at $1 million. “You can find dozens of shops that aren’t strategic but can do collateral in all channels. That gets you nothing and causes you to spend more money,” says Michael Perry, senior vice president of brand response for Story Worldwide. One-stop custom shops are “like dinner at a restaurant,” says Fred Petrovsky, president of custom publisher McMurry. “We do everything: shop, prepare, cook, and clean up—without the hassle.”
While business publisher Crain Communications has the expertise and capabilities to produce 30-plus titles, it opts for Wise Group to handle Crain Cleveland Business’ annual special sections and supplements, including editorial, sales and distribution for association partners like Association for Corporate Growth and National Association for Women Business Owners. A main impetus to outsource, says CCB’s advertising sales director Mike Malley, is that “doing it in-house isn’t a good way to utilize our sales or editorial staff, particularly for the sales team, who will end up chasing advertisers for one-time buy.”
Associations on Board
Recently, American Business Media (ABM) turned over its media sales and event marketing to The Pohly Company, says CEO and president Diana Pohly. “They had an in-house salesperson and she is moving to another related position.” Less than a year ago, the National Association of Convenience Stores also handed over its design to Pohly. “Not to have to manage and execute the design process is one less thing,” says Erin Pressley, editor-in-chief of NACS magazine. The six-year-old publication has a small staff handling editing and ad sales in-house. Annually, it costs “in the low six-figures” to outsource its design and production processes, says Pressley—a figure which she considers a break-even when compared to hiring a few more in-house staffers for the job. However, the “outside perspective” and a “limiting association mindset” of association publishing make outsourcing to a custom media company a positive.
Where NACS had virtually no response before, now readers comment on the visual. “Some of our advertisers, like Coca-Cola and Anheuser-Busch, are used to advertising in larger, for-profit publications—so we need to consider these as our competition,” she says. When NACS revamps its Web site, it will likely be done in-house.
For 20 years, the American Bus Association published Destinations internally. Within the last four years, it farmed out not only sales but editorial, including its magazine and directory, to The McNeill Group. “The sales commissions for an in-house staff versus outside sales reps were about the same,” says ABA president and chief executive officer Peter Pantuso. The publication went from a financial loser to see a “swing of about $300,000.”
The Economics of Custom
The trend has been in the works for the past few years, particularly in the association and b-to-b space. However, Pulizzi thinks this economy may be helping it gain traction. Consumer titles, like Meredith and Rodale, generally opt to start their own custom divisions instead of outsourcing. In 2006, the National Geographic Society teamed with the Magazine Group to form a custom project group, GeoGroup Media. A partnership between Readers Digest Association and McMurry in 2001, with plans to divide and conquer processes for Ritz-Carlton’s custom magazines, ultimately dissolved.
Previous to joining Story Worldwide, Perry was the decision-maker at Resorts Condominiums International. RCI, which produced Endless Vacation in-house for more than two decades, decided three years ago to outsource its editorial, sales and production to Story, keeping some Web and direct response in-house. Its first outsourced issue in February/March 2007 saw a complete redesign to “newstand-quality,” boosting ad revenues and reducing costs “to the tune of multiple-seven figures,” says Perry. Between added revenue, FTE reduction and paper and production, Perry estimates close to 30 percent—roughly $5 million—of total budget savings.
Now, RCI has outsourced all of its major titles to Story, including Ventures, as well as its annual directories, online and print direct mail, e-mail and other promotional materials.
In the span of just two years, CCB has gone from publishing five special sections to forecasting only two in 2009. Overall, Malley says that “the savings are tremendous. If they [Wise Group] bring in one supplement, great. Let’s say they were forecasting six pieces and only three get done; it’s no risk to us by not having to have a full staff here. But that’s not to say that someday we could reevaluate that model.”