Is Outsourcing Circ the Future for Publishers?
IDG and Ziff Davis Media have outsourced their circulation—will others follow?
Last week, Ziff Davis Media said it will outsource circulation for its two print titles, PC Magazine and Electronic Gaming Monthly, to consultant Charles Mast effective immediately.
The news came just a few days after IDG announced that it would outsource circulation for PC World, Macworld and GamePro to Miami and New York-based circ services firm ProCirc, which raises the question: will more publishers—large and small—follow suit, and if so, what factors are pushing the trend?
“The economics of the today’s environment have caused publishers to look at alternatives in order to be more cost effective,” says Baird Davis, senior consultant, Circulation Specialists [Note: Davis is also a regular contributor to CM and The Circulator].
"Newsstand sales are off, readership is down, and so is advertising. All of these factors combined make for a much tougher economic situation. I think circulation is kind of a natural area in which some publishers feel they can outsource because they don’t view it as mission-critical. To them, it’s a means of getting people off the payroll."
Neal Vitale, CEO, 1105 Media had a similar view when he spoke with CM for its June 2008 issue. “I think that as there’s more pressure on print and as we think of where there are knobs to turn and levers to pull to change the cost structures, we’re going to have to review circulation and the investment in circulation,” he said. “I think it’s going to be difficult to sustain levels of promotion and historical circulation quality if print advertising starts to erode.”
The reduction in the usage of direct mail as a major tool for circulators may also be to blame. “A lot of publishers have gotten away from direct mail, and that is one of the most significant, labor intensive jobs in the circulation department,” Davis says. “So now that they’re reducing their dependence on direct mail—or not using it all—it makes it easier for them to not be in the circ business at all. It makes the whole process a lot easier.”
Both the economic state of the print industry and the reduction in the use of direct mail are due to the same factor: the Internet. “The Internet is easier because publishers have their Web sites with front-end systems that process customers’ orders and make everything look seamless,” Davis says. “It’s the combination of greater ease and economic necessity that is pushing this thing.”
Davis adds that the reason may even be as simple as the lack of people who actually want a career in circulation. “Publishers, especially smaller ones, are having difficulty recruiting good circulation people. People aren’t as easily attracted to it like they were 10 years ago. Those who would have been are being drawn to other areas.”
Whatever the reason may be, the future may find that publishers will increasingly outsource their circulation in the same way that they outsource fulfillment and printing.
“Fifty years ago many magazine publishers had fully integrated operations, including printing and subscription fulfillment,” Davis says. “Today, all major magazine publishers have outsourced their printing and nearly all are many years removed from providing their own fulfillment services. Publishers big and small are becoming more comfortable with a growing dependence on outside suppliers for select circulation services.”