Publishers Confront “Scarcity/Abundance” Conundrum

by Glenn Hansen
President and CEO, BPA Worldwide

Today, diversification—in terms of media channels, as well as content formats—is increasingly the name of the game for companies that are based in traditional consumer and B-to-B print publishing.

And the biggest factor affecting the ability to diversify and reach our desired audiences is a scenario that might be termed “the scarcity/abundance relationship.” Meaning, our customers’ scarcity of time, combined with a growing abundance of media options.

FACT:  Today, other magazines aren’t your most serious competitors. The real challenge is the battle for people’s time.

The media choices available to all of us now—print, electronic and beyond—seem to proliferate with each passing day. Mobile phones, PDA’s, DVD’s, Blackberries, TiVo, IPods, Google and its many search cohorts, Internet video with quality that is now hard to distinguish from TV, the ever-faster Net connections...and perhaps the most transfiguring invention of all, email.

This doesn’t come as startling news to any of you, I’m sure. We can all list a host of industry challenges, large and small—but when we really stop to think about the big picture, we realize that competition for our time and attention is the core reality driving most of the other dynamics.

In the consumer publishing arena, discretionary income for magazines and other optional expenditures is certainly an issue in many markets. The success of a growing number of launches of low-priced women’s checkout magazines certainly attests to this. But even those of you whose magazines serve very high-income audiences feel the effects of the time-crunch factor. Most of us steal precious moments in between work and family responsibilities to engage in the very pleasurable and worthwhile activity of reading our favorite magazines.

This is certainly of equal import to B-to-B publishers. How much time do we really have to digest even the “must-read” business publications that come across our desks each day? If I’m in any way typical, I would suggest that most of this reading is done in airports, on planes, and late at night, after the kids are in bed and the day’s emails have been dealt with (or at at the crack of dawn, before the next day’s emails and phone messages begin to pile up).

While the 21^st century content manager relishes the challenge of creating pay-for-services, or transactions for advertisers, the impacts of the time-crunch/media barrage factor on our core, print businesses cannot be over-estimated.

One of the more telling pieces of recent research is the latest Media Comparison Study. Roper has been conducting this survey annually for the Mediacenter for 35 years now. In this year’s survey, the Internet—which wasn’t even part of the study until the year 2000—moved ahead of magazines in terms of reach. On a daily basis, the Internet now reaches 51 percent of adults, while magazines reach 42 percent. Not surprisingly, TV came out on top—reaching a full 94 percent of adults—followed by radio, with 73 percent, and newspapers, with 59 percent. More important, however, the study also found that, on a daily basis, adults, on average, spend 272 minutes with TV,  122 minutes with radio, 73 minutes with the Internet, 29 minutes with newspapers—and just 19 minutes with magazines.

Obviously, we are now competing for every second of time that we can wrest away from our consumer and business prospects, readers and customers—even the ones we once thought were “in the bag,” because they are so attached to or dependent on our excellent print products. 

FACT: Excellent, relevant content is still our first and best line of defense.

Editors and graphic arts professionals work extremely hard to ensure that our content platforms indeed offer highly relevant and compelling editorial and design. And editorial excellence will remain the cornerstone of our success for as long as any of us are in business.

Both consumer and business publications have done an outstanding job of keeping up with—even staying ahead of—readers’ changing needs and expectations. Smart publishing managements of course know that the game is over if they lose sight of this core mission. But we also know that all top executives are under greater pressure than ever to deliver quarterly numbers, or focus on shorter-term profitability.

Those of you who make the ultimate decisions about how budgets are parceled out—and what priorities your corporate cultures are truly supporting—will obviously shape your companies’ destinies. As an individual who continues to benefit both professionally and personally from your magazines, I would urge you to continue to refuse to compromise. Please keep investing in delivering the best 19 minutes possible.

FACT: We can’t beat new media, so we better join ‘em.

Leveraging new technologies without jeopardizing our editorial missions, or cannibalizing our core audiences and revenue streams, will continue to be our central business issue for the foreseeable future.

How successfully are publishing-based companies addressing this transfiguring scenario?

Let’s look first at what’s happening in the B-to-B arena, then swing over to the consumer side.

FACT: B-to-B’s have made significant progress, but they’re still very much in the transition phase.

Again, this is no shocker to any of you in this sector.

U.S. B-to-B’s took a nasty pummeling in recent years. Total B-to-B media spend in magazines and trade shows dropped by 13 percent in 2001 and 9 percent in 2002, according to Veronis Suhler Stevenson’s Communications Industry Studies. And although B-to-B spend has since begun to creep back up, few believe that the old print advertising boom levels will be seen again—especially now that print-based BtoB’s are faced with competition of an unprecedented nature from search engines and other thriving new online information sources.

B-to-B’s went through a hugely painful period of operational reevaluation—cutting costs and staff to the bone, restructuring, and selling off non-core divisions or products, where they could. Many seasoned professionals were compelled to make “career transitions” as a result.

The good news is that forward-thinking B-to-B’s went on from there. They engaged in difficult corporate introspection, and began the Herculean task of transforming themselves from hugely advertising-dependent publishing companies into media-neutral, multi-revenue-streamed purveyors of  “rich” information—developing brand extensions in print, electronic and other media.

But in this respect, the non-print-based “upstarts” have some advantages. As a consultant with B-to-B CEO background recently pointed out, “The real problem for our industry is that we think we’ve made a lot of progress, because we’re tightly tethered to traditional ways. If you’re tethered to something and you go 10 feet, that seems like a long way. But people starting new information companies today aren’t tethered to the print culture, its traditions or its executives. They’re not 10 feet from that—they’re not even seeing it as the center. They’re completely flexible to do things quickly and differently.”

This dose of realism doesn’t mean that progress isn’t being made, or that the prospects are grim.

The consultant continued: “For many years, B-to-B’s were gatekeepers. We were the most effective way to get “into” an industry. Now, there are many possible gates to go through, so we have to figure out how we make the shift to being a compelling participant among a wide range of other conduits to an industry.” Again, we’re back to the “scarcity/abundance relationship.“

FACT: Consumer magazines are also facing the most transforming changes since television came into being.

For most of the same, core reasons that already mentioned, consumer magazines, like B-to-B’s, are at a major turning point.

Those of you who serve special interest markets have a leg up, at least in some very important respects, in the current media climate. Many of your publications have never relied primarily or exclusively on advertising revenue to be profitable: Your targeted, special relationships with your readers—and the realities of your business models—have both enabled and required that your readers pick up a significant portion of the tab for the value that you provide.

Most of BPA’s 500-plus consumer magazine members fall into the special interest category, although we are also increasingly viewed as a viable, important option for titles like BusinessWeek, TV Guide’s new launch, Inside TV, and others. Having worked hand-in-hand with niche consumer titles for many years now, we have some sense of your needs and challenges. Clearly, special interest titles have disadvantages, as well as advantages. You not only have to deal with the spiraling problem of finding cost-effective, targeted lists; many of you are also finding it cost-prohibitive to have any significant presence in mass retail outlets, due to the new realities of mass wholesaler and major retailer economics and ROI demands.

On the other hand, because of your unique ties with your readers, you are somewhat less susceptible to the fall-out from the consumer time-crunch reality. Many of you have been affected by consumers’ ability to access special interest information on third-party Web sites—but what sustained you through the recession was that you retained your authoritative brand presence and close relationship with the reader. And the much greater obstacles you now face in terms of being in mass retail outlets have caused you to focus on your real strengths in the single-copy arena: bookstore chains and non-traditional outlets.

Special interest media companies will no doubt continue to adapt and develop practical, market-based ways to serve both your readers and advertisers. Not being dependent on syndicated research and readers-per-copy, and being far less dependent on maintaining perhaps overstretched paid rate bases, you are, in terms of overall profitability, in a better position than some of your seemingly more powerful cohorts.

Fact: Consumer magazines and their advertisers need and want new models and innovative thinking.

We are all only too well aware that, to maintain rate bases and advertising CPM’s, many large consumer magazines and publishers have become increasingly dependent on circulation sources that are neither renewable or profitable, even in the longer term.

Those economics worked for many years, but this model has been showing major signs of deterioration for some time now. If you teach consumers that they need only pay a few dollars for a subscription to a magazine that costs many times more than that to produce and distribute—and the advertising base that drives the profitability suddenly takes a dive (as it inevitably does, periodically)—you’re vulnerable.

BPA doesn’t publish magazines, but our mission and existence obviously depend on the contined success of this industry. We work in a tripartite, not-for-profit environment, in which media owners and media buyers sit down and continually reassess and work through what makes sense for both sides of this equation. And what’s become increasingly clear in the last few years, in particular, is that media buyers and sellers alike desperately need and want to find new models for doing business with one another.

Where things now stand, the day-to-day business of selling and buying media can often work to the disadvantage of both parties. Many publishers are stuck in an economic model that demands that they maintain paid rate bases that are out of proportion to their true, “natural” circulation levels, and supporting those with circulation marketing channels that are, in the long term, good for neither them or their advertisers.

For example, are third-party-sponsored subscriptions valuable? In many cases, these programs are indeed very valuable for advertisers, as well as publishers—because they are very effective for reaching key audience segments, or larger audiences, for prospecting purposes. It’s hard to argue with the sense of affinity-based or broader sponsorship programs that reach out to consumers that advertisers need and want to connect with.

But if a third party is paying for this exposure opportunity, is that payment indicative of “wantedness” or “engagement” on the part of the consumer or recipient? What media buyers ultimately, really, want to know is this: Are these programs really reaching the audiences they are paying to reach? Media buyers, as you know, are under greater pressure than ever before to demonstrate accountability for the dollars that they invest in media on behalf of their clients.

Based on much input from the major advertisers and agencies, as well as media owners, who are on our various consumer committees and advisory boards, as well as our board of directors, BPA is attempting to raise such major issues in the marketplace, in the context of our own rules. One proposal now being considered is whether sponsored subscriptions should be broken out as a separate category—reported neither as paid or non-paid. But the more important aspect of this proposal has to do with the mandate that we hear from the buyer side more and more, which is: How can you verify audience quality for us?

Under the sponsored subscription proposal being reviewed, the emphasis would be on mandating publishers to describe, in auditable terms, the nature of the sponsor and the nature of the recipients or audience.

Publishers, as well as media buyers, have been very responsive to this concept. And whatever the specific outcome of this proposal may be, we hope and believe that the enhanced focus on reader quality, rather than quanitity, will serve the industry well.

FACT:  We all need to think—and act—big...or go home.

The bottom line for all of us in what I’ve outlined, it seems clear, is that no matter which discipline or what level we are at within our companies, BtoB or consumer—and no matter how small or large our companies may be—we are all, as individuals, compelled in an unprecedented way to view ourselves as an integral part of a constantly evolving organism.

You can try to hang on to your old, reliable organizational attitudes and ways of operating, and you may get by on that—for a while. But for those of us who are planning a career span much beyond 2006,  the clear mandate is to broaden our thinking, broaden our roles, and reach out in every way possible.

Because of this whole dynamic, each of your roles is more critical—and should be more personally challenging and rewarding—than ever.

If you’re a C-level executive, or publisher, you’re now being asked to go far beyond thinking only about advertising revenue. You’re the hub for this whole make-or-break integration and diversification scenario. How you lead, or fail to lead, will determine, in a very concrete way, whether you—and many others—are part of a growing, thriving concern in the years ahead, or collecting unemployment. Adamant, underlying adherence to selling a print ad page above all else simply won’t cut it anymore.

No one expects even top-level executives to have all of the answers. In fact, willingness to involve your best minds, devise innovative plans, and then risk failure, will be what sorts out the wheat from the chaffe in the years ahead. When you think about it, that was always true. But today, stagnation is simply not an option.

Similarly, the professionals who may still be called circulators in your company—or may instead be called “audience developers,” or for that matter “consumer marketers”—are now being called on to think and act way beyond their traditional areas of operation. Those of you in this field who are embracing that dynamic are well-positioned. You’re taking your core marketing and analytic skills and using them to help professionals in other areas of expertise, such as IT and database management, make the right strategic decisions.

Those on the production and IT side are adapting very quickly to provide advertisers with what they want: Much shorter lead times for ad materials, as well as industry-wide standards that enable much greater quality assurance.

In short, our biggest challenges are, as always, also our biggest opportunities.

We at BPA continue to be proud to support an industry that continues to prove itself amazingly resilient, adaptive, creative and vibrant, in the face of all of these transforming forces.

And aside from integrity, if there’s one thing we pride ourselves on at BPA, it’s being responsive to not only our members, but the industry in general. New ideas and new, adaptive models are good. Discussion, debate and constructive change are good.