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Some Lesser-Explored Pieces of the Consumer Magazine Circulation Puzzle
by Karlene Lukovitz
Do consumer magazines have major circulation challenges? No question. But amid all of the negative coverage about circulation in the past year, there are some points that seem to get relatively little exposure, and are worth considering for perspective purposes.
Since the list of circulation challenges is now frequently recapped by the trade and even general press, there seems little point in revisiting these at length. We all know that newsstand unit sales have been declining; that the mid-90’s governmental crack-down on stampsheet agent and other sweepstakes promotions dealt a severe blow to subscription sources; and that many magazines are meeting with consumer resistance to subscription price increases born in no small part out of their own long-time practice of offering low introductory prices in order to maintain rate bases.
That said, here are some points and questions for consideration:
With circulation sources, “God is in the details.” Indeed, some savvy media buyers have stated in public forums that they know that it is neither fair nor prudent in serving their clients’ interests to simply “write off” whole categories of circulation sources or promotions, without assessing their value on an individual basis. The details of a given program—and the accuracy of how its subscriptions are reported on the publisher’s statement—are critical.
For example, buyers who examine sources closely know that subscriptions sold through legitimate third-party sponsorships or sold in partnership with marketers that have a “natural fit” can be effective, legitimate ways to reach new readers who have potential not only for renewing in future years, but for buying the products advertised in the magazine. As just one example, if some of a regional lifestyle magazine’s subscriptions are sponsored by a realtor serving that region, are these readers to be assumed not to be interested in the magazine’s editorial and advertising content? If the true nature of these sources and their paid or nonpaid status are accurately and thoroughly reported, media buyers can weigh their value and make informed decisions.
Are the readers of sponsored subscriptions that are distributed in public places not of potential value as prospects for advertisers, as well as publishers? Among the large magazines that are measured by syndicated research studies, readers-per-copy data is the make-or-break in many or most media buys. Advertisers value audience reach, and it has been shown time and again that distribution in public places increases readers per copy, for obvious reasons. Again, the agent’s methods and the accuracy of reporting on the publisher’s part are the critical keys in assessing a given program.
Similarly, a publisher-generated subscription offer such as a “two-for-one” gift program, which aims to encourage existing subscribers to share their enthusiasm for a publication with friends or family whom they have reason to believe would appreciate such a gift ,would seem to be a simple case of smart affinity marketing.
Virtually every consumer marketing company in the country—whatever the nature of its products or services—uses sampling and/or price discounts in promotion programs designed to reach targeted new prospects who can be turned into loyal customers. Are magazines different for some reason?
Publishers want to make money on circulation. For decades, the “stampsheet” agents tapped into major segments of the reading population, yielding many millions of subscribers who were quite renewable. When a few overzealous promotional mailings triggered the crackdown, the sudden loss of so many stampsheet-generated, reasonably renewable subscribers did indeed necessitate finding new ways to reach new prospects.
But publishers want and need to grow circulation revenue and profitability, particularly in the wake of some tough advertising years. Hence the fact that there was no rush to start selling subscriptions for a few cents (as some media buyers had feared). And hence publishers’ eagerness to improve renewals (which are, of course, far more profitable than replacing subscribers)—as well as to test new sources and offers and roll out the ones that prove viable, both in terms of pure circulation economics and in terms of being able to deliver audience value to advertisers.
Are publishers making progress in this regard? I think that this argument can be made, based on efforts on a variety of fronts, such as:
- Investing in the editorial product. There is a significant surge in ongoing research (much of it Internet-based), including reader surveys and cover tests, to continually hone editorial content/design and support new subscriber and renewal dynamics.
- Developing new sources, including partnerships with outside marketers and affinity retailers. Examples are Time Inc.’s highly successful program in which Sports Illustrated and Entertainment Weekly subs are sold to Ticketron customers, and sales of Parenting subs in a maternity store chain. Publishers are also investing in developing circulation sources such as the Internet (which now accounts for 5% to 10% of subs for more than one large publisher), strategic free-to-paid sampling programs, and “combination offers” of two magazines (or a magazine and a newspaper) that have editorial/audience affinity.
- Developing “continuous service” subscriptions. Practiced responsibly, with clear disclosure of the nature of the offer and careful compliance with all cancel requests, CS is a renewal convenience for subscribers that also makes economic sense for publishers.
- Moving from “soft” to “hard” offers. In new-subscriber promotions, publishers have moved away from free-issue, credit-based offers in favor of offers that require the subscriber to pay up front. While most of these “hard” offers are discounted off the full “suggested” sub price, pay-up is no longer an issue, these new subscribers are generally more renewable, and renewers are generally willing to pay somewhat higher prices.
Circulation and editorial practices that improve publisher circulation economics while delivering solid subscribers should work to advertisers’ advantage in the long term, as well as the short term.
Does a subscriber who pays more for a magazine “want” it more than those who have paid less? Some media buyers, and even some large publishers (at least in their sales efforts for those magazines that use less promotional pricing than others) say that they believe this to be intuitively true. And many small- to mid-size circulation special interest titles that are heavily or exclusively dependent on circulation revenue have been demonstrating for years that subscribers are willing to pay fair prices for these publications.
On the other hand, circulation-driven magazines have by and large been very careful not to risk creating consumer resistance by putting out discounted offers, and so editorial relevance may not be the only reason that their readers tend to be less price-sensitive. Also, if media researchers or media owners have hard data that scientifically correlates price paid with the “wantedness” of magazines, it has not been publicly released, to my knowledge. (In fact, in one test conducted for a major magazine some years ago, a subscriber’s renewability was found to have no correlation with the original price paid for the magazine.)
It can also be argued that only magazines are assessed so heavily on the basis of price paid by the ultimate consumer. Given the escalating rates being paid for commercial time on network television (where audiences continue to decline), can publishers be blamed for wondering whether there is some kind of a disconnect going on?
Similarly, can consumer marketers be blamed for being perplexed by some media buyers’ focus on the “average price paid” number on the statement, knowing as they do that accurately reported on a circulation statement can actually go down in response to circulation practices that might be perceived as improving circulation quality (such as increasing the number of multi-year subscribers)—and that average price paid can go up as a result of practices that may produce less renewable (and less profitable) subscribers?
Other puzzling phenomena: Why are some consumers willing to buy a magazine in a supermarket or other outlet several times per year (in some cases nearly every time that they are exposed to a new issue at the checkout), when they could spend less to get all of the issues through a subscription?
Also, why do many stampsheet-generated subscribers renew? These readers are renewed by publishers themselves, often without a sweeps incentive. People may “try” a magazine because a sweeps hook gets their attention, but why would they renew it without that side incentive, unless they “wanted” it?
Clearly, pinning down “wantedness” is not easy. Starcom has recently announced that it will begin assessing magazines’ effectiveness in three categories: accountability, connectivity and engagement. It will be interesting to watch how this system affects magazine buying decisions. And perhaps other media researchers have found answers to some or many aspects of this challenge, as well, but are keeping their findings proprietary. And if so, perhaps they will be able to apply or adapt these same metrics or techniques to other media.
In addition, perhaps, as some have suggested, the advertising and publishing communities can agree to return to using circulation statements and auditing for their originally intended purpose of core verification of a publication’s paid and nonpaid distribution, and build on this with other research. Perhaps with serious cooperation, the industry might even be able to develop and agree on assessment metrics that, unlike syndicated research, would be applicable to all magazines, not just those with larger circulations?
Obviously, advertisers must first and foremost be able to rely on reported, audited data. If a subscription is reported as paid on a circulation statement, then the circulation audit must be able to verify that the subscription indeed meets the definition of paid, meaning that either the consumer or a third party /sponsor has paid at least one cent for it. That is why all professionally conducted audits require hard verification of payment, whether the payment is from a consumer or a sponsor.
As long as the nature of all sources and the number of subscribers within each are fully disclosed in reporting (from copy one), and fully verified in auditing, media buyers and media owners can engage in meaningful discussions about the true value of any given source or marketing practice, and the demands of the marketplace will prevail.
(An aside: What would happen if publishers did not have to fear some media buyers’ propensity to label any sub that meets the “paid” reporting definition as being ipso facto more valuable than one that has been independently verified to have been requested by a consumer, but not paid for directly by the consumer, at least initially? Might it be possible to further streamline circ reporting and marketing practices, to the benefit of all concerned? The reality is that many consumer magazines do declare a verified request or controlled component within their overall circulations, because it is clear to media buyers that these recipients are indeed targeted, valuable prospects for their advertising clients.)
Finally, this must be said: Consumer magazine circulation reporting and auditing definitely need to be more timely, and advertisers and media buyers are right to demand this.
Karlene Lukovitz became VP, communications for BPA Worldwide in March 2003. Prior to joining BPA, she was a journalist covering the media industry, serving in positions that included editorial director of CM/Circulation Management Magazine; editor of Inside Print, a magazine for media buyers; and executive editor of Folio: The Magazine for Magazine Management.
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