In May,we hired a respected strategic planning company to develop an industry-wide strategy.Briefly stated,the conclusion was that-at a time when consumers are rejecting advertising interruption and television viewership is fragmenting,magazines offer advertisers something important-“engaged reach”,that is,our readers consider advertising a valuable part of magazine content and this engagement with magazine advertising is directly related to advertising ROI.
The Coalition has initiated a large-scale campaign to promote the value of magazines.We hired Fallon New York to create advertising as part of the marketing campaign,and we've committed$40 million to this three-year effort which will also include advertising guerrilla marketing,events and PR.
And the stakes are high-as many of you know every 1%that magazines gain in their share of advertising expenditures is worth over$1 billion in advertising revenue to our industry.
So up until now,magazines have been in an advertising ghetto,and we've often times been told that we can only compete with each other and forget about getting share from TV,and we have become focused almost exclusively on competing against each other.
People shouldn't be forced to live in ghettos and neither should magazines.Our industry needs to expand its scope from just worrying about improving our own house or even our own street,but to look toward selling the desirability of the whole neighborhood.We will not eliminate the competitive selling,but what we can shout about is to say what's right about magazines.Beyond promoting our medium,we also need to focus on running our business better.
If we want to focus on what really matters,I believe,it's important to realize it benefits everybody:publishers,readers and advertisers if the magazine industry can focus more on circulation profitability.Let's face it,publishers have made too many consumer marketing decisions based on advertising sales department demands on circulation rate bases and as a result the effect on subion pricing.
One thing that is very important,I believe,is to move the mission of the magazine consumer marketing department to focus more on two areas:circulation profitability and maximizing readership.
We should learn something from the way that the cable television business operates.The consumer marketing director of a cable TV channel is responsible,I believe,both for maximizing subion revenue and growing audience.Their mission is to maximize subscriber revenue while attracting the largest number of viewers possible and their ad sales departments sell advertising based on that reach.Advertisers don't really care what a viewer has paid for his or her cable service.
It is to the benefit of both the advertiser and the publisher to work towards a similar mission for magazine consumer marketing departments.The current system makes that very difficult to accomplish.
It is extremely difficult for the head of consumer marketing for a magazine publisher to make circulation decisions based on P&L issues and readership,when managing to a rate base and when many sources of readership are undervalued based on price paid or source.
We also need to better understand the connection between circulation and readership and audience.We need new forms of measurement based on engagement.Engagement is a new currency in terms of measurement-not only for magazines but for all media.
At the AMC,Starcom's Andrew Swinard said that he believes print is on the cusp of an explosion and the value placed on engagement is a key reason.
As you know,the MPA's Northwestern study began to take an overview of some of the real measurements of readership and involvement-why people like magazines,why people buy them and read them or don't.This year a new study,sponsored by individual publishing companies including Hachette,will look at measuring the relationship between pricing and retention.I believe involvement level does not necessarily relate to price paid or source of subion,and so far Starcom's research confirms that.
Let's face it,most consumers first decide what they want and then they figure out how to get it at the best price.That's the American way.It's true for cars,it's true for lipstick,it's true for Viagra and it's true for magazines.
And we need to do a better job in connecting circulation to readership because readership leads to audience which is really what impacts advertising ROI.We need to change their magazine perspective to encompass our total readership-not just the 25%of the audience who purchased the magazines.
Magazines can't really be comparable to other media unless we have not only credible readership measurement but also have audience accumulation data in a more timely manner.The improved ability to measure circulation and readership accumulation via subscriber data bases and scan based trading data will enable our industry to move on this area.
Publishers also need to redirect where we spend our research monies.At Hachette,we have dedicated consumer research focusing on the readers.In the past,less than one fourth of the budget Hachette invested in research was focused on the consumer.That is not healthy.
Editors are more involved in shaping consumer research;they take ownership and incorporate the findings into the pages of their magazines.We give editors,on a regular basis,key information about direct mail,renewal figures and newsstand data.
We have reconnected the communication between those people who write copy within the pages of the magazine and the people who write copy asking for a subion or renewal.
In the area of single copy sales-we now-for the most part-have a collaborative effort between the editors who design the cover and those people responsible for newsstand sales.The editors now have real influence and responsibility in the consumer marketing area.