Are you being served?

Are you being served?

Amid the gloom that has hit the media business over the last couple of years, there are some bright spots. New technologies such as interactive TV and text messaging have boomed and a more traditional form of communication, customer magazines, has also thrived.

The contract publishing market may have dropped back from the 20% plus growth rates it was recording in 1999 and 2000, but it is still racking up healthy improvements year on year.

And latest research shows that the market is still doing well. According to Mintel, 2001 saw growth of 10.2% while 2002 recorded a 7.6% improvement to value the total market at £313m. Continued growth is predicted, slightly above the 2002 level, for the next five years, with the £400m market value barrier likely to be broken by 2006.

In many ways, customer magazines seem unlikely to thrive in tough times. They are long-term projects at a time when business traditionally focuses on the here and now; they are complex and require a fair input of time from marketing departments and they do need a fair amount of financial investment.

Nevertheless the advantages of contract publishing do seem to have become clear to even the most sceptical of marketing directors and chief executives.

A study by Millward Brown, commissioned by the Association of Publishing Agencies and published in January, found strong support for the effectiveness of the medium. Fifty per cent of consumers read the magazines they received in detail, with 40% of readers spending more than half an hour reading each issue.

The study also found that readers of customer magazines were significantly more positive about the brand than non-readers. On criteria such as: "is a company you can trust"; "strives to meet customers' needs"; and "looks after its customers", scores from readers were up to 19 percentage points higher.


Pulling power

It also found evidence that contract titles could boost sales. Fifty-seven per cent of the consumers polled have purchased a product or service from a company as a direct result of reading its customer magazine.

One reason for continued growth of customer magazines is the fact that continued media fragmentation means that it is increasingly difficult to persuade consumers to sit down and spend time with a brand. Magazines are a medium that can achieve this.

"I think it's a lot harder to talk to your customers now, whether you call them customers or clients," says Michelle Palmer, new business manager at Cedar Communications. "It's cutting through. The magazine is getting to the heart of the home."

Nick Mayhew-Smith, joint managing director at Wardour Communications, adds: "People want to know what is going on with people they are doing business with. For many it's the only way you can forge a relationship."

In addition magazines also conform to the current vogue for measurability and return on investment.

"It's such a targeted medium and one that has become increasingly sophisticated and is much more measurable then it has been," says Nicola Murphy, managing director at River Publishing.


Measuring results

"Companies have recognised the value of magazines and also they can measure them. When times are tough they want to promote media where they can measure the results of them," adds Lisa Barnard, managing director at The Illustrated London News Group.

Contract publishers are now confident that the work that has been done in recent years to highlight the effectiveness of the medium has paid off when it comes to cold-calling potential clients.

"Despite the fact that life is a little flat, I don't think there's ever been a more positive response to the idea of magazines," says James Buchanan, managing director at NatMag Specialist Media.

However none of this means that life is a bed of roses for contract publishers. The general view appears to be that, as with many other marketing services, some pitches are being driven by a desire to save money.

"I think it's more a question of them wanting to feel that they are getting good value," says Simon Kanter, publishing director at Haymarket Customer Publishing, home of Army, Classic FM Magazine and Ruler.

Jonathan Simmons, commercial director at Zone, which has just picked up a title for the National Kidney Research Fund, adds: "If we are getting into the stage where we are consistently going up against each other, that's not good for us as an industry. We are finding that if they want us to reduce costs, you have to reduce costs by reducing the print run. Then you have to ask who gets the magazine."

In such a climate, the value of cold-calling and creating your own opportunities has never been stronger.

"Out of the 20-odd magazines, well over half of these are magazines that we have created from scratch where we have taken the initiative," says Raymond Lewis, chief executive at CBC Media.

After years of impressive growth, the prospect of cost-driven pitches with the same faces fighting for business does cause concern.

"The overall aim is to grow the market. It's not in anyone's interests that companies have cannibalised magazines [from each other]," says ILNG's Barnard.

Nevertheless, Andrew Hirsch, chief executive at John Brown Citrus Publishing, says the recent spate of pitches are a natural occurrence. Given the life stage of the business, it's only natural that clients would want to check that they are getting the best possible service.

"A lot of the magazines that have been around for a while are with their original publisher," he says. "The vast majority have been launched in the last five to six years and have been with the original publisher throughout."


Targeting employees

But while the big boys fight over the glamour contracts for established titles, many have been looking for new opportunities. The key areas being targeted here include staff titles and the public sector.

Hirsch points out that given many of the obvious targets in the retail and financial services sector have now got magazines, its natural that new business folk should seek to target other areas.

"To a certain extent in most sectors a lot of the blue chip companies such as the banks and the retailers have customer magazines," he observes.

Other sectors that are being tipped as possible growth areas include travel. River Publishing has just brought Sunday Times Travel Magazine to the market and other publishers also say there is investment in this sector.

Redwood commercial director Ian Sewell also points out that corporate social responsibility drive could be another potential growth area.

"I'm interested in the way that private sector companies are increasingly being asked to talk about their own environmental and social standpoints," he says. "Magazines can give shareholders and company stakeholders a much better sense of what the company is doing and also the issues around it."

According to the latest Mintel survey, while use of customer magazines as a loyalty mechanism has traditionally driven the market, other growth areas include use of magazines to target business prospects, business partners and dealers or distributors.

"Historically, in customer magazines from about four or five years ago, you produced a magazine in order to reward loyalty," says Kanter. "Now it's all about return on investment in the way that it is for any other form of communications."

Mayhew-Smith, whose company has just launched a title for the London Development Agency, says the rationale for communication is just as strong for the public sector as it is for brands.

"The users of public services want to know what's going on. People expect to know, to get some messages from people who are taking their money and supplying their services," he says. "It's okay to tell people what you are up to."

Redwood's Sewell says Government marketers have realised that complex policy changes need to be discussed in more mature forum than just an advertising soundbite and that the depth of a White Paper will put people off.

There's a similar rationale behind the growth in staff titles. "There's potentially a level of cynicism about what they perceive is propaganda," he says.

"Internal communications is the number one way to handle change within an organisation," adds Mayhew-Smith.

But there's also a further reason for the growth in staff titles according to CBC's Lewis, which produces titles for Royal Mail and the NHS: the value of these audiences to advertisers.

"What's happening now is that quite a lot of people are realising the value of their employee group," he says. "People have become more and more alert to the fact that to advertisers they are valuable target group."

Given the security of public service employment, he adds, in tough times these are tempting targets.

"There's a group of people that advertisers are going to want to reach," he says. "They are keen to reach groups of people who are in secure employment.

"In an economic downturn these sort of groups become all the more important."


Change of attitude

Advertisers do seem more willing to buy into the concept of customer magazines, Mintel's latest survey says the sector now takes £133m in advertising revenue.

ILNG's Barnard cites the fact that an increasing number of titles are now supported by advertising.  Mintel puts the figure at 55% as evidence that agency resistance is being overcome. Nevertheless she concedes: "It's a tough sell and we are often at the back of the queue.

"Ad managers are changing their views slightly, but not massively as they still get that resistance. It does depend on who you are talking to in an agency," agrees Cedar's Palmer.

Others say the key factor is the product. NatMags' Buchanan cites a new launch for BAA. "[Advertising for] Emporium has gone like a train. The majority of which has been booked direct," he says. "The resistance to customer magazines is no different to the resistance to other launches - it depends on what it's got going for it, do they get it?, and the quality."

Numbers is another key factor. The bevy of magazines at the top of the ABC numbers chart can all promise an attractive reach even if it is the National Readership Survey numbers that actually matter.

"Where there are big numbers and you can clearly show who is receiving the magazine, agencies at least then have the opportunity to say we've got the numbers, we've got the demographics, there's the reason why we've got to go against that," says Buchanan.

Redwood's Sewell adds: "You have to differentiate between what's a negotiation tactic and what is the real perception among ad agencies. Their job is to come up with objections."


Bright future

JBCP, home of Waitrose Food Illustrated, Sky and AA magazine is in no doubt that ad revenues will continue to grow. "The future is that contract publishing will continue to see more and more of that advertising revenue," says Hirsch.

It's all looking good for customer publishers in a tight market. The revenue is growing, third-party advertiser resistance is slowly but surely being overcome. If the market can continue to grow then the possibility of a price war driven by a fight over contracts can be avoided.

In this scenario the only cloud on the horizon is whether new titles can gain approval and sign-off fast enough.

Hirsch says the worrying trend of marketing directors quitting companies and not being replaced is reminiscent of what has happened in the States.

"I think that decision of spend is creeping away from the marketing directors and creeping upwards towards board level," he says.

"I think that's something that we should all be aware of. Advertising spend could slow down because it takes a little bit longer to get decisions."

One public service organisation that is hoping to use a magazine to communicate is the London Underground.

Tube, a quarterly magazine published by John Brown Citrus Publishing, is distributed to all monthly and annual season ticket holders. The aim, according to publisher Andy Roughton, is to change perceptions of the Underground.

"It's all about establishing London Underground more in the hearts and minds of these people rather than being merely a mundane part of getting to work and back, we want them to see it as an integral part of London life," he says. "London Underground is changing from being production focused to being customer focused and this title forms an integrated part of that."

It allows the organisation to explain the challenges of running a public transport network in one of the world's busiest capitals, as well as providing useful information about London life with a view to boosting off-peak usage of the system.

The title was first published a year ago when a pilot edition of the A5-sized magazine was sent to 30,000 homes. A further two issues were produced before the contract went out to competitive tender.

That process has now been won by John Brown Citrus Publishing, which is due to produce the next edition in July.

The spring edition has attracted London focused advertisers such as the Tate and the English National Opera as well as brands such as Orange, Linguaphone and Bose.

Roughton says the title is attracting interest from advertisers that want to reach an ABC1 25 to 35-year-old demographic.

However, there is no plan to make the title totally advertising funded. "It's funded through the existing marketing budget that London Underground has allocated and the advertising revenue is to help defray part of these costs," he says.

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