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Is the internet killing magazines?

Some publishers remain nervous about the impact of the internet – worried that their online efforts will cannibalise their offline business. And they have concerns about how to monetise their internet presence. Auto Trader has had no such qualms and was quick to embrace the web. Kevin Petley explains why.

By Kevin Petley

Like most publishers, Trader Media Group (TMG) has been struck by the amount of press surrounding the issue of ‘Magazine v Digital’. In many cases, commentators have been writing off magazines completely! For instance, in a recent interview, Ian Locks, chief executive of the PPA, referred to a research company’s spurious findings, based on a few consumer interviews, which tried to suggest that the future was bright… but that it was digital and not print.

Ian was rightly dismissive, reminding us that, "previously, we were told that radio would spell the end of newspapers and magazines. Then, well television certainly would… and now, of course, the internet and the digital world would finish them off."

Add to this the views of two very important media luminaries and an interesting position begins to develop. Bill Gates, a man who should know a thing or two about the digital world, said "Newspapers are going to survive, but they have to adapt to the digital world." Whilst Rupert Murdoch recently told media bosses that if their empires did not encompass multi-channels to pass on news and information, then their business will die.

Perhaps the issue is more about people’s understanding of what each channel has to offer and the complimentary role each plays in today’s world. Following the last round of ABCs, an article appeared in the press commenting on the performance of Auto Trader. It took the position, "Auto Trader magazine suffers from digital." But they could have said: "The Auto Trader brand (Print + Digital) announces record audience growth." I guess the suggestion of a circulation drop made for better news, although, unfortunately, it missed the point.

So what is the truth?

At TMG (Auto Trader), we have always been driven by the need to help dealers sell more cars, and private advertisers to sell their cars more quickly. With this in mind, it is in our interests to develop and maintain all effective channels. The advertiser doesn’t care which channel the motorist comes from, only that they call or visit and are genuinely in the market for their car(s).

So, we believe the answer is about balance and, more importantly, about giving consumers the choice. Choice of how they access their information on their preferred platform is simply allowing different ‘access routes’ to different audiences; consumers make their channel choice based on the one they happen to prefer and this will vary depending on what they are trying to achieve. Clearly, anything that uses a database automatically works better online and buyer’s guides, such as Auto Trader, do perform well on the web. But this shouldn’t be seen as negative or restrictive, merely complimentary and the beginning of a new opportunity.

Auto Trader’s reach

Whilst we do get more motorists through our website these days, this can be balanced against the fact that some 280,000+ motorists take the trouble to buy the magazine every week (over 3 million motorists read the magazine). Looking back, Auto Trader was the first classified magazine in the UK to go online – in February 1996. Since then, the magazine, the web site (and DTV, WAP) – all effective channels for motorists – have been developed alongside each other with great results. We can now boast a combined audience of over eight million motorists every week and we predict this will rise to nine million by the end of the year. The power of the best selling motoring magazine in the UK (and the 6th largest consumer magazine overall in RSV terms), together with (the busiest motoring web site in Europe, receiving over 6.5 million unique users every month and 355 million page impressions), is both significant as well as complimentary. Each feeds off each other and each benefits from the strength and reach of the other.

It is interesting to note a recent DTI report which highlighted that "many publishing products operate in dual product markets, where the publisher sells a product to an end-user (whether consumer or business) but also sells the attention of that end-user to an advertiser. For these publishers, the growth and distribution of advertising expenditure is critical, as well as the growth and distribution of consumer spending and its trends."

Therefore, it is fair to conclude that for a publisher to benefit from this and provide its advertisers with the exposure needed, the combination of a print and digital offering is not only a good idea, but ultimately an essential one.

Digital’s impact on publishing

The digital platform is fundamental to the future of publishing. However, it affects different areas of publishing in different ways, depending on the customer, the nature of the product and the business model.

The commonly held belief is that the sectors most impacted by digital media are B2B and institutional publishing, but there are also significant impacts on the national and local press. Arguably, the consumer magazine sector is likely to be the least impacted, although one should be careful to draw a distinction between lifestyle glossy magazines, general women’s, TV-related and celebrity weeklies on the one hand and interest focused magazines on the other, particularly those in more technology or youth-oriented segments.

Many book publishers were affected by the financial losses incurred by their enthusiasm for CD-ROM development in the mid-90s, and so tend to be cautious in their approach to e-books, although not necessarily to print-on-demand. On the other hand, they perceive the internet positively, mainly because internet booksellers such as Amazon are seen to be expanding the market and also selling books from the back list that would not find shelf space at retail. For them, the internet – to date – has represented an additional revenue stream, or, at the least, has not involved them in much cost.

These generalisations do not apply to journal and STM publishers, who have moved much further down the track of delivering content electronically. For them, the internet is a major channel to the customer, with correspondingly high expenditure and revenues.

In contrast, many national newspaper and some magazine publishers have invested heavily in online development, with many seeing little return to date. This is bound to influence attitudes to developing content for broadband, for example.

Regardless of attitudes to the potential of new platforms to generate revenue, publishers appear more positive about the benefits of these technologies within production and supply chain distribution, which should be welcomed. Many publishers have been enthusiastic in embracing new technologies and quick to see the opportunities both for increasing internal efficiency and for creating innovative products and services.

Within publishing, digital technologies have created what might be termed a new competitive ‘hinterland’. Whereas, in the offline world, newspapers, magazines, TV and radio form separate ‘channels’ with their own modes, the trick now is to understand how they can be brought together to compliment each other. There is little point in trying to ignore digital; it is here to stay in all its forms and there is also little point in getting hung up on the perceived negatives. The trick is to be clear about how it can benefit your business.

Auto Trader’s priorities

Our experience at TMG is based on a ‘no compromise support’ for the web, seeing it as complimentary to print and it is precisely in understanding how they compliment each other that we believe our future success will be realised.

We also knew that to achieve success in this new environment, we needed to focus on:

* Clear, solid commercial results-based objectives
* Understanding that this would kick start the virtuous business cycle – generating response for advertisers
* Combining our resources into a single direction
* Building internal enthusiasm and driving joint business activity
* Fully supporting our sales teams 
* Continuing to add brand value

For Auto Trader, we also had to formulate strategies to deal with the impact of:

* Media explosion and clutter (Each and every motorist in the UK will receive up to 1,500 advertising messages daily.)
* An increasingly demanding consumer
* Consumer ("Motorist") segmentation. Age, gender, lifestyle, media use… 
* The threat posed by Google / MSN / Yahoo / Ebay
* How our online approach works compared to print

Finally, the real value of taking this necessary and combined approach will only ultimately accrue all its benefits if we can convince the ABC to report jointly across the platforms. The good news is that they appear to be warming to the idea in principle, but it remains to be seen if the agencies will buy into this approach. This would be a major step forward and could in turn be a catalyst to kick start a new digital / print drive encouraging more publishers to enter the market or further develop their offering.