The context to all this is shown in the Publishing Futures survey where the 99 participating publishers reveal that end-user revenues account for 52% of total turnover currently as opposed to advertising / sponsorship; with this figure predicted to rise to 54% in two years’ time. While this is a significant shift, it is simply not fast enough for many publishers, who feel vulnerable to the ongoing vagaries of the ad market.
The full report provides some granular insights into four key audience areas of activity: retail, postal subscription, free distribution and digital.
While a significant minority of publishers see absolutely no positives at all in the current newsstand, others still see real opportunities. The top three are…
* Broadening out the retail distribution. This includes discounters, travel points, supermarkets, non-traditional retail (with direct-to-retail thrown in as an extra element) and a deeper involvement with independent newsagents.
* More creative and targeted retail promotions: cooperative cross-industry promotions, links with other FMCG companies in out-of-category displays, value packs, covermounts and using online marketing to drive traffic to stores.
* The ongoing creativity of print products. This is evidenced in launch activity, investment in existing products (including ground-breaking cover designs) and the ongoing growth of segments such as one-shots, bookazines and collectibles.
Here, the dominant theme is the consumer trends which are impacting on the magazine market. This has three elements: (1) the shift out of print into digital activity, (2) changing shopping patterns which are reducing the purchasing frequency of print products, and (3) the growing reluctance of readers to pay for content. Two factors then tie in second place: the reduction in magazine range and space in retail and the escalating cost of achieving a newsstand presence.
Two issues dominate:
* First, a widespread drive to add value to the subscription package in comparison to single copy / ad hoc purchasing. At the lower end, this could be adding simple gifts, but many publishers have much more ambitious plans to build or relaunch a fully-blown membership offer.
* Second, smarter acquisition driven by data-driven lead generation, longer and more sophisticated acquisition journeys, a more “test & tweak” culture of experimentation, making more use of external partners and better coordinating existing publisher assets.
Lying behind this is a belief in the improving quality and targeting of the editorial content, which increasingly is being sliced into more tailored niches, for which end-users must be convinced to pay / pay more via subscriptions, paywalls, meters, etc.
Backing all this up is commitment from many companies to invest more money and resource in this channel, though often this is simply shifting budget out of retail and into subs marketing.
These fall into three main areas:
* End-Users: Issues include more pressures on their time and attention, the shift from print to digital, digital distractions, reducing willingness to pay for content, information overload.
* Competition: The sheer scale of competition from every direction, often driven by free or heavily discounted content packages.
* Internal: Rising acquisition costs and cost-to-serve; the investment required to create membership services; reduced marketing budgets and stricter profitability targets. There are actually fewer comments in this year’s survey about a lack of staff skills, although this remains a big issue. What is of more concern is department structure: how best to harness the skills. Implicit in many of the opportunities above is the need for agile tech tools which are lacking in many companies.
Free distribution is playing a larger part in the audience strategies of both print and digital products because of…
* The need to build audience, especially for advertisers, in a competitive, noisy and changing marketplace.
* End-users in both consumer and B2B marketplaces wanting / expecting content for free more than ever.
* Threats to other channels of distribution (eg. rising postal costs, retail range reduction, changing shopping patterns, etc).
* The growth of freemium tiers and free sampling in audience acquisition programmes.
The distribution of digital content is a whole area in its own right – to be covered separately in the next issue. Yet here too there is massive change. The rapid growth of Readly and Apple’s acquisition of Texture demonstrate two things: that there is life left in the digital magazine format; and that new players are emerging in what is becoming a more structured and robust supply chain. Yet more of all that another time…
It is clear that the audience function is in the middle of unprecedented change. This is because the routes to end-users have rapidly become more complex and over-lapping; and also more unstable, particularly in the case of the retail supply chain. The imperative is to be much more strategic: breaking down the silos and joining the dots in more creative ways; understanding the detailed dynamics of each revenue stream; anticipating the future while still having real strategies for the declining routes to market; looking for new opportunities in market niches and overseas territories.
Yet the final lesson is that bottom-line profits ultimately matter more than top-line revenues: that perspective always provides the ultimate sanity check.