Battle for shelf space

Let’s try and keep this simple. There is a domestic market and there is an export market. So you need one circulation strategy for your domestic sales and one for your export sales. Right? WRONG! The number of export strategies needed is usually a one to one ratio with the number of export markets you want to enter. So if you want to enter fifty different markets you’ll need fifty different strategies.

I see you wilting already. Given that success in any market depends largely on the quality of your local knowledge this means that an exporter needs to acquire detailed local knowledge (structure of supply chain, availability of distributors, cultural issues, promotional opportunities, local purchasing power) on each export market. The minimum requirement will be the appointment of a local distributor in each of your chosen markets. There are two ways to do this. You either set up your own internal resource to liaise with each market or you do what the vast majority of UK publishers do and sub-contract the whole process to your UK distributor. The types of company that tend to go down the DIY route are either those with large enough overseas circulations (eg. the Economist with a weekly overseas sale of 761,220) to justify the extra internal resource or those companies whose titles are predominantly for the export market (eg IC Publications who publish titles like New African and The Middle East). Everyone else tends to rely on their UK distributor. The advantage of using them is that you benefit from their accumulated expertise and their leverage with local distributors.

Getting the most out of your distributor

The main UK distributors offer a full export service, so to a certain extent a publisher can make their appointment and walk away, leaving the job to the experts. However that would not necessarily be a good thing to do. Christopher Collins, from the Economist, says that the success of a distributor (indeed any supplier) is directly proportionate to "the interest you (the publisher) show, the pressure you apply and the information you share." In other words, if you engage and take an interest you are likely to get better results. Bill Palmer of COMAG notes that a common characteristic of successful exporters is that they all invest time in the subject. This does not mean employing dedicated export staff, because the reason you’ve appointed the distributor in the first place is to avoid that, but it does mean showing an intelligent interest and being aware of the issues and opportunities.

How important are exports?

In domestic markets every copy sale has two revenue implications. Firstly is the direct revenue from the sale, the second is the consequential revenue garnered through advertising. For UK titles, export sales usually have a negligible effect on ad sales. As a result, export sales have to justify themselves on direct revenue alone. With the UK market reaching saturation point and shelf space becoming scarce export markets represent real opportunities for maintaining and growing total sales. Given that export sales are likely to grow in importance it is perhaps surprising to see how many publishers continue to sell themselves short in the export arena. There are three areas in which publishers can help themselves: change in attitude, improved planning and budgeting, increased investment.

Change in attitude

Maybe it’s because they’ve been schooled in the domestic market, but some publishing directors show remarkable naiveté when it comes to export. They expect prompt high quality sales information, they want clean and transparent solutions and relationships and ideally would like to set a single export price and get uniform remittances back from any sale anywhere in the world. Oh, oh! Education, education, education. The reality of export sales is that sales information is often patchy and always takes a long time to filter back (think months not weeks), clean solutions are possible in some countries but not in most and as for a single price – forget it. No two cost structures will be the same: distributor share, freight and local tax regimes mean that each country will deliver different amounts and this is before you even start to consider issues like local purchasing power and competition. The lesson is to embrace variety (and be happy with twenty solutions to every challenge) anticipate delays and expect surprises along the way. Omar Ben Yedder of IC Publications recalls how some street vendors in Africa devised a neat little scam: they rented out copies of his title at 25p a go and then eventually returned them to the distributor as unsolds.

Improved planning and budgeting

For a lot of publishers, export is an after thought when launching a new title. The whole budgeting procedure and cost assumptions are based on domestic considerations. By the time the budget has been agreed and someone pipes up with "what about export" it is too late and export will be painted in terms of increased costs rather than increased opportunities. Bill Palmer makes a case for more imaginative budgeting procedures; if export copies are seen as print run-ons then a publisher can apportion a lower unit cost to each export copy. As Tracy Jones of Seymour International Ltd says, "some publishers still see export as an "also ran" and are not necessarily fully aware of all the territory options that exist." A further component to this is the need to include your distributor in the budgeting process. The more they know about your profit / loss considerations and break even points, the better job they will be able to do for you.

Increased investment

Publishers need to invest in three areas: sufficient copy supply, promotional activity and pricing support. We’ll take "sufficient copy supply" as read. A couple of general points about the other two. If you are in the habit of applying your added value promotions only to your domestic copies then think again. Scott Goward of Marketforce points to the success of Uncut. The title budgeted for export right from the start, invested in retail promotions and, importantly, kept the regular cd covermount on their export copies. No doubt also helped by the fact that it’s an extremely strong product, Uncut has an export ABC of over 45,000 copies overseas (40% of total circulation). Pricing promotions are inevitably one of the more popular tactics given their relative ease of implementation. Tracy Jones recommends that publishers, in markets where local competition exists, work closely with their distributor and give careful consideration to the option to sensibly price support relevant titles so as to enable direct competition with the local titles. The good news is that publishers appear to be getting the message; in the last five years, Scott Goward has noted a significant increase in publisher investment in export.

Promotions

What then are the promotional options for export? Too many to mention, but I’ll tempt fate and talk in generalisations. Broadly speaking, as with domestic, there are six areas: buying shelf space, point of sale activity, added value (supplements and cover mounts), price discounting, advertising and "ambient". Circumstances within individual markets will dictate your exact tactics in each of these areas but there are a few things worth pointing out. Buying shelf space has to, usually, be backed up with significant supply of copies and this is something you might not be willing or able to do in the export context. Whilst it is generally not a good idea to exclude your export copies from covermounts and supplements, the inclusion of them might run up against shelf space problems in overseas markets. Point of sales promotions often work best on a tactical basis. New African magazine recently ran an interview with Sam Nujoma, president of Namibia. Point of sales posters promoting this fact were created and included in the copy supply for that issue. Pricing is one of the most popular tactics, but does not work in every case. If your title is price inelastic then there is no point slashing the price, because all you will achieve is to reduce your margins. Above the line domestic advertising is beyond the means of all but a handful of publishers, however in some emerging markets it is more affordable. Radio advertising in Africa is one good example.

That leaves us with "ambient". Sometimes the most effective promotional activity is the result of "outside the box" thinking. In 2001 the Economist switched to full colour. To promote this fact their South African distributor devised a campaign based round multi-coloured lollipops. Each one was branded with the Economist white on red logo on one side and multi coloured on the other and was tagged with the promotional message. They were handed out at Johannesburg airport. The promotion hit all the right notes, cost virtually nothing and doubled sales.

What exports well?

According to Bill Palmer, "British magazines are consistently of a higher quality and as a result sell more in export terms." The reason for this is because magazine publishing in the UK is a highly developed and competitive industry so the product is strong and secondly because 80% plus of UK magazine sales are through the newstrade, production values are very high. There seems to be general agreement that niche titles work particularly well, as do titles which play on their "Britishness" (especially in the US, Australia and Canada). For your most important markets you might consider using a different cover; for instance 911 & Porsche World does this for its US copies. According to Ros Shaylor at MMC this reflects the importance of the US market to this title. The success of the title, she continues, is also down to subsidised overseas pricing, international content, added value through supplements and bumper issues and the fact that it is an internationally known aspirational brand. With the exception of titles written for specific geographical sectors UK titles that export well generally take advantage of shared cultural values or geographical proximity. Therefore it is no coincidence that the top five export markets for UK magazines are: USA, Australia & New Zealand, Canada, Netherlands and Switzerland.

Trends

Tracy Jones sees increasing numbers of titles looking to enter the export game on the one hand but a situation of increasing market maturity in the main export territories. Markets such as North America and Australia have matured and sales opportunities are harder to find. This might explain the increasing tendency to search out specialist outlets, noted by Scott Goward and Ros Shaylor. With shelf space in the traditional outlets becoming harder to secure, combined with the fact that so many exporting titles are niche, distributors are increasingly trying to source specialist outlets be they garden centres, craft superstores or car showrooms. One company leading the way in this area is Worldwide Magazine Distribution. Another trend is the increasing popularity of local language editions and licensing deals; both these options help increase sales in regions where language might be seen as a barrier to sales. In the US market Bill Palmer sees subscriptions as the future because, unlike in the UK, the vast majority of magazines are bought on subscription. Given the fact that the average UK import only reaches approx 2,000 retail outlets then it stands to reason that the only way to make major inroads into the US market is via subscriptions.

In Tracy Jones’experience, for the average established exported title, the top four or five markets can account for over 50% of total export sale. A bi-product of this is that the number of markets that some distributors consider viable for direct trading has reduced. All of which points to the need to discover new markets.

New markets

With our top export markets increasingly saturated, where then are the markets of tomorrow? The short answer is "anywhere that isn’t currently saturated" – so the main growth will inevitably come from markets currently outside the top ten. There seems to be general consensus that China is an exciting opportunity. Most of the big publishers and distributors are waiting for the Chinese government to give the green light and drop (or lower) the existing barriers to entry. Eastern Europe and India are also seen as offering potential for growth. Christopher Collins sees potential in Africa, not for quick or large profits but for steady growth. He points to the fact that in 1970 there were only five cities on the whole continent with populations in excess of one million. In 2004 that figure has grown to thirty and since the vast majority of export sales to Africa are in urban areas, the potential is obvious.

Conclusion

Given the increasing difficulties publishers have in securing domestic shelf space, export markets are becoming more attractive. Publishers should embrace export but be prepared to adopt a different mind-set and to think in terms of longer time frames, flexible solutions and ongoing investment. Furthermore with our main export markets starting to show similar problems of saturation you need to start looking either at imaginative new ways of reaching customers i-n these markets or start to look seriously at developing markets.