BCMA conference 2005: the changing role of circulation management

Perhaps in common with many other chief executives Martin Durham confessed to being not as up-to-date with the latest circulation thinking as he would have liked. Nonetheless he had identified three changes taking place in the B2B sector, along with three challenges facing it, that he wanted to expand on.

Change # 1: changing trends in advertising market

Display revenues have been in decline for the past 15 years, with each recession seeing cuts being made to advertising budgets that are not then reinstated to their previous levels afterwards. Advertisers are being wooed away, by more measurable forms of marketing, from comparatively expensive and less measurable display advertising. Even recruitment, a mainstay for many titles, is extremely volatile and is migrating online.

At Haymarket, advertising forms a declining percentage of total revenue. Like other B2B publishers they have benefited from the emergence of different business models; specifically the growth of revenue and profits from brand extensions such as directories, events and online. Indeed, in some instances, the value of the brand extension has eclipsed the value of the core product. At the heart of most of these brand extensions is a quality database and that is putting new onus on circulation teams.

Change # 2: growth of delivery of online content

Martin notes, and empathises with, a growing appetite for online. After all why hold your finger in the directory when you can click on a mouse or trudge down to the library when you can conduct all your research from the comfort of your office?

For online, he asserts, there is only one real business model and that is subscriptions. Recruitment advertising has enjoyed some success and there continues to be sponsorship opportunities but display advertising does not work online and click-through charges have provided negligible revenue to date.

Change # 3: changing newsstand model

OK, perhaps more a burning issue for consumer publishers, but many B2B titles published by the likes of Haymarket, Centaur, RBI and Emap have small newsstand elements that will be missed when they’re gone. Increasing pressure on shelf space and possible changes to the supply chain are all threatening B2B’s newsstand presence. According to Martin, "subs have always been more profitable than newsstand and the gap will continue to widen. The sooner we convert newsstand sales to subs, the better."

Challenge # 1: how do we get finance directors to take subscription income more seriously

The playing field is not level! Everything is stacked against subscriptions and liberties are taken with subs budgets that would not be dreamt of with advertising budgets. The practice of deferring revenue over the subscription period means that you get thumped in the year that you do any promotions. Publishers need to create management tools to account for subscriptions in a more sophisticated way; specifically to consider life time value – and not just the value in this quarter.

In terms of company acquisitions, Martin always values a subscriptions based business much more highly than an advertising based one – indeed twice as highly. For him, subscriptions provide a reliable income stream, are cash positive and are more predictable in that you can estimate future revenues with a degree of confidence.

Subscriptions marketing budgets have traditionally been vulnerable to cuts to allow companies to reach quarterly, six monthly or annual targets. Martin advises publishers to ring fence their subscriptions marketing budgets in the same way they do with sales department expenses.

Challenge # 2: sort out the advertising sales department

And this from someone who comes from an advertising sales background! Sales teams need to be weaned off large numbers (circ numbers that is). B2B publishers send out too many free and wasted copies which are little more than a crutch for ad sales teams who think they need high volumes to win advertising. In Martin’s experience, advertisers are better persuaded by quality editorial. Usually if you ask an advertiser why they advertise, the reason will be because ‘they like it.’ Then ask them what the circulation figure is for the title and they will not know. Push them for a figure and they will often get it wrong and usually by some way. The most potent ad sales weapon, according to Martin, is quality editorial backed up by proof of quality targeted readership. In Haymarket’s experience, subscription based titles generate higher advertising yield than controlled circulation ones and consequently there is a shift from very large controlled circulations to subscription.

Challenge # 3: changing the culture of publishing to paid-for

For many people employed in the publishing industry, it is a labour of love. Publishing staff work very, very hard to create quality products …. and then they give it away! No other industry does this. Martin feels this goes against the working man’s ethic – of doing a good day’s work and getting paid for it. The challenge is to get the whole publishing team – everyone involved in the publishing process – to take pride in their product and to feel confident in asking readers to pay for it. Free-to-paid conversions is the trend at Haymarket and Martin has issued the following challenge to his circulation managers (some of whom were sitting poker faced in the audience): "if any reader phones up to complain that they are now being asked to pay for their copy then put them through to me." I wonder if they do.