Investing in circulation

Business publishers’ primary sales assets should be circulation quality and editorial excellence. Everything else is a bit of a smokescreen, including PR puffs and price discounts. But with design, print and paper standards increasingly commoditized, me-too magazines on low overheads with energetic sales teams use that smokescreen to divide the spend.

There are too many business publications in most UK markets, splintering the ad spend which used to justify circulation development. For advertisers, it’s a downward spiral of reducing return from magazines as a medium and ever more casual commitment to individual titles. Rankings are often based merely on personal relationships or the brand’s strong history, not a close examination of qualitative differences.

"All the business magazines in our sector seem about the same. If they help us promote our products and ideas editorially, we occasionally say yes to one of their low price advertising deals. We like to spread our advertising around."

If yours is seen as one of those magazines, it’s hard to justify a significant investment in circulation, or indeed in anything else, after a decade or two of gradual market destruction. But not investing may actually end up costing more.

Overcrowded sector

The industrial sector is a good example. Findlay Publications has three titles, covering engineering design, production engineering and factory management. Over twenty competitors have display revenues now averaging less than £500k within a total advertising market spend below £10million. Half of these titles have been up for sale, with no obvious buyers.

Not much room for investment there. Yet Findlays spends over £500k every year on maintaining the circulation database of these three and its other four titles in the manufacturing sector. That database is seen as the engine driving the company’s envied position as the sector leader, though the company itself values its market knowledge and editorial expertise just as highly.

When Findlay’s industrial magazines were averaging over £1million each in advertising every year, a £500k annual database expense, with the bonus of attracting significant below-the-line marketing revenues, seemed fine. But three years of recession have heaped on the pressure to cut back.

Despite this pressure, Findlays has maintained its spend and invested a further £250k in new software and systems which complete the integration of all its database assets into a shared network of compatible information across the business as a whole. It has done so to widen the visible lead over competitors, firmly convinced that it can win the major share of returning business when the upturn arrives. It believes it can break the me-too mentality which has encouraged advertisers towards betting on almost every horse in the race instead of trying to choose only the winners.

Circulation can be the most tangible of all magazine sales assets, but only when demonstrated in terms which clients themselves can embrace. Findlay sales staff can sit with a client and use their laptops and mobiles to go live into its databases. The client names a company and the sales rep tells him all about it and its decision-making teams on the spot, using relevant demographics not available from any other source. The clients know whether Findlays have it right, because they choose for the test big companies they know well or small ones they think Findlays won’t know at all.

Building universes

Findlays’ ABC audits are different too, because the whole database is audited, not just one set of readers. But that’s not the secret of success, just the proof of it. What really sets Findlay circulations apart is that they deal in universes, not just numbers of requested readers.

Let’s go back a bit to see what that means. Before controlled circulation, business publishers sold the quality of a group of subscribers who cared enough to pay. Then free magazines offered higher circulations and produced superior demographics over the subscription titles. They persuaded the free recipients to request the title, providing information instead of money. ABC moved in to audit the demographics and the requests, as well as the total circulation. All these years later, there are still only a relative handful of magazines completing the ABC’s gold standard Profile audits.

Profile audited magazines generally set more stringent rules than the rest for acceptance of requested readers. But they still need to set coverage quotas, i.e. "X" readers will be accepted in sites of "Y" type, because they can’t afford to give the magazine away free to anyone who wants it. Or can they? There’s a conflict here: the higher the level of requested readers sought, the wider the terms of control need to be drawn in order to reach the target circulation total at reasonable cost.

ABC has become increasingly effective in testing that all readers meet the declared terms of control. Many magazines have either dropped out of Profile audits or relaxed their controls, often so far that virtually anyone can qualify, i.e. the magazine becomes fully requested but isn’t any longer truly controlled at all.

Findlays sets very tight rules, with no quotas. It studies every site separately in terms of departmental structure, size and reporting lines, creating full family trees of appropriate decision-making teams. It identifies two out of every five qualified staff in these departments and only then sets out to obtain enough requested readers to deliver, via agreed pass-on copies, full circulation within any department in the opinion of senior people in that department. The requested target is set and met at 90%, because experience shows that 100% of a universe is impossible, even for strong brands. Data is renewed on a rolling cycle averaging about two years and the company would like to shorten that, but costs are almost entirely pro rata to the time cycle.

That half million pounds of annual investment delivers high value. And despite recession, Findlays is still investing it, because the database is right at the heart of its leadership strategy and enjoys full buy-in at all levels within the company.

Spin-off revenues

Having such an unrivalled database opens up deeper relationships and wider revenues within leading clients. Findlays not only undertakes list rental and telemarketing services, it manages entire client company customer and prospect databases right through onto client sales staff desktops. And its separate subsidiary, Benchmark Research, conducts a wide range of market sizing and customer surveys alongside quantitative and qualitative research studies, using its preferential access to the databases.

Circulation development doesn’t get easier, with increasing market resistance to providing data and the growing obstructions of voicemail. But Findlays has been doing this work by telephone for over twenty years and is recognised by readers as updating data it already holds and uses for legitimate purposes. Staff take great care not to abuse reader relationships and the company benefits from the trust painstakingly created over time.

Findlays is ploughing its own market furrow, but is not complacent. As publishing director Peter Knutton puts it, "We are way out in front on delivering quality, but still engaged in a continuous struggle to convert that lead into superior ad volume and premium prices."

"With the manufacturing market ravaged by recession, it often seems a tough slot to maintain. But when we look at the future, we can see clearly how we will grow from market recovery, while me-too titles remain stuck in the rut of low value and low price. Most of them simply won’t be able to climb the steep hill up to profit in a more discerning market."

Is this philosophy right for your market? If you want to talk more about it, give Peter Knutton a call at 01322-860000.