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Coming from a land down under

Should you consider the Australasian magazine market as a potential export opportunity? Patrick Horton, circulation director of Emap Australia, shares his insights into selling magazines in the second largest export market for UK publishers.

By Patrick Horton

At the recent Australian Newsagents conference, I met a guy who had built up a highly successful seafood business, catered for the Queen in 1988, the Olympics in 2000 and sold it all to open a newsagents in Brisbane. Well not just one – he now operates a chain of three in shopping centres across Queensland – but nevertheless it’s still a pretty remarkable career change.

I think that says a lot about the business of news in Australia. Whereas in the UK (and most other parts of the world) independent newsagents are culling their ranges, diversifying into convenience or selling up altogether, Australian newsagencies are still seen as viable, profitable concerns with magazines particularly seen as fundamental to that success.

In my mind, that presents both local and overseas publishers with a significant and rare opportunity. Probably the single greatest issue facing smaller, more specialist publications in the UK is the distribution conundrum. Retailers are increasingly choosing to stock fewer titles, rationalising customer choice and sweating the space to maximise the return. Which is all very well, but just because fewer titles are available at retail doesn’t mean that demand is less. It is just that business pressures dictate that retailers in the UK have to use the space in the most efficient way possible.

Loads More Space

Space, therefore, is probably the reason why the situation is so different in Australia. There’s simply more of it. Retail rents on average are 40% lower in Australia than they are in the UK, which allows for retailers to be more generous with the proportion of the shop they allocate for products such as magazines. It is not untypical for newsagents in Australia to carry ranges of 2,000 to 3,000 magazines, large numbers of which are imported product. The most diverse interest categories are normally catered for. It’s like the largest Borders store transplanted to your local neighbourhood and for UK magazine publishers, it’s a revelation.

Which isn’t to say that the picture is entirely rosy. The number of newsagencies is relatively low – around 4,500. Multiple chains still have a low penetration of newsstand sales: only 25-30% of sales are estimated to come from supermarkets, convenience and other company-owned chains. And most perplexing of all is the concept of sub-retailing. Newsagencies are appointed by publishers and, rather like miniature wholesalers in the UK, are allowed to sub-retail their stock to other retailers in a defined geographical area. What that means in practice is that a lot of what happens is out of the control of the publisher or distributor.

The Big Boys

There’s also the stark reality of the balance of power in Australian publishing. Like a lot of industries in Australia, the magazine publishing business is dominated by two players, ACP and Pacific Magazines, who together own some 70% of the audited GBP400m pa market value. These two behemoths aren’t just magazine publishers – their parent companies own TV stations, newspapers, distribution companies and printers. Further recent relaxation of media-ownership laws in Australia means that increasing consolidation is inevitable. Indeed News Limited, which owns large TV and newspaper assets as they do in the UK, has just bought Federal Publishing (owners of Condé Nast’s licence in Australia) and are leading contenders to purchase Time Inc’s publishing interests in Australia too. That could take their share of the market to 11-12% and give them some heavyweight bargaining power across newspapers and magazines in both distribution and retailing.

What does that mean for everyone else? In short, focussing on where you actually have a chance to affect something. Supermarkets are a case in point: unlike the UK where you can actively invest in trade marketing and promotions to grow your listings and sales, the supermarkets here carry a much reduced range, little promotional space (mainly checkouts) and what they do have is largely dominated by ACP and Pacific. They’re also not growing: Woolworths’ magazine category is only growing at 3% pa and Coles, the other major supermarket player, is flat. Plus, they expect additional margin from publishers. In other words, as an overseas publisher, it’s not worth chasing.

The Outlets to Target

There are some enticing alternatives however. Newslink (formerly WHS Travel in Australia) has long been an attractive place to do business. Large, high-traffic locations in airports and train stations; a flexible ranging policy with a heavy international selection; varied promotional vehicles to allow publishers to showcase their key issues; it all amounts to a retail environment that is open to new and imported product and in driving sales. It can be expensive though, so be mindful of the return you want before you commit to investing oodles of cash in gondola ends and graphic panels.

Petrol and Convenience store outlets are also growing extremely fast at the moment, although they operate with fairly restricted ranges. 7-Eleven, BP, Mobil and the convenience arm of Coles, Coles Express, are experiencing double-digit growth and allow publishers to promote via off-fixture units and counter stands. Zoo Weekly, which Emap launched in Australia as a locally-published offshoot of the UK version in 2006, has been a phenomenal success in this sector and now ranks as the biggest title in this channel.

But for most UK-based publishers, the majority of your sales potential lies in focussing on the independently-owned newsagencies. With large ranges and pro-active staff (for the most part) that nurture smaller publications, this is the breadbasket for specialist and overseas publishers. The biggest challenge is in achieving standout amongst the clutter and noise and that frankly can only happen through awareness campaigns and promotional POS material in carefully-selected retailers.

It’s your distributor that can help here. There are three magazine distributors in Australia: Gordon & Gotch, Network and NDD, the first two of which are very similarly structured and resourced. Both operate large teams of merchandisers whose job it is to call on most of the bigger newsagencies each week and drive sales on behalf of their publishers. For a price, this team will be able to sell-up your title to the retailer, secure display space and site POS. Whether this translates directly to sales is debatable, but it certainly creates brand awareness.

So, what’s my advice to publishers in the UK who are eyeing up the Australian market as a potential distribution opportunity? Some key points:

* Spend the most amount of time getting the deal right with your distributor. Most distributors charge on a per-copy-distributed fee (either fixed or as % of RSV distributed) so think about what suits based on the value of your cover price (particularly relevant for imported magazines). Once agreed, ensure you make the most of that distributor’s local knowledge and expertise in promotions, allocations and category insight.
* Price your magazine effectively. Whether you air-freight or sea-freight will have a significant impact on this and if you do both, think about whether you want the two products sitting side by side as one will be carrying a heavy price premium. You might be better served by keeping air-freight titles for travel points only for example.
* Be highly selective about the stores that you invest in, but invest more in those stores. In the majority of cases, it’s only the top 200 newsagencies that deliver the vast bulk of your sales, so target them with copy appropriately, spend on merchandising to generate awareness and promotional positioning and then get your distributor to monitor the supply carefully.
* Forget about supermarkets unless you really have a genuinely differentiated offering that is likely to generate significant additional sales. Spend money in Newslink (travel) but try and link it to some degree of permanent listing in order to justify the investment.
* Be careful with your covers and content. What works in the UK might not work down under. Raunchy, controversial covers are out; the seasonality is different; and heavy UK-centric content might not translate to an audience 11,000 miles away, however similar you might think the culture to be.
* And finally don’t forget about New Zealand! Granted, it’s a smaller market but one that is in some cases more attuned to British publications than Australian ones. Loaded UK, for example, is the third biggest men’s title in NZ yet barely registers in Australia.

Australasia is still a vibrant market for magazine publishers. Yes, it’s still subject to the same global pressures on magazines as everywhere else - not least the migration to new media – but here there’s still a commitment to magazine retailing that is rare and precious. My advice is to take advantage of it while you can - while there’s still an appetite for consumer spending on a wide range of magazines and from pro-active retailers on selling them.

Australia & New Zealand magazine market at a glance

* Total magazine market worth £450-500m pa
* Growing at 2% per year (value)
* 95% of sales are from the newsstand (5% subs)
* Sales heavily concentrated around the urban centres of Sydney, Melbourne, Brisbane and Perth (Oz) and Auckland, Wellington and Christchurch (NZ)
* In Oz, there are 7,500 direct supply outlets and an unknown number of ‘sub-retail’ outlets. In NZ all 4,500 outlets are direct supply.
* 65-70% sales through independently owned newsagencies (also known as dairies in NZ)
* Major local publishers are ACP, Pacific, News Limited, Emap, Time and Northern & Shell
* Distributors are Gordon & Gotch, Network and NDD (Oz) and Netlink, Gordon & Gotch NZ and IMD (NZ)
* Most publishers pay on a per-copy distributed or % of value distributed basis
* VAT is included on all magazines

Distribution Contacts
Gordon & Gotch AustraliaGabriel
Network AustraliaAngelene
Netlink New ZealandJenni