Managing the Covermount Addiction

In 1999, a group of leading Spanish publishers held a meeting. The purpose of their meeting would, in most countries, be illegal as they were agreeing among themselves to stop a common publishing practice – covermounting.

In the following months, they watched sales drop, by up to 30% in several cases. So, the original agreement was then modified. Covermounts were to be reintroduced, but with a limit of four issues per year. Sales still continued to slide, so in the end the industry reverted to open, covermount war with no restrictions at all.

Yet this time around, a number of publishers started to develop a new strategy to cope with the situation, by getting the consumer to pay extra for the covermount. In Spain, Psychologies magazine, for example, currently has a three tier pricing structure:

* 1 Euro for the compact sized version with no covermount.
* 3 Euros for the A4-sized version with no covermount.
* 4 Euros for the A4-sized version with a covermount.

The consumer has a choice and the publisher has a new revenue stream: a creative way to manage a dangerous addiction.

Famously dubbed the "crack cocaine of publishing", covermounting has spread across a number of major magazine markets around the world and across a number of print categories. In the UK, fifteen years ago, covermounting was limited to cheap gimmicks, such as key rings and self-adhesive stickers and transfers, in a limited number of specialist magazine sectors. Since then, it has hit mainstream lifestyle magazines, moved into partworks (transforming them into "collectibles") and spread into national newspapers.

In addition, the cheap plastic widgets have become more expensive and sophisticated products: music CDs, film DVDs, computer CD ROMs, novels, makeup, handbags, flip-flop shoes; even radio-controlled cars, teddy bears and dolls houses - the list appears endless. The ante has been upped remorselessly as the competition intensifies. The Canadian market illustrates another dangerous influence. Here, the growth of "dollar stores" has offered the consumer the kind of products that used to find their way into magazine covermounts and this is making the magazine reader much more discerning and critical when it comes to the quality of magazine covermounts.

Brand advertising behind a publication is expensive, demands a long-term commitment and ultimately is very difficult to assess. By contrast, adding value to the magazine through covermounts and supplements brings immediate and measurable results. In an increasingly competitive magazine market, driven by the six month horizon of the ABC audit, that fast return-on-investment is difficult to ignore. It also creates accelerated consumer sampling for new or under-promoted titles.

So, covermounts "work" in the sense that they boost sales in the short-term. Yet what does "work" actually mean? They raise a number of fundamental issues:

1. Covermount costs
With few covermounts providing any real retention after the promoted issue, one-off sales uplifts can turn out to be very expensive. One UK newspaper publisher recently reported costs of up to £8 per additional copy added in covermount promotions.

2. Impulse purchasing
The magazine sectors which have very high levels of covermounting also have high levels of impulse purchasing. Which came first is a complex question, yet there is a real fear among covermount publishers that they are merely encouraging consumer promiscuity and volatile purchasing patterns through their activity.

3. Consumer expectations
Through this kind of promotional activity, the publishing business is constantly boosting the consumer's expectations as to what a magazine should deliver in terms of value-for-money.

4. Added value or product feature?
At some point, as has already happened in sectors such as computing and music, the short-term, added value promotion is used so often that it becomes part of the permanent publishing package, raising for ever the cost base for the publishers concerned.

5. Covermount fatigue
The publishing business, like any other, is driven by fads and fashions. This is often reflected in rashes of similar covermounts appearing. At some stage, the covermount, however attractive, can lose its appeal in the consumer's eye, simply because of its over-use. Publishers are then forced to move on to more innovative (and expensive) gifts.

6. Retail issues
While covermounts are well-liked by the retail head offices due to their proven sales-boosting power, they are much criticised at retail branch level for the practical problems they can create in terms of the limited number of copies that can be stacked on the shelves and of being subject to pilferage.

7. Advertiser issues
Are covermounts attracting the type of reader that the advertisers actually want? And, as the way that the industry measures magazine audiences drives marketing activity, are we measuring the right things? In addition, the sales boost from bargain-hunting consumers may be offset by the loss of some hard-core, loyal readers.

8. Covermount strategy
For such a powerful promotional tool, little strategic thinking seems to go into the usage of covermounts:

* Whether a particular covermount enhances the editorial values of the magazine.
* What is the publisher actually trying to achieve through a covermount? Is it a one-off brand-switch or is it part of a longer term promotional plan?

There are a number of key sectors in the UK where covermounts are used extensively. Research, commissioned by magazine distributor Frontline, highlights those sectors where the consumer is aware of covermounts and claims that they are a significant factor in the decision as to which title they buy. These are shown in the table, where the second column contains an index showing the influence that the cover mount has on the purchase decision (100 = the average for the whole magazine industry).

So, what does the consumer make of all this? Readers are actually very ambivalent about covermounts. Research across a number of magazine sectors shows that what appeals to consumers is very specific to individual markets and varies greatly from sector to sector. Yet there are some broad conclusions:

* In research, consumers initially play down the importance of covermounts in their purchasing decisions, yet once they have "warmed up" in the research process, they do own up to what a real difference they can make.
* Older readers tend to prefer editorial supplements. Younger readers love gifts.
* Modern, savvy consumers are very aware that they are paying for covermounts in the price of the magazine. Some would prefer a cheaper magazine without the gift, but the price differential would have to be significant to make a real difference.
* The quality of the covermount is a tricky balancing act. If it is too cheap, it is immediately seen as being tacky and patronising the reader. If it is too expensive, the quality of the magazine editorial itself is seen as being suspect and below standard.
* Polybags hamper browsing and can give the impression that the publisher has something to hide, but they can convey a sense of mystery and of there being something special inside.
* The covermount has two roles. It is important in the first stage of the purchase process in visually attracting the consumer to browse. It then can influence the final choice between titles after the browsing has been completed.

What is clear is that there are three broad kinds of covermounting magazine:

1. Those where covermounts have become an integral part of the editorial (eg. computing). The covermount is assessed in the same way as the editorial features in the magazine and is absolutely central to the choice of title.
2. Those where covermounts are an extension of the editorial product, but which are perceived as distinct promotions (eg. music, men’s lifestyle). The covermount is an important, but not dominant factor. The relevance and usefulness of the gift are key criteria.
3. Those where the covermount is seen as a simple promotional add-on. The consumer becomes very cynical and calculating with these titles. The perceived value of the gift becomes the central issue. Get the gift wrong and the publisher can really damage the magazine’s long-term image with the consumer.

What all this adds up to is that covermounts are a powerful sales-boosting tool, but one which can be very expensive and which can undermine both long-term reader loyalty and the magazine’s own brand values. As a result, many publishers who are currently committed to covermount programmes would love to end them. Will this ever happen? As long as covermounts work, it seems most unlikely that publishers will ever voluntarily stop. Although the option of trying to get consumers to pay a higher price for covermounted versions is an intriguing route.

Instead, what many industry leaders are now talking about is the environmental impact of cover gifts, polybags and plastic packaging. Apart from what the consumer does with their covermounts, the fact that waste levels on monthly magazines in the UK are currently averaging 47% (and rising) means that too much magazine product is heading towards the landfill. It is felt that some kind of "green tax" on covermounts will be imposed in the future, perhaps sooner than many think.

Only a sharp shock of this kind is ever likely to force publishers out of their current addiction.