Silo strategies?

Today’s consumer demonstrates increasingly promiscuous purchasing behaviour, driven by more choice of products, promotions and distribution channels than ever. Additionally, the increasing demand for our products to be delivered across multiple platforms is resulting in consumers becoming more selective on when and how they engage with our brands.

This is good news for magazine publishers as total audiences will grow. However, the fact remains that, generally, the circulation market is tough, especially at the newsstand.

At this time of the year, driven by either the annual budgeting process or the need to create a stand-out strategy for the major retail chains, newsstand circulation managers are knee deep in discarded ‘draft plans’ which still don’t add up to the publisher’s, or the retailer’s, revenue target. At the next desk, or possibly somewhere quite separate within the organisation, a subscription manager will be suffering the effects of hours of forecasting response rates, renewal rates and lifetime values.

Effective circulation planning should result in a cost effective circulation strategy to achieve a set of challenging, yet achievable, goals which has consumers at its core and is driven by purchaser insight. But, will that be the final output from weeks or months of hard work? The alternative is separate newsstand and subscription strategies, developed mutually exclusively in terms of thought processes, information sources and goal-setting.

Integrated or fragmented?

Have magazine publishers recognised this as an issue and structured circulation departments to integrate newsstand and subscription strategies?

Not according to Nicola Rowe, circulation director at the PPA; "About three years ago, I got a sense from publishers of there being more integration between newsstand and subscriptions: greater communication between the two functions, definitely less of the 'silo' thinking. My impression is that this integrated approach has not been adopted that widely and publishers are generally reverting to the previous approach where newsstand and subscription teams remain separate."

When Stephen Hirst, managing director at Marketforce, joined the organisation "many years ago" it had responsibility for IPC Media’s subscription business. However, the quality of subscription marketing has evolved at a frenetic pace over the past ten years and, according to Hirst, "requires such a different skill set" that this part of the circulation business is now managed within IPC Direct, which encompasses the company's subscriptions marketing, fulfilment, database marketing, mail order and telemedia operations, while IPC’s newsstand circulation team is embedded within Marketforce.

It could be suggested that such an approach could lead to a lack of joined-up thinking when it comes to circulation strategy. But that’s not the case says Hirst; "Although IPC Media splits the functions, the (newsstand) circulation team works closely with the various publishers, who are responsible for the bottom line of their magazines. With this over-arching responsibility, the publisher will work with both the (newsstand) circulation manager and subscription manager to create a strategy for all channels, subscriptions, newsstand, export and, increasingly, digital."

Simon Owen, publishing director at IPC Marine agrees; "The whole dynamic has changed. Even colleagues at Marketforce used to accuse the subscription department of ‘nicking’ customers, but now it’s a real team effort. We benefit from having the great depth of expertise at both Marketforce and IPC Direct. On a title like Practical Boat Owner, with subscriptions representing a 40% share of total circulation, it becomes harder to grow the subs base. The ‘brand team’ agrees on the strategy and where to invest the marketing budget, whether that is selling subs at a boating event or a promotional vehicle within the grocery channel."

However, there must be the potential for greater tension between teams when newsstand, subscription and marketing departments reside within separate parts of the publishing organisation. Varying opinions over the allocation of marketing budgets could result in a turf war where protection of budget becomes the over-riding priority. In this scenario, it is the publisher who is expected to make the ultimate circulation decision based on advice from different departments. That could be a tough call. Reid Holland, circulation director at Hachette Filipacchi is responsible for both newsstand and subscriptions. He believes there are obvious benefits of having newsstand and subscriptions reporting to one person; "We are able to manage our ABC strategy very effectively and develop the sales channel (subs or newsstand) which makes most sense. I am not emotionally tied to newsstand or subs and am able to target our marketing investment based on where we will get the best return on investment."

Holland believes the way Hachette Filipacchi is structured also avoids the problem of unrealistic targets; "I’m creating a circulation strategy for each of our titles which is focused on return on investment and delivering agreed sales targets, not putting in sales targets simply to hit an imposed budget."

For smaller, independently owned publishing companies, the challenge is not how to structure a circulation team but how to create time to allow some focus on circulation.

Patrick Napier, publisher and proprietor of Rock Sound, and a former circulation director, says he has so much to do that he simply cannot give circulation the focus he’d like; "I spend 15-20% of my time on circulation," he says, "and although I do believe there is potential to grow subscriptions, I have to focus my time on newsstand. My distributor does all of the analysis and makes recommendations on, say, retail promotional strategy, but I make the decisions. It’s my money so I’m very focused on return on investment."

Look across the organisation for talent

A team ethic is vitally important but too often commercial strategies are created with no, or minimal, input from editors. However, editors, especially of specialist interest magazines, should be seen as a rich source of consumer insight to fuel the circulation strategy. They probably spend more time with purchasers than any marketing manager within the industry, whether it is attending sailing events, running half marathons or listening to live music. Their feedback lives and breathes and can be of high value.

And, while the marketing skills reside within the circulation department, some (but, importantly, not all) editors have the commercial acumen to be terrific copy writers for subscription creative. It is a skill, for example, to be able to write the copy for direct mail campaigns which promotes the features and benefits of the brand in a language which potential purchasers understand and respond to, by subscribing.

In addition, by working closely together, both newsstand and subscription marketing managers can find that the best performing newsstand covers and cover-lines can become winning subs creative and that research on subscribers can support the newsstand strategy.

There’s more support out there

Publishers, or circulation teams, have benefited for years from the range of services provided by the national distributors – from how many copies to print, to where, and where not, to invest at retail in order to achieve the best return on investment.

But with an increasing focus on subscriptions, specialist knowledge is required. On the subscription side, over the years the service offer from fulfilment bureaux has not always included subscription marketing analysis and advice. That appears to be changing. For example, Dovetail, the new brand for the merged Galleon and Customer Interface businesses, provides a full subscription service, working with publishers to plan, implement, report and analyse results. And Tower Publishing Services recently launched a new marketing services function which aims to work with publishers or subscription teams to support the development and implementation of their subscription marketing strategy, offering a wide range of services.

Interestingly, circulation marketing companies are developing their range of services for publishers. Companies like Alliance Media, which previously operated as Bellsize, are providing one-stop circulation solutions for publishers. With a track record in controlled circulation and subscription marketing, Alliance Media now provides support across all areas of circulation, including newsstand. Former group managing director of COMAG, David Garratt, is now a director of Alliance Media. "We aim to provide specialist magazine publishers with advice across all routes to market", which, continues Garratt, includes the challenges which traditional "ink on dead trees" publishers face from online competition and "the challenge of meeting and embracing the need for online marketing of their own products."

The new challenge

Garratt’s last point is an interesting one. With brands extending online, a new challenge facing publishers is how to grow and understand their total audience. With some publishing companies, including IPC Media, releasing ABCe figures for some of their brands, publishers are beginning to think in this way. Not all circulation departments see this as within their remit today, and a lot will depend on organisational structure, but they may be expected to optimise total audience in the future rather than just total circulation.

Integrated approach

In a highly competitive market, in order to optimise return on marketing investment, a circulation strategy must be fully integrated, consisting of newsstand, subscriptions, digital, and ‘non-traditional retail’ strategies which support each other rather than pull in different directions. Only this way will publishers create a strategy with the consumer at its core.

Whichever circulation structure is in place, effective communication combined with quick and logical decision making based on consumer insight is the key to success. As Simon Owen at IPC says, "Structure doesn’t have to get in the way. It’s people and the quality of the team that make things happen."