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You really should get out more …

Whether to use hard won marketing investment to drive postal subscriptions or retail newstrade copies is a daily dilemma for circulation directors and publishers. Why are subscriptions growing? What are the USPs and plusses for retail that need to be reinforced? David Stam, a self-professed newstrade devotee, weighs up the arguments.

By David Stam

Picture a typical consumer magazine circulation department. The subscriptions team in one half of this high-tech environment have smiling faces. They are struggling to cope with the influx of new readers and the queue of publishers lining up with their pots of marketing money. Across the way, their war-weary newstrade colleagues battle with declining monthly volumes and continued supply chain uncertainty. What has happened to the perception of newstrade sales? And how do newstrade stalwarts come back from the dark end of the street to the bright side of the road?


The trends seem quite clear. According to Wessenden Marketing’s Circulation Briefing (No.118–2006) subscriptions account for 13% of sale for an average UK consumer title. For weeklies, this figure can be as low as 6% and for other frequencies, as high as 20%. Wessenden estimates that the current drift of retail into subscriptions is half a percent a year. This number would probably be higher if it were not for the strength of weeklies in the UK marketplace and the healthy retail estate who sell news. It is concluded that the subs / retail mix could stabilise at 22½% subs to 77½% retail but that will depend upon publishers’ initiatives and investment.

One key reason is that postal subscriptions are becoming easier and cheaper to harvest. Dave Appleton, client services director of Quadrant Subscription Services, states, "Over the last 18 months we have seen a tremendous uplift in web based orders. Subscribers to titles now have the ability to fully manage their subscriptions online." Appleton also emphasizes the popularity of direct debits. "Subscribers now have real confidence in this payment method."

Leading consumer circulation directors and publishers point to a whole host of practical and strategic reasons to explain the shift into subs. Exclusivity of wholesale territories is now in its fourth year of review by OFT – a time span which is causing increasing uncertainty about the future of the independent retail sector. In particular, retail availability of specialist titles is seen to be under pressure. They also point to the increasing cost of retail promotions and the difficulty of justifying rates of return compared to many subscription promotions.

From a practical perspective, subs marketeers stress the positive cash flow from this market route as well as the highly cost effective and environmentally friendly lack of unsold copies.

But, talking to the main players, the big issue is about control. Subs bring your customers to life – not just a name and address, but increasingly a lifestyle profile. Treat them with respect and new subscribers can be yours for life.

Subscription marketeers desire to spend what they want, when they want to spend it. Return on investment modelling is becoming increasingly sophisticated. The mantra is Test, Test, Test. They don’t have to worry about the foibles of the latest range review or hike in retail promotional costs.

However, like their newstrade colleagues, they have had their own regulatory issues to deal with. In August 2006, Royal Mail introduced Pricing in Proportion, a pricing mechanic which introduced size as well as weight to pricing templates. According to the Periodical Publishers Association, the industry is now grappling with an April price increase from Royal Mail of over 6% and potential changes to discounts with a zonal pricing review.

The benefits of retail

A consumer magazine’s circulation profile is a balance between newstrade, subscriptions, international and frees / controlled copies. If the balance of optimism is starting to swing towards subscriptions and direct marketing, what are the key benefits of retail sales and how can the newstrade address that swing?

1. Effective launch pad.
Let’s not forget that mass weekly sales are the lifeblood of the magazine industry. Women’s weeklies and TV listings titles combined account for 33% of retail newstrade revenue. These sectors have been the focus of launch activity over the last three years and the market has just welcomed Look, from IPC Media. Relatively low cover prices, when compared to postal costs, make mass weeklies a tough sub to sell – and the time sensitivity of the products does not assist. If mass weeklies are where all the action is – and you want to be with that action – you have to think retail.

Will it one day be possible to launch a mass consumer title on a pure subscription model? Launch could be by mailshot, email marketing or TV shopping channels. In theory, there is no reason why not. But it would be a slow sales build and does not fit well with the traditional print-on-paper financial model of high start up costs followed by low run on costs. Awareness of advertisers is likely to be low and media buyers may be less likely to support such a launch. Retail newstrade is going to be the most effective launch pad for mass consumer titles – for a long time to come.

2. Highly visible.
A high degree of retail visibility is seen as a key component in building and maintaining a strong brand for consumer magazines. Major launches need to be supported with retail market budgets close to half a million pounds and the established icons of the magazine world also still spend heavily to maintain listings, sales and the awareness of consumers and advertisers alike. Retailers and media sales houses are savvy to the opportunities. Publishers can purchase window displays, in store TV or radio or outdoor poster sites adjacent to key retailers. Retail promotions are increasingly seen as a form of brand support at the all important point of sale.

3. Opportunities for specialist titles.
Don’t just think that newstrade is now the domain of large circulation titles. Specialist magazines, with relatively high cover prices and loyal frequencies of purchase, still have many opportunities open to them. As far as the independent sector is concerned, try one of the sales clubs managed either by the multiple wholesalers or by the National Federation of Retail Newsagents. They offer targeted and tailored promotions with high rates of compliance and are a highly cost effective way of promoting your title to independents.

Ranging and listing of specialist titles with multiple retailers is becoming tougher and more expensive. But supermarket groups are keen to extend their ranges and offer innovative specialist promotions. Tesco, in particular, is keen to extend its range to include specialist titles and, in 2006, extended its range by 20%. They are also just about to run a unique sector promotion with specialist weeklies the Economist, New Scientist and the Spectator.

There are always customers who want to buy at retail – however hard you push them to take out a sub. There are also customers who dip in and dip out. All have to be catered for. Many specialist publications excel at leveraging good PR around their editorial content. Country Life is a brilliant example of this, with well executed campaigns such as Britain’s Best Loved County. It’s Devon by the way – and you can bet that plenty of copies were sold to doting Devonians when the story broke. A purely subscription title could not have flexed to such instant demand.

4. Data rich.
Newstrade folk can be data junkies too. Your author comes from a generation which believed that more sales could be achieved by sharing a couple of pints of Guinness than from a computer print out. But he hails from a dying breed. All major distributors and many publishers now have access to every sale of all of their titles every week. Daily epos-driven rates of sale are available for the larger circulators. Promotions are analysed and ranked by cost effectiveness. Highly robust, cost effective and well targeted newstrade strategies can be devised and executed and go hand in hand with instinct and trade nous. And many will continue to be executed over a pint of the black stuff!

Recently, the industry has seen two innovations which bring together the differing skills of retail and subs marketeers to achieve the common goal of more sales. Homelink is a business run alongside the National Federation of Retail Newsagents. According to Homelink’s chairman, Peter Wagg, between four and five million newspapers are home delivered each day. Homelink is starting to use call centre technology to sell magazines alongside these home delivered copies. Wagg is adamant that ‘service sells’ – the service in question being home delivery of the ordered title via a local newsagent. He goes on to say, "consumers don’t think of home delivery for magazines any more – they have to be prompted." He stresses that many of the beneficiaries of the initial tests have been niche and specialist titles.

WH Smith High Street has been an innovator in marketing gift subscriptions to their customers. That last minute gift idea for Mum or Dad can be a 12 month sub to their favourite magazine. The concept is simple – buy an attractively packaged subscription gift in store and give it to your loved one. After the year, the customer hopefully renews.

Homelink and retail subscriptions are great examples of circulation fusion – promotions which combine the strengths of both channels. They deserve to succeed, so do support them.

Retail circulation marketing is constantly innovating and it’s an exciting place to be. So subs marketeers, turn off your computers for a couple of days and come and look. You really should get out more.