2010 Fulfillment Service Bureau Survey

The numbers are not pretty, but vendors continue to push ahead with innovative solutions for publishers.

By Chandra Johnson-Greene and Bill Mickey
Monday, January 4, 2010

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[Click here to view accompanying charts.] 

While last year’s survey offered positive results for the fulfillment business overall, this year’s survey shows that the recession’s effect on an already-battered magazine industry has trickled down to its vendors.

The magazine shutdown trend continued unabated in 2009, and many of the surviving titles were forced to decrease circulation, frequency or were hit hard on the newsstand. These trends are reflected in sobering detail in the survey numbers for this year’s report. Title density, record counts, staffing and auditing are all in sharp decline.

The good news is that fulfillment vendors are now, more than ever, looking to accommodate their clients’ needs. Publishers are still working toward centralizing their databases and building out multiplatform product offerings, and the bureaus, both big and small, are ready and willing to assist.

As a part of this year’s survey, we asked the bureaus to list some of the new and more unique services that have been requested by their clients—from social media integration to paid content support—and how they’re planning to accommodate these requests. These new features, of course, are linked to publishers’ continued goal of building their digital products as way of compensating for print’s declining performance.

Title Density on the Decline
The results this year have been adjusted slightly due to the omission of several companies that have not responded to the survey for the last two years. These companies, however, only handled a small number of titles. We should also note that while CDS Global and CDS Global Canada were historically listed separately, the company has requested that we combine their numbers this time.

While the overall number of titles has been on the upswing during the last four years, bureaus reported a decline in 2009 to a collective 4,631 titles—down 226 titles from 2008, but up 239 titles from 2007.

The total number of print magazines is also down to 3,498—4,857 titles were reported in 2008 and 3,674 titles were reported in 2007. The only increase, as far as the number of titles vendors handled this year, was in non-magazine titles: 1,145 were reported this year compared to 1,076 the year before.

Total Number of Records Continue to Fall
While the bureaus reported an impressive 318 million records for 2008, it was still a slight decline from 2007. And, unfortunately, that decline has ramped up quite a bit. In 2009, the total record count collapsed almost in half to 230 million records.

The amount of total paid records has declined to 262.2 million in 2009 from 282.8 million in 2008, while the total amount of controlled records fell to 115.2 million from 295.1 million in 2008.

One area that is still experiencing growth is the amount of email lists being managed by the bureaus. In 2009, vendors handled a total of 1,420 lists, up from 2008’s 1,340. This area has seen steady growth since 2006, when bureaus only reported handling 670 lists.

Staffing Down, Account Reps Steady
While the downward trend in full-time staffing slowed a bit in 2008, it has picked up this year. Bureaus reported having 5,161 full-time employees in 2009 versus 6,299 in 2008.

The amount of account reps available to serve clients is slightly on the rise, however, continuing a trend from 2008. Bureaus reported having 592 account reps this year versus 588 the year before. It appears that vendors are cutting back on their full-time employees in all other areas except in their account rep departments, perhaps because clients are demanding more attention.

Auditing Support
Auditing support is also on the skids. Fulfillment bureaus reported 1,193 BPA audits in 2009, down from 1,307 the year before. The number of supported ABC audits was also down to 566 this year from 680 the year before.

The Street-Level View
International b-to-b publisher Institutional Investor has been taking the steps necessary—like many publishers—to make the transition to a multi-platform provider, and it expects its fulfillment provider to make that transition easier.

“We no longer use ‘publisher’ as a way to describe what we do,” Robert Tonchuk, director, central operations and fulfillment, told AD. “We are a global information provider. We no longer look at subscriptions as being something physical because we’re delivering content in numerous ways: Print, Web, email and digital. And what we need from our [fulfillment] vendor is a multilayer service for all of the ways we reach our customers.”

In addition to print products, Institutional Investor has Web sites that are only accessible via paid memberships, and some of those memberships are multi-tiered. Therefore, the audience development department needs to know what level of service each user is paying for in addition to all of the other products the user is receiving. “Our fulfillment house has to be flexible enough to handle products within products,” Tonchuk said. “We used to have everything separated by product, but now every product comes with all of these different packages. It’s really pick-and-pack publishing. It’s custom brought into the mainstream.”

Tonchuk said that fulfillment vendors can help make this type of “pick-and-pack” publishing run more smoothly by making data more flexible—for example, making flash-counts available in real-time. But it also involves a certain amount of flexibility from the vendor itself. “There is no fulfillment nirvana,” he said. “It takes steps to react to publishers’ needs because products get created and killed so quickly nowadays. With the market being what it is, if there’s a surge of interest in a certain area of the business, companies want to be able to create the content, go to press and get on the Web almost immediately. Vendors have to be there to assist.”

But despite all of the talk about integrated databases, real-time results and lead generation, there’s one basic area that vendors haven’t really figured out yet— international addresses. In order to print most addresses outside of the U.S. and Canada correctly, eight address lines and 80 characters per line are needed. Most vendors only offer four address lines and 50 characters per line, said Tonchuk. “You could connect a data cleanser to the entry forms, but that’s definitely an area that needs some attention.”

For the past few years, Tonchuk has been working with his fulfillment provider to create a master database that pulls in all of the company’s fulfillment data and allows him to map out everything the company needs to know about each client. He described it as an “octopus-like” system that reacts to each move that a subscriber makes. For example, if a customer subscribes to one of Institutional Investor’s products online, he may be immediately offered a related product. Fulfillment is at the core of this project, Tonchuk said.

“Most [publishers] look at their Web system as the most important, but if it doesn’t know what to do with the information it has, it’s just going to sit there,” Tonchuk said at a recent NTCFI luncheon.

“Fulfillment is where all of your demographic information is, so it’s important to marry the two together so that you know more than just what someone is subscribed to. With our systems tied together, we know subscribers’ renewal patterns, their areas of interest, and so on, and we can use that information much in the way that Amazon does.”

The Vendor View
In verbatim responses, vendors repeatedly hammered home their aggressive efforts to provide new services to publishers. Increasingly, these are Web-based functions that reflect the anytime-anywhere proclivities of consumers. Also this year, however, some vendors are reporting that they’re assisting publishers with unique projects that aim to assist their haggard print products. “Due to economic conditions, we are finding customers are interested in doing more special projects that may have fallen outside traditional fulfillment services,” said one vendor. “Some of these include targeted newsstand sales and inventory management and alternative promotions for attracting and renewing subscribers.”

Similarly, another vendor said “new” and “unique” were not on the menu. Rather, clients are looking for desperately simple solutions: “How can we, as a fulfillment provider, help in slowing their downward spiral of renewal percentages and conversions?”

Yet another has already jumped on the paid content wagon—a strategy that received renewed and intense scrutiny from revenue-squeezed publishers in 2009. “Another growth area is paid access to online content, such as a day pass or full archived issue access. No more freebies. This is accomplished through a Web interface between our client and the live integrated database housed here.”