Integration, Meet Circulation

In the U.S. portion of the Hachette deal, Hearst Magazines gets five new titles. Here, AD checks in with Liberta Abbondante about Hearst’s strategy going forward.

By T.J. Raphael
Monday, August 1, 2011

Liberta Abbondante is a circulation veteran currently working as senior vice president of consumer marketing at Hearst Magazines. Before signing on with Hearst she was vice president of circulation marketing for Dow Jones. She has held circulation roles at Forbes, Reader’s Digest, Lang Communications and the Smithsonian Institution.

With the integration of the Hachette titles, Abbondante is working with other groups to blend the company’s various marketing platforms and optimize the brands. Audience Development checks in with Abbondante to see how her team is executing their circulation strategy, Web subscription marketing efforts and what the new ventures mean for the company.

Audience Development [AD]: How has the integration of the Hachette titles, from a consumer marketing perspective, been going?

Liberta Abbondante [LA]: It’s been a very smooth integration because we’ve had ample time to study and plan for this. We started to look into the Hachette business well into the beginning of this year—sometime around January or February—so we’ve had plenty of time to study and plan.

AD: Can you take us through that process? Highlight for us the major steps in integrating that many titles and at that kind of scale.

LA: We began the process several months ago. We started with what is normally called due diligence, which was part of the acquisition process. We looked at vendor agreements and the terms and services that were provided in those agreements. We reviewed and analyzed the marketing plans that were in place, as well as historical performance from a marketing perspective, for all of their subscription and newsstand channels and the sources of business they were using.

We documented what their pricing strategy was, we evaluated all of their subscription sources from a financial perspective to determine profitability for all of those assets and we also assessed the staffing plan and their resources. 

Once all that was done we then structured our consumer marketing organization to accommodate those titles coming over. We had to make some changes to our existing team and the first thing that I did was I created title-specific and category-specific, broad product groups. We created a men’s group, a women’s lifestyle group, a home and shelter category and a beauty and fashion category.

Several of the marketing directors were assigned to each of those broad categories and they’re now the specialists in those categories. The titles were then parsed into each. We’re now structured with a matrix environment so we’ve reorganized customer and market segments like new business acquisition or retention, and operational processes like fulfillment. I have a staff of people that is responsible for fulfillment; a staff that is responsible for database and analytics, and planning. There are teams that are responsible for new business and subscriber acquisition or retail sales and chain marketing. We also evaluated the incremental workload and how many more people we would need within each of those teams. Once the teams were in place, we began to operate the business—drafting our own marketing plans, creating promotions and campaigns using Hearst tactics and techniques. We then we began to shift the operation towards vendors.

AD: Will the Hachette titles be undergoing any rate base changes, adjustments at newsstand and/or subscription pricing changes to put them more in line with your existing stable of magazine brands?

LA: We’re going to certainly take a look at the publishing models. We have evaluated the cost of all those titles as well as our own. The rate bases we guarantee our advertising partners, as well as the frequency that each of these magazines is published under will be reviewed for some changes, but there isn’t anything I can speak to because it’s not public yet for 2012. But it’s something we do on an annual basis here at Hearst, where we evaluate the publishing model and determine if the economics support the current plan.

AD: What were some of the cross-marketing strategies between the existing Hearst magazine brands and the new magazines that were immediately evident?

LA: Certainly, we like the editorial content. So, now that I have a men’s group, we’re testing whether there are synergies between, let’s say, Popular Mechanics and the car titles—Car and Driver and Road & Track. So just from a straight cross-sell, whether it’s online, in the mail or even doing combination promotions where we’re selling two magazines together, we’re definitely moving down that path. We’re also applying this on the home side with Elle Decor, House Beautiful and certainly with Good Housekeeping, Redbook and Woman’s Day—these are all opportunities.

AD: How have you executed on these?

LA: We have tests in place for next March and a direct marketing campaign, which launched in September, and we’ve begun some cross and upsell marketing online. Online, we’re upselling and cross-selling, so if the customer comes to Good Housekeeping and they order a Good Housekeeping subscription, there’s an immediate upsell that might say something like ‘Would you also like to order Woman’s Day?” There’s a version of that where we’re selling Good Housekeeping and Woman’s Day together to see if we can’t sell more subscriptions with that formula versus an upsell.

AD: In terms of the customer base of the new magazines, how will you be integrating these folks into the Hearst customer database?

LA: That’s happening right now. Hachette did have a database of about 25 million customers and we’re moving that into Hearst’s, which will give us a very large database of about 165 million customers. To accommodate the larger size that we anticipate from the integration we had to migrate to a larger and faster platform. In addition to migrating the database, we’re also migrating the subscriber fulfillment files from the current vendor to CDS Global, which is Hearst’s fulfillment company. There’s a lot of moving parts that are going up and down right now.

AD: How are you managing this while simultaneously distributing the magazines into the market? 

LA: The fulfillment databases are separate from the marketing database.  We can continue to service our customers from the fulfillment database while we integrate Hachette customers into the Hearst database.  

AD: With the drop in print ad revenue felt across the industry, many publishers are now focusing their revenue-generation strategies back on the readers. The idea is to draw consumers deeper into the brand and getting them to purchase more print and digital products. From a consumer marketing perspective, how is Hearst approaching this tactic?

LA: First let me say that the Hearst strategy is direct to consumer, over 70 percent of our subscriber base is derived from direct consumer promotion, the remaining subscribers we get from partners that can acquire those subscribers on our behalf at better economics than we can. In addition to that, there are a number of initiatives in place, whether it’s e-commerce that we’re completely involved in or upselling consumer products and goods to our consumers—these are all things we’re now beginning to do. Hearst has a book division, so we’ve been somewhat active in the direct channel in selling books to our customers. That is accelerating and you’ll see some pretty big initiatives from us in the first quarter of next year in that regard.

We have a very large partnership, for example, with CLAD and Gifting Grace. We’re very involved in helping drive that relationship and we’re driving it through our database and our analytics that we’re providing to the partners, so we’re helping them target their marketing efforts using our resources to our customers.

AD: How has the introduction of the tablet devices, and Hearst’s aggressive moves in this area, impacted consumer marketing—from how you’re positioning and pricing print magazines to potential bundle offers, and the like?

LA: Hearst has been very active in the tablet market for many years, as you know we’ve had a long standing relationship with Zinio for at least four to five years so we’ve been active in that market place and we’re really encouraged to see the growth of both single copy and subscriptions over the past few months.

It’s one giant public experiment. We haven’t cornered the market on the best way to go, but we do have several tests on the way that involve bundling and discounting digital to customers that already pay us for print. There is a lot of activity in testing and measuring how to position these offers to consumers, as well as a large research study that Hearst is undertaking regarding consumer acceptance of pricing.

AD: Can you elaborate on how the consumer marketing team contributes to the experimenting on the tablet pricing and bundling, based on what you know about your print audience and what you’re learning about the digital audience?

LA: We have a wide range of tablet-specific price and bundle tests active across online, email, retention and direct mail. We also spend a good amount of resources working directly with the digital storefronts influencing their marketing approaches and optimizing performance. Our success with digital editions and tablets will come from a group collaboration both within Hearst and with our outside partners.

AD: Like other publishers, Hearst has moved into the group buying/commerce space, particularly with Car and Driver and Road & Track. Is your team offering any insight into this project from a consumer marketing and customer data perspective?

LA: We’re helping our commerce partners with their analytics. We do help them with the models and the targeting of their messages to their customers because we know our customers well. So, we’re helping them with pinning the right message to the right person at the right time.  

The New Titles

In all, last May Hearst acquired almost 100 titles in 14 countries from Lagardére SCA, as well as associated digital products—50 Web sites and other mobile and tablet products—in a $919 million deal. The U.S. portion included Car and Driver, Road & Track, Elle, Elle Decor, and Woman’s Day.