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By and large, media coverage of magazines’ retail sales declines since the start of the recession has been big on assumptions (the always-reliable “digital is killing print” angle) and short on factual context.
Obviously, digital is a game changer for all traditional media, including print magazines, which are clearly being challenged to adapt their value propositions to meet consumers’ needs and expectations within shifting media consumption patterns and integrated publishing models.
But for all of digital’s strategic importance and growth, publishers’ own digital replica editions (paid, verified and nonpaid) accounted for 1.7 percent of ABC magazines’ total circulation in first-half 2012 (up from 1 percent in first-half 2011). And reliable consumer surveys have to date mostly found high percentages of consumers confirming continued preference for access to both print and digital versions of magazines—whereas it appears accurate to state that we’ve yet to read about research that directly correlates declining magazine single-copy sales with consumption of digital media (magazines or other).
Speaking recently to The Wall Street Journal, MPA president Nina Link acknowledged that competition from the Web and other media are no doubt playing a role in newsstand declines—but stressed that the primary reason is the weak economy’s impacts on store trips, traffic and impulse purchases.
Magazines are not alone. Nielsen data as of mid-March showed overall unit and dollar sales for U.S. food, mass merchandiser and drug chains down 2 percent and 1 percent, respectively. General merchandise as a whole was down 4 percent in units and 5 percent in dollars. In Q2, 30 percent of U.S. consumers reported that they have no cash for discretionary purchases after buying necessities, and 63 percent said that they’ll continue to restrain spending.
Supermarkets and supercenters—which together generate nearly 50 percent of magazine dollar sales—are fighting for traffic and market share with warehouse clubs, drug and dollar chains and other retail formats expanding their food offerings. Throw into this mix the demise of Borders, previously one of magazines’ top-10 retail outlets.
Yet, after several rough years, magazines generated $3.7 billion in retail sales ($71 million per week) in 2011—while delivering high profit margins for retailers and publishers alike. Further, in first-half 2012, while overall volumes dropped due to significant declines among the top 10 titles (nine of which are weeklies), 74 of the top 200 newsstand titles posted positive dollar sales versus first-half 2011 (combined growth of 24 percent, or $54 million), reports MagNet.
That’s why, “despite some of the trends, we find that retailers are supportive of and even bullish about the category,” said Jay Felts, president of national distributor Comag Marketing Group (CMG), at this year’s Retail Marketplace. Retailers “are more open than ever before” to innovative concepts and promotions that will help drive store traffic and sales of magazines and products with affinity to magazines’ editorial content, concurred David Parry, president of wholesaler The News Group U.S. and LP.
In short, while the long-term effects of mega-trends such as economic recovery and consumer spending and digital media consumption behaviors remain to be seen, there are areas of leverage or opportunity for magazines in the retail channel. Here’s a look at some new frontiers with potential for improving sales, along with more traditional strategies that can help move the needle.
Harnessing Consumer Insights
Retailers are revolutionizing their marketing and product offerings by employing consumer data gathered through loyalty programs and other sources (including coupon redemptions, responses to email promotions and site usage), combined with sophisticated analytics, to glean actionable consumer insights.
Can magazines, like other consumer products, harness some of this power through cooperative arrangements with retailers or retailers’ marketing/analytics partners?
“Technology and marketing data capabilities present areas of opportunity that we all need to explore and test—direct-to-consumer promotions that can incentivize and drive purchases in highly targeted, effective and measurable ways,” said Time/Warner Retail (T/WR) president/CEO Rich Jacobsen, in a 2010 interview with IPDA Newsstand Forum.
P&L challenges have tended to limit newsstand titles’ incentive-based promotional activity. To be financially viable for publishers, promotions have to generate incremental sales exceeding their costs: Success hinges on maximizing sales from new customers and minimizing giving discounts to existing customers who might otherwise have paid full price.
But according to Jacobsen, through proprietary research and testing with Time Inc. magazines, T/WR identified “keys to creating a purchasing ‘tail’ that continues beyond the promotional period”—meaning not only attracting new purchasers, but converting them into repeat buyers for magazine brands, thereby realizing positive P&L.
Not surprisingly, given competitive concerns, Jacobsen declined to elaborate on those proprietary “keys” to making incentivized consumers “stick” to brands, or provide examples/specifics.
However, an online search turns up some recent examples of limited-time offers for Time Inc. magazines, many of which link consumers into CouponNetwork.com—an offshoot of shopper data-driven retail coupon giant Catalina Marketing Corp. One was for a printable coupon good for $2 off a retail purchase of People. In another, targeted customers of a retail chain were offered a $2 coupon toward groceries for every two Time Inc. magazines they purchased, redeemable on their next shopping trips.
Time Inc., including People, has of course not been immune to newsstand sales trends, which have in recent periods been particularly tough on celebrity weeklies. But continuing use and testing of consumer promotions presumably speaks to their producing leverage for Time Inc. Further, Jacobsen’s core point was this: “Being able to harness trial [offers], as CPG companies have been doing for decades, is essential to building the magazine category’s customer base over the long term…and [making] headway in penetrating the huge wealth of potential new customers for magazines within mass retailers’ customer bases.”
More food for thought: During 2012’s Retail Marketplace, Jacobsen shared an example of how magazines can leverage “borrowed” partner platforms (as well as owned and purchased platforms) to drive awareness and sales for specific issues. CVS included an offer for People’s 2012 “World’s Most Beautiful” issue in an email promotion for its private-label beauty products, sent to millions of targeted loyalty-program customers. Those who bought a copy of the issue (at full price) could purchase three of the beauty products for $10. Results: a 53 percent sales jump for the issue in CVS stores, and an exceptionally high redemption rate for the three-for-$10 products offer.
Given that content/covers have to be more compelling and relevant than ever to appeal to increasingly selective and connected consumers, another potential opportunity lies in enhancing magazines’ currently-limited ability to gather direct feedback/insights from single-copy purchasers on a cost-effective, ongoing basis—insights that can’t necessarily be gleaned from using by-issue sales indexing and analysis. (Although timely access to POS data has certainly enabled faster editorial response, as well as faster adjustments of distributions and business models.)
Joe Bertolino, VP client services for Condé Nast Publications, notes that access to some retail behavioral data, in particular, would enable publishers to more precisely identify the specific drivers or “whys” behind single-copy purchases, and use those insights to take the honing and development of products and their retail marketing strategies and promotions to the next level.
He and other executives say they’re hopeful that retailers will become more open to mutually beneficial data-exchange agreements with publishers, given their overlapping customer bases, publishers’ own data-rich, subscriber-based databases, and retailers’ desire to drive magazine category performance and use the category to drive sales of other products.
Display Fixture Innovations
Even the most compelling magazines can’t hit home runs if they’re not in locations that provide exposure to the consumer traffic that drives impulse sales. In this regard, the category’s challenges include competition from other products for its traditional space at regular checkouts, self-serve checkouts with minimal or no merchandising fixtures (a significant contributor to sales declines for magazines and other front-end products), and mainlines relocated to less-than-optimal locations within some chain stores.
Various fixture initiatives are underway. In one, T/WR, wholesaler Source Interlink Distribution (SID), The Coca-Cola Company and checkout system vendor NCR used research and shopper data to create model fixture solutions for regular and self-serve checkouts, designed to optimize impulse sales of magazines, beverages and confections.
Separately, International Periodical Distributors Association president Jerry Lynch reports that a committee of national distributor and wholesaler executives is exploring potential display innovations for mainline, front end and other store locations, with emphasis on concepts that are executable, scalable and deliver ROI.
And in another example of how data can yield significant insights, TW/R’s Jacobsen noted during Retail Marketplace that research by Nielsen, Catalina and others shows that consumers are increasingly making their discretionary purchases within the first 100 feet of the store, in departments like produce and deli. Since magazines generally don’t have presence in those departments, key players are collaborating on display solutions that can be tested at retail.
Leveraging Digital/Social Power
Publishers are experimenting with ways to tap digital/social power to drive newsstand sales, and some early successes offer glimpses of the potential.
Using QR codes to add value and excitement is one tactic that’s showing results. Case in point: In Target, recent issues of Condé Nast’s Lucky have featured QR codes on the cover that link buyers to bonus-content videos (beauty and fashion tips from Lucky’s editors) plus an exclusive sweepstakes offering a grand prize of a $5,000 shopping spree at Target. Bertolino reports that the April, May and June issues’ unit sales significantly outperformed Lucky’s sales for the same issues in 2011, both on a national basis and within Target.
Condé will continue to test and expand use of QR code-driven value-addeds—and explore other potential digital opportunities. “All assets are on the table,” says Bertolino. He adds that while targeting likely newsstand-buyer prospects through social media is logistically challenging, location-based social and mobile are intriguing because they can reach consumers at point-of-sale.
New Products That Resonate
The success of high-priced specials or “bookazines” is a well-documented newsstand bright spot. But regular-frequency launches that tap into consumer passions and leverage multiplatform strategies can also still succeed on today’s newsstand. Hearst’s Food Network and HGTV magazines are high-profile examples, but smaller, more targeted newsstand launches can also hit the mark.
Examples: Three recent Source Interlink Media (SIM) launches that mark editorial category departures from its portfolio of automotive/action sports-enthusiast titles, have nearly totally print newsstand-driven business models, complemented by digital versions.
Quarterly Bound by Ink, launched in spring 2010, is selling 50,000-plus newsstand copies per issue with a cover price of $8.99 (print subs, numbering under 1,000, are sold only online, at a price higher than newsstand), reports SIM EVP David Algire. Recoil, a bimonthly (plus buyer’s guide issue) for gun enthusiasts/collectors launched in May, is selling over 60,000 print newsstand copies, also at $8.99 (no print subs). The launch issue of Geek ($6.99), aimed at young males hooked on the latest technology and entertainment (games, music, comics, events, etc.) hit newsstands July 3 (again, no print subs).
All three are premised on differentiating themselves through in-depth editorial and physical formats that include heavy-stock covers with special, visually compelling inks—addressing enthusiast content within an “upscale lifestyle” approach, says Algire.
Also, all three are using Facebook and Twitter to engage and build word-of-mouth among target audiences and promote new issues/content. Recoil is also driving sales with a novel value-added: A usable practice target is inserted in each issue. Going one better, a recent target replicated actual bullet groupings produced by a retired special ops soldier, and had a QR code linking users to a related video. Readers could use the target to do a practice shoot, compare their performance against the ops expert, and video their shoots for posting on Recoil’s Facebook page.
Cross-Merchandising: Working for Rodale
Outposting magazine displays in store departments that mesh with the editorial category is one of the existing concepts that retailers are more open to exploring these days—although the right dynamics and implementation have to be in place to make these profitable for magazines, as well as retailers.
Retailers have expanded their health/wellness departments, in turn opening more cross-merchandising opportunities for health/fitness magazines, according to Rich Alleger, SVP, retail, magazines and books. Wing racks that feature several Rodale magazines and other leading health/fitness magazines are now in the health/wellness departments of several regional grocery chains and national grocery chain divisions, as well as divisions of mass merchants, with testing and expansion continuing—and the displays are generating net unit and dollar sales growth on high efficiencies, Alleger reports.
Alleger stresses that significant logistical coordination and follow-through by all partners involved are critical, that programs often need to be adjusted based on the in-store location provided by different retailers, and the importance of reporting results back to retailers.
Publishers (including Rodale) also continue to partner with advertisers/CPG companies on in-store promotions. Developing, coordinating and implementing such partner promotions is complex and time-intensive, which has tended to limit their number. However, these programs also tend to yield particularly strong sales and ROI for all concerned (including the retailer), and publishers (who also benefit from strengthened advertiser relationships), are more keen than ever to develop such synergistic promotions.
When it comes to wholesaler and retailer promotion programs, Michelle Ingenito, SVP, publisher services and sales for Curtis Circulation Co., stresses that publishers need to understand all of the specifics, including number of stores, per-dealer sales and post-promotion coverage in the retailer, in order to select programs with real potential for the on-going, post-promotion sales that will yield a positive P&L on the initial investment.
Tip of the Iceberg
There are, of course, many more strategies and tactics being leveraged by publishers and channel partners.
Expanding distribution in specialty/nontraditional retailers is crucial for enthusiast publishers, in particular, as bookstore locations decline.
Developing and expanding promising new classes of retail trade, like dollar stores and warehouse clubs; tapping into consumer trends by testing launches and creating specials; and continued focus on honing retail distributions and targeting are crucial to the entire category.
On a tactical level, traditional, as well as digital, value-addeds or premiums seem to be on the rise. One example: Skateboarding magazine Thrasher sees consistent sales lifts from polybagging or inserting CDs or DVDs (inserting is less costly and pulls nearly the same results), as well as from inserting posters or stickers, reports newsstand consultant Joseph Berger. Moreover, these issues carry a cover price $1 higher than those without premiums.
Some publishers are also creating new newsstand-driven revenue streams through nontraditional models, like creating exclusive magazines for specific retailers, or launching titles sponsored by a single, key advertiser, points out Jim Roberts, EVP and COO for Kable Distribution Services. For instance, Air Age Media, the leading publisher of magazines and other media for enthusiasts of radio-control (RC) cars and planes, has recently partnered with Traxxas, the largest maker of RC vehicles, to launch Traxxas Magazine in traditional magazine mass channels and specialty retailers.
In short, there’s no dearth of possible areas to explore. The bigger challenges may be determining which have the greatest potential, juggling short- and long-term objectives and allocating investments and resources.
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