The customer magazine sector is on course to become a 100m business by the end of this year – double the size of the market just six years ago, according to Mintel. This trend is endorsed by CondÃ© Nast’s recent decision to join forces with Forward Publishing to expand its contract publishing interests. Both are working to meet growing demand from companies eager to have their own customer magazines.
CondÃ© Nast has been involved in contract publishing for the past decade, previously publishing titles for Selfridges and Harrods and now a quarterly title for House of Fraser. “The market is active although still in a state of development and widely varies in quality,” says CondÃ© Nast managing director Nicholas Coleridge. “There are a lot of blue-chip companies at the moment which have nowhere to go,” he adds. “We believe we have an edge with access to journalists and photographers most contract publishers don’t have.”
It is perhaps an indication of the level of sophistication the customer magazine business has now achieved. Jim Addison is managing director of Specialist Publications whose titles include Homefile for NatWest and Rapport for Peugeot. He says: “The demands on the publisher are greater than ever. The pressure is on to turn out magazines that are at least as good as those produced for the newsstands. If all a company is doing is publishing a magazine that’s thinly-veiled advertorial it will swiftly bounce back in its face.”
“Customer magazines” is fast replacing the term “contract publishing” as many within the industry seek to shed the tawdry association the old term still conveys. Some of the leading publishers, such as Redwood and Forward Publishing, even refer to themselves as “publishing agencies”. And they are being encouraged to do so by significant growth: there are now more than 160 customer magazines with many new titles planned for launch this autumn.
Growth is being driven by new companies which recognise the value of contract publishing and existing users exploit their customer magazines more creatively. There is increased understanding about what magazines can do. According to recent research conducted by RSGB, companies which do not have magazines assume the chief purpose is to raise awareness of a company or its products, and this is the main reason for launching a title.
However, those companies readily acknowledge it is one of the best ways to build customer loyalty, generate customer dialogue and even stimulate additional sales.
“Across a whole range of markets, price-cutting has been adopted as a short-term strategy. Many companies are now asking: ‘What next?’ They are addressing a new priority – customer loyalty,” says Jonathan Berry, new business director at Redwood.
“Although loyalty cards have their uses, whether they persuade people to swap brands remains questionable. The point about customer magazines is that they are a way of communicating with customers, reiterating benefits and reinforcing what’s good about that particular product or service.”
From a traditional core clientele comprising financial services, airlines and supermarkets, contract magazine publishers are now pursuing new business from electrical retailers, video games companies, the catering trade, travel agents and even fmcg brands.
New contracts confirmed in recent weeks include Switch On! – a customer magazine for Dixons Stores Group which will be launched this autumn by IMG. This will be available in all branches of Dixons, Currys and PC World as well as WH Smith and independent newsagents.
Future Publishing recently picked up the contract to publish the Official Sony PlayStation magazine which will support the launch of Sony’s new generation video games system this month. Meanwhile, the division of British Rail into separate operating companies has also generated new business.
This autumn, John Brown Publishing will expand Livewire – a bi-monthly title for standard class InterCity East Coast rail passengers – to replace InterCity, the previous long-distance rail title published by Redwood. Cross-country routes will be served by CrossCountry, a magazine launched last year by Mediamark.
“Growing interest in the business does seem to be changing what customer magazines are about,” says Neil O’Brien, publishing director at The Publishing Team. Future Publishing’s recently launched Magazine With No Name for Silk Cut and the success of New Crane Publishing’s Sainsbury’s The Magazine are two indicators of the redefinition of customer publishing, he believes. “These magazines are truly regarded as brand extensions in their own right.”
The aim of any customer magazine varies according to respective companies’ needs. “They will always be different – some want primarily to have a dialogue with the customer, others to create an overt sales place,” O’Brien explains.
“Our clients include Barclaycard, for whom we produce a mix of general interest editorial and Barclaycard information. The balance depends on the client.”
The client will also dictate whether a title takes paid-for advertising from other companies, or remains “clean” except for the company’s own advertising and promotional messages.
“In the early days, contract publishers did themselves no favours by promising to produce a magazine that could become self-liquidating through paid-for ads: it was completely the wrong approach,” Addison says.
“Unarguably, advertising can help give a title a true magazine feel, but revenue should never been seen as a way of producing a marketing tool on the cheap. It’s easy to promise, harder to deliver.”
Advertising revenue will become less important as marketers appreciate magazines can and do deliver against specific marketing goals, he believes. “We publish numerous titles with no advertising at all – it is a degree of sophistication in the market.”
Nor should newsstand distribution become a future goal for any self-respecting customer title, despite the precedent set by Sainsbury’s. Sainsbury’s The Magazine is widely regarded as a general interest newsstand title, although it can only be bought at newsstands in Sainsbury’s stores.
Benetton’s title, Colors, sells on newsstands for 2. Customer magazines should remember their place, Redwood’s Berry believes. “In the end, the consumer is buying a brand: people can buy general interest consumer titles elsewhere.”
A customer magazine cannot build a brand or lift a company’s profile on its own, says Addison. But by encompassing all of the other marketing services, it can build brands: by advertising products, running sales promotions, developing existing customer databases and through generating a feel-good factor simply by showing that the company cares enough to communicate. It can also combat the potential problem of brand decay by reinforcing a brand’s message.
“People already using customer magazines are finding they work,” he claims. “It’s a soft sell, but it’s an effective one.”
However, there are pitfalls. The target readership must be clearly identified and understood before any editorial product can be launched. It must offer the reader something of value – a good read as well as generally relevant and interesting information. “Only then can their needs be married with the marketing objectives of the client company.”
Evaluating the effectiveness of a customer magazine is often essential to encourage advertisers – and more critically, advertising agencies – to buy space in advertising-supported titles.
“There is little doubt the advertising agency’s perceptions of what is a customer magazine lags some way behind reality,” O’Brien says. “There is a perception that if people aren’t making a choice to go out and buy a magazine why bother advertising in it. This is naive.” Those companies using customer magazines do so for a reason – because it works.
This is borne out by qualitative and quantitative research, Berry claims. Reader response can also be tracked by monitoring the use of coupons included in the magazine, or by running controlled tests – promoting a certain product only in the customer magazine and watching subsequent sales.
Recent research conducted by Redwood showed that 70 per cent of people were buying a particular Marks & Spencer product after it was promoted only in M&S Magazine.
The potential of the market is also proven by the innovative use of customer magazines by a growing number of companies. Barclaycard recently replaced its previous single, all-purpose customer title with three magazines – each aimed at different customer segments.
Redwood’s new title for Safeway, A Taste of Safeway, will enjoy wider distribution than the supermarket chain’s own stores. Meanwhile, Omnicom-owned Premier Magazines plans a sponsored book division, Premier Books.
Many publishers are looking forward to significant growth in business from fmcg brands, although they concede that the message that a customer title could benefit a can of beans as much as a supermarket chain is yet to be fully acknowledged.
While Heinz incorporated a magazine within its 12m below-the-line campaign through WWAV Rapp Collins earlier this year, and Buitoni has produced five issues of a newsletter for members of its Casa Buitoni Club, the industry awaits the first food brand to launch a fully-fledged customer title.
“Inevitably, it’s about relationships – making sure people come to you and then come back for more,” Berry says.
And for the consumer goods brand it offers an opportunity to do so without the retailer getting in the way.
MARKETING WEEK SEPTEMBER 15 1995