Contract killers

As the quality of customer magazines improves, more companies are getting in on the act.

The customer magazine industry is growing fast – turnover is up by 11 per cent a year and the market itself is now worth over 100m. Editorial and production standards are higher than ever and, perhaps most importantly, levels of consumer awareness and acceptance of the medium are also on the increase. However, it is still difficult to ascertain precisely how – and, indeed, whether – readers respond differently to customer magazines as opposed to news-stand titles.

A new Mintel report sheds some light on reader perceptions. The research reveals high awareness levels of many types of publication. Almost half the sample of 1,517 UK adults had received and/or read a supermarket customer magazine, while a third of the sample had seen a magazine from the travel sector. In addition, an increasing number of people now keep magazines on certain subjects – particularly IT, finance and travel – for future reference.

Certainly UK customer magazines’ circulations are rising. According to data from the Association of Publishing Agencies (APA), 15 of the top 20 UK magazines by circulation are contract publications. But does this growth actually mean readers are beginning to see less difference between contract and news-stand titles? Premier Magazines’ managing director Craig Waller is among those who think so.

He says: “Our view is that we’ve now got magazines of a size and penetration that it makes no difference to consumers whether they are door-dropped or bought. They are more likely to perceive a difference between consumer and trade magazines than between customer and news-stand publications. A magazine you produce for a client may be an extension of their brands, but it becomes a brand in its own right.”

Others argue that the public may make a distinction between the two types of publication. Jim Addison is chairman of Specialist Publications, which produces The Mag for Iceland and Rapport for Peugeot. He says: “As far as the reader is concerned, it depends on the quality of the magazine. They do make a distinction if it’s a bad publication and some are still very poor in terms of editorial and design standards. If it’s a paid-for title they are less likely to see a distinction.”

Redwood’s managing director Mike Potter says: “Readers do see customer magazines as different, but in a positive way. They understand them and know the deal is that they come from a manufacturer or a retailer. And they’re prepared to go along with the deal if we keep them informed and en tertained. The key is targeting. A customer magazine has to be relevant and shouldn’t try to be a general lifestyle magazine.”

Potter adds that perceptions may be influenced by the size of the magazine. “Customer magazines were initially positioned against colour supplements, which used to be the major colour medium.

“Now we are up against perfect bound and much bigger, fatter titles and the public may think they get less for their money if they see a customer magazine is thinner than a news-stand title,” he says.

Julian Treasure is chairman of TPD, which produces O magazine for Hutchison Telecom, and chairs the industry’s trade body, the APA. He says: “The two sectors do and will co-exist. They do different jobs and people will always want both independent views and better relationships with companies. Magazines need to be upfront about their objectives and not pretend it isn’t sponsored. The explosion in the number of magazines around shows it can work.”

Treasure believes that customer magazines have two big advantages over their news-stand competitors. He says: “We have more money to spend, thanks to the sponsorship element, and we measure the hell out of the publications because clients need to know how they are performing.”

Both these differ- ences are born out of the customer magazine’s raison d’être as a marketing tool financed out of a marketing budget and not necessarily expected to be self-liquidating. But in the past five years, customer magazines have become more sophisticated machines, with two devel- opments in particular taking them beyond the role of straightforward marketing vehicles and making them more like mainstream news-stand publications.

The first of these is editorial quality. Few observers would argue with the claim that customer magazines have blossomed in the Nineties. Editorial and design standards are now high across a wide range of titles and publishing companies have a more sophisticated and long-term view of what is expected and needed than ever before. Editorial credibility is all-important. As Waller puts it: “We must endorse the brand behind the publication without becoming a quasi-brochure.”

The second area of development is third- party advertising. Until quite recently most customer magazines took few outside ads. But now, thanks to increased circulations, im-proved content and more communication with media buyers, ad revenue is up.

Waller comments: “Third- party advertising helps readers identify a publication as a magazine not a brochure. With British Airways’ High Life magazine we compete with mainstream titles for ad revenue and have invested heavily in research to persuade sceptical media buyers to use us.”

Many media buyers and mainstream publishers still underestimate the importance and scope of customer magazines, though the situation is changing as industry-wide initiatives attempt to change the lag between perception and reality.

Treasure says: “Commercial publishers tend to be fairly insular and don’t look at what’s going on around them. If we deflect more ad spend away from their titles they will probably start to take more notice. There is still a degree of cynicism from agency media buyers who are used to putting money into the commercially researched sector and we will change this.”

While few would argue that customer magazines are likely to challenge news-stand titles in terms of content or style, some industry pundits expect various research methods used by contracted publishers to be taken up by others.

Says Treasure: “Mainstream titles can write what they like and are strong brands whereas customer magazines are strong brand annexes. The growing competition between them will focus attention on the ways and extent to which we research and measure our magazines. If there is any displacement of ad revenue it may encourage them to do more research into readers and more effectiveness measuring.”

Waller also believes this influence will come. He says: “Until recently we have tended to make sure the quality of our magazines is equal to news-stand titles. The next step will be not just chasing news-stand titles but influencing them. We must invest in editorial and design to achieve this.”

While Addison at Specialist Publications feels that any influence in magazine production has all come one way – from the news-stand titles – he does predict that if standards continue to improve contract magazines may be sold alongside news-stand titles.

He says: “This would need much bigger media budgets and a courageous and forward-thinking client. It could be driven by a sector under threat like tobacco or alcohol, and could be achieved if clients accepted the ‘need to read’ factor and treated their magazines as profit centres in their own right.”

Already the cross-over between major marketing groups and media owners and contract publishers has begun. Omnicom now holds a majority stake in Premier while Abbott Mead Vickers.BBDO bought Redwood in 1994.

Condé Nast is the latest commercial publisher to enter the contract game. Among other projects the company now produces a House of Fraser magazine internally and has set up a joint company with Forward Publishing to produce a range of titles.

Addison argues that the skills required for commercial publishing are very different to the marketing know-how necessary to produce a successful contract title.

However, Condé Nast managing director Nicholas Coleridge is adamant that the two areas of publishing can complement each other.

He says: “The moment Condé Nast came into the market people found it reassuring to be able to go with a publisher with a record of producing successful paid-for titles. The quality of what we produce is high and we know some tricks of the trade that producers of free magazines won’t.”

Whichever way relations between customer and news-stand titles develop, one thing is certain. As customer magazine standards of editorial, production and research improve, more and more clients will look into developing a publication. Already 11 out of the top 20 marketing companies in this country have a customer magazine. This alone must herald increased competition between all magazines as they vie for reader attention.

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