Contract Killers

Much of the debate surrounding customer loyalty has centred on the merits or otherwise of the loyalty card.

But perhaps it’s time the marketing community looked more closely at the potential of the customer magazine. This often overlooked sector is producing impres- sive results, and today’s technology means that we have the means to exploit it even more.

The worlds of journalism and media buying are often a little snooty towards the customer magazine. The term conjures up images of fluffy editorials, flung together magazines produced by Macintosh novices, and cheerful chairman’s statements extolling the virtues of the company.

But this image belongs to the Eighties. Today’s customer magazines are glossy affairs with high-quality editorial. What’s more, customer magazines are dominating the magazine circulation sectors. Heinz at Home and Tesco’s Clubcard magazine each have over 4.5 million readers, and dwarf Reader’s Digest which has about 1.5 million. Their readership makes impressive comparisons too. The M&S Magazine, published by Redwood, reaches 14.52 per cent of all ABC1s, higher than Reader’s Digest which reaches 13.3 per cent.

Reaching this kind of reader through TV is not cheap. Clearly, the industry likes the low-cost alternative – it is taking to customer magazines in the marketing mix rapidly. Mintel figures reckon the contract magazine market at about 127m, on a yearly growth rate of 11 per cent. More than three out of five of the top companies in the UK produce a title, including Heinz with its At Home Magazine, Safeway’s A Taste of Safeway, BA’s High Life and the AA Magazine.

Those companies willing to talk about marketing results from this area say it works. Nikon, for example, chose to launch its new F5 camera solely through its Nikon Pro magazine, published by Premier Magazines. It took its highest ever number of advance orders.

Whenever Heinz carries out a promotion for a specific product in its At Home magazine, also published by Premier, it claims that sales of that product grow by six to seven per cent among its readers. Considering Heinz is operating in a 230m market these are enviable increases, and ones which are far more cheaply achieved than through a mass-media campaign.

As Heinz spokesman Steve Merenke says: “There is a need for big brand manufacturers to forge a closer relationship with the customer. For us, the media environment was becoming untenable. We didn’t have 57 varieties, we had 360. To continue to be that active with all those brands and categories was becoming more and more expensive.

“At Home magazine is quantifiable through our research. And we are happy to say that it definitely works,” he says.

The question for marketers is whether it could work even better. Although marketers are starting to use the customer magazine as an integral part of their marketing mix, there is still evidence that this sector is largely unexploited.

One of the most visible areas of improvement in these titles over the past ten years is in the value of the product on offer.

Marketers have woken up to the value that a glossy, informative magazine can bring to the marketing mix. According to magazine producers, the average magazine can cost up to 60p per copy to produce for a circulation of over 1 million. Less than 1 million and the cost rises to over 1, which once postage, stationery, design and editorial costs are added on, obviously takes a hefty part of the marketing budget. But observers say that it’s worth it.

As Graham Lake, managing director of magazine publisher TPD, puts it: “Any customer magazine has to be at least as good as newsstand magazines. The minute we as an industry believe we can get away with not producing something as good as a bookstand title, we are finished.

“We are presenting information to readers. We are intruding on them, in a way, by going through their letterbox. You have to make sure it’s something they want to read.”

The industry has taken this on board. Recent customer magazine redesigns include BA’s Business Life (Premier again) which has taken on a more contemporary look and feel. The AA Magazine, published by Redwood, made the decision last summer to drop straight company plugs in its articles for more general motoring features.

But magazines could go further, say observers. One of the areas which many feel is under-exploited is the technology that is available today in terms of digital printing and database analysis.

There are some efforts at using technology in the market. Apple Computer, as you may expect from a technology evangelist, uses technology to tailor magazines. Its Education Interface magazine is produced in five languages. Each carries a local inner supplement tailored for the individual country, and a common outer section deals with broad pan-European issues. TPD handles all Apple’s contract publishing.

Barclaycard’s Addition’s magazine, produced by The Publishing Team, carries advertising which is tailored according to what sex the recipient is. A female appears on the NordicTrack exerciser in the version for women, while men are presented with a reassuring image of a butch type similarly happy to work out.

The Heinz database also caters for the needs of the individual with its At Home magazine. Magazines for mothers-to-be are sent out in four stages. One magazine targets women four months before they give birth, another version targets new mothers, and two more are targeted at mothers whose children are in later stages of development. Each carries specific offers and editorial. Magazines are also able to change rapidly if Government nutritional advice changes, says Heinz.

There is evidence of database analysis and targeting, but observers say this market segmentation could go further. The technology is there, but marketers stand accused of not fully exploiting it.

Barclays is one of the companies which embraced the marketing power of the database. Next year, The Publishing Team will be producing up to ten different magazines for its client, all targeted at different areas of Barclays’ database, with differing content to suit.

Sue Dammant, strategic development director of The Publishing Team, says clients are now beginning to recognise the potential marketing might of the company databases. Databases are about 500 times cheaper to set up today than they were 20 years ago, and are becoming crucial to the success of the contract magazine market.

“What’s making it easier now is the willingness of clients to use their databases for marketing purposes,” says Dammant.

“We have grown up with the financial services industry, and they have huge databases and spend a fortune on managing them, but they tend to be very focused on personal transactions.

“When you actually interrogate the databases, there is often not that much on them. Sometimes you can’t even get a person’s age off them. It’s become essential that people do something with these massive databases, that they spend money getting information on them, and spend money profiling their databases,” adds Dammant.

Although clients are willing to invest, Dammant says the role of publishing agencies is to ensure the sector is exploited properly.

“Publishing agencies are becoming more like marketing communications agencies. We are having to step back and ask the client what they want to achieve: a 100-page glossy magazine with blanket coverage or four versions of a 30-page targeted magazine.”

One area where there is evidence of real segmentation in terms of copy is the Internet. Already companies such as Redwood Publishing, which produces BT’s Talking Business and the Dulux Colour magazine, has a dedicated electronic publishing arm. Premier Magazines launched an electronic offshoot called Premier Interactive last year.

The cost effectiveness of the Internet, and the ease with which copy can be edited and targeted to individual readers makes the Internet attractive. But now publishers say it is also possible to gain this level of individual targeting in the print industry.

One company that is about to show the contract magazine industry how to do it is Goldfish. It has licensed Dutch technology to launch the Goldfish Guides. The Guides, which are due for publication this spring, will be at the forefront of personalised print publications. Al-though initially intended as a standalone commercial enterprise, rather than a customer loyalty scheme for the Goldfish card, the company plans to build links between the two in the future.

The Guides, produced by TPD and Goldfish’s direct marketing agency DP&A, are personalised consumer guides. Customers planning to make a major purchase, such as a hi-fi, car or sports equipment, will be able to receive them free.

Each guide contains core copy containing a product overview, but each consumer will also receive a list of dealers local to them. Eventually, the Guides will even come with a map, with the consumer’s home marked and directions to the dealers enclosed. In a year’s time, there are plans for travel guides. Customers asking for information, on say motoring holidays in Scotland, will receive a route-map giving directions from their house, petrol consumption and costs based on their cars and even a list of the toll charges they would encounter en route.

Three hundred Guides are planned within two years. Although all editorial is independent, Goldfish will fund the Guides by selling advertising space to local dealers, and selling on sales leads to local dealers for 5 a time.

Goldfish says the Guides show what the print industry can achieve today. “I don’t think many clients are exploiting technology enough,” says Goldfish product director Keith Taylor. “What we’re working with here is state-of-the-art database software and information management and digital printing skills.

“Today you can really mix and merge information and produce it on very high quality print. That means the latest and most pertinent information will get in there. What it also means is that you can do specific and highly targeted advertising and editorial copy. I don’t know anyone else in the UK who is doing it to this extent.”

TPD’s Lake agrees: “The Goldfish Guides show the publishing technology is there to produce a unique magazine for the individual,” he says. “The technical ability is there, if the clients have the databases in place it is now possible to marry the two.

“Flexibility was already being used in the contract publishing industry on the Internet, but there is now the flexibility to do this in the print industry too.”

The contract magazine industry has already undergone one marketing revolution since the Eighties, changing from a cottage industry of scrappily produced product plugs into viable titles which span the magazine sector. Technology which produces individual targeting on a level which is out of reach of other media looks on course to drive its next revolution.

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