A contract killing

Contract publishers have experienced a boom in customer titles, but many big advertisers remain reluctant to test the waters and establish their own promotional magazines. By Sonoo Singh

The customer magazines market has experienced a boom over the past decade. The sector grew substantially after hordes of advertisers were lured to contract publishing in an effort to strengthen their brands and forge deeper relationships with their customers. According to a Mintel report, between 1995 and 2000 the sector grew by 127 per cent, and between 2000 and 2004 publishing agency turnover is likely to exceed £319m – an increase of 29 per cent in real terms.

The other good news is that the sector is attracting fresh categories, beyond the usual suspects of travel and finance. For instance, retail is one of the fastest-growing sectors for contract publishers. But there remains a growing concern that heavyweight advertisers, such as Coca-Cola, Unilever, Procter & Gamble and McDonald’s, are simply ignoring the medium as a means of communicating with their customers. In fact, the number of new clients entering the market appears to be declining, with most contract publishers chasing existing clients.

One publisher says: “There are very few ‘virgins’ entering the market. Most of the big advertisers have considered producing a magazine for their customers but rejected the idea, because of the simple reason that budgets are tighter at the moment and so they do not want to risk venturing into a new territory.”

Who’s calling the shots?

Interestingly, contract publishers lay the blame at the feet of marketers for not understanding the needs of customers, and thus losing out on the opportunity to target them effectively. Just Customer Communication chairman Julian Treasure says: “The problem seems to be that marketers think that it is only hard marketing (direct response) that creates hard results. We need to shout from the rooftops: this is simply not true. People do not buy more just because you ask them more insistently. But they do if they like you and feel that you care about them.

“Customer magazines only work for the client if they work for the reader. As long as the industry keeps its eye on the ball, there is no reason why people should get tired of reading high-value, well-targeted magazines.”

Wardour Communications head of marketing Sarah Harrison points out that the recent past has seen big advertisers such as utility services joining the queue outside contract publishers. She says: “Utility providers, such as Thames Water and npower, are not shying away from having direct contact with their customers through magazines. But in order to produce a customer title, the benefits need to be very, very clear.

“For instance, for financial services a brand relationship with the consumers is essential, because it makes it easier for these advertisers to sell their products softly. Also, the existence of a database is key before producing a customer title. Coke, for example, will not have any customer database, so who would it send its magazine to if it were to produce one?”

She says that Starbucks might be considering producing an in-store title soon: “It has a captive audience and the magazine will have resonance with the Starbucks’ customer. There is no formal pitch though.”

Of course, contract publishers cannot know precisely which customer titles customers will choose to read or decide to throw away. Jigsaw Consortium – a conglomerate of packaged goods giants Unilever, Cadbury Schweppes and Kimberly-Clark – was set up in 1997 to sell directly to consumers and tried to produce a customer magazine. But the magazine, Voila!, was eventually closed this summer. It is understood that the title was axed because it did not fulfil its promise of being a customer relationship marketing tool.

Propaganda warfare

Jason Frost, managing director of Publicis Blueprint, which produced Voila! magazine, says: “The title had two objectives: to raise brand awareness and to act as a sales promotion tool. The magazine failed to become a sales promotion vehicle. But I refuse to believe the corporate world is against contract publishing. It is all a matter of presenting the right idea at the right time. Even Jigsaw is likely to go ahead with another title if the objectives are right.”

A spokesman for one packaged goods company agrees and explains that it will be difficult for any company that consists of disparate sub-brands to target customers or build brand loyalty. “We spend a lot of money on direct response marketing (DRM) such as mailers and we would not be going back to DRM if it didn’t work for us or served our objectives of building the brand. Therefore, we do not see any benef

it of producing a customer magazine when DRM works just fine.”

Another advertiser averse to contract publishing says: “The way we want to make our brands become lifestyle brands is through customer experience, so we invest in brand innovation and extensions. The only experience a magazine can provide is, maybe, to offer money-off coupons, which we already do through various promotions on the retail shelves.”

Redwood commercial director Ian Sewell argues that the big challenge for contract publishers is to get marketers to rethink what is accepted as a good result among their customers, and to consider an approach beyond the traditional “interrupt and repeat model” of direct mail. A lot of direct mail, he says, is an interruption that is generally not welcomed by consumers.

Richard Proctor, managing director of publishing company 21 Carrot, says there is no doubt that customer titles are produced to build or reinforce relationships with customers and so it is debatable whether a brand with virtually 100 per cent global awareness would gain anything from producing a customer magazine. He does, however, offer a solution: “Coke is a good example of a brand with global awareness. But a magazine might well be beneficial if Coca-Cola wants to be seen in a less predictable way, maybe by producing a small, snappy women’s magazine to support replacing morning coffee among middle market women with Coke. Or do a sports sponsorship magazine like a football title.”

A shot in the dark?

He says that Unilever in the past has announced plans to produce a series of publications to support certain food brands in an attempt to use editorial content in print to communicate with customers ad hoc.

Forward international marketing director Kristen Harbin says: “Big advertisers such as Unilever publish a great many direct mail publications that border closely, in scope and content, to a lifestyle publication, which could be construed on some level as a customer publication. Also, our Tesco Clubcard magazine, with 8.2 million recipients, regularly features Unilever products. And Unilever pays up to £25,000 per full-page insertion for the pleasure of appearing in the publication.

“Perhaps Unilever and other such advertisers feel that their money is better spent investing in established publications like Clubcard magazine rather than creating their own, which would scream of the Unilever brand and corporate sponsorship.”

But then there are issues surrounding such third-party advertising in contract publishing. Many believe that it might risk alienating readers because it could mean some of the titles might end up taking on irrelevant ads as a way to defray costs.

One press buyer says: “Contract publishing is not a priority for most media buyers because we have yet to see the real benefits of advertising in a magazine that is so one-dimensional and without any valuable editorial content. Most of these titles end up being ads for the brand or company concerned.”

Sticking the knife in

Proctor says: “Customer magazines need better editorial content; in this both clients and publishers share responsibility. Everyone says their magazine is as good as a newsstand title in every way, but that isn’t so. In the past ten years or so, these magazines have really improved in terms of production qualities and design, but almost without question, they remain weak editorially.”

Most publishers, however, like to cite a recent survey by Millward Brown, according to which 94 per cent of respondents said that they look forward to receiving a customer magazine. The survey says that 47 per cent of respondents claimed to have bought goods after reading about a product or service in a customer magazine.

It adds that 78 per cent believed that customer magazines made them want to trial or buy a new product, and 58 per cent said they would recommend their customer title to a friend. The study also reveals that 92 per cent of people spent an average of 30 to 40 minutes reading a customer title, with 73 per cent claiming to have read articles about products and services and 48 per cent reading the title from cover to cover.

Contract publishers believe that surveys like these will prompt more advertisers to use their services to communicate with their consumers,

This could create another problem – if every advertiser were to jump on to the bandwagon to produce customer magazines it will mean surrounding the consumer with clutter or what the industry refers to as “doormat fatigue.”

Many fear that there could be a downside to the growing number of companies investing in contract titles because it could mean flooding consumers with messages they will choose to ignore. What is the value of those persuasive and forceful marketing messages if no one were to read them?

The simple solution, publishers admit, is to produce the right magazine for the right brand.

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