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Numbers Are Down, Prices Are Up… So Is This the Right Solution for the Celebrity Titles on the Newsstands? MagNet Experts Beg to Differ… The Mr. Magazine™ Interview

March 31, 2014

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An ongoing series of interviews with MagNet’s Luke Magerko.

Luke Magerko was a consistent contributor to my blog in 2013. Luke has partnered with MagNet to provide retail analytics for the publishing industry. Today, we pick up our conversation from two two weeks ago and, going forward, MagNet will provide me with an interview with Luke every other week highlighting retail analytics.

So Here is my first question of this segment of the Mr. Magazine™ Interview with MagNet’s Luke Magerko.

WHY ARE WE FOCUSING ON CELEBRITY COVERS AGAIN THIS WEEK?
MagNet is reporting on sales results from the weeks of 2/10/2014 (“week seven”) and 2/17/2014 (“week eight”) to analyze cultural topics on regional sales. In light of recent celebrity price increases, we want to provide an alternative marketing/editorial strategy to increase sale.

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WHO WON THE WEEK: THE ISSUE CATEGORY STANDINGS (“ICS”)
In week seven, there were strong performances by both People Magazine (1.28 Seasonal Performance Index) and Life & Style (1.25 Seasonal Performance Index).
Titles generally underperformed in week eight with only two issues showing average results: In Touch and Life & Style both garnered 1.00 Seasonal Performance Indices while all other titles were below average.

SINCE THE PERFORMANCE INDEX IS STILL A NEW CONCEPT, LET’S LOOK AT ONE EXAMPLE AND WALK ME THROUGH THE RESULTS:
People Magazine, Issue 7, posted great results in sell-through efficiency (50.0%) and both performance indices. Looking at the performance index (1.15), People indexed 15% higher than one year of previous issues. The seasonal performance index (1.28) indicates the 2014 issue 7 outperformed previous issue sevens by an index of 28%. This is a spectacular result and an early candidate for 2014 celebrity magazine of the year.

DID ANY ISSUE STAND OUT FOR YOU THESE WEEKS?
Yes, we will focus on InTouch (issue 7) and briefly mention that OK! Magazine results (issue 8) are similar. Both issues were average nationally, however when we mined the data, the results were anything but average.
At MagNet, we have been tracking cultural topics and regional sales. To do so, we produced performance indices at the regional level. We found the two country celebrity titles had specific areas of strength (the American South* and states of the West North Central United States*) and areas of weakness (The Northeast* and Pacific United States*).
For example, in the West North Central United States*, InTouch seasonal performance index was an incredible 1.44. Similar results were found in the American South. Unfortunately, while some areas did extremely well, others regions tapered off almost as much. The Pacific region showed double-digit declines in the seasonal performance index and the northeast season performance index was 0.79.
Although the national performance suggests an average issue, a lot is going on at the regional level.

NEWSTANDS SO WHY IS THE SALES VARIANCE BY REGION SO IMPORTANT?
Editors need a more granular level of detail to make informed editorial decisions. We are proponents of the split cover, especially when we can prove certain content significantly increase sales in certain regions of the country.

WHAT IF EDITORS DO NOT HAVE ENOUGH CONTENT FOR A SECOND COVER?
We understand there are editorial constraints on cover production. However, our findings might incentivize editors to consider ensuring there is enough content to provide a cover worthy of nearly half the population.

AND WHAT DID YOU FIND WHEN YOU ANALYZED THE CELEBRITY TITLES?
Our goal was to monetize different cover results. To do so, we needed to create an index that identified a yearly average sales index per store. We created Sales above Replacement (“SAR”). SAR is a formula that asks: what would happen to sales if we replaced the existing cover with average result or replacement cover? For this week’s analysis we analyze all 2013 – 14 cover results highlighting Kim Kardashian or Blake Shelton (including Miranda Lambert where applicable) on the cover.

DID THE REGIONALITY ASSUMPTION HOLD?
Yes. Blake Shelton easily outperformed a replacement cover in most of the Midwest and the Deep South from Arkansas to Alabama. His covers performed very poorly in the Pacific and New England. Other regions were essentially flat. Kardashian was average in all regions but one, the Mid-Atlantic (essentially the I-95 corridor between Washington D.C. and New York) where results were significantly above average.

CAN YOU MONETIZE THIS SUCCESSES AND POOR PERFORMANCES?
In order to monetize our findings, we looked at one title specifically. In 2013-14, one of these five celebrity titles carried both Kardashian and Blake Shelton multiple times. We found the Shelton covers would have provided a 12 – 25% sales gain in the Southern regions and a 12-13% loss in the Northeast and Pacific Regions. Kim Kardashian’s garnered 15% increase in all the Northeast and flat in all other regions.

SO WHAT WOULD HAVE HAPPENED IF THERE WERE TWO COVERS?
Knowing what we now know, MagNet would have recommended a split like this:
∗ NORTHEAST: Kardashian
∗ MIDWEST (West North Central): Shelton
∗ MIDWEST (East North Central): Kardashian
∗ SOUTH: Shelton
∗ WEST: Kardashian
The strength of Shelton in the Midwest and South plus the strength of Kardashian in the Northeast would compel shoppers to buy more copies. However, the weakness of Shelton in the Pacific would be masked by the consistently average results of Kardashian.
MagNet estimates that if the covers were split between the two celebrities, this publisher would have received an 11-16% sales gain.

YOU CAN’T JUST HAVE A CELEBRITY WAITING IN THE BACKGROUND, YOU NEED TO USE SOMETHING FROM THE MAGAZINE!

I couldn’t agree more! MagNet’s goal is to provide a regional sales above replacement number for any celebrity, topic or other attribute that has been on the cover of a magazine. This would allow an editor to cull their content and find the two best images for the week.

HOW WOULD THAT WORK?
Imagine the editor looking a simple index table that would show Miley Cyrus’s regional rating or Duck Dynasties’ regional rating (hint, these two celebrities are stronger in different parts of the country). Then the editor and newsstand team could create a galley reflecting the cover splits. MagNet would be happy to walk any publisher through this process.

OPERATIONALLY, CAN WHOLESALERS SHIP TWO DIFFERENT COVERS?
Yes, I worked for with a publisher which split covers more than 100 times over the years. Publishers cannot send two covers to one wholesaler location, but other than that restriction, there should be very little standing in the way of a cover split.

HOW DOES THIS RELATE TO THE PRICE TEST?
The publishing industry focuses on increasing revenue from the internet, mobile devices, and a myriad of other platforms such as print on demand. However, it seems as if the only strategy for newsstand is acceptance of newsstand declines and price increases. Samir, we will continue to mine the data, finding insights for publishers and editors but our editorial knowledge is limited. We ask editors to reach out to Josh Gary at MagNet jgary@magnetdata.net or me, lmagerko@market-analytics.com and we will confidentially consult with them. We understand that each title is unique; we will identify trends that are of specific interest to each individual editor. We look forward to those conversations.

ENDNOTE: CENSUS BUREAU REGIONS:
The United States Census Bureau provides a regional breakdown by state. There are four regions and nine sub-regions (sub-regions in parenthesis): Northeast (Mid-Atlantic and New England), South (South-Atlantic, East South Central and West South Central), Midwest (East North Central and West North Central) and finally the West (Pacific and Mountain).
You can visually see how each state is categorized here.

© Samir “Mr. Magazine™” Husni, 2014.

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