Newsstands and Retail: What’s On the Mind of Top Magazine Executives? A Panel at the MPA/PBAA Retail Marketplace Provides the Answers.June 13, 2013
What is on the mind of Stephen M. Lacy, chairman of the board and CEO of Meredith Corp.; David Carey, president of Hearst Magazines; Bob Sauerberg, president of Condé Nast; and Efrem “Skip” Zimbalist III, chairman and CEO of Active Interest Media (AIM) when the questions are all about the newsstands and magazines at retail? Well, I was honored and privileged to moderate this panel of top magazine media executives at the MPA/PBAA Retail Marketplace conference on Tuesday June 11 in Philadelphia.
Karlen Lukovitz, editor of IPDA Daily Publishing & Retail News published an excellent recap of the panel. I hope you enjoy taking a peek inside the magazine media executives as they answer some of the most important questions regarding printed magazines at the newsstands.
By Karlene Lukovitz, IPDA Daily Publishing & Retail News
Top Magazine Execs Focus on Retail Channel
Top executives affirmed the critical importance of the retail channel for magazine media, and offered their views on how publishers, retailers and other channel partners can stem sales declines and maximize the category’s performance and profitability. Shown above, from left: Stephen M. Lacy, chairman of the board and CEO of Meredith Corp.; David Carey, president of Hearst Magazines; moderator Samir Husni; Bob Sauerberg, president of Condé Nast; and Efrem “Skip” Zimbalist III, chairman and CEO of Active Interest Media (AIM).
Top executives affirmed the critical importance of the retail channel for magazine media, and offered their views on how publishers, retailers and other channel partners can stem sales declines and maximize the category’s performance and profitability.
The panelists: Stephen M. Lacy, chairman of the board and CEO of Meredith Corp.; David Carey, president of Hearst Magazines; Bob Sauerberg, president of Condé Nast; and Efrem “Skip” Zimbalist III, chairman and CEO of Active Interest Media (AIM). Moderator (center in the photo above): Samir Husni, professor and director of the Magazine Innovation Center at the University of Mississippi’s School of Journalism.
Assessing Trends Going Forward
Asked if the magazine sales declines that commenced with the recession in 2008 will level off going forward, Hearst’s Carey noted that the category has faced several simultaneous issues, including a decline in the frequency of consumer grocery trips as a result of the recession; the “mobile blinder” syndrome (wherein consumers use their mobile devices rather than notice products displayed at checkouts); and the declining draw of most film stars as cover subjects.
“I think there’s an opportunity to address each one, but it’s not so easy,” he said. “Hopefully, the improved economy will translate into increased visits to stores,” and the magazine category needs to work with the retail community to find a solution to the mobile blinder factor. “We have to co-opt that experience at the front of the store” with magazine content and promotional innovations that employ digital and mobile technology, he said.
At the same time, there’s a demand for the new, demonstrated by the combined 700,000 monthly single-copy sales for Hearst’ s recently launched Food Network Magazine and HGTV Magazine, he said. Publishers also need to refurbish magazines that might have “lost their way a bit,” and increase promotional activity on every level, Carey believes. “If we do everything simultaneously, I’m not sure we’re going to reverse the slide, but I think there’s a good chance to moderate it,” he summed up.
Meredith’s Lacy added that consumers who were once in traditional supermarkets three times per week are now often spreading their business to competitive formats like warehouse clubs, which changes the dynamic.
“We’re working very hard on our product,” he said, noting the success of special interest publications (SIPs) and bookazines. “I think certain things will continue to decline, but I think we’ll continue to innovate with new and different types of product and help fill in a consumer need.”
“We have to stop the decline,” declared Condé Nast’s Sauerberg. He acknowledged that “there’s no silver bullet,” and stressed that all supply-chain partners have a role to play. “This industry has brands like no other, it has assets like no other, it has editors and consumer marketers like no other,” he said. “And we’ve all accumulated incredible digital assets that I think will really help us grow. We’ve got to work together to ‘product-ize’ those things, to get to retailers and really move the needle.
“There are hundreds of projects we’re going to need to put in play,” Sauerberg continued. “But it’s so important to us to have this [retail] business be as good as it can be. And our digital assets are the best thing that ever happened, because they’re bringing new people into our brands and ultimately new people into the stores. These people like to consume our content.”
Zimbalist said that AIM has spent a lot of time on its covers and working with partners on selecting the right retail dealers and right in-store locations, but hasn’t spent a lot of time “marketing directly to consumers to come into the store to find the magazine,” as other types of consumer product marketers do.
There’s much that can be done by combining magazines’ databases (built from a variety of sources, including subscriptions and digital) with retailers’ databases to promote directly to consumers and drive them into stores, he pointed out.
Demonstrating the Category’s Full Value at Retail
Lacy pointed out that publishers are developing new mechanisms to prove magazines’ full value to retailers, beyond the magazine sale itself.
He cited Meredith’s new ad sales guarantee, based on work with Nielsen, which demonstrates the high levels of engagement of its magazines’ readers; that they’re inspired to purchase products as a result of seeing ads in the magazines; and that they buy more products than consumers who don’t see the ads.
He also noted Meredith Xcelerated Marketing’s partnership with Lowe’s, in which the retailer’s database is overlaid on Meredith’s to enable driving and measuring sales lifts of their branded products.
Developing such partnerships with retailers and promoting the inevitably positive results about magazines’ impact on sales of other retail products is critical to the magazine category being able to work with retailers to secure the right kind of in-store placement and display, he stressed. In the past, lack of such data has been the “missing link” in decisions about magazines versus other categories’ placements at front of store, he added.
Retail As Crucial as Ever for Publishers
How important is the retail consumer magazine buyer to publishers?
Consumers who buy magazines at retail are “absolutely critical” to the business of Meredith and other publishers looking to reach Gen Y consumers who are enthusiasts in areas including home improvement, cooking and gardening, he said. “They are the lifeblood of our business going forward.”
Carey noted that Hearst sells more than 4 million magazine copies a month at retail, so the channel is clearly economically important to the company. In addition, retail sales are critical in determining whether to roll out a test magazine concept–and as ongoing indicators (akin to Nielsen ratings for TV) of how in-synch the magazines are with consumer needs. “We have our hits, but if we don’t execute well, we really get punished by the marketplace,” he said. “The positive in that [feedback] is that it puts a lot of pressure on us to make sure that every single cover is well-thought-out in terms of its construction and execution.”
“We live in an on-demand world, and retail sales satisfy that need,” he said, although as important as it is, today it must be one of many ways people access magazine brands’ content. “We’re on the same curve as TV and all other media: You have to be ubiquitous with your distribution,” he said.
Condé Nast’s magazines at retail act as “100,000 billboards” all over the country ever month–a “huge lead-gen” source for the company, as well as a highly profitable business in and of itself, said Sauerberg. Retail consumers “are not only engaging with us on a monthly basis; they are our next set of customers–so we love this business,” he said, adding that the company’s editors “agonize” over every issue’s cover and content, including reviewing consumer trends on social media and other factors.
Zimbalist said that retail will continue to be “critically important.” AIM is redoubling efforts to get into specialty retail stores serving the same consumers that AIM titles serve, such as equine and boating–”and if it’s Vegetarian Times, to be in the section where soy is sold.”
He added that retail distribution is excellent for exposing consumers to magazine brands and sampling, and that single-copy purchasers are the most responsive consumers. They typically read a magazine cover-to-cover within 24 hours–which is very important to AIM’s advertisers (most of which are direct response). “It’s the purest form of feedback that you can get,” because the magazine is competing in an open marketplace against many others, and a magazine has just seconds to influence the consumer to choose it, he said.
Prospects for Bookazines
High-priced bookazines are very profitable for both the publisher and the retailer, and Condé Nast will be publishing a growing number of them, reported Sauerberg. “I think this is going to be a big piece of the sales potential over the next few years, and I think the better we get at it, the better the sales and profits for the retailer.”
Zimbalist agreed that bookazines are very important. He said they demonstrate consumers’ willingness to pay high prices for high value, and are a great way to test ideas for new magazines.
Lacy, noting that Meredith has been publishing special interest publications/SIPs since 1938, says these offer the advantage of being able to be expanded or reduced in number based on economic circumstances. When the economy–including home remodeling and decorating–was very robust, Meredith was up to about 200 SIPs per year; currently, it publishes about 130 per year, he reported.
In addition to their profitability and usefulness for testing magazine concepts and how in-synch a magazine is with its readers, he said that SIP’s tend to flow into and support the activities of Meredith’s monthly magazines and digital and ecommerce businesses. SIPs “are a big part of what we do,” he said.
Hearst is using SIPs in a variety of ways, reported Carey. One is accessing new markets. For example, the frequency of Cosmopolitan for Latinas was increased from two issues last year to four this year, and Hearst will be testing an Hispanic edition for another magazine this year, he revealed. He noted that the premium-priced Esquire Big Black Book is in its seventh year, and that Hearst is looking selectively at extensions off its existing brands.
“With the high pricepoint and longer shelf life, [bookazines] have very good economics for us,” and have gotten strong retailer support, particularly in airports, Carey said. He reported that Delish, a digital product in partnership with Microsoft, did a print supplement polybagged with four Hearst magazines at Wal-Mart last year, and saw sales lifts of 10% to 25%, demonstrating consumers’ desire for added value.
Mobile: Pros and Cons
While mobile phones are a serious challenge to checkout impulse categories, the executives agreed that they’ll also be valuable as retail promotional vehicles.
AIM is doing a lot of push messaging through smartphones, because mobile is driving virtually the entire growth of its Web traffic, according to Zimbalist. He points out that phone location devices will enable sending promotions about a new issue at retail when the prospect or existing reader is in the store. “You can’t fight mobile, but you can use it,” he said.
Sauerberg said that within five to 10 years, there will be massive programs offering all kinds of ways to target and promote to consumers in-store, and the magazine business needs to be prepare to leverage these capabilities.
Carey added that, in addition to using mobile messaging, it makes sense to try to design store promotions that reach consumers in parts of the store where they’re likely to be shopping (and attentive to what’s around them) rather than using their smartphones.
Lacy pointed out that Meredith’s recently acquired all-digital brand AllRecipes is an eye-opener, because about a quarter of the 25 million unique visits per month are generated right in store aisles, as shoppers look for recipes and ingredients information. As a test, Meredith took one of its food special interest publications and put the AllRecipes logo on the cover. This yielded a 40% retail sales lift, he reported.
“This is a digital consumer, and she’s also very interested in the print that ties this all together. Our greatest corporate lesson in the last year has been to figure out how to connect those dots and help our advertisers sell product to her when she’s right there in the supermarket. Everything that we’re seeing is that Gen Y is very engaged in these brands on every platform, from mobile to print.”
Innovations, Focus Going Forward
Asked about innovations, Zimbalist said that while it’s early days, “there’s got to be a way for us to partner with retailers to sell digital copies and digital subscriptions” generated by a consumer’s interest being spurred by seeing a magazine in-store.
He also said that events that AIM partners with retailers on, such as clinics in an outdoor retailer helping consumers on a topic like putting a backpack together, bring the magazine to life in the eyes of the consumer and generate substantial sales for the retailer.
Carey said that it’s time that publishers put aside some of the old orthodoxies, when it comes to promotions. “The goal is to move product, and as we partner and use our own covers as promotional tools, we have to continue to push the boundaries,” he said, noting that select retail copies of an upcoming issue of Cosmopolitan will have a visible discount IRC in the “belly button” area of the model.
He also said that publishers should be looking to find ways to do even more to help the retailer tap into the power of the magazine readers who are retailers’ most profitable customers.
Sauerberg stressed that retailers, as well as publishers, should be embracing and pushing to leverage big data/data partnerships on an industrywide basis, to achieve the scale needed to target efficiently to consumers.
Sauerberg also offered comments that summed up many of the themes in this session and others at the conference.
He said that he believes that magazines will continue to be very attractive to retailers from a profitability perspective. “But there are a lot of efforts that need time and support from all channel partners,” he said. “We need to work together to set priorities, create some wins, talk about these and get retailers excited, and make [initiatives] work financially for all parties. [As a publisher], we’re going to do all we can with content, innovation and putting digital assets on the table, but we’re all going to have to [collaborate] to think about the potential we have, rather than just manage decline.”
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