So When Should You Raise the Cover Price of Your Magazine? MagNet Has the Answer in This Mr. Magazine™ InterviewApril 14, 2014
An ongoing series of Mr. Magazine™ exclusive 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.
Samir Husni: DO YOU BELIEVE MAGNET CAN FIND A REVENUE ENHANCEMENT ON EVERY MAGAZINE TITLE?
Yes, we at MagNet believe there is at least one opportunity for every magazine at newsstand. Some opportunities are editorial in nature, some are pricing, and some are promotional.
Luke Magerko: MagNet creates a composite sketch of a consumer using exploratory data analytics (EDA) and statistical modeling techniques. We apply these analyses to determine whether marketing efforts successfully speak to the retail consumer.
For example, we can reveal if certain cover elements were successful, if the price point matches the consumer, and if the product is being sold in the right retail outlets.
SH: WHICH CATEGORY DID YOU ANALYZE THIS WEEK?
LM: MagNet is reporting on the young women’s category with results from February 2014 and March 2014. We also look at a potential opportunity for both magazines (and others like them) to significantly increase revenue.
SH: I NOTE YOU ADDED THE PHRASE “POS ESTIMATES” TO MARCH ISSUES. WHAT DOES THAT MEAN?
LM: The March issue off-sale dates are March 4 (Cosmo) and March 18 (Glamour). All unsold magazines have not been returned so I used Magnet’s Point of Sale (“POS”) data to estimate final sales. MagNet collects POS data for more than 40% of the US market.
SH: WHO WON THE MONTH: THE ISSUE CATEGORY STANDINGS (“ICS”)
LM: February was a soft month for both Cosmo and Glamour, however we estimate Glamour had a very strong showing (1.33 seasonal performance index) in March.
SH: YOU MENTIONED MAGNET HAS A PLAN TO INCREASE REVENUE FOR THIS POWERFUL CATEGORY?
LM: Last time we spoke, I pointed out that a celebrity price increase might not be the best approach to increase revenue. We at MagNet are not against all price increases, however. A price increase is a viable option for these two titles based upon their demography. Let’s focus on Cosmo, highlighting some pertinent demographic information, notably U.S. Census Bureau County Data. This approach also applies to Glamour.
SH: WHAT IS COUNTY DATA AND HOW CAN IT HELP PUBLISHERS?
LM: The United States Census Bureau breaks the U.S. into four distinct regions, ABCD. Here is a definition and example of each:
Now let’s look at an example of how county data is used: This map represents the 2012 Presidential election results by county. Please note that there are blue shades in a heavily red state like Texas and varying shades of red in a blue state like New York.
In many instances, there is more similarity between county groupings than regional groupings. For example, the audience in White Plains, New York, has more in common with the residents of Glenview, Illinois, rather than their fellow statesmen in Schenectady, New York.
This data intelligence supplements regional analyses and provides a clearer picture of the retail consumer.
SH: HOW DOES COSMO SALES BREAK OUT BY COUNTY?
LM: I referenced Cosmo’s website and media kit for this information.
Not surprisingly, 76.5 percent of Cosmo subscribers reside in the major or minor metropolitan (A or B) counties.
We also learned other important traits about the Cosmo subscriber: 56 percent of the readers are 18-34 years old and 83 percent 18-49. The majority are employed, college educated, and nearly half (49 percent) are single.
This information provides a composite image of the Cosmo subscriber: she is in her mid-twenties, single, urban and has significant disposable income.
SH: BUT HOW DOES THAT RELATE TO NEWSSTAND?
LM: Newsstand sales results can confirm subscriber demographics. MagNet compared Cosmo newsstand and subscriber county information and found newsstand sales results mirror subscriber data. 70 percent of all newsstand copies sold are in A and B counties. Further, using MagNet financial estimates, A and B counties are 15.4 percent more profitable than C and D counties suggesting a lower sell through efficiency in the C and D counties.
SH: I KNOW THAT THE PRICE FOR COSMO IS $3.99 IN THE U.S. EXCEPT FOR THE JANUARY AND AUGUST ISSUES WHICH ARE AT $4.99, SO WHAT WOULD YOU CHARGE?
LM: Knowing what we know from the sales data on January and August and the demographic information on Cosmo’s website, we recommend a rollout of $4.99 in the U.S. County information indicates the vast majority of readers live in areas where price sensitivity is less common.
SH: DOES THIS PRICE CHANGE HURT SALES?
LM: The January performance indices have been approximately 10% lower than previous four years’ issues (mostly due to a very poor 2013 issue) and August issues are slightly below average versus other issues. We believe the revenue increase validates the loss in unit sales contingent upon consumer marketing’s ability to find other subscription sources.
The key to any significant change at newsstand is to provide a strategic plan to consumer marketers to ensure price increases are implemented at the optimal time in the circulation cycle.
SH: HOW DOES THAT WORK?
LM: MagNet can work closely with consumer marketing departments to increase price at a time of year that produces high rate base bonuses or in concert with a rate base reduction. A successful price increase should be orchestrated to provide the least amount of disruption for the consumer marketing group.
SH: I HAVE BEEN TOLD IT IS MORE DIFFICULT TO GET PRICE INCREASES APPROVED.
LM: It should be difficult. A price increase for the sake of a price increase is not a solid business model. Most magazines’ page counts are decreasing because of advertising loss. Our price increase recommendation provides incremental revenue that will:
•Increase wholesaler profitability
•Allow stronger promotional activity (thus increasing sales further)
•Enable product enhancements such as more content or higher paper quality
There are more interesting findings using county data and MagNet will be providing those analyses in the future.
SH: THANK YOU.
© Samir “Mr. Magazine™” Husni, 2014. All rights reserved.