magazines

Uncensored arrived on Australian newsagency shelves this past week. It’s a New Zealand magazine which the publishers and distributors want placed next to The Bulletin, Time and Newsweek.

I don’t like this title. It is the ultimate conspiracy theorist’s magazine. The production quality is poor and the writing quality worse. I’m not proud to have it on my shelf. To want it placed next to the other respected news and current affairs titles is an appalling decision by the publisher and distributor. The only product advertised in the magazine, besides a sister magazine and some dubious books is an ad for MAGNA-RX+, the “world’s #1 best-selling all-natural male performance formula”. Yep, a quality publication.

Uncensored is a perfect example of poor product which should not, in my view, get distributed in Australia.  That said, when you look at the numbers you can understand why. Magazine distributors receive a fee to circulate product like this through the system regardless of whether the title sells. Newsagents, on the other hand, receive payment only if the product is stolen. Of the $9.95 cover price, I get $2.48 if I sell a copy. I receive three copies and have to hold them for a month. I have been invoiced for the three this month and have to pay by the end of next month. I return what is not sold and I get the credit in March. So from a cash flow perspective, I’m out for at least 30 days. The display pocket the product takes costs me $3.00 per month and the title will use around $1.00 in labour for the month. So, I need to sell two copies to break even.

Uncensored is being distributed because the magazine distribution model in Australia allows titles like this through the system as long as the distributor is paid a fee for their efforts. That newsagents receive nothing and therefore carry the risk is a shameful big business versus small business imbalance.

I don’t deny the right of the publishers of Uncensored to publish this magazine. My complaint is with a system which makes my small business a stakeholder in spreading this trash. If they want to use my store they should pay and pay handsomely. I have good traffic and they want to access that. So they can pay. To leech off a system which makes me invest in their business and ideas is appalling.

I’m going to return Uncensored this week and claim the credit this month.

You can find out more about Uncensored from their website.

Maybe I missed it in previous issues but the new issue of Better Homes and Gardens out this week seems considerably stronger in promoting the TV show on the cover. The cover design is also the best I’ve seen in years – which will make it stand out in the mass of colour of a magazine display.

We didn’t get That’s Life yesterday. For some customers it’s like the end of the road. Wednesday is their day out and buying Take 5 and That’s Life is the cherry on their ice cream. For some reason, That’s Life didn’t make it to many stores yesterday and so our customers missed out on their cherry. Their sadness illustrates the emotional connection between some magazine titles and their readers.

Even though the new issue of the Bulletin is on the shelf customers are still chasing the Kerry Packer tribute issue. We’ll sell out for the third round of supply without a problem. I’d expect some of these reacquainted readers to stay with the title for a while.

This story from UK mediaweek about yet another weekly title launch – this time involving Australia’s own ACP. Here in Australia weeklies are the strongest growth category from the sales data I see. Even in my own show where aggressively push magazines it’s the weekly titles which power further ahead of others. The challenge with new weeklies is that they alter consumer buying habits away from the traditional newsagency.

Some magazine publishers regularly bag back issues of a magazine with the current issue and label the sealed plastic bag 2 for 1 or even 3 for 1. Retailers often find bags torn open and at least one of the magazines missing.

The 2 for 1 offer is common in the craft (quilting, cross-stitch, scrapbooking) category.

Last week I was talking with a friend who is to crafts what Imelda Macros was to shoes. Every wall of her house is covered in quilt panels, cross-stitch and other craft things I cannot describe. She loves the craft and buys at least four magazines a month. She hates these 2 for 1 plastic bagged issues because she cannot see what what’s covered in the magazines unless she opens it. So, rather than asking at the counter for the bag to be opened, she leaves without purchasing. After she told me this story I watched on our CCTV in my store at least three customers in the craft section do the same thing. They picked up one of the plastic bagged offers, tried to see the second magazine, put it down and left.

Craft is a growth category but I’d bet the growth is stilted to this type of marketing.

I’d like to see publishers give newsagents the giveaway stock for storage behind the counter. This way customers can leaf through the current issue and then choose the free magazine they want. The publishers get to make their 2 for 1 offer and customers are more likely to be satisfied. Some newsagents will find the behind the counter approach problematic. Id; say it’s better than what happens today.

Star is still struggling to make an impact in sales at newsagencies I check in with. It’s the weakest performer of the 2005 launches and receives the least publisher support for in store promotions. Creating strong promotions at this time of the year would have been ideal given that just about every other magazine is running on cruise control when it comes to point of purchase marketing. The folks at Star ought to have seized the opportunity and grabbed real-estate left with now old product.

Give me a reason to put the magazine on the counter, give the customers a reason to pick the product up – besides the cover story.

Star is not a great product so marketing effort is necessary to get retailers and consumers to take the next step.

Magazine publishers are pulling out all stops to drive sales. These gifts have a high cost on the shop floor. TV Hits, for example, is offering a pack of hair colour. This magazine used to take two pockets to hold 40 copies. Now I have to give it a flat (premium)position and at least six additional pockets. This means that for this month in my store TV Hits has a real estate cost of $35.00. That’s just for rent. Even if I sell all the stock I won’t cover real estate and labour costs. The option is to not display all the stock – however that adds to the cost of managing what is on the shop floor compared to the back room – hence the need for newsagents to display all magazine stock on hand on the shop floor.

Free gifts are well and good to drive sales. However, publishers would do well to liaise more closely with retail newsagents to develop more economically viable sales drivers.

There is no doubt that easier broadband access, mobile devices and mobile access is impacting magazine sales. As I have commented here before, the magazine categories of Buying and Selling, Computers and Adult seem to me to be hardest hit. Computer titles are especially suffering. Titles such as PC Authority, APC, PC World, Aust. Net Guide, Macworld – the data I am seeing suggests all are losing sales.

One title, the worst in the category, used to sell 80% of all copies received in the 5 stores I have looked at data for and today it sells 40% – just one year later. Newsagents are carrying higher cost since supply quantities have not been cut. That aside, publishers must be carrying additional cost and must be under pressure from advertisers who are not getting the same readership. This will push advertisers online and place the magazines under more pressure to scale back or close.

In my part of the world and in anticipation of change, we’re focusing more on magazines less likely to be disturbed in the short to medium term by Internet related technologies – and there are plenty of these. Besides the continually strong women’s weeklies and women’s interests categories, we’re also focusing on crosswords, cars, pets, craft, gardening, health and fitness, sport, children’s and hobby titles. We’re contracting music, adult, buying and selling, computers, photography and games – so we can sell more magazines in the growth categories. It’s all about efficient space management.. Of course our desire to contract and the position of the magazine distributors can be challenging to synchronise. Plus there is the risk of our move becoming a self-fulfilling prophecy because of lack of stock. However, I have seen enough sell through and cash flow data to give me confidence that we have picked the trend.

Unfortunately too many newsagents are carrying too much magazine stock and as a result will be cash flow negative unless they realign their category focus to reflect market trends.

So when is enough enough? When should a publisher/distributor/newsagent kill a title? Given the distribution model, the break even point is different for each player involved. From a newsagent perspective, titles achieving a sell through of less than 50%, based on the current supply paradigm, needs to be cut. The alternative is more equitable arrangements (greater commission, a handling fee, a real-estate fee) to make these titles viable.

This report from Mediaweek about magazines entering the podcast space. Runner’s World released a podcast of training tips for the New York Marathon and Playboy has announced plans for a similar offering.

Magazines are late adopters of podcasting as a means of growing their reach. It’s a logical step, especially if they are to remain relevant in the growing wireless and paperless world – as much as I don’t want that to happen from the perspective of the retail channel.

Glam.com is an impressive … well what is it? It looks like an online magazine, a shopping guide, a social network, a blog. Glam.com ‘gets’ the online opportunity in a way which many of the shopper (and therefore advertiser) focused magazines don’t today. It’s a consumer outcome focused website. It’s interactive. It connects. Given the noises being made in the US about Glam.com I’d expect to more sites like it and Australian specific sites. For the best understanding of the Glam strategy, consider this from their website:

Glam.com is a unique entertainment website covering the worlds of fashion, beauty, and celebrity style, while providing women a shopping experience available nowhere else. The team that designed and built Glam.com was handpicked from the best of the technology, fashion, design, and publishing industries. This unprecedented collaboration between the best minds in the business has transformed the way women will shop online. Gone are the days of ripping out pages of gotta-gets, making lists of must-haves, dealing with packed stores, or spending frustrating hours looking for finds online. Glam.com brings it all to you!

Yep, they get the opportunity and commercial imperative of online.

Interesting report from the International Federation of the Periodical Press about magazine launches around the world and in particular their report of the launch of Total Kakuro. Here’s part of what they say:

Justine Wall, publisher of Future’s puzzle portfolio, said: “The word of mouth around Kakuro is steadily building and is set to be the biggest new challenge for puzzlers next year. Not only is it incredibly addictive, but it’s for everyone who has mastered Su Doku and is now looking for a new and taxing challenge.”

The crossword segment is very strong in Australia and the Sudoku market has reached a plateau recently so a new game to take Sudoku fans to a new level would be good to see.

I always like it when a new magazine launches so I’m happy to see Star arrive today. It will be interesting to see how it travels. There are several challenges: gaining retail space (existing high volume product already fights to get pockets in newsagencies, supermarkets, petrol and convenience); it’s Wednesday on sale date is contrary to consumer habits (Wednesday is hump day, it’s a light Lotto night etc etc); Wednesday is guilty pleasure magazine day (that’s what I call it at least) – That’s Life and Take 5; confusion about where to place it – I’d say next to NW but as I said that’s prime position and there are no spare pockets; what’s the value proposition – especially for the newsagency customer?

Star is a very different product to Real Living, Notebook, Madison and OK! – the recent major new releases I can recall. It looks and feels like a supermarket magazine from the US or the UK. Based on what I saw in the UK a few weeks ago I’d expect more magazines in the Star genre. This genre presents more of a challenge for newsagents than supermarkets. While celebrity is separate to the Woman’s Day / New Idea space, it’s close yet the product looks and feels very different. In fact so different that it may be appropriate to identify the celebrity category some way – away from the others. I could be completely wrong on this and my thoughts are only half baked at present.

I’m a but frustrated with supply quantity – it’s low for an established magazine in this category. When OK! launched we received plenty of stock and could create a good retail story. With Star we can fill a few pockets but that’s it.

All that said, it’s great to have a new title and the opportunity to work with the title to find sales.

Yesterday’s Mediaweek industry newsletter carried a story reporting comments of New Idea outselling Woman’s Day on several weeks recently. There is no doubt that New Idea is the big improved in circulation in 2005. This is based on the newsagent sales data I am privileged to see. It is also true that, for the stores I look at, on two weeks New Idea passed Woman’s Day – mainly due to it’s Princess Mary and earlier Bec Cartwright coverage. Looking at issues published over the last, say, six weeks, you can see Woman’s Day fighting back – better covers, more focus on celebrity. In newsagencies around 50% of the time both magazines are purchased together; between 60% and 85% of all sales are on a Monday – the day of issue.

The more active battle for circulation between the two this year is great. More please!

The October 2005 issue of Circulation Management, a US journal for Circulation Managers, carries a story about the battle for checkout space in US supermarkets. The article discusses three main trends: shrinking rack space, the rising cost of checkout fees and an influx of new titles and categories.

The most interesting point in the article is what publishers pay supermarkets per pocket for premium checkout space. Annual fees per pocket are made up of: $25 to rent the pocket, $50 per quarter Retail Display Allowance, $100 for a one time introductory placement offer (IPO) and 20 percent of the cover price – usually paid based on scanned sales (not supply and return as handled here in Australia). So, for one title in one pocket at a checkout, the retailer gets $325.00 plus 20% of the cover price for each copy sold.

Now, the IPO is an introductory fee so in year two the figure will drop to $225.00. However, supermarket leverage being what it is, only very successful titles will remain at the checkout unless additional fees are paid to maintain position.

Australian newsagents receive no fees beyond 25% off cover price for net sales. This is calculated as supply quantity less return quantity. Newsagents carry the cost of shrinkage which is, on average, 3% of supply quantity. They also pay for everything supplied and receive a credit for returns once processed by the distributor and this can be several months after supply.  This is why we need a scanned based trading model in Australia – it is the only fair model for payment of magazines sold in newsagencies.  SBT holds distributors accountable for their actions whereas the current model does not.

We can see from the data presented in Circulation Management the US numbers and can only assume that Australian supermarkets will have negotiated along similar lines.

The argument, of course, by supermarkets and publishers will be the higher volume of traffic in supermarkets, consistent compliance and negotiating power. I agree with these points. Many newsagents, however, deliver compliance, we have excellent traffic and we have the best depth of range in the magazine category. More important than anything else is that we have less capacity to carry the operational costs associated with magazines then supermarkets. Those least able to pay are the ones actually paying.

If newsagents received the US style fees it would add, on average and based on more reasonable charges, $100,000 a year to their bottom line. Such fees would put our stores on a more level playing field with supermarkets and others selling magazines.

Back when only newsagents sold magazines such fees were not appropriate. Now that almost 50% of all magazines are sold outside newsagencies it is appropriate and socially responsible for publishers to pay newsagents following a structure similar to that provided to supermarkets.

Publishers could argue that newsagents get 25% here compared to the 20% supermarkets receive in the US. However, the additional 5% accounts for considerably different accounting practices and a supply paradigm in less successful titles which means a loss situation for around 40% of magazines carried in any given newsagency.

With many new titles expected to be launched in 2006, newsagents could consider introducing fee structures along the lines of US supermarkets. This would value their real estate, their time and the traffic their store already pulls in supporting the entry of new product in an already well served marketplace.

One Australian company, InSite, compensates newsagents for space. However, their roster of titles is not high volume enough at this point in time to compensate for the additional real estate their promotions require. Further, their fee structure is nothing like the US fees paid to supermarkets.

Newsagents and publishers would do well to discuss these US figures and consider appropriate action on both side to arrest the falling net return from the total magazine category for newsagents.

Found this blog entry by ‘Luke’ about magazine covers. An interesting observation.

I created the magazine club card fourteen months ago to drive magazine sales in my shop. There are now over 70 newsagents running this simple magazine sales promotion tool. It’s like a coffee card but for magazines. Customers love it. In our case we’re still well ahead fourteen months in. The key is how you interact with the customer. Every day we hear customers comment that this card draws them back to our shop to buy their magazines. It is a great loyalty builder and sales driver. And only newsagents would offer such a promotion. I reckon it’s better than any fuel discount offered by the supermarkets. Plus it goes to the heart of the Australian newsagency point of difference – the best range of magazines in the world.

Explode magazine is proving to the problem launch of the year thanks to bad press and what seems to be an ill conceived product. We’ve had more in store complaints about Explode than anything else. I thought Explode was to be the boys’ Girlfriend of Dolly. It’s not. In fact it’s barely a step down from FHM and Ralph and while that’s okay for some, to place it in the teenage section is where we’re getting grief. I could be wrong but I reckon the publishers will either rest the title and regroup or kill it altogether. In its present form sales are not there from what I can see.

It’s good to see Ita Buttrose back, indirectly, in newsagencies. Bark!, a dog lovers magazine hit the newsstands yesterday and judging from this first day at the counter it will attract a good following.

Based on sales data from several newsagencies (small sample I know) I am seeing exceptional results for New Idea, Woman’s Day and Australian Women’s Weekly. New Idea and AWW are the strongest performers with the former maintaining 25% sales growth in the stores I have seen. If these results are seen across the country it will cement Mary as the magazine cover darling of this decade and lead to more Mary coverage. I’ll be interested to see if Lleyton and Bec Hewitt can beat Mary led sales when their baby is born.

To capitalise on the Mary covers on all three magazines at once we created a Mary pack with the three magazines and a baby card in our store – more to enhance focus than anything else.

Princess Mary and her new baby have propelled New Idea and Woman’s Day to strong sales on day two of their seven day on sale period. My small sample of newsagents suggests between 6% and 30% growth with New Idea leading in growth.

Day one of a very important seven days for magazine retailers and magazine publishers is over. In my own newsagency and several I have spoken with first day of issue sales of Woman’s Day and New Idea set new records for the year. I’m hearing of first day sales increases of between 8% and 30%. By all accounts New Idea is achieving greater growth. In my own case Woman’s Day is up 8% and New Idea 30%.

Our Woman’s Day display at the entrance.

Our New Idea counter display.

Tasmania’s Mary Donaldson, now Princess Mary of Denmark, is driving magzine sales this year. This week Mary will single handedly push, I predict, New Idea and Woman’s Day to close to their best sales result for the year.

Footnote: While supermarkets and others will put the product in the usual spot, newsagents will embrace the larger print run and boldly promote the titles.

I’ve been into between 50 and 60 retailers selling magazines here in the UK since arriving ranging from newsagents to bookshops to petrol outlets to supermarkets. It’s a very different magazine market to Australia both in terms of titles published and how they are retailed.

Newsagents in the UK range from what we in Australia would call convenience stores through to something close to a full service newsagency. However, this full service newsagency is rare here bit would seem.

I’m leaving the UK with then impression that what we have in Australia in the newsagency network, warts, divisions and all, is a tremendous asset to consumers and distributors and needs to be cultivated for these stakeholders.

Talking with people who should know there is less compliance here in the UK and far greater diversity across the newsagent shingle. There is little consistent in store promotion.

The magazine marketplace is dominated by what I would generously call trash magazines. They sell for under one pound. Titles for men, women, boys and girls. These titles make New Idea and Woman’s Day look like top shelf product. They don’t seem to have anything like a Woman’s Weekly as a cornerstone of the category. The UK weeklies are celebrity driven. The boys and men’s magazines are breast driven. Sure there are car magazines but it’s the trash which seems to dominate.

In the other segments of gardening, crafts, model making etc the best range I could see was not a match for an average Australian newsagency except for a couple of what they call super stores in the heart of Birmingham. The lack of range in most of the stores underscores the value of the real estate asset newsagents make available for publishers.

Having said all that, in the specialist newsagencies they display magazines better than we do. Adjacencies make more sense and their display systems allow for more full cover displays. In the women’s weeklies and women’s interests area especially I saw several innovations which must drive sales.

Explode, the new magazine for boys 14 to 17 has been out for two days and is showing signs of acceptance in what is traditionally a tough market for new magazine titles. Explode seems to be FHM or Ralph for younger guys. Just look at the point of sale material provided by the publisher (above). Based on anecdotal evidence from a few newsagents late yesterday and applying reasonable analysis of sales decay for titles in this segment I’d expect a sell through rate of 70% for this first issue. If Explode achieves that I’d call the launch a success. This weekend will be the key. Explode needs to achieve at least 50% sell through by Sunday night to reach the predicted 70% sell through.

Footnote to publishers: Visit almost any newsagency and you will see in store displays like the one above from my newsagency. This is the type of support newsagents give new titles. You don’t see it at petrol and convenience outlets nor do you see it in supermarkets. Support newsagents and they support your products.