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Customer Magazines and Contract Publishing Market Assessment
Key Note Publications Ltd, January 2001
The contract publishing industry has continued to expand since Key Note last reported on it in 1994. There have also been a number of important developments in the market, including the rapid expansion of online publishing and the widening of many contract publishers' activities to encompass a range of other services.
The current contract publishing market began around 30 years ago, with the launch of a number of publications for travellers - notably the High Life magazine by British Airways. The retail and financial sectors were next to exploit the benefits of customer magazines. The contract publishing industry which grew up to service the demand for customer magazines initially consisted mainly of companies which were associated with either advertising agencies or public relations (PR) firms, or which were established as the contract publishing arms of publishers of consumer magazines.
The market was further boosted during the mid-1990s as the marketing emphasis shifted more in the direction of customer loyalty, with customer databases being used to make the magazines even more effective as marketing tools. Most recently, the Internet has begun to play an important part in the market, with many new contract publishing launches now incorporating - or consisting solely of - websites.
The objectives of customer magazines can vary according to sector, and according to the needs of individual clients. They may include: providing product information for the reader (particularly important within sectors such as finance and information technology [IT], where products and services may be complex, and for retailers with a broad product base) providing information about the reader (through response campaigns) promoting customer loyalty (recent improvements in the editorial and design quality of customer magazines mean that they are often seen as a customer benefit in their own right) enhancing brand image (editorial material can contribute to the creation of a 'lifestyle image' for the brand) and sales revenue/lead generation (through special offers and money-off coupons, and through informing customers about new products).
The contract publishing sector is still growing more rapidly than other areas of the magazine publishing market: by 2000, the market size (based on contract publishing turnover) was showing a 70.3% increase on the 1996 figure.
Many customer magazines, particularly in the retail sector, have very high circulations: in the year to December 1999, customer magazines took more than half the top 20 places in terms of average audited net circulation. The true figure is undoubtedly higher than this, since (for a variety of reasons) only a proportion of customer magazines have audited circulations.
Although some customer magazines carry a notional cover price, the vast majority are free to qualifying consumers, who may be existing purchasers of a company's products, loyalty card holders, or simply shoppers or travellers. Some paid-for publications have been extremely successful (notably Sainsbury's The Magazine, which now considers itself a fully-fledged consumer title, rather than a customer magazine). Other companies - mainly retailers - have experimented with paid-for titles with varying degrees of success.
It is estimated that just over half of all customer magazines carry third-party advertising. This may represent a substantial source of revenue - in 1998 there were five customer magazines (including the Sainsbury's title) in the top 100 consumer magazines for display advertising revenue, and two in the top 20.
Among the recent developments in customer magazines has been the targeting of readerships, using improvements in printing technology and increasingly sophisticated consumer databases to produce different versions of the same magazine for different segments of a company's customer base.
Most publishing agencies are now involved, to a greater or lesser extent, in the provision of content for clients' websites, as well as in producing print magazines. However, more innovative ways of using the Internet - for example, by integrating online and print publishing to establish two-way communication with customers - tend to be confined to `hi-tech' and new-media sectors at present, probably because client companies in most other sectors tend to be more conservative in their use of the Internet than the publishers themselves.
The contract publishing industry has been characterised in the past by the importance of small and medium-sized companies, and to an extent this still applies, with only a handful of companies having a contract publishing turnover of more than £10m. However, an increasing number of companies have links to larger concerns, notably in advertising or consumer publishing.
The largest market sectors in terms of number of magazine titles are retailing and travel, each of which accounts for 19% of the total. The third-largest sector - and the one which has shown the most growth since 1996 - is business-to-business publications.
Key Note's consumer research shows that customer magazines within the travel sector are the most widely read free retail magazines are next in popularity. Relatively few respondents read paid-for customer magazines those that do are more likely to be under 35 than older.
Respondents are generally very positive about customer magazines, with a high proportion agreeing that they are a good way for companies to communicate with their customers, and most saying that they can usually find at least one or two features to interest them in the magazines they receive. Well over half say that they like finding out about new products and services through this medium, and just over half have used coupons and special offers from customer magazines.
Opinion is equally divided over the question of whether customer magazines should be free, but the balance of opinion is that customer magazines are just as well-produced and interesting as standard consumer magazines.
The contract publishing marketplace will undoubtedly change considerably over the next few years, as developments in technology, and in marketing strategy, make traditional means of communicating with customers seem less effective. They will increasingly come to form part of integrated customer relationship management (CRM) strategies, with the emphasis on one-to-one communication rather than on blanket coverage - something which is already happening in some sectors of the industry.
There will also be a continuing development of the international market for customer magazines most UK publishing agencies now produce magazines in several languages, and it is possible for a magazine to be published entirely in one country, with local-language journalists being employed to produce articles tailored for the local market.
The opportunities afforded by online publishing are already making themselves felt in the market, and their influence will increase in the near future.
The contract publishing industry continues to attract new entrants, with several companies being established during the second half of the 1990s. The trend towards the integration of publishing agencies with marketing and new-media companies will undoubtedly continue, in line with the integrated media strategies which will eventually become an important part of the marketing mix for client companies of all types.
Although the market for contract publishing could be said to be reaching maturity, and is unlikely to show the high levels of expansion recorded during the previous decade, a respectable rate of growth will continue, with a forecast increase in market value of 47.2% between 2000 and 2005.