Custom Publishing Grows Despite Downturn

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Despite a difficult economic climate and a downturn in consumer publishing, it seems marketers' movement toward customer relationship management initiatives has sparked growth in the custom publishing industry.


In fact, the custom publishing industry went from $1 billion in revenue in 2000 to $1.5 billion in 2001, according to the Custom Publishing Council, which is a part of the Magazine Publishers of America trade group. Consumer publishing revenue declined from $17.7 billion in 2000 to $16.2 billion in 2001, according to the Publishers Information Bureau, part of the MPA that tracks consumer advertising.


"Custom publishing in the U.S. has been around for a number of years and originated primarily in the financial services and health industries," said Diana Pohly, president of custom publisher Pohly & Partners, Boston, and co-chair of the Custom Publishing Council. "In the last three or four years it has really started to bubble up in the minds of corporate marketers in the U.S. outside of those fields."


Some of Pohly's custom publishing clients include Continental Airlines, the Direct Marketing Association, the Massachusetts Office of Travel and Tourism, Sotheby's International Realty and Western Union.


The increase in custom publishing grew out of the customer relationship management push of the past few years, she said. Marketers invested tremendous amounts of time and money in CRM technology to better understand who their customers are, she said, and now they need to put that information to use.


"I call it moving a brand from awareness to affinity," Pohly said. "Custom publishing is tremendous for that particularly when you already have a customer and you want to cross-sell and upsell to them. You can't do it with print or broadcast advertising."


Another custom publisher echoed Pohly's sentiments.


"There is this movement towards trying to establish a deeper relationship with customers," said Chris McMurry, CEO of McMurry Publishing, Phoenix. "How are you going to differentiate yourself? You can no longer just send the cheesy little invoice stuffer newsletter. You have to do more, and if you're a big company you can produce your own magazine with your own content."


In addition to serving clients such as 24 Fitness, Mothers Against Drunk Driving and Origins, McMurry serves as the custom publishing partner of Reader's Digest Association Inc. Through that partnership, McMurry creates custom publications for the Ritz-Carlton Hotel Company LLC and pharmaceutical firm GlaxoSmithKline.


Of course, custom publishing is an expensive venture with the cost depending on reach, frequency, quality and other factors.


Both McMurry and Pohly said single-sponsor custom publications start at a minimum of $300,000 to $500,000 for a year with a frequency of two to four times.


"If you're going to go up in the quality to a very consumer-magazine-like publication and up the frequency say to six or 12 times a year it will cost $2 to $4 million to do that," Pohly said.


Though some of the cost can be offset through subscriptions, advertising and other revenue streams, companies should not expect to see any type of break-even for three to five years, she said.


And though custom publishing appears to be on the rise, publishers do not expect it to replace all other types of marketing messages.


"I don't think that big business will ever stop traditional advertising mediums but I think they see custom publishing as a way to control their destiny somewhat," McMurry said.


Early this year, the Custom Publishing Council did an e-mail research study with its members. Sixty-two percent of respondents said their business was up 15 percent or better, according to Pohly.


"You can contrast that with a Publishers Information Bureau report that said 70 percent of traditional adverting categories were down by more than 15 percent," she said.


The Custom Publishing Council projects the custom publishing industry will grow about 20 percent this year.


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