Magazines count on nonpaid readers

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Amid the thought-provoking discussion about digital and other brand extensions at the American Magazine Conference in October in Phoenix, it also was refreshing to hear assertive, unambiguous statements about the value of nonpaid circulation and overall readership to advertisers and publishers.

The industry beat around this bush for far too long out of fear of the potential consequences for the traditional advertising-driven model of major consumer magazine brands. Meanwhile, the dynamics of magazines and all media have continued to shift relentlessly. Time-challenged consumers have seemingly endless options for information and entertainment - some they pay for, some that are mainly or fully supported by advertising or sponsorships.

At least for larger-circulation magazines, it's long been true that syndicated readership numbers determine whether a given title finds a place in a media plan. At the same time, it's been standard to use circulation statements to try to dig into reader specifics and negotiate costs, and negotiations often have been based on premises such as the presumed higher quality or value to advertisers of readers who pay (or pay relatively more than others) for magazines.

By failing to confront and refute such assumptions as an industry, publishers became complicit in a system in which 100 percent paid rate bases ruled and claiming paid (at any price) copies became the sine qua non driving business decisions. The results: declining circulation profit margins and the devaluation in advertisers' eyes of large numbers of consumers who are reading and being influenced by the editorial and advertising in magazines, regardless of whether they're personally paying for the experience - meaning, of course, readers of public-place and other free-to-the-consumer copies now reported under the "verified" category on Audit Bureau of Circulations statements.

In addition to the high readers per copy generated by public place, which translate to the high readership numbers that media planners desire, a growing body of independent research illustrates these readers' high demographics, engagement and even propensity for acting on the ads that they're exposed to. Further, marketers have proved eager to reach the billions of consumers who are accessing free (to them) content via the Web.

In short, we have a double standard here. Though to be fair, it's one that's persisted in no small part because the Web is highly measurable while magazines have lagged in providing timely, ROI-based metrics.

Publishers may have a battle on their hands in the short term from some media buyers who want to discount or disallow verified circulation as counting toward rate bases. But what's critical is that they've recognized that their medium's future depends in large degree on ensuring that all valid audience members, whether they're reading magazines or accessing the content through digital extensions, are fairly included in magazine metrics and advertiser decisions.

In his AMC address, Jack Kliger, president/CEO of Hachette Filipacchi Media U.S. and chairman of the Magazine Publishers of America, declared that the industry's most important guiding principles must be achieving greater circulation profitability and "at the same time, developing the largest number of readers engaged with our products."

Mr. Kliger urged the industry "to operate on the premise that rate bases should follow, and not lead, our strategies" and to focus on proving the value of public place and verified to the advertising community rather than using this circulation to sell against one another.

The good news is that results-oriented media buyers will objectively weigh hard research on the makeup and value of nonpaid readers and are eager for new tools to quantify magazines' effect on brand awareness and purchasing behavior.

Even better news: If publishers focus on addressing the imperatives laid out by Mr. Kliger, they not only will be fairly compensated for their value by advertisers, they'll also have the freedom in their business models to capitalize on opportunities to create brand-based, multichannel platforms that attract an optimally profitable mix of paid and nonpaid content users.

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