Put Circulation on Par With Advertising and Editorial, Speaker Says

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NEW YORK -- John Q. Griffin, president of the magazine group at the National Geographic Society, was at his pugnacious best at yesterday's 18th annual DMA Circulation Day conference.


He used PowerPoint and videos of jungle shoots, including one of a National Geographic documentary maker reacting calmly to a boa bite, to argue for strong leadership in a circulation business.


"It's time for circulation to go on an offensive," he said. "We too have been bitten."


Indeed, the circulation category has suffered over the past decade.


Since 1995, use of direct mail and sweepstakes are down 65 million pieces. Between 1992 and 2002, 265 million fewer units of TV Guide magazine were sold. And in 2002, the top four newsstand sellers sold a combined 237 million copies.


Griffin pointed out several other maladies.


For instance, there are lower remits. Legal concerns are rising on soft offers, spam, telemarketing and privacy. Publishers lost sweepstakes as an effective tool. The pressure to maintain rate base, or circulation guaranteed to advertisers, is mounting.


Competition also is growing. Last year, an estimated 800 titles launched. This year 1,000 are expected to debut.


Finally, rule and reporting changes at Audit Bureau of Circulations are getting even more irksome. Advertiser scrutiny of the pink sheet -- the circulation report card -- is higher than ever.


"The perfect storm is what this group has been living," Griffin said.


How have circulators replaced lost sales? Many are resorting to field sales, negative remit sources, public placement and bulk distribution and discounting.


Meanwhile, circulation's role in overall magazine revenue is declining.


In 1994, advertising accounted for 44 percent of the revenue, circulation 42 percent and single-copy sales 14 percent. By 2002, advertising's share jumped to 53 percent, circulation fell to 35 percent and single-copy sales accounted for 12 percent.


The expenses side was a little better for circulation. In 1994, editorial accounted for 10 percent of expenses, circulation 34 percent and advertising 9 percent. While others stayed constant, circulation expenses dropped to 29 percent. Production estimates were not included.


Circulators must stop reacting in the face of these challenges. Griffin told the 500 attendees at the luncheon keynote session to take control of their destiny. His list of suggestions combined common sense with admonition.


First, circulation must have an equal voice with editorial and advertising.


The publisher of Gruner + Jahr's Rosie, for instance, did not accept the magazine's circulation numbers. The top circulation executive, although she did not have direct oversight over the title, had to resign over the Rosie lawsuit for misstated circulation numbers.


Griffin found the publisher's attitude unacceptable, bemoaning that the circulation department was "less than full partners."


When asked, he said not all magazines cheated on their pink sheets.


A recent Magazine Publishers of America comparison of 500 pink sheets found actual circulation was 1.62 percent lower than the audits. By the same token, an informal survey of 13 audits found the pink sheets overstating numbers by 1.6 percent, or 125,000 copies on sales of 7.69 million.


Second, circulation must focus on selling.


"Circulation is not a job of analysis," Griffin said. "It's about being bold. We're in the business of selling. Our job is to sell the magazine that we represent. We're not a cost-center."


Creativity certainly needs to return to the business, he said. Lines like "Save 80%!" are not a reason to buy. Circulators must think fresh, too.


"We're so much the victim of common knowledge," Griffin said.


Circulators always complain that TV ads do not work, space ads are not effective and so on. They must find opportunities to make things work. The Internet is a good source, with the multiple vehicles it offers through e-mails, Web sites and banners to target prospects.


Direct mail, for example, works well for the National Geographic. It mailed 30 million pieces in October to maintain its rate base.


"I don't think we stint on creative testing," Griffin said. "Nor do we intend to cut our direct mail. In fact, we intend to increase our direct mail across all magazines."


Equally important, publishers must sell benefits -- the first rule of circulation.


"Selling price is the last refuge of bad marketing," Griffin said.


The Magazine Publishers Association, of which Griffin is secretary, and Northwestern University did a recent survey on benefits from reading a magazine. The respondents said magazines gave them value for money, made them smarter, offered a personal time-out and a chance for reflection.


Similarly, the No. 1 reader benefit according to surveyed National Geographic readers was the way the magazine helped them better understand and appreciate the world around them.


Publishers must find the reason why people are passionate about their magazine. Editorial should then deliver on that promise. They must find new ways to test to see how people are passionate about the magazine. And sell benefits at every opportunity, not prices.


"Our challenge at the National Geographic is to sell this passion and power … to keep 6 [million] to 6.5 million readers to renew each year," he said. "Eighty percent of our revenue comes from readers."


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