Trends Brighten for 2006

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For Millard Group publishing brokerage clients, 2005 same-store direct mail order volume was essentially flat. We did see movement in the children's market, with some increase in the use of insert media, as well as some volume cutback from mailers that had mailed a greater-than-usual volume in 2004.

When we look at list order activity across both our brokerage and list management divisions, we see a more encouraging trend.

Millard Group's fourth-quarter 2005 seasonality study reported that 2005 was the third consecutive year in which consumer magazines represented the largest category of direct mail activity. Consumer magazines contributed 16 percent of total list order activity. December remains the month having the greatest amount of activity.

 There was considerable buzz in Q4 2005 around the pending postage rate increase. We had heard from many publishing clients that they were considering either an increase in December 2005 volume or a cutback in January 2006 direct mail volume.                                           Jeremy Johnson

However, neither scenario took hold. Order volumes in both months were roughly on budget.

The number of consumer magazines is at an all-time high, with more than 18,300 recorded, according to the Magazine Publishers of America. The same report finds that in the past 10 years, subscriptions have grown at a rate of 5 percent and that the subscription-to-single-copy ratio remains 85:15.

More than 1,000 magazines launched in 2005 for the second consecutive year. But many of these titles were one-shot brand extensions. Millard Group's list management division reported a slight increase in test orders in 2005, with orders from magazine launches playing a key role.

Samir Husni, founder of www.MrMagazine.com and a journalism professor at Mississippi State University, listed domino from Condé Nast as the launch of the year, followed by Quick & Simple from Hearst Corp., Celebrity Living Weekly from American Media, Everyday Living With Rachael Ray from Reader's Digest Association and Sudoku, the puzzle craze of the year with multiple title launches.

Another positive trend in 2005 was the recovery in ad sales for many publishers. The second and third quarters enjoyed improvement versus the year-ago periods. It was a much-needed indicator as newsstand sales continued to drag with fewer distributors and more competition.

Michael C. HeaneyConsolidation in consumer magazines was another hot topic during the past year, most notably the sale of Gruner + Jahr to Meredith Corp. This typically means more cross-file promotion and a potential reduction in outside list acquisition.

Many of our clients enjoyed solid results from the models that were built and mailed in 2005, and we expect an increased focus and investment in this area throughout 2006.

The lack of quality sourced new files entering the market also has fueled the renewed interest in developing outside models. Another positive here is that models no

Michael C. Heaney                        longer are reserved for just the largest mailers. Publishers of multiple smaller titles can have models built by negotiating minimum-use agreements corporately instead of by individual title.

In addition, clients say they will monitor their exchange relationships even closer to better balance acquisition costs versus list rental revenue. The days of mailing based on budgeted mail volume are replaced by mailing smarter, with an eye toward true cost-per-order and lifetime value.

The ongoing interest in partnership opportunities remains a trend for publishers. However, some publishers who relied heavily on partnership marketing in 2002 and 2003 and saw soft renewal rates this time are doing so more cautiously.

This year also likely will see the continued trend toward use of the voucher package. While our clients continue to tweak and refine this publishing mainstay, it remains a seemingly indefatigable control.

An interesting development in 2005 was some publishers splitting their control and mailing more elaborate pieces such as magalogs. These they mailed to lists that themselves may have a softer original source or that simply do not respond as well to the voucher package.

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