Six Questions I Used to Think Had Easy Answers
President’s Letter
Do fewer ads simply mean...fewer ads?
It has been almost two years now from the start of the meltdown of our financial systems. Clearly, the magazine industry has been in tremendous turmoil. Some have used the metaphor of the “perfect storm” to describe our industry’s plight because, not only have advertising revenues declined, but the industry has been challenged by innovations such as applications for mobile devices big and small and the continuing challenge coming from digital media for the same ad dollars.
But the focus on magazines’ revenue troubles fails to recognize that advertising revenues in just about every medium have been down. And, yes, it is true that some have been down more than others but this has been an advertising recession not a magazine recession.
Fewer ads can often mean fewer subscribers since some publishers may no longer have the revenue to finance money-losing subscriptions. Maybe it is the loss of cheap subs that fuel the “magazines are facing a calamity” talk.
Do salespeople with a passion for their product perform better?
What I have been absolutely amazed by is the lack of an aggressive response from the magazine industry to those who claim that magazines are a medium of the past. This premise, heavily pushed during this recession, has naturally been based on the fact that magazine advertising revenues have been down. Well, they have been down before— generally, about every eight years or so. And with each previous dip there have been the predictable results—magazines closing, magazines reducing rate bases, magazines reducing staffs, and so on.
Do we just believe that digital alternatives are better? Or do we just lack confidence that we can persuade anyone else that our entertainment and information products are superior? I’ve always found that salespeople who lack confidence in their products will simply sell less advertising.
How will we sell in an era of low commitment media?
Historically, during times of recession, advertising expenditures tighten up and are reviewed often. Because advertisers are working with short-term horizons, advertising is often placed in media that meet these three criteria: they have a low out-of-pocket commitment; they have short ad closes; the advertising can be easily and quickly canceled. Electronic media, particularly Web advertising, lends itself very well to this sort of requirement. Costs sure are low. Publishers’ net CPMs are now less than a dollar. Impressions can be scheduled in less than 24 hours and buys can be canceled any time after a minimum buy of, say, $300...all great news for advertisers, but not so much for publishers. Because when the economy changes, as it usually will, these criteria will not.
Now it will not matter to the several dozen or so digital publishers who are actually making money. But how will the thousands of others survive? I suppose they will all become better salespeople.
What’s more impactful: the written word, printed word or spoken word?
Magazines are just like radio and television. They will survive because the concept of a magazine makes eminent sense. A magazine is a vehicle which establishes a relationship on an ongoing basis with a reader, as it explores subjects in some depth in particular areas of interest. Just like in radio, if a magazine’s format ends up going onto satellite or some other distribution system, that’s all it is—another distribution system. In the event that the magazine format transfers at some point to an electronic medium which duplicates that same format, so be it, but it won’t be anytime too soon. Incidentally, so that this doesn’t sound too self-serving, the Elliott Co. has hedged its bet selling many millions of dollars of online advertising. But I still don’t think that print is going away.
What is going away are magazines that should go away. In the evolution of selling products and services, good companies take a product, contemporize it or retire it or start a new product. A company like Procter & Gamble is always investing in research and development. In the magazine industry, it seems that magazines oftentimes aren’t contemporized and are not reconfigured to serve a slightly different audience. If a magazine was originally founded to serve the baby boomer generation and the baby boomer generation is growing older, it has to either move the magazine in the direction of the baby boomer generation or try to remodel it so that it attracts a new generation.
Can you get thin without losing weight?
Two years ago, I wrote a newsletter about the do’s and don’ts for rocky times. Point #7 of this article was “do not dismantle infrastructure to solve a short-term problem.” In my recent travels in the publishing world, which have been extensive as companies examine their outsourcing option, this single issue is the one that seems to come up repeatedly. Many publishers have experimented with closing offices, converting salespeople to independent reps or just letting people work from their homes.
As I had said then, “I believe that is a fundamental error on many levels and it rarely works.” It’s one thing to find intelligent options; it’s another thing to take out the fundamental business support systems and expect business to move forward. In the area of sales, running an independent sales organization, even if it’s made up of one person, is distinctly different than working for a large company. Intellectually it might appear that those differences could be manageable, but when one examines the skill sets of most sellers, the divide can be very wide.
Should we invest now or sit on the sidelines until the market improves?
If there was any time to invest in one’s business, it would be now as we are coming out of a severe recession. I know the Elliott Co. has done its best to try to invest during these times. We have added some additional research services and really honed in on some key training areas. I believe that training is the single most important thing a company can provide and it is more important then ever before to do so. With all the new product offerings that are coming out, including but not limited to iPad applications, a sales force needs to have confidence in their abilities to sell multiple products and services. n
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