Public Place Distribution Fuels Increased Magazine Audiences; Advertisers Benefit
By Rebecca McPheters

Over the last five years, advertisers have reaped substantial benefits from increased public place and “sponsored” distribution of magazines. Now they are pressuring publishers to take steps to limit this distribution by implementing more rigorous standards for reporting it on ABC statements. In recent years, increasingly detailed reporting standards have resulted in publishers making information available that is not only rightfully proprietary, but which has frequently been misused by advertisers to publishers’ detriment. Publishers need the flexibility to manage their circulation, their audiences – and their bottom lines – as they see fit. Advertisers should be concerned not with the details of circulation management, but rather with the end result; i.e. the size, quality, and responsiveness of the audiences that magazines deliver.

Since 1998, the average RPC for MRI measured magazines has increased a full reader-per-copy, from 5.5 to 6.5 ¹. A major reason for this change has been a large increase in readership outside the home – from 46% in 1998 to 53% today - largely driven by increased public place distribution and resulting increased readership. In public places a single copy can generate as many as 30 readers.

With the demise of PCH and AFP as substantial sources of magazine subscriptions, many publishers turned to public place distribution and sponsored subs to fill the void – and advertisers benefited substantially! Audience sizes not only increased, but they increased while high levels of reader quality were maintained. Since 1998:

• Average page exposure increased by a third.
• Median income of magazine readers increased by 15% and remained at a level 20% higher then that of the population overall.
• Median age remained 3 years below the median for the adult population.

Despite the fact that these audience shifts increased the value of their offerings, publishers derived little economic benefit from this gain. Advertisers “refused” to allow more than minimal price increases unless “justified” by increases in ratebase - something few publishers were in a position to provide. While advertisers saw magazines’ reach of their target audiences expand without a commensurate increase in cost, the rapid escalation of television CPMs continued unabated. Put another way, magazines are providing advertisers with more readers per dollar, while television is getting more money per viewer. Not surprisingly, the end result of this inequity has been a continued deterioration in magazines’ share of advertising dollars.

Advertiser’s primary use of circulation data is as a negotiating tool – and it has been used very effectively to limit publishers’ ability to increase their prices even in the face of increasing audiences. The continuing focus on circulation puts publishers in a no-win situation; when audiences increase they cannot reap additional revenues, but if audiences decline they will be accused of losing relevance.

It is anachronistic that circulation measures are still accorded substantial importance by advertisers when the true measure of any medium lies in the size and quality of its audience. It makes even less sense for advertisers to focus on circulation than it would for them to focus on TV “sets in use” – where not only 3 times as much is spent, but where there is also a more consistent relationship between sets and viewers. The fact is that in both cases value is determined not by the number of delivery vehicles in place – or by their locations - but rather by the audiences that they reach.

For magazine publishers, circulation and editorial content provide the means of generating those audiences. If advertisers’ primary concern is to sell their product, then they should spend less time on how their ads are distributed and more time on who their ads reach, whether they are read, and whether they elicit the desired response. Instead of squeezing the last bit of profit from already strapped publishers, advertisers should focus on using magazines more effectively as a way of increasing the sales of the products they advertise.

Over the years we have continued to see the publishing business diminished as it has consistently tried to reactively accommodate the priorities and concerns of those with a sometimes limited understanding of advertising generally and of magazine advertising in particular. It is time for publishers to start dealing more directly with clients’ misperceptions and to devote the resources necessary to educate their clients regarding the underlying value of magazine advertising and how it works. It is time to stop foregoing much needed cost increases and giving in to increasing demands for circulation disclosure. It is time for publishers and advertisers to shift their focus towards the size, quality, and responsiveness of the audiences that magazines deliver.

¹The MRI data used in this analysis was supplied courtesy of MRI. All comparisons are based on Fall 1998 and Spring 2003 data for consistently measured titles. McPheters & Company has sole responsibility for the analysis.