The funny thing about change is that while no one ever expects it, it is generally inevitable. This is true in the print media industry and specifically in the magazine sector. Each year we review two readership reports from the All Media and Product Survey (Amps) and four Audit Bureau of Circulations (ABC) updates, while monthly we see the ad investment data from Nielsen’s Ad Dynamix. Although change is ongoing, it isn’t simple to pinpoint the trends or to pull out the consistent winners from the whiners.
To get a better insight for identifying the top 10 magazines, I reviewed advertising income, circulation and readership for the past few years, despite the imperfection of these measurements.
Now, the definition of ‘top’ is a point of debate, but for the moment let’s go with it being about advertising income as imperfectly but uniformly measured by Nielsen. Profit or operating income would be better, but that’s unlikely to be shared.
I say “uniformly imperfect” because, with no disrespect, Nielsen records advertising exposure at rate card value. In other words, discounts are not measured nor are free or compensated placements. Normally this approach results in a uniform exaggerated income. Only a few readers will know the reality.
In terms of the specific measurement criteria, I’ve tried to best match the various sources to obtain this snapshot most accurately. Specifically:
Expenditure / Ad Income: Nielsen data across five years from February to January (this is the most recent data comparison point available).
Circulation data: For perspective, ABC Q4 total circulation rather than core, in order to be the most generous and compared to 2012 only to show most recent shifts.
Readership: Also for perspective, a two-year trend to match circulation comparison using AMPS 2012AS through to AMPS 2013 BA.
Bearing in mind the use of both five-year and two-year data, it’s still interesting to see the overall emerging trend.
With magazine rate inflation running at in excess of 5% over this period, the results clearly show the tough trading conditions. Ad income remains constant in real terms, production costs are increasing (estimated in excess of 20%), there are continued circulation declines, and matched growth in readerships reflect the cash-strapped public’s response. It has certainly not been a pleasant few years for anyone.
But with every dark cloud comes a silver lining. Make no mistake about it, tough times weed out the weak, shift the status quo and allow for entrepreneurial spirit and ability. Add to that a good product in order to thrive.
So let’s review the financial trials and tribulations the top 10 magazines by looking at advertising income for the 12-month period to January 2014.
Immediately obvious is the scale of the weekly magazine Huisgenoot topping the ranking at R174 million during the measured period. This is followed by its sister title, YOU, at R119 million. Some might say that their sheer size gives them the economy of scale to survive. But I feel in the current economic climate that this is unfair. It’s easy to believe that you are big because you’re good, while the reality is that you’re good only because you are big. Either way from an ad income perspective these two Media24 giants certainly earn their position as the largest income-generating titles. Health-wise, however, there seems to be little to celebrate in the growth in reported income.
The ‘star’ performers from an income perspective have to be DRUM and Car magazine. While they address completely different editorial genres, their income growth is strong, with 59% for DRUM and 24% for Car. These are the only titles in the top 10 that reflect reasonable advertising income growth.
Landbouweekblad and Sawubona report modest increases (9% and 6% respectively) but they are well below inflation. So in real terms, their income base has decreased.
COSMOPOLITAN has recorded the greatest advertising income decline, amounting to some 20%. Some of this will certainly be as a consequence of right sizing to scale into a profitable sweet spot where income is optimised on margin.
Positions five, six and seven could not have been guessed. Who would have thought that in fifth position one would have Financial Mail and Men’s Health in sixth? Both, incidentally, record a percentage growth in income; albeit small, but less than inflation. In seventh position is TRUELOVE, which did surprise me.
Looking at the second piece of the puzzle, in other words, the circulation shifts for these titles over the past two fourth-quarter reports, we see an overall 2% decline in these top 10 titles.
Building on the logic taken from the previous chart, one would have expected growth from the two income star performers… but not so. DRUM delivered a stable circulation over the study period while Car’s circulation declined 6%.
Men’s Health and TRUELOVE reported the highest declines, followed closely by COSMOPOLITAN.
The star performer in terms of circulation was Sawubona, up 50% even though its distribution and circulation is linked predominately to a contract with South African Airways.
It is interesting to point out that there is a correlation between income and circulation, thus ranking, at least for the first three titles. The anomaly that catches my eye is the Financial Mail, which ranks fourth in income yet records a significantly lower circulation than even the 20th ranked magazine on income. The editorial environment, and the premium that advertisers are prepared to pay for their association with this magazine, is the only explanation for this.
The final piece of the puzzle comes from the Amps readership study over a two-year period.
Readership is, as one knows, based on claimed performance of the survey sample and while I’m told that there is no link between circulation and readership, the results certainly prompt a few questions. For example: How could a title deliver a 37% growth in readership, while circulation dropped 2%? Is it possible? I guess the answer must be yes, but common sense, or at least my common sense, suggests that status claiming may have played a role. However, I could be wrong, as could advertisers since ad income did not follow either.
In terms of readership declines, Landbloweekblad dropped 13% while Car dropped 10%. Huisgenoot, YOU and DRUM all grew readership, as did COSMOPOLITAN.
We have no readership data for Sawubona, in case anyone is wondering.
Is there an outright winner?
No, simply because all titles in the top 10 income earners have suffered declines in one or more of the criteria. I am, however, not the sort of person to shy away from controversy, so here are my winners:
In the income category, it has to be Bona, up a reported 59%.
In the circulation category, this is a hard one because the bigger you are, the harder it is to grow, but that said even reporting a -3% performance, in my opinion it has to be Huisgenoot.
Finally, from a readership perspective, Financial Mail has delivered a truly incredible performance to such an extent that it’s difficult to understand why this has not been converted into advertising income growth.
If I were to award a magazine in the top 10 for the ability to produce the most impressive ad sales results it would be Bona. With only a 1% circulation growth, and a 4% readership gain over the past years, Bona‘s income has grown 59% over the past five years. All of these titles are winners. They’ve all performed remarkably and have delivered their results differently. All credit to their editors and publishers and, of course, their sales teams.
This analysis, however, provides some context upon which to ponder the wellbeing of the magazine industry. While all the measures are imperfect in their own way, it’s nevertheless clear that success comes from financial growth, and an ever-increasing circulation driving gains in readership. Good content drives magazine purchase, which impacts on readership and this makes selling the title to prospective advertisers a great deal easier.
And remember, if all else fails, try selling advertising in your title rather than servicing and drinking client coffee.
Gordon Patterson is a media agency icon and, until recently, he was group managing director of The Starcom MediaVest Group and chairman of VivaKi SA.
Patterson thanks Nenette de Lange from Initiative Media SA for extracting the raw data.
This story was first published in the May 2014 issue of The Media magazine.
