Last year proved tough for the UK's customer publishers, and the league tables for the industry show some marked drops in turnover. As the recession hit home, significant declines were reported across the board, including big-name agencies such as John Brown Media Group and Redwood.
There are now, however, glimmers of hope. While pitch activity has not yet recovered to 2007-08 levels, it is clearly on the increase. Clients are showing greater interest in the production of branded content, which is, of course, what these publishers are geared to providing; and for all the pain of last year, customer publishers did not suffer the same dive in profits as their consumer counterparts.
'We are in a pretty good place,' claims Julia Hutchison, chief operating officer of the Association of Publishing Agencies. 'Our members have not suffered the problems that consumer magazines have been through, as they don't rely on third-party advertising revenues and have proved that their editorial work boosts sales and brand-awareness.'
Some agencies - John Brown and Haymarket Network, for example - increased their profits last year despite falls in turnover, thanks to fierce cost-cutting that obliged them to offload some talented members of staff. 'Last year was the toughest I can remember since we launched the company in 1997,' says Andrew Taplin, managing director of Haymarket Network (part of Haymarket Media Group, publisher of Marketing). 'It wasn't so much a loss of business as having to manage the reduction of budgets - cutting the number of editions here, the volume of pages there.'
While some brands have trimmed their budgets, few have shown a desire to completely axe an area of spend that they clearly see as integral to their customer communications strategy. 'Customer publications are incredibly valuable to us because they enable us to talk to our consumers in a more in-depth way than any other means of communication,' says Mark Elwood, head of strategic planning at Bupa. The private health-service provider started working with John Brown last year, consolidating work that was previously carried out by several different agencies.
'The recession meant being more rigorous with spend, and there have been a lot of internal challenges around that,' Elwood concedes. However, research shows that Bupa's customer magazine is read in depth by seven out of 10 recipients, some of whom also pass it on to friends - a compelling statistic to justify the investment, he adds.
Positive outlook
John Brown's chief executive, Andrew Hirsch, says clients are beginning to talk less about cost and price than quality and timing. 'This time last year it was, "How can you do this 20% cheaper?" whereas now it's "How quickly can we get this out?",' he explains.
The UK market has also become a centre of excellence for customer publishing. John Brown opened an office in Cape Town two-and-a-half years ago, and the agency is now earning 10% of its profit from outside the UK. It hopes soon to double that figure through its new offices in Tokyo and Shanghai.
Redwood's turnover decreased by 18.8% year on year in 2009, as clients such as Land Rover and Volvo were hit hard by the recession.
'Our clients see the relationship as a partnership, and although money was tight it wasn't a matter of stopping but of working through it together. So 2009 was a much better year than we might have expected,' says Redwood managing director Keith Grainger.
One of the agency's most interesting briefs last year was print and digital work for global fashion brand Esprit that featured in store window displays worldwide. 'It was more than just a magazine or a catalogue; the brand wanted us to communicate the season's products throughout its stores and across its customer base,' says Grainger.
Publicis Blueprint made up for the loss of automotive clients with its thriving relationship with Asda, which has had a good year. An online version of the supermarket's magazine is adding new visitors at the rate of 10% a month.
The agency has also been developing its magazine for retailer Cath Kidston, with retention and acquisition spin-off activity producing a positive return on investment, according to Publicis Blueprint chief executive Geri Richards.
Smaller agencies, too, are upbeat. August Media launched Completely London for estate agent Kinleigh Folkard & Hayward earlier this year and now claims to be involved in an unprecedented number of pitches. It is also recruiting across all main departments. 'Loyalty has never been more valuable, and this is where customer magazines come into their own,' says managing director Mark Lonergan.
Market upheaval
WordWide picked up five new accounts in the past year, proving that there is plenty of activity at the lower end of the market. Managing director John Chadwick-Jones is pleasantly surprised that last year's prophecies of doom have not been fulfilled.
He sees a big opportunity for smaller agencies coming from the upheavals in marketing departments caused by the recession. 'Where a brand's customer magazine might have sat with the same agency for 10 years, suddenly all bets are off and the marketing director is very happy to listen to new agencies,' he says.
Digital, of course, remains the great hope of customer publishers. The leagues reflect an industry that is still heavily skewed toward print, although, given the costs involved in magazine publishing, it is no surprise this dominates their turnover figures. Several agency heads insist that their repositioning as purveyors of branded multimedia editorial content is gaining traction. The mood is summed up by Sean King, chief executive of Seven Squared. 'Customer publishing companies used not to be at the top table. But the world has moved toward us, and now, as content providers, we very much are at that table,' he says.
The rise of devices such as iPhones and iPads, along with the need to feed social-media communities with content, certainly means there are some interesting opportunities for publishers.
Redwood's Grainger is optimistic about this trend. His agency started the year publishing just one interactive digital magazine, but ended it producing nine as clients expanded their briefs. 'The shift from being a magazine publisher to a content provider was being talked about two years ago, but now we are seeing real evidence of it,' he says.
Grainger is enthusiastic about Apple's iPad, and reveals that Redwood is using it to develop ideas for clients. He expects it to become a mainstream platform for clients by next year.
The success of Forward's work for Tesco Baby & Toddler Club is something many publishers would want to emulate. Its brief spans email, the web and magazines. Forward managing director Simon Hobbs describes this sort of activity as relationship marketing that builds loyalty among customers through various channels.
'The magazine element is classic loyalty marketing, based on advice and expertise, while the digital element seems to be much more related to sales and tactical messages,' he says.
Haymarket Network has invested in an in-house team to plan, design and build websites and other digital projects. 'This is really paying dividends and will ensure that we are future-proofed as we develop as a multichannel content provider,' says Taplin.
Digital progress
Haymarket Network's recent content includes an integrated magazine and website for the International Association of Athletics Federations as a means to stimulate interest in athletics, and an editorialised brochure to launch Jaguar's prestige XJ model. The agency also produced an online magazine for UEFA to promote the Europa League Final, supported by a sophisticated social- media and pay-per-click campaign.
Digital work need not simply replicate the print edition of a magazine. The online version of Orange's magazine, exchange, produced by Publicis Blueprint, contains extra content and features such as videos, more timely news and exclusive competitions, as well as offers tailored to particular customer segments.
On average, 84% of pages are viewed, and the average email open rate is 39%. 'Thanks to detailed content tracking, we've proved that exchange online is effective and engaging, while customer feedback has exceeded expectations,' says James Kipling, SME marketing manager for Orange.
One dissenting voice comes from WordWide's Chadwick-Jones, who is less sure than other agency heads about the industry's remodelling. 'There is a massive difference between what is reported in the trade press and what we are seeing happening,' he asserts.
For all the industry talk about page-turning software that would make reading an online magazine an attractive experience, none of his agency's clients has taken up that option or gone heavily into video as a core medium.
Instead, Chadwick-Jones predicts that clients will invest more in the creative production of magazines. 'There is a retrenchment to what print can do best, such as tactile, odd-looking publications, with interesting paper stocks or sizes, metallic colours or embossing on the cover,' he says. A motorcycle manufacturer, for example, recently asked WordWide to produce a magazine with a type of paper stock that feels like rubber.
Judged solely on the figures, this may seem to be a stagnant time for customer publishing agencies. Beneath the surface, however, there is no shortage of innovation and development. The industry spent the past decade successfully carving itself a niche, but an automatic return to growth following the recession is far from assured. Like all areas of the marketing services sector, publishers must now question what role they should play in a rapidly changing environment.
MAZDA
Mazda's Zoom Zoom magazine, published by Redwood since 2007, has three editions a year and is mailed to 1.5m customers in 37 countries. Its success, and the fact that customers were making an increasing number of photo submissions to the magazine, encouraged the car manufacturer to provide extra content online.
The e-zine was launched in Canada last September, followed by editions in the US and Australia in January. The online format enables flexibility of design, with animated covers and embedded games, different font styles, live links to external websites and more timely content.
Digital magazine technology means the publication can be sent to customers and prospects via email, giving Mazda the opportunity to reach a bigger audience in a cost-effective way. Short films, created in a variety of styles, showcase featured action events or Mazda's cars. Content from photo-shoots that could not be squeezed into the print version is also included.
The e-zines go live to coincide with delivery of the print magazine. A URL published in the print version points readers to the website, where they can view the interactive content, and a link to the e-zine is emailed to members of the brand's customer database.
Results show that customers are engaged with the content, with an average dwell-time on the e-zine of eight minutes and a peak dwell-time of 13 minutes. Click-through rates from the email have outperformed many other of the brand's email communications.
Agency notes:
John Brown Media Group
Founded 1987. Privately owned. Chief executive Andrew Hirsch. 94% consumer, 4% B2B, 2% internal. Clients include John Lewis, Orange, RBS. Member APA. www.johnbrownmedia.com
Ten Alps Communications
Founded 1970. Privately owned. Chief executive Adrian Dunleavy. 12% consumer, 84% B2B, 4% internal. Clients include Association of Optometry Practitioners, Road Haulage Association, Women’s Institute. www.tenalps.com
Redwood
Founded 1983. Subsidiary AMV Group. Chief executive Keith Grainger. 89% consumer, 8% B2B, 3% internal. Clients include Boots, Marks & Spencer, Volvo. Member APA. www.redwoodgroup.net
Publicis Blueprint
Founded 1999. Subsidiary Publicis Groupe. Chief executive Geri Richards. 87% consumer, 5% B2B, 8% other. Clients include Asda, Hewlett-Packard, Cath Kidston. Member APA. www.publicis-blueprint.co.uk
Seven Squared
Founded 2007. Subsidiary Seven Publishing Group. Chief executive Sean King. 79% consumer, 12% B2B, 9% internal. Clients include Sainsbury’s, English Heritage, Lawn Tennis Association. Member APA. www.sevensquared.co.uk
Haymarket Network
Founded 1997. Subsidiary Haymarket Media Group. Managing director Andrew Taplin. 85% consumer, 13% B2B, 2% internal. Clients include British Army, Jaguar, Manchester United. Member APA. www.haymarketnetwork.com
Ink
Founded 1994. Privately owned. Chief executive Jeffrey O’Rourke. 99% consumer, 1% B2B. Clients include United Airlines, KLM, Brussels Airlines. www.ink-publishing.com
Redactive Media Group
Founded 1981. Privately owned. Chairman Brian Grant. 88% consumer, 12% B2B. Clients include Chartered Institute of Personnel & Development, Chartered Institute of Marketing, Royal British Legion. Member APA. www.redactive.co.uk
River
Founded 1994. Subsidiary River Group. Chief executive Nicola Murphy. 100% consumer. Clients include Holland & Barrett, Ramblers, The Co-operative. Member APA. www.therivergroup.co.uk
Forward
Founded 1985. Subsidiary WPP. Managing director Simon Hobbs. 99% consumer, 1% B2B. Clients include Patek Philippe, Tesco, Standard Life. Member APA. www.theforwardgroup.com
FuturePlus
Founded 2003. Subsidiary Future Publishing. Managing director Jayne Caple. 100% consumer. Clients include O2, Sky, Musicians Union. Member APA. www.futureplus.co.uk
Think Publishing
Founded 1999. Privately owned. Chief executive Tilly Boulter. 60% consumer, 40% B2B. Clients include Association of Accounting Technicians, Zoological Society of London, ±±¾©Èü³µpk10 for Real Ale. Member APA. www.thinkpublishing.co.uk
Wardour Communications
Founded 1986. Privately owned. Chief executive Martin MacConnol. 35% consumer, 55% B2B, 10% internal. Clients include HSBC, Royal Society for the Arts, Bupa. Member APA. www.wardour.co.uk
Story Worldwide
Founded 2005. Privately owned. Managing director Jon King. 86% consumer, 9% B2B, 5% internal. Clients include Lexus Cars, Johnson & Johnson, RCI. Member APA. www.storyworldwide.com
Redhouse Lane
Founded 1989. Privately owned. Chairman Jeremy Redhouse. 30% B2B, 70% internal. Clients include EDF, Rolls Royce, Anglo American. Member APA. www.redhouselane.com
Absolute Publishing
Founded 1997. Privately owned. Chief executive Anthony Leyens. 60% consumer, 40% B2B. Clients include ABTA, Advantage Travel Centres, American Society of Travel Agents. www.absolutepublishing.com
Northstar
Founded 2003. Privately owned. Managing director Mark Beazleigh. 100% consumer. Clients include Audi, Marie Curie Cancer Care, Go Ape. Member APA. www.thisisnorthstar.com
Caspian Publishing
Founded 1996. Privately owned. Chairman Nick Winks. 70% B2B, 30% other. Clients include CBI, CIMA, HSBC. www.caspianpublishing.co.uk
August Media
Founded 2005. Privately owned. Managing director Mark Lonergan. 94% consumer, 5% B2B, 1% internal. Clients include IKEA, Butlins, Kinleigh Folkard & Hayward. Member APA. www.augustmedia.com
Sunday
Founded 2005. Privately owned. Chairman/managing director Toby Smeeton. 75% consumer, 15% B2B, 10% internal. Clients include Serco, Toyota, Westfield. Member APA. www.sundaypublishing.com
Illustrated London News
Founded 1985. Privately owned. Chief executive Lisa Barnard. 97% consumer, 3% B2B. Clients include East Midland Trains, Orient Express, Value Retail. Member APA. www.iln.co.uk
PSP Rare
Founded 2002. Subsidiary PSP Holdings. Managing director Grahame Lake. 65% consumer, 30% B2B, 5% internal. Clients include Kia Motors (UK), British Heart Foundation, UK Trade & Development. Member APA. www.psprare.co.uk
Specialist Publications
Founded 1969. Subsidiary Omnicom Group. Chief executive Niki Webb. 65% consumer, 19% B2B, 16% internal. Clients include Peugeot, HSBC, Specsavers. Member APA. www.specialistuk.com
Axon Publishing
Founded 1994. Privately owned. Managing director Ellen Brush. 80% consumer, 10% B2B, 10% internal. Clients include Marks & Spencer, University of Bedfordshire, National Childbirth Trust. Member APA. www.axonpublish.com
Summersault Communications
Founded 1992. Subsidiary Motivcom. Managing director Gail Franks. 27% consumer, 13% B2B, 60% internal. Clients include Lincolnshire County Council, Empire Cinemas, National Grid. Member APA. www.summersault.co.uk
WordWide
Founded 1999. Privately owned. Managing director John Chadwick-Jones. 80% consumer, 15% B2B, 5% internal. Clients include Bank of Scotland, Subaru Motors, Yorkshire Building Society. Membr APA. www.word-wide.co.uk
Editions Financial
Founded 2000. Privately owned. Chairman Caspian Woods. No specialisms disclosed. No clients disclosed. Member APA. www.editions.co.uk
James Pembroke Publishing
Founded 2001. Privately owned. Chairman James Pembroke. 80% consumer, 20% B2B. Clients include Society of Garden Designers, The Country Gentleman’s Association. www.jppublishing.co.uk
Communikator Publishing
Founded 1999. Privately owned. Managing director Henry Weston. 85% consumer, 5% B2B, 10% internal. Clients include L’Oréal, House of W, Arrogant Cat. www.communikator.com
BBC Customer Publishing
Founded 1998. Subsidiary BBC Magazines. Managing director Andy Marshall. 100% consumer. Clients include Cineworld, HMV, Royal Opera House. Member APA. www.bbccustomerpublishing.com