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The customer publishing sector grew by 56% between 1999 and 2004, according to Mintel's biennial Customer Publishing Report, commissioned by the Association of Publishing Agencies (APA). The study, released this week, shows the industry is worth more than £385m, a 244% increase since 1995.

Such figures are in stark contrast to those for other media sectors, which have experienced a slow-down. Mintel attributes this rise in spend to 'a growing recognition of the advantages that customer magazines can offer'.

Further significant growth is forecast. Mintel predicts the sector will be worth £531m by 2009 - an increase of 54%, or 36% when the effects of inflation are taken into account.

Julia Hutchison, director of the APA, believes the Mintel figures reflect the increasing regard in which customer publishing is held by marketing directors. 'The medium is regarded as a fundamental part of the marketing mix by a growing number of businesses,' she says. 'While the report does still reveal some scepticism from clients and media planners regarding the value of customer magazines, we are confident that our forthcoming Effectiveness Measurement Programme (EMP) research will quantify the effectiveness of the medium.'

In the past two years, almost two-thirds of publishers surveyed by Mintel reported a rise in turnover as a result of an increase in spend by clients, while 90% had grown by attracting additional customers.

The focus has been on magazines but a sizeable minority felt there was scope to convince existing clients to increase their internet spend or add online customers (31% and 22% respectively). Content provision was found to be the most common web service offered by publishers, with 96% doing so.

Publishers expect clients to continue to spend more on this area, indicating that while print is still the core business, replicating or revising content for use on the web is becoming more prevalent in customer publishing briefs.

Retail and financial services remain the biggest single customer publishing categories, accounting for 30% of the total market between them. Retail has experienced major growth, having increased its share since 2002 to 17%. This rise has been led by major retail grocery multiples, as well as department stores.

While financial services magazines remain a major source of revenue for customer publishers, their share of the market has declined to 13%. This has more to do with increased spend by the retail sector, rather than any loss of faith in the medium.

The media sector was the other big winner in the research. Figures show that the wide array of TV and press-related titles has significantly increased market share from 3% to 6%.

While not representing a huge revenue stream for customer publishers when compared with retail and financial services, the growth represents a sizeable opportunity for them to extend beyond their core market.

In terms of target markets, nearly half of customer magazines were found to be aimed at prospective customers. The growing value of such titles as an acquisition tool for brands increased the use of the medium for this purpose from 35% to 48% between 2002 and 2004.

Distribution techniques are also changing. The Mintel results show there is a shift away from postal distribution to titles being sold or handed out free in-store, thereby reducing distribution costs and ensuring that only those who have an active interest in the publication will pick it up.

Of those publications that are mailed, nearly three-quarters are sent through personalised distribution, a 6% rise since the last report two years ago. The demand for highly targeted one-to-one marketing undoubtedly lies behind this surge.

The research also shows a shift toward paid-for magazines. This is still relatively uncommon, with only a fifth of publications having a cover price. However, customer magazines are beginning to compete head-on with traditional newsstand titles. The average cover price for customer magazines is £3.17, although retail titles have a significantly lower average of £1.86.

Overall, the Mintel research shows that brands have an increasing faith in the ability of customer publishing to deliver value - an attitude that can only be helped by the publishing industry's increasing desire to prove itself as a fully fledged and accountable marketing tool.

FINANCIAL TOP 5 PUBLISHERS

Agency Net turnover Financial

2003 (pounds) (% of work)

1 Wardour Comms 2,131,346 45.0

2 ICP Creative 718,157 27.0

3 Alchemy Worx 315,000 25.0

4 Crimson Impact 587,984 15.0

5 Conde Nast 6,630,000 12.5

Source: Marketing customer publishing league 2004

Note: Does not include agencies affected by the US Sarbanes-Oxley Act

TRAVEL TOP 5 PUBLISHERS

Agency Net turnover Travel

2003 (pounds) (% of work)

1 The ILN Group 3,210,000 69.0

2 Mediamark 1,898,236 49.6

3 Conde Nast 6,630,000 37.5

4 Wrap Comms 247,056 25.0

5 River Publishing 7,575,000 20.0

Source: Marketing customer publishing league 2004

Note: Does not include agencies affected by the US Sarbanes-Oxley Act

B2B TOP 5 PUBLISHERS

Agency Net turnover B2B

2003 (pounds) (% of work)

1 Redactive Media 23,500,000 64.0

2 Wrap Comms 247,056 60.0

3 ICP Creative 718,157 27.0

4 Wardour Comms 2,131,346 24.0

5 Crimson Impact 587,984 23.0

Source: Marketing customer publishing league 2004

Note: Does not include agencies affected by the US Sarbanes-Oxley Act

RETAIL TOP 5 PUBLISHERS

Agency Net turnover Retail

2003 (pounds) (% of work)

1 New Crane 9,100,000 100.0

2 21 Carrot 628,948 100.0

3 Publicis Blueprint 12,805,871 82.0

4 Origin Publishing 1,829,051 70.0

5 Axon Publishing 1,179,601 46.0

Source: Marketing customer publishing league 2004

Note: Does not include agencies affected by the US Sarbanes-Oxley Act

LEISURE TOP 5 PUBLISHERS

Agency Net turnover Leisure

2003 (pounds) (% of work)

1 Zone 1,453,000 56.0

2 Highbury Lifestyle 3,656,469 37.0

3 Haymarket 20,500,000 33.0

4 Northstar 997,000 20.0

5 Axon Publishing 1,179,601 15.0

Source: Marketing customer publishing league 2004

Note: Does not include agencies affected by the US Sarbanes-Oxley Act

AUTOMOTIVE TOP 5 PUBLISHERS

Agency Net turnover Automotive

2003 (pounds) (% of work)

1 Brooklands Group 897,000 80.0

2 Mediamark 1,898,236 40.6

3 Northstar 997,000 40.0

4 Haymarket 20,500,000 27.0

5 Conde Nast 6,630,000 12.5

Source: Marketing customer publishing league 2004

Note: Does not include agencies affected by the US Sarbanes-Oxley Act

ESSENTIALS

APA Effectiveness Measurement Programme

Customer publishing is at a turning point. Next month the industry is set to reveal the initial findings of its Effectiveness Measurement Programme (EMP).

Conceived by the Association of Publishing Agencies (APA) and conducted by Millward Brown, the EMP has three main objectives: to establish a means of quantifying the impact of customer magazines, to provide an industry standard, and to gather evidence of return on investment.

'This will be the first time there has been data on how titles are read, how long they are kept and how long people spend reading them,' says Brian Jacobs, executive vice-president at Millward Brown's global media evaluation unit.

APA director Julia Hutchison adds that the programme will dispel the myth that customer magazines can be expensive and are a soft marketing tool because it 'gives hard evidence that these titles deliver'.

The research - which costs under £2000 a title - initially covered 40 magazines in the retail, automotive and financial services sectors.

The EMP will enable clients and media agencies to compare the performance of customer magazines not only against each other, but also against rival media, in particular, direct mail, from which many in the industry believe they can win spend. As Grahame Lake, managing director of Just, says: 'Direct mail has huge waste and low consumer take-up. Customer titles deliver on response and on the emotive side.'