Customer magazines have had a roller-coaster ride in recent months. As rival media experience the first signs of a slowdown, this particular sector has been booming: in 2007, a new customer magazine was launched for every working day of the year.
Such unprecedented growth led industry body the Association of Publishing Agencies to predict that the value of the total customer publishing industry will pass £1bn by 2011 - an increase of 54% on the current market.
But no sooner does the APA trumpet the market's vigour, than news breaks that Publicis Blueprint has resigned the Blockbuster account, leading to job losses, the departure of the company's finance director, the closure of the 500,000-circulation Blockbuster Preview magazine, and fears for the company's other ad-funded titles.
The blow was particularly bitter for Publicis Blueprint, as Blockbuster Preview had been flagged as an innovative hybrid, incorporating a combination of digital and print product, paid for by blue-chip advertising.
The problem for Publicis Blueprint, one that the APA is lobbying hard to address, is third-party advertising - or rather, its ability to sustain a customer magazine. By choosing an ad-funded model, insiders say that Publicis was left vulnerable to some agency media planners and buyers' lack of faith in the sector.
Clare Rush, head of press at Mediaedge:cia, asks: "Are customer magazines a cost-effective advertising medium?
"On paper it may look like that, but do consumers really view them in the same way as an actively bought product? I remain unsure."
She is not alone in her opinion. David Casson, Rush's opposite number at Walker Media, is equally unconvinced. "Customer publishing is not, with the greatest respect, a sector we deal with a lot," he says.
Why? Because he is sceptical about whether the titles have the same impact for advertisers as consumer magazines.
Casson adds that his attitude may be outdated. However, customer publishers have not beaten down his door to convince him otherwise. He says: "Maybe their sales reps are not doing their jobs properly, but I can't remember when somebody last rang me up to talk about their publication or came knocking on my door to explain its virtues."
As a third of customer magazines rely on third-party advertising for part of their revenue mix, it is no wonder APA chief operating officer Julia Hutchinson sounds frustrated. "It remains a challenge to attract third-party advertising and to convince media buyers," she admits. "They still have the view that, because the magazines are free, they don't get read. However, all the research we have done actually proves that, on average, customer titles are read for at least 25 minutes per issue."
According to Andrew Hirsch, chief executive of John Brown Group, the problem is not media buyers - it is the belief in certain quarters of the customer magazine market that third-party advertising should be a sole source of income. This reflects, he says, a fundamental misunderstanding of the sector.
"Our magazine Waitrose Food Illustrated is arguably the most respected food magazine in Britain," he claims. "We take well over £2m in third-party advertising in that magazine, but it all goes back to Waitrose, which pays us a fee to produce the magazine. If there is no advertising, we still get the fee."
Hirsch believes the danger of promoting ad-funded models is that it leaves good publications vulnerable to the vagaries of the advertising market, and risks undermining products that deliver far more than ad revenue to clients.
What customer magazines deliver is shown in two pieces of research commissioned by the APA: The Advantage Study by Millward Brown, which quantifies the effectiveness of the sector and, among other things, compares it against other media; and, secondly, sector-wide research by Mintel, which revealed the impressive growth rates.
According to Millward Brown, 82% of people spend up to 45 minutes reading a customer magazine, with 64% returning to the title more than once. This, claims the APA, is a higher rate than that enjoyed by the average news-stand title.
Response rates to customer magazines are also impressive: 47% of respondents said they were more likely to purchase products featured in a customer magazine than in other types of advertising or marketing. Customer magazines, says the Millward Brown research, create a more positive relationship with a brand: 93% of readers, compared to 80% of non-readers, felt a company had a "good reputation".
Magazines also improved readers' perceptions of a company's trustworthiness, service and value for money. "We've proved they work," Hutchinson says emphatically. "Customer magazines are a very effective marketing tool. We have measured everything from brand loyalty to sales uplift and response rates. The average response rate is 44%, which outweighs lots of other media."
Jayne Caple, managing director of Future Plus, admits: "Media buyers are a nut we have yet to crack." Future Plus publishes titles including Sky Movies, which has a circulation of 4.2 million a month; the O2 magazine Blue; and PC World. Although high-circulation titles achieve healthy third-party revenues, buyers resist titles where lower circulations mask their ability to deliver a target audience.
"We have not yet been able to convince the agencies of the value of customer magazines at a much broader level," Caple acknowledges. "We can do it with core brands, such as Sky Movies, but the challenge for the industry in the next six to eight months is to challenge these attitudes among buyers at West End agencies."
Future Plus is among publishers including Cedar Communications, Redwood and John Brown who supplement the APA research with their own data. For instance, readers of Future Plus's PC World magazine, 63% of whom are male, spend an average of 41 minutes reading the title; 37% keep the magazine for reference, and 35% discuss articles they have read with someone else. The research also found that 67% were prompted to visit the store and 13% to make a purchase.
River Publishing also provides bespoke research to clients on the performance of its publications. These include high-street chemist Superdrug's vehicle Dare, which recently challenged established distribution models for the sector by launching as a free magazine distributed on the street.
River managing director Ed Axon says that, not only is the research a valuable way of promoting the company's services to clients and advertisers, but it is also invaluable for marketing directors who want to know more about their customers' relationship to their brand.
"Part of our contract is that the performance of the magazines will always be measured," he says. "That is our collateral. Our job is to never lose sight of the fact that the marketing director you are working for should know more about the audience than you do."
Acknowledging Walker Media's Casson's scepticism, Axon claims the improved quality of sales people moving into customer magazines is having an impact on media agencies and, as a result, is attracting more third-party advertising.
"If media agencies are really worth their salt, they will have to look at this sector," he adds. "It simply isn't good enough anymore for agencies to just look at the top five magazines in a sector. It is our job to make sure the staff we have are keyed up to get the agencies on board about customer magazines."
Part of the frustration felt by customer magazine publishers when dealing with media agencies is due to the fact that other media professionals, notably celebrity PRs and management, have long since realised the sector's reach.
It is not unusual to see A-list celebrities granting interviews to customer magazines that their news-stand rivals would die for. BT Vision's ON magazine recently featured an exclusive with Johnny Depp; Samuel L Jackson granted exclusive access to the latest issue of Cedar publication BA High Life, and Cameron Diaz invited the Seven Squared publication ASOS.com into her home.
A drain of high-profile editorial talent from consumer to customer magazines has driven this change. Andy Pemberton, editor of ON, lured Johnny Depp thanks to contacts in the entertainment world, built up while editor of US music magazine Blender and editor-in-chief of Q.
If a sign was needed that customer magazines have lost their second-rate image, it came last September when Redwood poached Sara Cremer, editor of Haymarket women's magazine, Eve. Cremer joined as editorial director.
"It really is the quality of the work coming out of companies such as Redwood that is attracting high-profile talent," Cremer explains. "This sector now has very high design and editorial standards," she adds.
Cremer, like other consumer magazine ex-editors, is the final weapon in customer magazines' arsenal to demolish resistance among agencies. These professionals know how advertising works and have contacts in the media agencies, thanks to years spent presenting their publications to them.
For their part, agencies respect customer titles' ability to draw in an active - and addicted - readership, all of which is delivered free. But, as the APA's Hutchinson points out, those who regard that as a reason to dismiss the sector are behind the times.
"Consumers expect their media to be free," she says. "They don't pay for Metro or magazines such as Sport or commercial radio, or other terrestrial channels. As long as the content is good, consumers look at customer titles in the same way as consumer magazines."
It is a message she hopes will now hit home with media agencies.
IKEA GOES INTERNATIONAL BY STAYING LOCAL
UK customer publishers are world leaders in the sector, thanks to innovative editorial, distribution and sales models. Although there remains room for growth in the UK market, many are looking overseas to expand.
"The UK is an extremely developed and competitive market," says Sean King, managing director of Seven Squared, which last year entered into a joint venture with Canadian publisher Transcontinental. "The joint venture gives us the opportunity to export our customer publishing expertise into overseas markets and to build an international capability."
IKEA Family Live, produced by August Media, is a quarterly magazine available in 21 languages. It recently launched in China, Hungary, Slovakia, Portugal and the Czech Republic. Managing director Mark Lonergan claims the magazine is now the biggest customer title in the world. "With in excess of 25 million copies going out there, it's vast," he says.
A magazine on that scale presents unique issues, in terms of distribution models to suit a myriad of postal services, and acting global while feeling local. It sounds like a logistical nightmare. Lonergan says: "When we first started work on the magazine two years ago, a key part of the project was to roll out to all countries with as little impact as possible on the marketing departments in each country."
August Media created a magazine that could work in any territory, from Paris to Tokyo. Local nuance is created with the editorial copy: the publisher ensures the editorial works in each different language.
Communication between August, IKEA head office and marketing departments in each country is key. "You shouldn't just turn the magazine into a production line, but must work to maintain a sense of openness and creativity," Lonergan advises.
"We always create more content than can be fitted into one magazine, so that different regional and local challenges can be taken on board with minimum fuss and small changes to layouts."