The DMA's most recent census found customer magazines to be the public's favourite form of direct media and recent Mintel research commissioned by the Association of Publishing Agencies (APA) valued the sector at almost £680m - a 2.2 per cent rise on 2004. By 2011, the value of the industry is tipped to reach £1bn.
DM agencies have undoubtedly jumped on the digital bandwagon, but can they take advantage of customer magazines' growth as well? The answer is yes, to a degree.
This year has seen the first real forays by direct and integrated agencies into territory generally occupied by specialist contract publishers. Publicis has long had a specialist division, Publicis Blueprint, while TMW this year launched a customer publishing arm, headed by Amber Key, an editor with experience in customer and business publishing.
TMW, which publishes titles for Lloyds TSB and T-Mobile, recently joined the APA, and is the only DM agency so far to be awarded membership. Another major direct agency has said it is close to launching a contract publishing division, while others, such as EHS Brann, have dabbled in the sector.
Customer magazines are, however, an expensive way to get through to customers. But since the medium makes greater use of traditional DM measurement methods, such as coupons and competitions, alongside qualitative research, return on investment is an increasingly persuasive argument in its favour.
According to Nicola Murphy, managing director of River Publishing, whose clients include Harrods and Honda, most retail titles cover their costs and some, such as Holland & Barrett's magazine, Healthy, even turn a profit due to a small cover price.
Honda's Dream bases its viability on ROI. "We've done a lot of testing and proved that people are more likely to buy Honda again if they've received Dream," says Murphy.
Not everyone is convinced by this argument, however. For Steve Barton, chief executive of DM agency Keevil Barton Kershaw, the cost in financial and environmental terms is difficult to reconcile. "I think it's important to provide people with the information they want, but I'm not sure that it should all be in big, glossy magazines. Many people would be happy to get the information online."
But with contract publishers making the most of direct techniques and measurement, could DM agencies really offer something different? According to TMW's Key, they have the edge on integration. "You can't look at a magazine as a solution on its own. It's vital to look at the client's overall communications strategy and look at how the magazine fits with this."
Others in the sector are not concerned about more providers entering the market. "While some DM agencies are now getting into publishing, we don't feel threatened. It just proves that the industry is growing and they want to be part of the action," says Sean King, commercial director of customer publishers Square One.
The good news for DM agencies is that the customer magazine market looks set to grow. Segmentation is another positive force, with many clients, such as Tesco and Sky, sending different titles to separate sections of their database.
With customer magazines becoming increasingly targeted, responsive and in demand, DM agencies have an opportunity to seize some of this space. Whether they do so will depend on clients' willingness to fund what is an expensive, albeit effective, channel to consumers.
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