As magazine subscribers become few and far between, and subscription prices are practically free, there is an approach that publishers can take to maximize revenues from traditional print audiences. It requires quantifying the value of readers, a recent A.T Kearney study found.
Many subscribers to glossy two-pound fashion magazines pay less than $15 a year, which doesn’t even cover the costs of printing and mailing, much less content generation. The problem is that magazines’ deals with advertisers involve circulation targets known as base rate.
Everything follows accordingly. Subscribers undervalue the experience, magazines teeter near bankruptcy, staffers lose jobs, advertisers suffer disappointment, and pundits mourn “the death of print”. With advertising down 24% in 2009, it’s a downward spiral that can end only in its self-fulfilling prophecy.
But is it really the death of print? A.T Kearney ponders. Magazines’ consumer marketing departments have a solitary goal: to hit rate base. Focusing on this short-term target - rather than seeking to maximize long-term content-related revenue – results in counterproductive practices: publishers set prices too low for direct-to-publisher sources (a trend only exacerbated by the growth of free online content).
Most companies, such as telecommunications, consumer packaged goods, and retailers, can discuss at great length value of their customers, because they’ve quantified that value using lifetime value (LTV) models. Magazines use direct marketing, but rarely comprehensive LTV.
At most publishers, LTV models exist. Subscriber value is measured and sometimes used in budgeting decisions. But most publishing executives lack real-time access to that data. Instead, they do circulation planning using backward-looking metrics that are often limited to the cash value of the subscription.
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