Marketing League Table: Customer Publishing - Customer Publishing Leagues

Article excerpt

A flourishing sector has seen a slew of agency arrivals and a move toward multichannel offers.

Last month's ABC figures capped what, on the surface, has been an outstanding 12 months for the customer publishing industry. The top six magazines in the UK are all customer titles, heading a list of 27 that made it into the top overall 100. After two years of ferocious growth, the sector has never enjoyed such a high profile; client spend on the discipline has reached pounds 680m, according to Mintel and the Association of Publishing Agencies (APA), and is forecast to hit pounds 1bn by 2011.

With this level of income, one might expect customer publishers to be in a bullish mood - and by and large they are. But beneath the headline success, there are ripples of discontent and uncertainty. Having put customer publishing on the map, agencies are beginning to ask where they should go next.

The sector's growth is evident in the slew of launches in the past year. AA Roadside, for example, which is published by Specialist and debuted in the last ABCs, has already become the second-biggest magazine in the UK with a circulation of 3.4m. What's more, the market is attracting brands from a variety of sectors, including fashion retailer ASOS. One of several web brands using the medium to establish an offline presence, it recently hired Square One to launch a lifestyle title.

'It is encouraging that we have been taking part in pitches for totally new projects,' says Keith Grainger, Redwood's chief executive. 'It is a sign new advertisers are entering the market.'

This expansion is evident in research from the Direct Marketing Association (DMA), which revealed that the customer publishing medium grew 15% in 2005, second only to digital. The DMA also found that consumers rated customer titles as the most relevant and positively received medium.

As the sector has grown, so has the number of agencies operating in the arena, with several smaller shops springing up as seasoned executives have struck out on their own. Companies such as August Media and Aspect Media are new to the league table this year, while start-ups Sunday and Engage Publishing are not yet old enough to supply figures.

Customer publishing's development has been attracting some envious glances from other sectors. Another debutant in this year's leagues is TMW Publishing, launched by direct agency TMW to capitalise on the industry's growth. TMW has already succeeded in pitches against publishers, most notably winning a contract for Lloyds TSB.

A glance at the league tables shows that smaller and medium-sized agencies are having no trouble picking up contracts. These agencies are driving growth in the sector, while the bigger players have endured a largely flat 12 months. One reason for this is that customer publishing remains an industry with few big contracts; most are small projects that can be delivered by an agency of any size. Moreover, the first half of the year saw virtually no movement in existing big contracts.

As in most marketing services sectors, the smaller agencies claim to be more flexible and dynamic than their bigger rivals, as well as offering clients greater access to senior management. The other advantage they have, of course, is that with lower overheads, they can undercut the big agencies.

With so many new agencies on the scene eager to win business, it is no surprise that a common grumble is a relentless squeeze on margins. 'The first half of this year was the hardest six months of trading I have ever seen,' says PSP director Graeme Lake. 'It has been tough to maintain margins. Even if we can show good revenue growth, making a profit is difficult.'

Indeed, some agencies believe that many clients are buying purely on cost. For all the success of the APA's Advantage Study, which demonstrates the effectiveness of magazines as a marketing tool, convincing clients to invest in creative ideas is still an issue. 'Clients are becoming more demanding, but if they keep cutting margins, we can't deliver the same quality,' says Tilly Boulter, managing director of Think Publishing. 'All the research suggests customer publishing is a highly effective marketing tool, but clients are still asking for it to be cheaper.'

The other major issue facing the industry is what it should offer. There is growing debate about whether it should be looking beyond its heritage of magazine publishing. 'The industry is at a crossroads,' says Lake. 'We have spent the past five years proving that our publications work. Now the question is whether we begin taking our skills to other media.'

In recent years, direct marketing has been targeted by some agencies as a growth sector. Several shops produce mini-magazines designed to act as highly editorialised mailshots. The entry of TMW into the market suggests the direct industry is wising up to the threat and hitting back in the other direction.

Another emerging area of opportunity is catalogues, which dovetails neatly with magazine publishing. In June, John Brown purchased catalogue firm Code London. The deal was intended to bolster the agency's retail offer and extend its business beyond magazines, according to chief executive Andrew Hirsch. Axon Publishing is following a similar strategy, and now publishes a catalogue for Marks & Spencer.

Other agencies are trying their hand elsewhere. Think has set up a book-publishing arm, which has produced titles for clients such as the Royal Horticultural Society and the Wildlife Trusts. Seven, meanwhile, has created content for Sainsbury's prototype in-store TV system.

But for many, the big opportunity is the internet, and there has already been movement online as clients have sought to develop a web presence to support their magazines. Though the leagues show that online content still makes up only a small fraction of industry revenue, many agencies nevertheless believe it represents a key growth opportunity.

'If you stick with print, you are limiting the relationship you can have with your client,' argues Juliet Slot, managing director of Haymarket Network, whose online work includes websites for Manchester United and Toyota. 'There are so many websites out there that, with a bit of nous, could be so much more compelling.'

One reason for clients to consider online publications is cost. Print, paper and postage overheads account for a big slice of client spend on publishing, but they can be wiped out using online channels. Publicis Blueprint has begun to do this for magazine client Prudential. It is contacting recipients of the title to find out how they want to be communicated with; those who prefer to use online channels will receive a version by email.

Publicis Blueprint is one of several agencies shifting its positioning toward multi-channel content delivery. According to managing director Jason Frost, the company's goal is to become 'the editorial communications advisers for our clients'.

He is not alone. Mark Lonergan, managing director of start-up August Media, believes customer publishers can turn their hand to branded content. His agency handles IKEA's customer magazine in 15 markets and now supplies all online content for its loyalty programme as well as on-screen content in stores. 'No agency sector owns branded content yet, but our industry is in the best position,' he says. 'The challenge for us is to grab that opportunity and make it ours.'

Not everyone is convinced. John Brown, whose Waitrose Food Illustrated title picked up the 2006 customer magazine of the year award at the Periodical Publishers' Association Awards, has no plans to shift its focus away from print. 'Media-neutral means you are passionate about nothing. You become bland and boring,' says Hirsch. 'The reason we have been successful is that we are passionate about something.'

It is a view shared by Toby Smeeton, managing director of Sunday. Rather than build online skills in-house - an expensive process for a smaller agency - he plans to form alliances with independent agencies in other sectors. That way the company can meet client demand for non-print content when it arises.

'We focus on producing the best possible magazines for our clients. We are not trying to pretend the same rules apply in other media,' he says. 'I would rather we continued to raise our game in our sector rather than dilute it across media.'

It is clear, however, that most advertisers do not want their content restricted to print magazines. Julia Hutchison, chief operating officer at the APA, points out that 'most clients now want a digital offering'. How publishing agencies service that need remains far from clear. Should they maintain their focus on magazines, look to other print-based media such as direct mail or catalogues, or move wholeheartedly into multi-channel content? Expect plenty of debate in the coming year.

TOP CUSTOMER PUBLISHERS
     AGENCY                                  Net             Net
                                        turnover        turnover       %
                                   2005 (pounds)   2004 (pounds)     chg
1    John Brown                       48,300,000      48,700,000      -1
2    Redactive Media                  25,000,000      25,200,000      -1
3    Haymarket Network                21,000,000      19,100,000      10
4    Cedar Communications             16,541,131      15,842,504       4
5    Redwood                          15,721,297      16,719,312      -6
6    Publicis Blueprint               12,331,000      11,984,000       3
7    Ink Publishing                   11,065,997       7,097,832      56
8    River Publishing                 10,678,760       7,546,716      42
9    Seven Publishing                  8,458,000       8,832,000      -4
10   Square One Publishing             5,937,020       4,926,910      21
11   Newsdesk Media Group              4,630,379       3,582,489      29
12   Illustrated London News Group     3,855,000       3,793,000       2
13   Wardour Publishing & Design       3,633,566       2,841,826      28
14   Caspian Publishing                3,420,000       3,400,000       1
15   BBC Customer Publishing           2,576,478       2,280,000      13
16   Story Worldwide*                  2,500,000             n/a     n/a
17   Rare Publishing                   2,314,000             n/a     n/a
18   Axon Publishing                   2,236,000       1,842,000      21
19   Future Plus                       2,100,000         400,000     425
20   Zone                              1,980,000       1,265,000      57
21   Summersault Communications        1,808,595       1,436,809      26
22   Think Publishing                  1,791,991       1,761,608       2
23   Atom Publishing                   1,660,000       1,730,000      -4
24   August Media                      1,608,000             n/a     n/a
25   Brooklands Publishing             1,582,000       1,104,000      43
26   Northstar Publishing              1,418,046       1,171,136      21
27   WordWide Communications           1,224,541         678,653      80
28   PSP Communications                1,105,447       1,373,435     -20
29   Communikator                        770,000         550,000      40
30   Alchemy Worx                        684,000         391,000      75
31   Real London (formerly 21 Carrot)    572,600         563,400       2
32   TMW Publishing                      484,999         260,153      86
33   White Light Media                   173,375         180,790      -4
34   Aspect Media*                       169,989             n/a     n/a

     AGENCY                                 Intl            Intl
                                        turnover        turnover       %
                                   2005 (pounds)   2004 (pounds)     chg
1    John Brown                                0               0     n/a
2    Redactive Media                           0               0     n/a
3    Haymarket Network                11,700,000      10,200,000      15
4    Cedar Communications                      0               0     n/a
5    Redwood                          28,476,994      43,827,485     -35
6    Publicis Blueprint                        0               0     n/a
7    Ink Publishing                    2,484,549         328,529     656
8    River Publishing                          0               0     n/a
9    Seven Publishing                          0               0     n/a
10   Square One Publishing                     0               0     n/a
11   Newsdesk Media Group              1,446,440         777,386      86
12   Illustrated London News Group       219,000         200,000      10
13   Wardour Publishing & Design               0               0     n/a
14   Caspian Publishing                  511,000         115,000     344
15   BBC Customer Publishing                   0               0     n/a
16   Story Worldwide*                  1,150,000             n/a     n/a
17   Rare Publishing                           0               0     n/a
18   Axon Publishing                           0               0     n/a
19   Future Plus                               0               0     n/a
20   Zone                                      0               0     n/a
21   Summersault Communications                0               0     n/a
22   Think Publishing                          0               0     n/a
23   Atom Publishing                           0               0     n/a
24   August Media                              0               0     n/a
25   Brooklands Publishing                     0               0     n/a
26   Northstar Publishing                      0               0     n/a
27   WordWide Communications                   0               0     n/a
28   PSP Communications                        0               0     n/a
29   Communikator                              0               0     n/a
30   Alchemy Worx                              0               0     n/a
31   Real London (formerly 21 Carrot)    700,000         660,000       6
32   TMW Publishing                            0               0     n/a
33   White Light Media                         0               0     n/a
34   Aspect Media*                             0               0     n/a

     AGENCY                         Print:online          Staff
                                             (%)
1    John Brown                             97:3            230
2    Redactive Media                        98:2            113
3    Haymarket Network                     90:10            101
4    Cedar Communications                   99:1             94
5    Redwood                                98:2            325
6    Publicis Blueprint                     97:3            130
7    Ink Publishing                         99:1            100
8    River Publishing                       95:5            120
9    Seven Publishing                      100:0             88
10   Square One Publishing                  98:2             45
11   Newsdesk Media Group               99.5:0.5             60
12   Illustrated London News Group         83:17             41
13   Wardour Publishing & Design           83:17             40
14   Caspian Publishing                     97:3             80
15   BBC Customer Publishing               100:0             10
16   Story Worldwide*                      100:0             84
17   Rare Publishing                        95:5             24
18   Axon Publishing                       100:0             20
19   Future Plus                           90:10             28
20   Zone                                  20:80             20
21   Summersault Communications            90:10             34
22   Think Publishing                       98:2             25
23   Atom Publishing                       90:10             10
24   August Media                           97:3             15
25   Brooklands Publishing                 100:0            100
26   Northstar Publishing                   97:3             14
27   WordWide Communications                95:5             15
28   PSP Communications                     98:2             14
29   Communikator                          100:0              9
30   Alchemy Worx                          0:100             12
31   Real London (formerly 21 Carrot)      100:0              7
32   TMW Publishing                        100:0             14
33   White Light Media                      95:5              5
34   Aspect Media*                         100:0              6

     AGENCY
1    John Brown
Founded 1987. Privately owned. Chief executive Andrew Hirsch. 90%
consumer, 5% B2B, 5% internal. Clients include BSkyB, Waitrose, BDO Stoy
Hayward. Member APA. www.johnbrowngroup.co.uk

2    Redactive Media
Founded 1981. Privately owned. Managing director Brian Grant. 14%
consumer, 86% B2B. Clients include Royal British Legion, Chartered
Institute of Purchasing & Supply, British Institute of Facilities
Managers. Member APA. www.redactive.co.uk

3    Haymarket Network
Founded 1997. Privately owned. Managing director Juliet Slot. 82%
consumer, 13% B2B, 5% internal. Clients include Toyota, British Army,
Manchester United. Member APA. www.haymarketnetwork.com

4    Cedar Communications
Founded 1992. Subsidiary Omnicom. Managing director Clare Broadbent. 90%
consumer, 10% B2B. Clients include British Airways, Tesco, Central
London Estate Agents. Member APA. www.cedarcom.co.uk

5    Redwood
Founded 1983. Subsidiary Omnicom. Chief executive Keith Grainger. 98%
consumer, 2% B2B. Clients include Marks & Spencer, Boots, Volvo. Member
APA. www.redwoodgroup.net

6    Publicis Blueprint
Founded 1999. Subsidiary Publicis Groupe. Chief executive Jason Frost.
96% consumer, 4% B2B. Clients include Asda, Debenhams, Prudential.
Member APA. www.publicis-blueprint.co.uk

7    Ink Publishing
Founded 1994. Privately owned. Chief executive Jeffrey O'Rourke. 100%
consumer. Clients include Turner Broadcasting, bmi, easyJet. Member APA.
www.ink-publishing.com

8    River Publishing
Founded 1994. Privately owned. Managing director Nicola Murphy. 100%
consumer. Clients include Weight Watchers, Holland & Barrett, Superdrug.
Member APA. www.therivergroup.co.uk

9    Seven Publishing
Founded 2002. Privately owned. Chairman Michael Potter. 100% consumer.
Clients include Sainsbury's, BBC Worldwide, BSHG. Member APA.
www.7publishing.com

10   Square One Publishing
Founded 1994. Privately owned. Directors Sean King, Peter Dean, Simon
Chappell, Roger Baker. 89% consumer, 7% B2B, 4% internal. Clients
include Waterstone's, Home Office, Unichem. Member APA.
www.squareonegroup.co.uk

11   Newsdesk Media Group
Founded 1997. Privately owned. Chief executive Alan Spence. 5% consumer,
95% B2B. Clients include Ministry of Defence, New York Mercantile
Association, National Association of Pension Funds.
www.newsdeskmedia.com

12   Illustrated London News Group
Founded 1985. Subsidiary Sea Containers. Managing director Lisa Barnard.
76% consumer, 11% B2B, 13% internal. Clients include Orient-Express
Hotels, GNER, South West Trains. Member APA. www.iln.co.uk

13   Wardour Publishing & Design
Founded 1996. Privately owned. Chief executive Martin MacConnol. 30%
consumer, 60% B2B, 10% internal. Clients include KPMG, JPMorgan Asset
Management, RSA. Member APA. www.wardour.co.uk

14   Caspian Publishing
Founded 1996. Subsidiary Caspian Media Holdings. Chief executive Mike
Bokaie. 100% B2B. Clients include CBI, CIMA, IBM.
www.caspianpublishing.co.uk

15   BBC Customer Publishing
Founded 1998. Subsidiary BBC Magazines. Managing director Andy Marshall.
70% consumer, 15% B2B, 15% internal. Clients include Royal Opera House,
Cineworld, HMV. Member APA. www.bbccustomerpublishing.com

16   Story Worldwide*
Founded 2005. Privately owned. Managing director Jon King. 82% consumer,
12% B2B, 6% internal. Clients include Microsoft, Lexus, Bluewater.
Member APA. www.storyworldwide.com

17   Rare Publishing
Founded 1986. Subsidiary Chime Communications and PSP Communications.
Managing director Kim Conchie. 81% consumer, 19% B2B. Clients include
Somerfield, UK Trade & Investment, LloydsTSB. Member APA.
www.rarepublishing.co.uk

18   Axon Publishing
Founded 1994. Privately owned. Directors Ellen Brush, Paul Keers. 100%
consumer. Clients include Marks & Spencer, University of Luton, Hildon.
Member APA. www.axonpublish.com

19   Future Plus
Founded 2003. Subsidiary Future. Head of customer publishing John Gower.
100% consumer. Clients include Vodafone, PC World, HMV. Member APA.
www.futureplus.co.uk

20   Zone
Founded 1996. Privately owned. Chief executive James Freedman. 65%
consumer, 35% B2B. Clients include Channel 4, Fremantle Media. Member
APA. www.zonecontent.com

21   Summersault Communications
Founded 1992. Subsidiary Motivcom. Managing director Brian Jeavons. 5%
consumer, 12% B2B, 83% internal. Clients include Asda, McDonald's, TUI.
www.summersault.co.uk

22   Think Publishing
Founded 1999. Privately owned. Managing director Tilly Boulter. 84%
consumer, 15% B2B, 1% internal. Clients include The Scout Association,
Wildlife Trust, Environment Agency. Member APA.
www.thinkpublishing.co.uk

23   Atom Publishing
Founded 1996. Privately owned. Managing director Stephen Quirke. 30%
consumer, 70% B2B. Clients include Norwich Union, Royal Institute of
Chartered Surveyors, Open University. Member APA. www.atompublishing.com

24   August Media
Founded 2005. Privately owned. Managing director Mark Lonergan. 100%
consumer. Clients include IKEA, Strutt & Parker, Leap. Member APA.
www.augustmedia.net

25   Brooklands Publishing
Founded 1992. Privately owned. Chief executive Darren Styles. 95%
consumer, 5% internal. Clients include Renault, Vauxhall, Channel 4.
Member APA. www.brooklandsgroup.com

26   Northstar Publishing
Founded 2003. Privately owned. Managing director Mark Beazleigh. 100%
consumer. Clients include Mazda, Fat Face, Mappin & Webb. Member APA.
www.northstarpublishing.com

27   WordWide Communications
Founded 1999. Privately owned. Managing director John Chadwick-Jones.
60% consumer, 30% B2B, 10% internal. Clients include Bank of Scotland,
DHL, Home Office. Member APA. www.word-wide.co.uk

28   PSP Communication
Founded 2002. Privately owned. Managing director Peter Moore. 100%
consumer. Clients include Kia Motors, British Heart Foundation,
Tottenham Hotspur FC. Member APA. www.pspcom.com

29   Communikator
Founded 2000. Privately owned. Chairman Henry Weston. 70% consumer, 30%
B2B. Clients include L'Oreal, Charles Worthington. Member APA.
www.communikator.com

30   Alchemy Worx
Founded 2000. Privately owned. Chairman Dela Quist. 80% consumer, 15%
B2B, 5% internal. Clients include Carphone Warehouse, Sainsbury's Bank,
RAC. www.alchemyworx.com

31   Real London (formerly 21 Carrot)
Founded 1999. Privately owned. Managing director Richard Proctor. 100%
consumer. Clients include Akzo Nobel, Brintons Carpets. Member APA.
www.real-london.com

32   TMW Publishing
Founded 2004. Subsidiary Creston. Managing director Chris Warren. 86%
consumer, 14% B2B. Clients include Lloyds TSB, T-Mobile, Unilever.
www.tmw.co.uk

33   White Light Media
Founded 2001. Privately owned. Directors Fraser Allen, Alan Lennon. No
work breakdown given. Clients include United Utilities, City of
Edinburgh Council, University of Strathclyde. www.whitelightmedia.co.uk

34   Aspect Media*
Founded 2005. Privately owned. Managing director Roger Wilsher. 62%
consumer, 38% B2B. Clients include Ladbrokes, Cardiff University. Member
APA. www.aspectmediauk.com

SARBANES-OXLEY-AFFECTED AGENCIES
AGENCY        Turnover           Turnover        %       Print:    Staff
              2005 (pounds)      2004 (pounds)   chg     Online
                                                         (%)
Forward       11,715,513         13,557,588      -14     97:3         85

              Founded 1985. Subsid WPP. CEO Sarah Wyse. 95% consumer,
              5% B2B.Clients incl Tesco, Barclays. Member APA.
              www.theforwardgroup.com

Specialist    2,110,586          1,925,481       10      n:a          22

              Founded 1969. Subsid Omnicom. MD Niki Webb. No breakdown
              given. Clients incl AA, Npower. Member APA.
              www.specialistuk.com
Source: Companies House data provided by Willott Kingston Smith.

TOP 5 FOR GROWTH - Big agencies
      AGENCY                      Net turnover    Net turnover    Change
                                      2005 (%)        2004 (%)       (%)
1     Ink Publishing                11,065,997       7,097,832        56
2     River Publishing              10,678,760       7,546,716        42
3     Newsdesk Media Group           4,630,379       3,582,489        29
4     Wardour Publishing             3,633,566       2,841,826        28
5     Square One Publishing          5,937,020       4,926,910        21
Does not include Sarbanes-Oxley-affected agencies.

TOP 5 FOR GROWTH - Small agencies
      AGENCY                      Net turnover    Net turnover    Change
                                      2005 (%)        2004 (%)       (%)
1     Future Plus                    2,100,000         400,000       425
2     TMW Publishing                   484,999         260,153        86
3     WorldWide Comms                1,224,541         678,653        80
4     Alchemy Worx                     684,000         391,000        75
5     Zone                           1,980,000       1,265,000        57
Does not include Sarbanes-Oxley-affected agencies.

For US-owned firms restricted by the Sarbanes-Oxley Act, which limits the financial data companies can disclose, we have used Companies House figures supplied by Willott Kingston Smith. Unlike other Marketing league tables, these firms are listed separately. This is because publishers in the main table are ranked by net turnover, which excludes print and distribution costs passed on to clients without mark-up, figures unavailable at Companies House.

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