Marketing League Table: Customer Publishing - Customer Publishing Leagues

Marketing, September 13, 2006 | Go to article overview

Marketing League Table: Customer Publishing - Customer Publishing Leagues


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. …

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