Are magalogues worth the investment?

When Loblaw Cos. pulled the plug last month on President's Choice Magazine, it was just the latest in a long list of custom publishing fatalities. Hudson's Bay Co. ditched its B fashion magalogue after only three issues. JCPenney has killed not...

When Loblaw Cos. pulled the plug last month on President’s Choice Magazine, it was just the latest in a long list of custom publishing fatalities. Hudson’s Bay Co. ditched its B fashion magalogue after only three issues. JCPenney has killed not one, but two, such efforts – the most recent being RealYou, a fashion and lifestyle-oriented book targeted to thirtysomething women. And Starbucks wasted Joe, its glossy paean to coffee-house culture.

Which begs the question – are magalogues worth the investment?

The short answer is ‘sometimes.’

Eric Schneider, president and CEO of Toronto-based Redwood Custom Communications, which published the ill-fated RealYou and is soon to launch Outlook, a fashion/lifestyle effort for Sears Canada that’s due to be dropped on 2.5 million Canadian doorsteps in March, says custom books are great at building customer loyalty over the long-term.

But Greg MacNeil, president of Toronto-based Multi-Vision Publishing, warns they won’t accumulate an audience as quickly as TV or radio, nor should they be expected to generate a measurable return on investment, in the same way that other direct marketing vehicles do.

Jack McIver, president of Zaxis Publishing, the Toronto company that published President’s Choice Magazine, agrees. He says PC Magazine cost about $3 million a year to produce, making it a money-losing proposition. But he also argues that marketers shouldn’t be publishing a glossy for profit in the first place. Instead, he says, it should be treated as a brand-building device, as well as a means to strengthen relationships with consumers.

‘If you view it as something that has to become another profit centre, or become self-sustaining, then it’s a tougher road for sure,’ he says.

MacNeil, whose company produces a slew of custom-published magazines on contract for marketers such as Shoppers Drug Mart (Images and HealthWatch), Avon Canada (Confidante) and Honda Canada’s Acura division (Expressions), says that when he meets with potential clients whose goal is to net a profit, he’s likely to turn them away.

‘It’s not right for everybody,’ he says. ‘You need a clear understanding of what can happen.’

Which was obviously not the case with Loblaw.

Geoff Wilson, vice-president of industry and investor relations at the Toronto-based grocer, says PC Magazine – which sold, on average, just 60% of its monthly print run of 125,000 – was too niche-oriented to serve the company’s broader interests. ‘[It] wasn’t really achieving our core objectives – to promote the brand PC to a large consumer audience.’

McIver, for his part, blames poor distribution and a lack of marketing support for the failure of PC Magazine. It’s wrong to think you can simply slap a book on the newsstands and see results, he contends. ‘If you have 600 stores, and half of them aren’t doing a good job [of merchandising the magazine], it could have an effect on sales potential.’

Schneider agrees. A custom book shouldn’t be limited to those patrons who are prepared to pay for it, he says. (PC Magazine had a cover price of $1.95). ‘When you try to implement a direct mail exercise, you go out to the people you’re trying to affect, you don’t wait for them to come to you.’

That’s not to say, however, that custom-published magazines can’t work. It depends in large part, say analysts, on the category.

For Imperial Tobacco, which recently launched an arts-and-entertainment glossy called Pursuit, custom publishing allows the Montreal-based company to neatly sidestep new federal legislation that severely restricts the sponsorship marketing activities of tobacco manufacturers, says Richard Talbot, president of Toronto-based Talbot Consultants International.

Wendy Evans, president of retail consultancy Evans & Company, says that because of the considerable expense involved in producing a custom publication, such magazines make more sense for marketers who are selling high-margin products, such as luxury vehicles, than food and beverage retailers.

Chris Layton, media relations co-ordinator with the Liquor Control Board of Ontario, which publishes Food & Drink magazine, begs to differ. He says the board considers its investment in the 12-year-old, six-times-a-year freebie ‘worth every penny.’ He says all 500,000 English and 20,000 French copies disappear within weeks of landing on store shelves.

The fat, glossy magazine, which is filled with tips on entertaining, as well as recipes that make use of the LCBO’s wine and liquor selection, provides the board with an effective means of enhancing its brand image and a timely way to communicate in-store promotions, he says.

All well and good, say Len Kubas, president of Toronto-based Kubas Consultants, but the fact that such publications don’t provide a proven return on investment does not bode well for the future of the industry – particularly if the economy falters.

‘Unless these publications have a track record of saying they achieve a certain [return on investment], I think the bean counters will probably whack [them],’ says Kubas.

He says he thinks a lot of marketers should question whether it’s necessary to ‘go to the expense of a fancy publication, when you can do the same thing with a simple newsletter.’

Those that will survive, Talbot predicts, are those driven by sophisticated consumer databases – such as magazines for luxury auto makers – rather than those that don’t have a clear handle on the demographic and psychographic makeup of their audience.

Schneider, for his part, says custom-published magazines are a worthwhile investment, particularly during a recession – because they target and influence a company’s most profitable customers.

‘When times get tough, 80% of the business comes from 20% of customers. First thing you do is focus on them,’ he says.

‘These magazines are in a phenomenal position to deal with issues like customer retention and optimization, where they are incredibly targeted.’

MacNeil, who has retained Shoppers Drug Mart as a client through several economic swings over the past 18 years, says a shaky economy shouldn’t necessarily sound the death knell for custom-published books.

‘If you underpromise and overdeliver, then you have a good chance of hanging in there.’