Tuesday, July 3, 2018

Put a Wrap On It: As Magazine Ads Dwindle, One High-Priced Approach Thrives

The front of 2 Audience Innovation wraps
While U.S. magazine advertising revenue has been circling the drain with double-digit declines the past couple of years, a little corner of the business has been doing just fine.

It’s a niche – or, rather, a tactic -- that probably doesn’t even show up on most magazine-industry estimates or projections. And it involves mostly the kind of big-name, big-circulation consumer titles that have suffered the most precipitous advertising declines.

The tactic is sponsored cover wraps – typically a four-page piece placed atop the regular front and back covers of select copies. Here’s a great example of one.

(Note for fellow print geeks: On saddle-stitched magazines, the wrap is simply a four-page signature that’s placed atop the regular cover. On perfect-bound magazines, the wrap acts as the magazine’s cover, spine and all, while the regular front and back covers become two-page inserts placed just inside the wrap.)

From an MNI promotion
The continued success of sponsored cover wraps, especially on copies sent to non-subscribers, has valuable lessons for all magazine publishers that rely on advertising.

Publishers have been doing their own cover wraps for decades, most often for subscription renewals but sometimes for advertiser-paid promotions.

Several companies, such as CoverWrap Communications and MNI, are in the business of selling advertising programs that involve cover wraps placed on highly respected magazines and sent to custom mailing lists.

To get a better understanding of this prosperous little corner of the magazine business, I turned to Paul Kostial, the founder, president and CEO of another of those companies, Audience Innovation.

I called on Paul because he has been focused primarily on cover wraps for years and is passionate about the subject. Plus, I met him a few years back (He’s not aware of that.), so I know he’s the real deal.

“Our programs are really direct marketing,” Kostial says, adding that his company is usually selling to the people who handle direct marketing and not to those responsible for ad buys.

"We’re just using a magazine to do direct marketing because the content is still valued.”

“A lot of our clients use this program because they are not big enough necessarily to even be in the magazine full run with ad pages,” Kostial says. Sales revenue at AI (the company, not the technology) were up in 2017, he says, bucking the estimated 15% decline for U.S. magazine advertising.

Hitting home
“It’s really hitting home right now with a lot of clients that are having a hard time with their digital strategy.”

An MNI wrap
Many AI campaigns focus on two hard-to-reach groups – business decision makers and affluent people. Using a multitude of data sources, AI follows the client’s specifications to create a hyper-targeted mailing list that often has fewer than 5,000 names. From a stable of more than 400 titles, including offerings from most of the major consumer publishers, AI and the client select the magazine most likely to appeal to the target audience.

A campaign typically starts with an introductory letter or postcard announcing that the sponsor will be providing a complimentary subscription to the magazine for up to a year. At least four of the issues include a cover wrap with the sponsor’s messaging.

“Because the magazine is attached we get readership rates as high as 80 or 90 percent,” Kostial says. And the recipients aren’t just reading; they’re responding.

Response x 100
One client that targeted chief information officers – an overmarketed-to group if ever there was one – reported a 56% response rate to its cover-wrap campaign. Kostial states that another company aiming for C-suite executives “said they’re getting 100 times better response there than they are on their digital campaigns to the same target.”

Audience Innovation, like several other companies and publishers, offers “point-of-care” campaigns – typically copies mailed to specific types of doctors’ waiting rooms to promote pharmaceutical products. And for other types of public-place campaigns, it offers a selection of more than 400,000 retail locations ranging from hair salons to fitness centers, auto repair shops, golf courses, and B&B's.

The programs are mostly turnkey for the publishers. AI handles the sales, the printing of the cover wraps, and supplying the mailing list. Some publishers have also turned over management of their own cover-wrap offerings to AI.

The intelligence I’ve been able to gather indicates that AI’s payments to publishers are typically far greater than the publishers’ costs related to the cover wrap – mostly from bindery charges and postal inefficiency – but not necessarily enough to cover the costs of printing and mailing the copies.

From CoverWrap Communications
But because the copies count toward audited circulation, they are highly profitable for the publisher when used to displace giveaway copies or unprofitable subscription sources, an AI campaign is quite profitable for the publisher.

Kostial says there’s another benefit: “Clients using magazine cover wraps with a given magazine are also much more likely to advertise in-book too . . . and also far less likely to cut that magazine from their schedule if or when they have budget cuts.” Magazine cover wraps combine the best of digital and print advertising.

Programmatic ads can be micro-targeted to a highly select group, such as the proverbial “left-handed plumbers who drink chocolate milk.” But who actually looks at web ads these days (unless the ads are on Dead Tree Edition, of course)?

AI’s results show that people still like magazines, even though much of their reading has shifted online, and find print ads highly engaging. But there’s no magazine for left-handed plumbers, much less for those who drink chocolate milk. For advertisers who have been spoiled by the data-driven targeting of digital media, the audiences offered by big-name consumer magazines seem hopeless generic and mostly irrelevant.

CPM x 100
Cover-wrap campaigns show what happens when heavy-duty data analysis is combined with respected print brands in a highly visible format. For one thing, CPMs (the price of an ad per thousand readers) skyrocket.
An MNI wrap

At one magazine with a ratebase of 500,000, $15,000 can buy you a full-page ad – or a cover-wrap campaign mailed to a custom list of only 5,000 VIPs. That’s a $30 CPM versus a $3,000 CPM.

(I guestimate that Audience Innovation’s rates are closer to a CPM of $1,000, unless the campaign includes such extras as NFC chips or a companion digital effort. Kostial will only say that a cover-wrap campaign typically costs somewhat more than a direct-mail brochure or large-postcard campaign.)

With that same $15,000, you might be able to get 1 million or more page views from a programmatic campaign focused on a specific type of VIP – such as people with household incomes over $1 million or CIOs at major manufacturers. But how many of those views would be bots, or would only be seen for one second, or would just be ignored? And how many in the target audience would actually welcome the ads and click through to the sponsor’s white paper or product promotion?

Magazine people like to complain that web advertising has “turned print dollars into digital dimes.” Cover-wrap campaigns flip the tables, turning digital dimes into print C-notes.

So maybe magazine publishers should stop complaining and start figuring out how they too can leverage data and their trusted brands to create high-value campaigns for advertisers.

Other articles about magazine advertising include:

1 comment:

David said...

As a consumer the first stop with my mail is the trash can. Anything marked Presort Standard goes in the trash without being opened. Next, the magazines. All inserts are trashed along with wrap arounds. I wish I got delivery once a week.