Media: All About ... Customer publishing

There's still life in the last bastion of print publishing.

You could be forgiven, at first blush, for assuming that BSkyB's decision to shut two of its customer magazines (and scale back a third) is rather dire news for a whole sector of the publishing industry.

These titles are, after all, numbered among the biggest and most important customer titles around. Sky Sports Magazine and Sky Movies Magazine, both of which are published every two months, have a combined circulation of eight million. Meanwhile, Sky Magazine is distributed to the majority of BSkyB subscribers, giving it an ABC figure of 7,291,605 million, making it the largest-circulating magazine of any sort in the UK.

As of this summer, the sports and movies titles will be closed altogether and Sky Magazine, currently a monthly, will be published only four times a year, signalling a shift in the burden of customer marketing emphasis from print to digital. Beginning in August, there will be a weekly e-mail with links to richer online content.

So it goes, you might assume - customer magazines arguably represent the last vestiges of an analogue world destined soon to fade utterly from the industry's collective memory. Well, think again.

According to Julia Hutchison, the chief operating officer of the Association of Publishing Agencies, the BSkyB situation is something of an anomaly, not least because its titles are published in-house. "We believe it works best when you use a specialist agency," she says.

And the outlook, particularly from the perspective of the specialist agencies, is anything but bleak. The truth, Hutchison argues, is that the consumer magazine sector remains buoyant on the print side, while making the most of (rather than being superseded by) new digital opportunities.

1. By most measures, this sector is continuing to grow. There are more titles being launched (around 90 last year), new advertisers are becoming involved and many existing titles are recording increasing circulations. The most recent ABC report shows that 65 per cent of customer titles in the league table of the top 100 mags are new entries or have increased their year-on-year circulations. New brands that have recently launched into this space include Vodafone, Lloydspharmacy, Bluewater and First Great Western.

2. The underlying long-term revenue trend is believed to be healthy too - though the past couple of years, as in most media sectors, have been challenging. The most recent comprehensive survey of the industry was undertaken by Mintel and was published in November 2008, before the full severity of the downturn was realised - so its projected turnover figures have to be treated with caution. It forecast that the 2007 industry turnover (including direct client fees and third-party ad sales) of £473 million would increase in 2008 to £499 million. No accurate publicly available figures exist for 2009/2010 - but the APA is willing to provide a headline figure. Factoring in additional costs (for instance, those connected with distribution), this will, the APA claims, soon be a £1 billion industry.

3. Marketing magazine published a customer publishing league table in June 2010. The top five specialists were: John Brown Media Group (2009 turnover: £46.3 million); Ten Alps Communications (£43.4 million); Redwood (£34.4 million); Publicis Blueprint (£28.2 million) and Seven Squared (£23.7 million). All but Publicis Blueprint reported turnover down year on year.

4. The sector's revenue model has evolved substantially. Until recently, half of turnover came from clients' fees, the other half from third-party ad sales. Now only 20 per cent comes from ad sales. Customer magazine agencies argue that this is a good thing.

5. One-third of the UK's top 100 magazines by total average net distribution are customer titles, as are eight out of the top ten: the trio of Sky titles plus Asda Magazine, Tesco Magazine, The National Trust Magazine, Tesco Real Food and Morrisons Magazine.

6. According to research conducted for the APA, 5 per cent of recipients of customer titles say they feel a stronger empathy with the brand as a result, while 47 per cent of respondents say that they are more likely to purchase products featured in a customer magazine than in other types of advertising or marketing. More people read customer magazines than national newspapers, and customer publications are read on average for 25 minutes.

WHAT IT MEANS FOR ...

Customer Magazine Publishers

- There's a small but interesting divergence of opinion between media agencies and publishing agencies when it comes to the effectiveness of customer magazines - and the challenges they might face in the future.

- Media agencies tend to argue that clients are sometimes guilty of overestimating the value they accrue from customer magazines, especially those principally distributed direct to homes.

- Indeed, they suggest that some of these titles are no more than elaborate and costly direct mail exercises. APA research tends to suggest otherwise, clearly - but some of these ventures are undoubtedly expensive and the cost side of the equation may come under increasing scrutiny at a time when paper prices are going through the roof.

- So we're bound to see more clients experimenting with e-zines or e-mails linking to regularly updated websites - and this will expose specialist publishers to more vigorous competition from digital content specialists. That, in turn, may force contract publishers to accelerate their own evolution.

- As you'd expect, they tend to say that they are well-placed to meet that challenge.

BSkyB

- Sky sources point out that the difference between Sky Magazine's distribution figure (just over seven million) and BSkyB's total customer base (just over ten million) is down to the number of people who've opted out of receipt of the hard copy and have indicated they'd rather access the content online. Or, indeed, a cynic might surmise, not access it at all.

- In pursuing its digital options, Sky claims to be ahead of the curve here. But it will be interesting to see the traffic figures come autumn.

- This move can only be judged a success if more people spend more time engaging with the content.