MEDIA FORUM: Will circulation figures ever be truly transparent?

Can anyone persuade publishers to become more open about circulation figures and would any change be for the better?

Whatever you think about the pros and cons of last week's revelations about The National Magazine Company and its Audit Bureau of Circulations figures, the whole episode can hardly be construed as good news for the integrity of the ABC system. But so what, you may well ask. There have been question marks over the ABC system for as long as anyone can remember.

For those who missed it, NatMags was found guilty of breaching rules on bulk sales. In the figures for January to June last year, it included a large number of copies in the bulks column that should by rights have appeared in the "monitored free distribution" column. A minor distinction, you might think, but the extra copies made a substantial contribution to trading currencies during the period in question. The rogue "sales" were those shifted in joint promotions with national and regional newspaper publishers whereby the titles were "bagged up" with newspapers. They were thus extra incentives to a newspaper purchase. However, no money changed hands for the magazine in each bag.

This was a reminder, should one be needed, that the rules on bulk sales are still open to abuse, prompting many to speculate that reform of the system is not moving forward quickly enough. Even fans of NatMags (and it has many defenders) admit that the publisher was being difficult when it claimed it hadn't understood the rules. After all, it found countless ways to prevaricate, including disputing the ABC's preliminary findings line-by-line, paragraph-by-paragraph. The appeal process took three months.

So is it time for the industry to demand movement here - not just on the issue of bulks but on other transparency issues, such as forcing magazines to release figures on individual issue sales? Some analysts believe that single-issue figures are now the main priority. Once that level of transparency is achieved, the bulks issue will be easier to police. Of course, publishers tend to argue that this will be too costly for all concerned, especially for the big buying points. And anyway, buying the medium is already complex enough.

"Rubbish," Paul Thomas, a managing partner at MindShare, counters. "The reason publishers don't want monthly figures is obviously that it will highlight the massive issue-by-issue variations there are and that will open up the market to seasonal pricing. I'm more than happy to negotiate against circulation."

It would also, he argues, make publishers manage their inventory more effectively. At the moment, everyone has a fair idea of the issues that genuinely sell well and those that don't. So a lot of opportunistic advertisers come into just a handful of issues, which grow to the thickness of telephone directories. "There's a need to penalise advertisers that are creating the clutter and aren't committed to using the medium the rest of the year," Thomas says. "If there is a seasonal market, they can run smaller issue sizes and charge more. For many magazine advertisers, stand-out is a real issue. The current system allows publishers to hold prices artificially - and the fact that they resist change makes you wonder whether they have any faith in the ability of their sales teams to trade against the actual figures."

Ian Locks, the chief executive of the Periodical Publishers Association, states the publishers' case: "Advertising space needs to be bought and sold with the confidence that what is promised is being delivered, that what is bought will be paid for within an agreed time frame and that transactions will be handled in a cost-efficient way."

He says that ABCs are really a back-up to the main trading currency, the National Readership Survey. And in any case, magazine publishers recently adopted a package of changes to ABC figures, including indicating where single issue sales varied by more than plus or minus 20 per cent. The clearer definition of actively purchased copies also provides the additional transparency on bulks many had been requesting.

He adds: "Adoption of single-issue figures would force up costs for everyone through pressure for a level rate base, increased ABC audit costs, agency costs in handling hugely increased volumes of data and the costs for both sides of renegotiating on issue by issue rather than average issue historical data. A shift to single-issue data for magazines alone would be totally unacceptable, making magazines excessively costly to use compared with newspapers."

Some buyers have sympathy with this position. Tim Kirkman, the director of press at Carat, says: "You can reach a point when you are asking for figures for the sake of figures. The truth is that a lot of the magazine advertising business is driven by broader seasonal effects anyway." In other words, fashion advertisers, for instance, will always be in the spring or autumn issues of glossy titles, because spring and autumn are the busiest periods in the fashion business. Summer issues aren't necessarily punished by advertisers (as the publishers fear) because everyone suspects that their circulations are low. "I don't think anyone will gain any extra insight from having the numbers," Kirkman adds. "They might influence my non-season brands but not hugely. In practical terms, you can have the figures anyway if you ask for them. It's always possible to have sensible conversations with grown-up people."

However, not all buyers are as understanding as Kirkman. Some are irked by the fact that this has taken so long to come to light. The period that the restatement relates to is January to June one year ago. Now that we're in a new budget period, it's going to be messy negotiating any compensation packages that advertisers are now entitled too.

Of course, the people who can do most to force a change are the advertisers themselves, aren't they? Alison Brolls, the head of marketing at Nokia, says the unwillingness of publishers to change is a substantial obstacle.

Meanwhile, the whole issue of transparency continues to be frustrating.

She states: "We need to know how many copies are being distributed and sold every month. The rules for bulks should be simplified - and publishers should also disclose where they are going. Are they just being used to hoist sales or are they being used as genuine, carefully targeted sampling?

"The current six-month ABC audit period is not an accurate way of assessing the impact of one-off monthly initiatives, yet a one-off hike in circulation can massively skew the six-month figure for a particular title. We are counting on the publishers changing the way they do business and in future they have to be more accountable and transparent. In any other business, the way the ABC figures are currently presented would certainly be regarded as creative accounting."