PUBLISHING AGENCIES: A BUOYANT MARKET

Publishing agencies are booming, with new titles arriving all the time. Lexie Williamson reports on the sector's blooming health.

Sick of tales of recessionary doom and gloom? Cheer yourself up with a few statistics on the contract publishing industry. In a year when TV companies reported record advertising losses and consumer magazine casualties mounted, Royal Mail registered 100 new contract titles. The sector grew its combined annual turnover by 10 per cent from 2001 to 2002 and is predicted to continue this growth, increasing turnover by 34 per cent between 2000 and 2004, according to the Association of Publishing Agencies (APA).

"The first six months of 2002 were pretty nail biting," Hilary Weaver, the director of the APA, says. Its members produce 73 per cent of UK contract titles. "It was tough, particularly in the travel sector, but we turned a corner at the end of the year and are confident about the future."

Although 2002 saw new launches, such as Freeserve's Be Free, there was more squabbling over existing accounts than in rosier economic times as clients repeatedly played old rivals off against each other in a bid to drive down costs.

This trend of undercutting worries many in the industry, such as Forward Publishing's marketing director, Sarah Morris. "Clients are becoming more savvy about using one agency's tender proposal to negotiate with another, which happened in our last four pitches. Clients are driving down prices dramatically, which means quality can suffer," she claims.

That said, Morris describes last year as "extremely good" for Forward. The agency earned a place on Barclays' marketing roster and will launch several titles in 2003. Rather than cutting staff, like some big agencies, Forward has just hired 15 people to work on Barclays.

Ian Sewell, the commercial director of Redwood, believes the sector is managing to ride out the recession because customer magazines are a "common sense" medium in hard times. He explains: "When budgets are squeezed you protect your loyal customers by making them feel secure about your brand and magazines are the ideal way to do this."

Sewell thanks the Government for making 2002 a stable year and sees the sector as a future boom area for contract publishing as Labour gears up for a general election. Redwood won the contract for a Welsh Development Agency title aimed at Welsh SMEs and a Department of Education magazine called Teachers, among others, and is pitching for more government contracts.

"Magazines are perfect for government communication as they allow the use of a sound bite through headlines as well as the explanation of complex policy issues, such as changes to pensions or farming practices, through features," Sewell explains. "You only have to look at the Official Journal of the European Communities to see the number of tenders out there; we think there's a big opportunity for contract publishers."

Another publisher likely to benefit from Labour's spending spree is Haymarket, having proved itself with Ruler, its title for the Teacher Training Agency, which won the APA 2002 Launch of the Year category, as well as its Army/COI Communications publication Army.

For Just Customer Communications, which attributed 28 per cent of its 2001 turnover to online publishing, chasing online accounts has paid dividends.

While some publishers dismiss the sector as having failed dismally to live up to the hype, Just has nailed four digital contracts in the past three months and hopes to pitch for more in 2003.

"Online was a classically hyped market," Just's managing director, Grahame Lake, says. "The bubble burst, people were putting up complex sites that were all gimmick and marketers got their fingers burnt. Most content on e-commerce sites is still crap because quality journalism is seen as a cost. But if you treat literate web users like idiots, they'll leave. There's a real opportunity for good quality content and contract publishing is well positioned to deliver it."

Lake pinpoints business-to-business, staff magazines and publications aimed at shareholders or institutional investors as two other ripe areas.

"It's ludicrous that shareholders can make share prices fluctuate because of something they read in the financial pages, yet virtually none of the FTSE top 100 firms talk to them via a customer magazine," Lake says. He adds: "Staff magazines are frequently done by the HR department and are absolute drivel. Companies forget that their employees are customers who choose to work there. They need to be talked to maturely, not made to read about the office party."

Lake comments on the steady growth of the industry: "It always surprises me that it's not bigger than it is. People spend an average of 27 minutes reading a customer magazine. I defy anyone to prove that they can get 27 minutes-worth of attention through another medium for that rate."

The industry's one big problem, according to Lake, is that it's just "too worthy". "We should be more like TV advertising and appeal to the ego of the marketing manager," he explains. "We need to be more sexy."

John Brown Citrus Publishing is forging ahead with its expansion plans in 2003 and promises more news on the merger-and-acquisitions front soon. Its biggest win last year was the fiercely fought-after Sky magazine.

The contract publishing industry is surviving, according to the chief executive, Andrew Hirsch, because, when the going gets tough, clients just want a medium that sells products, not an off-the-wall TV commercial.

"Sometimes good creative advertising gets in the way of selling a product," he adds.

Far from being complacent, however, Hirsch reckons the industry needs to improve drastically the overall quality of magazine design and editorial if it wants to sustain growth. He also predicts that 2003 will be a tougher year. "Retail sales were better in 2002, people were much freer with their credit cards," he says. "And if there's a war they'll be sitting on their money."

Morris agrees that the worst is not over. After nine years in the business, she is sceptical that there are new sectors waiting to be discovered - which means more in-fighting. Combine this with forecasts that sectors such as the car industry will be hit by a fall in consumer spending, and the industry could be in for a rougher ride. "The market is going to get even more competitive this year," Morris states. "Magazines relying on ad sales will find it tougher as they continue to battle for the same ads, and this trend of driving down prices will see some titles closing or changing beyond recognition."

So it seems that publishing agencies will have to work harder than ever to prove the value of customer magazines in the coming months. But, based on existing evidence, the bulk of the work has already been done: now it's simply a case of convincing the clients.

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