Contract publishing, once the magazine market’s poor relation,
appears to be on an unstoppable growth curve.
According to Mintel, the UK’s publishing agencies generate a turnover of
pounds 182 million a year. If incremental revenue, such as advertising
and fulfilment services, is added, the figure leaps to pounds 302
million. These sums represent 21 per cent growth in 1997 and 17 per cent
More significantly, this research suggests 43 per cent of clients plan
to spend more on customer titles. This has prompted Mintel to suggest
that contract publishers will see a further 29 per cent growth over the
next four years, taking the core turnover above pounds 250 million.
Publishers cite a variety of reasons for the growth. The most frequently
mentioned is a perceived shift in the mindset of marketers.
Julian Treasure, the managing director of TPD, whose clients include
Microsoft, United Airlines, Toyota and Orange, says: ’Marketing has been
aimed at getting customers in through the front door. But there is a
realisation among marketers that existing customers are a valuable
asset. Clients must keep communicating with them if they are to stop
them leaving by the back door.’
Other publishers, such as Kim Conchie, the managing director of Brass
Tacks, build on that premise by stressing that customer magazines are
cost-effective and have been ’proven to work’.
Conchie says: ’There are now numerous case studies which make the impact
of magazines on sales directly measurable - and clients are increasingly
keen to use their databases in ways to help them retain customers.’
A final driver of growth, according to Craig Waller, Premier Magazines’
managing director, is the quality of writing in the contract sector.
’The power of journalism has been recognised,’ he asserts. ’Good
contract magazines talk to customers in a grown-up fashion - and the
readers appreciate it.’
Of course, the question for any sector experiencing growth is how to
keep up the momentum. Mintel identifies three broad categories in which
it sees potential for expansion.
The first is new product areas. Travel, finance and retail account for
nearly half the UK customer magazine market at present. But Mintel
believes fmcg, manufacturing, telecoms, IT companies and local and
central government are all ripe for growth.
Of all these sectors, fmcg generates the most interest. Heinz tried and
failed in this market. More recently, Unilever, Cadbury Schweppes and
Kimberly-Clark formed a consortium called Jigsaw which, through its
agency, BLA, is targeting nearly half a million UK housewives with
various magazine titles.
Five years ago, the notion that commodity fmcg products could form the
content of a readable customer magazine would have been dismissed
out-of-hand, Treasure says.
However, the growing power of the major multiple retailers has forced
manufacturers to look for new ways to talk to customers and drive
In Treasure’s opinion, there are opportunities for those fmcg customer
titles that ’can differentiate brand and service. Successful customer
magazines have got to appeal to customers of high value and enhance the
communication experience with the client’.
The second opportunity for publishing agencies lies in the international
domain. Members of the Association of Publishing Agencies claim that the
UK market is ahead of many foreign markets in its understanding of
As a result, some agencies see the opportunity to piggyback on the
expansion of their clients.
This is particularly true for publishing agencies that belong to
international advertising groups. Premier, for example, is part of
Omnicom, while Redwood belongs to Abbot Mead Vickers BBDO.
According to Waller: ’Part of the reason we joined Omnicom was because
we wanted help with our international expansion plans. As clients
expand, we want to be able to retain them overseas.’
Waller, like many of his counterparts, believes UK companies are
well-placed to succeed. ’The UK is a long way ahead of most markets in
this sector. Working in English as our native tongue is obviously a
benefit and the UK is still a key jumping off point between Europe and
Redwood has made significant strides in this arena. It has a standalone
international division with offices in Cape Town, Hong Kong and
It publishes in nine languages across 36 territories.
One of the most vivid examples of international potential is Redwood’s
relationship with Volvo. The Volvo Magazine has a 140,000 print run
domestically but distributes a further 920,000 copies overseas.
Redwood’s magazine for Dulux, Colour, which has a 100,000 print run at
home, has a further 2.3 million copies targeted overseas.
Forward Publishing, the UK market’s number two publishing agency, has
also expanded its activities overseas. It has internationally focused
clients such as Patek Phillipe, for which it has produced a magazine in
eight languages, and IBM Helpware, which is published in 12 languages
across 14 territories. The Body Shop’s Naked Body is currently being
piloted in the US. In addition, Forward has built up publishing
alliances in the US, Japan, China and Russia.
However, international growth is not limited to the big three
TPD, the UK’s fourth-biggest player, has an office in Seattle, set up
primarily to service Microsoft. The Publishing Team, whose clients
include NatWest, Shell, Virgin and Barclays, is looking at expansion
into the US, Europe or South Africa.
River Publishing, identified by Mintel as the fastest-growing company in
the UK, sees potential to use its sister agency, Mongoose, as a
springboard into the US or South-east Asia.
The third broad heading identified as a potential source of growth is
the internet. As clients attempt to grow their online transactional
base, so publishers see the opportunity to create good quality content
to drive interest.
In some ways, however, online developments disguise a more significant
trend - the desire among some publishing agencies to expand their
relationship with clients by moving up the food chain.
River’s marketing director, Nicola Murphy, says: ’Once you get to know a
particular market sector or the client’s brand, there is always more
work that can be done for them.’
At a market sector level, River’s experience with BMW has been
influential in winning it work with other prestige car brands, such as
MG. At a client level, ’we do a lot of brochures, reports and
newsletters for clients’, Murphy says. ’We also run a car club for
In its most ambitious move to date, Murphy is heading the company’s move
into brand consultancy with the launch of River Direct. ’Our aim will be
to look at the whole customer journey. We will act as a consultant - but
will also seek to create opportunities to publish communication vehicles
off the back of it,’ she says.
This route has been pursued vigorously by TPD, which sees itself as
being in ’customer value management’. Talking to customers through a
magazine is the first step in ’a much more rich and complex process’,
TPD’s approach has been to form a liaison with the direct marketing
company, Manifesto. ’They look at the customer value methodology,’ he
says. ’We then deliver the communication. Whether it is intranet,
extranet, interactive, multiple media or multiple language, we see
ourselves as part of a much wider process that also involves call
centres and customer service in shops.’
At the heart of this shift in positioning is the increasing ability of
clients to target the right customers with the right information. ’New
technology means clients can reduce wastage and increase value,’
Treasure says. ’A key goal is to define the return per customer. There
are great benefits for those companies that can find the 20 per cent of
their customers who generate 80 per cent of their profits.’
Neil O’Brien, the managing director of The Publishing Team and the
chairman of the APA, agrees. ’Companies are getting more sophisticated
in using databases to target people more closely.’
TPT’s best example is Barclays, for which it publishes eight titles on
topics as diverse as small business banking, the Euro and travel.
’As the customer magazine industry grows, one of its key opportunities
will be to drill down into the relationship between the advertiser and
specific customers,’ O’Brien explains. ’Financial services has always
been at the forefront in using databases as a marketing tool. That sort
of knowledge can also be used to talk to customers in sectors like
This is already happening in some sectors. Forward reckons to be
producing 15 different types of publication for Tesco such as Tesco
Clubcard and Tesco Baby Club. It also produces books and material for
John Brown Publishing publishes four titles for Virgin Atlantic Airways
and one for Virgin Trains.
Within this broadening of the client-agency relationship, the internet
will clearly have a role to play - though no-one knows when it will have
real commercial value to clients.
O’Brien says: ’Online is a small part of what we do right now. But we
see it as a growth area. Clients have spent a lot setting up websites
but have then not been able to maintain them. As a sector, our
opportunity lies in refreshing websites so there is a reason to keep
Waller is also cautious in his appraisal of the net. ’I think online
customer publishing is a possibility when it is an adjunct to
e-commerce. When people have a reason to keep going back to a site to
buy tickets or get information, then our skills will be valuable in
making that shopping experience more pleasurable.’
Neil Mendoza, managing director of Forward, echoes Waller: ’We do some
work for Tesco’s internet site but e-commerce has to become a more
important part of the business before we spend too much time on it. We
don’t want to push the internet at clients just for the sake of it.’ At
Redwood, online is taken seriously enough to have a standalone
Most of the above opportunities for growth are real enough - but some of
them raise new questions. First, publishing agencies that seek to move
upstream will face resistance from existing players in those markets -
some of which will see the reverse opportunity to branch out into
Second, new jobs require new skills. At the most basic level, Conchie
says, ’publishing agencies entering the online environment have to
appreciate there is a real difference between push and pull media when
talking to customers.’
Mendoza, who has clients such as Tesco, Lloyds TSB and Nasdaq, sees
opportunities for growth but is keen to ’stick with what we know. We
don’t want to stray too far from our core publishing competencies. A lot
of effort has gone into getting clients to divert budgets out of
traditional disciplines into publishing projects - and that is still our
Waller agrees: ’We don’t want to move out of our core competence. We
wouldn’t dare venture an opinion on advertising or direct marketing and
I don’t think there is a company in our sector which has the credibility
to do so.’
The need to stay focused takes on deeper significance in the context of
new competitors in customer publishing. Sally O’ Sullivan’s start-up,
Cabal, and Haymarket (publisher of Campaign) have both ventured into
Dennis Publishing formed Dennis & Beyond in 1997, which publishes titles
for Toshiba, Thomson Holidays and CompuServe. A danger for contract
publishers might lie in taking their eye off the ball and allowing
aggressive newcomers to steal a march.
Mendoza sees merits in drawing on the expertise of other businesses.
Forward has a joint venture with Conde Nast which, he claims, ’has given
us global access to the luxury goods market’.
Forward is 50 per cent owned by Maurice Saatchi’s media group,
’That has been invaluable as a means of gaining introductions to
companies,’ Mendoza says. ’We have worked with M&C Saatchi on
Formal ownership by ad agency groupings is already a significant feature
of the UK market. But strategic alliances are also expected to underpin
further growth. Conchie says Brass Tacks has worked closely with the
likes of Brann on a variety of Royal Mail titles and with Finisterre on
the RAC’s Motoring magazine.
Despite the threat of competition from non-traditional players,
publishing agencies are bullish. Most play down the threat of recession.
Redwood’s new-business director, Matt Prior, sees the prospect of an
economic downturn as a chance to grow. ’Clients look to improve the
efficiency of their budgets in a recession and that represents an
opportunity. The evidence of the last recession is that client companies
which kept up their communications with customers benefited during the
recovery,’ he says.
Whether or not there is a recession, there is one classic sign that the
sector is maturing. Murphy expects ’two more years of easy organic
growth then more fighting among ourselves’.
The market-leading sectors are not immune to attack. Waller says:
’Financial services is most in need of improvement.
I believe the heavily divisionalised approach of banks has led to a lot
of extremely bad magazines which don’t relate to customers
The first client to come up with a proper, grown-up personal finance
magazine will do well.’