A.T Kearney: Print media still has a chance if it diversifies revenues sources

Many subscribers to glossy two-pound fashion magazines pay less than $15 a year, which doesn’t even cover the costs of printing and mailing, much less content generation. The problem is that magazines’ deals with advertisers involve circulation targets known as base rate.

Everything follows accordingly. Subscribers undervalue the experience, magazines teeter near bankruptcy, staffers lose jobs, advertisers suffer disappointment, and pundits mourn “the death of print”. With advertising down 24% in 2009, it’s a downward spiral that can end only in its self-fulfilling prophecy.

But is it really the death of print? A.T Kearney ponders. Magazines’ consumer marketing departments have a solitary goal: to hit rate base. Focusing on this short-term target - rather than seeking to maximize long-term content-related revenue – results in counterproductive practices: publishers set prices too low for direct-to-publisher sources (a trend only exacerbated by the growth of free online content).

Most companies, such as telecommunications, consumer packaged goods, and retailers, can discuss at great length value of their customers, because they’ve quantified that value using lifetime value (LTV) models. Magazines use direct marketing, but rarely comprehensive LTV.

At most publishers, LTV models exist. Subscriber value is measured and sometimes used in budgeting decisions. But most publishing executives lack real-time access to that data. Instead, they do circulation planning using backward-looking metrics that are often limited to the cash value of the subscription.

What of magazines decided to use LTV model to quantify the total value of a subscription, in a forward-looking environment? The LTV model would need to allow for changes in market and internal dynamics, such as acquisition rate, acquisition cost, renewal rate and price.

On the other hand, the LTV should provide a holistic view of the subscriber across all acquisition channels over time, an understanding of how to allocate resources to maximize consumer revenue, and the ability to sensitivity-test scenarios.

LTV models are mere tools, but they can help smash the traditional limited view of subscriber value - by forcing publishers to consider revenue sources such as brand extension, licensing arrangements and associated product sales.

Today, there is a widespread fear that no magazine can survive the attempt to shift away from the advertising-dependent profit model. The fear is well-founded. The process will not be easy, and not all companies will succeed. Yet, it starts with a simple goal: shifting the publisher’s focus beyond circulation management to multifaceted revenue and profit management. And the first task is equally simple: providing consumer marketing departments with tools to facilitate the move.

Calculator Salariu: Află câți bani primești în mână în funcție de salariul brut »

---

Te-ar putea interesa și: