I’ve been attending the annual American Magazine Conference since 1985, back when the conference was about magazines and brand extensions that created “ancillary revenues.”
In 2006, things have become much more complicated.
Historically, only a handful of magazines have ever created non-magazine revenue from television, books, events or other brand extensions that exceeded the magazines’ core circulation and advertising revenue. There are, of course, some very notable exceptions.
In 2006, dozens of websites bearing nameplates borrowed from print magazines are nearing the point where online revenues will surpass print revenues. Forbes Media and PC World executives both predict their online revenues will pass magazine revenues in 2007 or 2008. Sports Illustrated, Consumer Reports, Cook’s Illustrated and Playboy are headed in the right direction. And this online eclipse will occur while their print revenues are growing at five to 10% annually. Online revenues for all the publishers I’ve mentioned are growing at 50 to 100% annually and will likely continue to do so for several years to come.
Most magazine publishers are still being left behind with no clear strategy for increasing online revenues beyond a fraction of their magazine revenue. The magazine industry is in a virtual panic. It is a good panic, because it voices most publishers’ lack of a clear strategy for going online the way a recovering alcoholic announces his intention to fall off the wagon at an AA meeting.
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What do the most successful online publishers do that most magazine publishers do not do when setting up their online publishing plans?
1. Human Resources: They treat online publishing as a business unit with an audience, mission, business plan, online brand champion and dedicated editorial, marketing, sales and management.
2. Content & Community: They build a massive content base of editor and user generated content that far exceeds the limited content of its magazine namesake. They use content and community to drive an online audience that is different and much bigger than their print audience.
3. Audience Development: They follow the 5X Rule. To be a viable online business, your website must have at least five times the audience (measured in unique visitors) that your magazine has in print circulation. Successful online publishers are building online audiences the same way they built print circulation—source by source with models, goals, campaigns and ROI measurement.
Delusions of Advertising Grandeur
Too many magazine publishers have delusions of online advertising grandeur without the editorial, audience or marketing plan to be a destination portal for their subject. A 500,000 circulation magazine needs an online audience of at least 2.5 million unique visitors with five to 20 page views per visitor to create an audience that can support a dedicated sales effort and compete on a playing field dominated by website networks like Google and Yahoo!, who have enormous online audiences and superior ad targeting technology.
User Driven Online Publishing
User revenue is the answer for most magazine publishers’ 2007 online efforts. Print magazine subscriptions, online subscriptions, books, ebooks and events can generate more than enough revenue to justify the existence of an online publishing business unit—as long as they are not stopped from using the website and email impressions to direct market their own products.
While it is impressive that Forbes.com will generate an estimated $150 million in gross online advertising revenue this year compared to the estimated $380 million in gross ad revenue generated by its print sibling—it is perhaps more impressive that Boston Common Press (America’s Test Kitchen, Cook’s Illustrated, Cook’s Country) will generate about 23 percent of its $46 million online—almost entirely from users (magazine subscriptions, online subscriptions, books and DVDs).
The fact that Google and Yahoo! will jointly take in $15 billion in online advertising revenue in 2006 need not be a siren’s song luring online publishers to waste time trying to sell online display advertising to an audience that is just too small to merit a dedicated sales effort.
Most magazine publishers should use 2007 to invest in building a content-rich interactive website hub, robust email newsletters, effective online publishing teams and a loyal online audience.
Google and Yahoo! both endured years of losses to be where they are today and both are busy reinventing themselves as you read these words. Becoming a successful online publisher will take dedication, resources and time. Online publishing, even under a familiar nameplate, is a new business start-up. The sooner magazine publishers start treating them as such, the sooner the online publishers who run Forbes.com, PCWorld.com, CooksIllustrated.com, ConsumerReports.org and Playboy.com might have a reason to attend a future American Magazine Conference.
Tell me what you think about magazines and online publishing below!