Editorial and the bottom line; editorial is not defenseless in the face of accusations that it is only an expense, not a revenue producer

Editorial and the bottom line

Take a look at almost any publishing company's P & L ledger, and you'll see Advertising and Circulation on both the Expense and Revenue sheets. Not so Editorial. Editorial is listed only under Expense.

It is a common accounting assumption that editors spend money but generate no revenue. This belief has occasionally led to a kind of cynicism by which editors are perceived as being rather like eunuchs guarding the harem . . . only subtracting from the sultanate's exchequer and doing nothing to add to it.

In fact, at the very least, publishers do recognize that poor editorial quality adversely affects newsstand sales, subscription renewals and advertiser evaluations of magazines. But to what extent?

Editorial vitality, or lack of it, is like an invisible electromagnetic field surrounding a magazine's profitability: It's hard to measure how pervasive is its effect. But publishers struggling to maintain or increase their rate bases in the face of escalating costs of circulation acquisition, or spending heavily on promotion to increase their share of ad dollars, should be acutely sensitive to the true effect of editorial on those costs.

Meanwhile, what steps, if any, can editors take to make magazines more profitable?

"Whether or not ad revenues can be increased or circulation can be more cost effective, it's clear that the one department which has been ignored as a contributor to the bottom line is editorial," says Wendell forbes, deputy publisher of Guideposts. Forbes is also the former circulation director of Life and has been a strategy consultant to a number of leading magazine publishers over the years. I asked him to supply comments for this column so that editors can understand the circulator's point of view.

Benign neglect?

Because editorial is seen as a cost center, says Forbes, it's often treated with "benign neglect" by publishers who've come up through advertising. They may glorify editorial for its inspiring words, but they note that it doesn't produce income to offset its expenses, which typically run around 10 percent of a magazine's aggregate expenditures.

From an alliance

To create a circulation rate base designed to maximize advertising sales, publishers press circulators to sell more subscriptions.

"The circulation manager, because of the high net paids that he's forced to deliver, is victimized just as much as the editor," says Forbes. That's why there should be strong alliances in publishing between editors and circulators to stave off easy answers.

"On the other hand, you have to be careful about saying that a magazine is overheated--that it's pushing too hard for circulation for purposes of generating ad revenue--when the magazine may not be popular enough to stand on its own.

"I think the answer is halfway in between. Yes, we circulators may be pushing too hard, but the editor has to work harder."

Few editors are thrilled by the knowledge that circulators use sweepstakes or free clock radios to entice new subscribers, rather than the content fashioned by the editors themselves. Forbes counters, however, by saying that when circulation brings in new subscribers--new golfers, handymen, computer buffs--by whatever means and from whatever lists, then the editor's effectiveness as a proselytizer should come into play. The editor should be concerned with how to turn that new reader into a disciple of the magazine.

Working with circulation

The editorial/circulation alliance is one I've always found worthwhile. Editors can directly benefit from an interest in what circulation is doing. And if you as editor haven't previously shown such interest, I suggest you do. Should a particular mailing piece, for example, pull a remarkable 5 percent, read it carefully. Its content and images should influence--in a reasonable, balanced way--your thinking about what you put in your magazine.

Editors have occasionally been called upon to write circulation promotion pieces when publishers become frustrated with the efforts of pros. Indeed, an editor is inclined to wonder why someone else should write a piece selling his or her magazine when 1. the editor knows better than anyone else what the magazine is about, and 2. the editor also happens to be able to write. Right?

"Wrong," says Forbes, who echoes the opinion of his fellow circulators. And now take this, you editors who are aspiring promo writers: "I really don't think an editor should try to help the circulation department," Forbes continues. "Just don't hinder them by putting out a lousy product.

"Truthfully, though, it's fatal to have the editor write such copy. The copywriter has to fantasize . . . that's part of the selling process. The editor, on the other hand, has to deal with a much more realistic world of facts. Editors are too pragmatic when it comes to direct mail copy. That's why the two rarely coalesce."

Should editors have final approval over circulation copy? Yes, when it comes to statements of fact about the magazine and its content. No, if the editor objects to the approach, tone and offers in the direct mail piece. In cases where editor and circulator can't agree, the magazine's CEO should be the arbitrator.

What about shrill mailing pieces that make large promises about what the prospective subscriber will get? Often, promotion writers base their copy on things that have already appeared in the magazine. The effect is to pressure editors to mirror past stories--and that leads to repetitive publishing.

If such a situation exists at your magazine, I suggest you remedy it with an obvious solution. With the backing of the publishing CEO, if necessary, institute a system whereby the circulation department, prior to working on any new mailing piece, must sit with the editor to listen to his plans. If it's an important direct mail campaign for the last half of 1988, then the copywriter should key his copy to the editor's plans for that period--not to what was published in 1986 or 1987.

Obvious as such an interface should be, it's remarkable how many magazines don't use it: "In some publishing circles," says Forbes, "it seems to be a point of honor that the editor not meet with the copywriter."

Yes, that's true, but often it's because the circulation director doesn't want the editor screwing up circulation's concept of what sells the magazine. Or publishing people often are able to communicate superbly with everyone except themselves.

Because editors believe so strongly in the value of their efforts to attract readers, most typically fall into a depression when a particular issue fails to sell well on the newstand, or when a sub offer with a free trial copy of the magazine fails to pull well.

If you've felt that way recently, take heart from circulation expert Forbes who, by the way, brought Norman Vincent Peale's Guideposts from 1.9 million to 4.3 million circulation in just 10 years.

"If a free trial offer fails to pull or the pay-sup is poor, I wouldn't necessarily blame the editor. If I were the editor, I'd say, 'Offer the guy three free trial copies because no magazine can be judged on a single issue.' A magazine is a continuity of experience."

There are perhaps 3,000 magazines struggling to get on the newsstands every month, and Forbes says that's too many: "For most magazines, newsstand selling is another way for the publisher to advertise. On of the great fallacies is that newsstand is an index of editorial vitality. That may be ture for an individual issue. But over the long haul, newsstand sales may simply be an index of how vigorously a publisher is competing for subscription sales."

Editors may also be perceived as failing when subscription renewal percentages fall off.

"That's another fallacy," says Forbes. "If you're the editor of a magazine that has a whole bunch of conversions of first-time subscriptions, don't be discouraged necessarily if the average renewal percentage goes down. What it actualy may mean is that the magazine is vital because it's growing.

"Conversely, a magazine with a high renewal percentage could be one that has leveled out, feeding off itself and just replacing its expires."

So there are many thing going on for which editors shouldn't necessarily be held totally responsible. In the long run and in gross numbers, though, circulators sell new subs and editors do sell renewals.

Because circulators create millions of pieces of mail that go head to head with millions of pieces from other direct mailers, they tend to perceive a communications world full of static and competing messages. Consequently, Forbes tends to equate editorial success with the ability "to penetrate the clutter of communication--the VCR, the car radio, the TV turned on briefly at night, newspapers with livelier feature content--to say nothing of magazines competing with one another for the attention of readers."

The success of one magazine over another, in Forbes's view, is its ability to blast through the clutter and establish its unique identity.

Canadian-born Forbes believes that most publishers and their editors fail to perceive the need to set aside time to reflect about their magazines--to reconceptualize them in order to make the kind of breakthroughs needed to separate themselves from their competition and break through the communications clutter.

The last word? Without editorial excellence, circulation cost effectiveness suffers and advertising is harder to sell. Maybe that doesn't put editorial in the revenue section of the publishing ledger, but it does go right to the bottom line.

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