Making every issue count

New strategies in circulation and editorial, as well as diversification, has helped to more than double revenues at Sacramento since owner Mike O'Brien took over in 1993.

PERHAPS IT'S THE NORTHERN California upbringing, but Mike O'Brien is remarkably laid-back when describing the growth of Sacramento, a title he purchased in 1993: "Our mission has always been to publish the highest quality magazines that serve readers by informing and enlightening them, while enabling us to make a profit and have fun," he says. "We've always had fun, but we didn't start making a profit until a few years ago."

That attitude belies the risk that he and his wife, Jennifer, assumed when they bought the magazine from Micromedia Affiliates, a New Jersey-based conglomerate of regional titles-but the facts speak loud and clear. O'Brien and associate publisher Joe Chiodo had been with the organization since the mid-eighties (most recently as publisher and ad director, respectively), and neither recall Sacramento ever turning a profit under the many ownership hands that had held it since its 1975 launch. Add to that poor timing for the O'Briens' acquisition: The nation was at the tail end of a recession-one that Sacramento's government-fueled economy felt acutely when extensive military and aerospace cutbacks and shutdowns were made. And in parting from Micromedia, Sacramento also bid farewell to the cost efficiencies that multi-title organizations afford.

Chiodo recalls, "We lost a lot of the money flow, so we had to be smarter, do things carefully and make use of every penny.

At first some hard decisions had to be made, O'Brien admits, including eliminating some positions and employee benefits. The organization barely broke even under his first two years of ownership. But today, after fine-tuning circulation, repositioning editorial, creating a strong community presence and diversifying operations, O'Brien reports that annual revenues have more than doubled since the couple assumed ownership-to more than $3 million in 1998.

Nancy Moore, publisher of Miami Metro, says that as a fellow regional publisher, O'Brien 's approach has been instructive for her: "Mike is the perfect example of what you can accomplish when you're very focused on your market," she says. "He created his own organization, and it takes time to do that well."

Some fundamental changes

One important step was not just boosting Sacramento's circulation, but giving that facet of the business a complete overhaul. In the past, audited circulation had been artificially inflated by methods such as a free subscription program for a local public radio station's donors and controlled distribution to upper-income neighborhoods. As recently as the December 1995 auditing period, the BPA-audited title had a circulation of 16,085-of which nearly half was qualified nonpaid.

The plan to remedy this was twofold: Reduce controlled distribution while simultaneously increasing overall circulation. So far, it's been successful. As of its December 1998 audit statement, Sacramento's circulation was at 25,478-of which just 14 percent was qualified nonpaid.

Publishing a magazine with a regional focus essentially means a limited audience, so part of the overhaul plan involved trying to make every copy of the magazine count. Controlled distribution was not eliminated, but gradually cut back to the current 3,555 request-controlled copies sent to individual businesses, such as doctors and lawyers. "We made a conscious decision to make [controlled] more productive," explains Chiodo. Additionally, he says, many staff members deliver leftover expiration copies to public places like hospital waiting rooms, nursing homes and jury rooms. These efforts afford Sacramento increased exposure, and more important, have likely played a part in the tripling of subscription card returns since 1995.

O'Brien also hired a single-copy circulation manager in December 1995 to improve sales and sell-through. "It's very frustrating for a small magazine," he explains. "We can't get to the decision-maker on the wholesaler level--but we have found that the gourmet grocery markets, the wine stores, the deluxe car washes will work with us." As a result, each month, 1,500 to 2,000 copies of Sacramento are now sold through more than 30 direct outlets--including several chains like Safeway and Borders Bookstores. While the magazine's sell-through averages about 50 to 55 percent through traditional distribution channels, those at the direct locations sell 80 to 85 percent. Efforts like this have complemented direct mail's role in boosting circulation.

Another move designed to give a lift not only to circulation, but also advertising sales, was one of the earliest and most significant changes to be implemented: a reassessment of the magazine's editorial. "Like most magazines during the recession, we were the first to be cut out of the buying loop because we were a little bit too general," says Chiodo. "So we needed to develop our target niche better."

Chiodo and editor Krista Minard decided how to best go about this based on the magazine's demographics (like many regional magazines, the majority of Sacramento's readers are females above the age of 35): "We still wanted to remain a lifestyle publication, but we wanted to really focus on and target women 35 years and above," Minard explains. The most prominent example of this repositioning was a regular editorial section called "Sacramento Women," which ranges from profiles (for example, "No baby on board," of women who choose to remain childless) to health and fashion. The section regularly rates as the best-read part of the magazine in readership audits and, equally important, it's favored by many advertisers. "I've been placing ads with them for a couple of years," says Barbara Bowers, marketing director at Arden Fair Mall. "The women focus is one of the reasons I am an advertiser."

Branching out

O'Brien made the name change from Sacramento Magazine Inc. to Sacramento Magazines Corp. because he says the plural "connotes more accurately what we do." The company does a lot these days, and will in fact be involved in more than 40 promotional activities in 1999. Sponsoring and attending local events is one facet of the organization that O'Brien's staff now devotes a lot of energy to--so much so, that in 1997 he hired a full-time promotions coordinator. "You're in a unique position, publishing with the name of the community on your masthead," he says. "It's important that we're out there, visible."

Women in Business is one event that Sacramento sponsors, and with 900 attendees in 1998, is one of its biggest. First held in 1994, WIB originated from an advertising section in the magazine that allows women to network and profile their companies. Much of the proceeds from both the ads and the event are donated to charitable causes like breast cancer research.

The business was also expanded by creating ancillary publications. Readership audits indicated that a significant portion of Sacramento readers--both men and women--golf, so Minard began devoting more editorial attention to the sport in 1995. In 1996, a map of area golf courses was published in the magazine. This prompted many requests for extra copies, so The Northern California Golf Guide was created and bound into the March 1997 issue. The supplement has its own Web site (norcalgolfguide.com) and is printed with an overrun of 20,000 copies, which are sold at newsstands and pro shops. The Guide generated approximately $95,000 in ad revenues in each of its first two years, Chiodo says; the 1999 edition pulled in about $145,000.

Another offshoot is Sacramento Business. Sent to 6,000 area business managers and CEOs, it's now polybagged with five issues throughout the year, and averages between 50 and 70 pages.

But the biggest ancillary source of company growth has been contract publishing. O'Brien recalls the company had "just a handful" of such accounts prior to his ownership. Today, he's grown that end of the business to a stable of 20 publications, representing about 35 percent of annual revenues. Chiodo believes that much of that success can be attributed to the magazine's high visibility in the community. "When you're publishing a high-quality product like ours that's all over town, that's a pretty good sales tool," he says.

It's also opened doors to several advertising opportunities, as one client, Betty Drake, director of memberships for the Sacramento Convention and Visitors Bureau, notes. "We really have a crossover marketing with each other, which wasn't happening with previous relationships," she says. "They've gotten new members for us while they're selling ad pages, and they've gotten new advertisers for [their magazine]."

1998 was a record-breaking year for advertising revenue at Sacramento. The core magazine alone produced nearly $1.8 million--and according to Chiodo, based on the first four months' performance in 1999, could possibly triple 1993's advertising revenues of approximately $720,000.

Despite these unprecedented gains, the company is still seeking new ways to improve, even subtle ways. For example, an expanded "Sacramento Women" section ran in the January issue to create advertiser appeal in the typically light issue. One particularly touted feature included results from a "For Women Only" questionnaire, which was inserted in the issue that was distributed at last year's Women in Business reception. Chiodo says the issue brought in a nearly 40 percent increase over the same month last year.

What's next?

O'Brien doesn't have any definite projections for future growth. He says that he'd like to continue to grow the business at a 30 percent annual rate, "but growth requires caution," he says. "This is still a challenge, and we don't want to bite off more than we can chew."

Vital Statistics

Magazine: Sacramento

Company: Sacramento Magazines Corp.

Personnel: Publisher/vice president, Mike O'Brien; Associate Publisher, Joe Chiodo; Editor, Krista Minard

Key Strategies: Fine-tune circulation, reposition editorial, expand franchise through community events and ancillary products.

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