Publishers of consumer and business publications sometimes find their title outstripped by a competitor which piles on subscriptions at every opportunity, much to the delight of the marketing community who always revel in watching how some people make it all look so easy.
The competitor appears to have something that the other title doesn’t. Is it money? Is it a better editor? No —it’s neither of these.
There are some great publications that could increase copy sales substantially if only the public knew they existed.
The problem lies with the way the company budgets.
There is a well rehearsed, almost formal procedure in publishing companies when a title suddenly has competition, or just enters a bad patch:
1. The circulation and advertisement revenue slip.
2. The Advertisement Director presses for higher circulation – the key to greater ad revenue.
3. The finger is pointed at the circulation department. Surely some promotion is needed?
4. The circulation people need money to organise the necessary promotion.
5. The publisher has fixed budgets. No more money is available.
6. The title’s slide continues.
This sad old routine is not the scenario in the more successful publishing company. They use modern budgeting methods and circulation is soaring.
The subscription fast lane — R.O.I.
In the successful company the subscriptions marketing people are not simply given an expenditure budget for the year. After all — their efforts are earning the company money. What happens to that income?
It is therefore accepted that their performance should be measured by comparing their expenditure against the revenue they achieve (which is how all business is measured).
They are given a target for a ‘return on investment’ (R.O.I.).
Let’s say the marketing department has an initial Â£20,000 to invest in subscriptions. They are then given a Return on Investment target of 100% in the first year.
This means for their marketing expenditure of Â£20,000 they must achieve a return of Â£20,000.
So the outgoing promotion expenditure is balanced by the new subscriptions income on the trading statement.
The marketing people can then spend as much as they like — as long as their expenditure is matched by the income.
The advertisement revenue rises, which pays the production cost for the extra circulation. The asset value of the publication rises too. Everyone’s happy and market leadership is on the way!
Whatever you are publishing, if this not happening in your company, it may not be the financial director’s fault — it’s the MD who decides what level of responsibility is delegated to the marketing department. And if the MD doesn’t understand or accept R.O.I. budgeting you have a long term problem!
Your competitor’s MD may well be using R.O.I already.
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