Mr. Magazine

This week we focus on the most effective use of checkout space for the publishing industry, analyzing the value of multiple titles sharing checkout space, and how this can benefit small publishers and large publishers equally.

YOU WANTED TO ADDRESS ANOTHER READER’S COMMENTS THIS WEEK?
A newsstand consultant told me that “none of your analytics matter until you can solve merchandiser challenge.” One quick note: a merchandiser is responsible for placing magazines on the racks in-store.

I am frustrated by the defeatism of this comment. While publishers have no control over merchandisers, all is not lost. Publishers should influence what titles are shipped, and should work closely with wholesalers on store-level product mix.
This is why MagNet recommends a profitability approach to distribution, especially for titles which are part of a checkout rotation.

WHAT IS A CHECKOUT ROTATION?
Publishers like Meredith and Time Inc. rotate multiple special interest publications (“SIP”) through checkout space. Publishers use this rotation to ensure the product remains fresh. Publishers give the consumer an opportunity to choose from a wide variety of product which changes on weekly basis.

DOES THIS TECHNIQUE WORK?
Yes. Meredith SIPs and Time Inc. Home Entertainment SIPs rank in the top 15 of all publications based on profitability.
IS IT FAIR TO COMPARE AN SIP ROTATION OF MULTIPLE TITLES TO AN INDIVIDUAL TITLE?
Not necessarily, but title rotations are quite beneficial to the retailer, and these rotations are rewarded with checkout space.

HOW DOES THE RETAILER BENEFIT?
As I mentioned in our last session, checkout space is not optimized when a title can remain in a location for extended periods. The consumer shops multiple times a week. If they do not take action in the first or second visit, it is fair to assume they will probably not purchase the product in the third or fourth visit. Retailers benefit from the fresh product and enhanced sales title rotations bring.

https://mrmagazine.wordpress.com/2014/06/16/single-copies-at-the-check-out-and-the-mid-level-publishers-a-solution-to-a-major-dilemma-a-mr-magazine-magnet-exclusive/

IS THE CONSULTANT RIGHT? WHAT IF A MERCHANDISER MAKES THE WRONG DECISION AND REMOVES A GOOD PRODUCT AND INSERTS A POOR PERFORMING PRODUCT?
It happens all the time, but that is something a publisher cannot control. A publisher, however, can control what is sent to the merchandiser. This has been a debate in larger publishing houses, and needs to be explained to smaller publishers interested in checkouts.

WHAT IS THE DEBATE?
Publishers attempt to influence the merchandiser’s choice of product through communication. Two examples: (1) color coding and (2) rotation schedules.

For example, a red dot on the spine of a magazine might imply this title should be replaced in favor of green-dotted titles. Publishers also send rotation schedules, a title-specific guide for the merchandisers to follow when a new product arrives.

THAT SOUNDS CONFUSING!
It is both confusing and wrong. Publishers who try to influence merchandisers this way make the tactical error of leaving the decision in the merchandiser’s hands. Our approach determines which titles are successful in a store, and removes those titles which are not, completely removing the merchandiser choice.

HOW DO YOU KNOW IF A TITLE IS SUCCESSFUL?
Profitability by store. A publisher who tries to influence the merchandiser assumes the strongest national-selling title should have a higher position than a lower-selling national title. Every title has successful stores and unsuccessful stores, even the best title in the rotation should not be in every store.

IS THERE AN EXAMPLE OF THIS?
This is a top-20 publisher with greater than 25,000 checkout pockets, rotating six titles through these pockets. The publisher’s strategy is to rotate most, if not all titles, through each checkout pocket. Let’s look at the profitability results of some individual stores in Walmart Canada:

All titles are profitable in stores 1122, 3075, and 3076. This is wonderful news and needs no further analysis. However, Title 5 is highly unprofitable in store 1094. There is no benefit to shipping Title 5 into this store.

Publishers can eliminate merchandiser choice by not shipping Title 5 to the store. It is impossible for the merchandiser to make a bad decision if the poor performing product is not available.

In the case of stores 1145 and 1149, most titles are unprofitable. What would happen if this store only received two or three titles as opposed to all six? One can assume there would be some slight sales increase for the remaining titles but the publisher (and wholesaler, by the way) would gain overall profitability.

THAT IS A VERY INTERESTING USE OF SPACE FOR LARGE PUBLISHERS. HOW WOULD THAT WORK FOR SMALLER PUBLISHERS?
In the last newsletter, I stated some mid-sized publishers could benefit from following the SIP model. Today, I implore small publishers to work together combining their magazines into one category-specific checkout offering. Many smaller titles, when combined with other smaller titles are in fact quite powerful and are worthy of checkout space.

THIS SOUNDS VERY COMPLEX TO ME!
It is a bit complex, but MagNet looks forward to offering advice to smaller publishers about how they can play at checkout. The most important note is that these publishers have to think about their competition a bit differently, and retailers have to think about their checkout space a bit differently.

WILL THERE BE PUSHBACK?
One senior level publishing executive bemoaned that the problem with this industry is poor checkout productivity. Another account representative pointed out checkouts are locked down because some large publishers agree to pay for space only if their product is represented at checkout in every store. This is not helpful in making the industry more productive at retail.

MagNet provides an objective look at each title’s profitability at checkout, and provides alternative titles not currently being considered but are valuable to the retailer.

The era of a mass checkout planogram with 15-20 titles in every store needs to end sooner rather than later. The checkout needs to become a bazaar worthy of the audience these publishers target. We look forward to leading that conversation.

THANK YOU LUKE.

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The Mr. Magazine™ Blog is taking the first break since its inception in March of 2007. We will be back at the end of July. Enjoy your summer.

“The whole world doesn’t tip over to online or digital and there’s something about holding that magazine with the content and the experience you have with it in your hands that clearly consumers still enjoy.” Debra Janssen

CDS Global is the leading provider of end-to-end business process outsourcing. With more than 40 years of expertise, the company assists and supports brands across industries, including media, nonprofits, utilities and consumer products. Hearst Magazines, CDS Global owner, recently announced that Debra Janssen, former COO would step up to the position of President and CEO of the company. Former Chairman and CEO Malcolm Netburn will retain the title Chairman of CDS Global.

I recently spoke with Debra to get her thoughts on the future of the media business, finding the right balance between print and digital and a host of other topics that shed enormous insight into how CDS Global is paving the way for a successful and bright tomorrow for Hearst and all of their clients.

So sit back and be prepared to learn how CDS Global allows clients to focus on creating great content and raising support for their mission, while they work on audience connection and interactivity. Enjoy the Mr. Magazine™ interview with Debra Janssen, CEO and President, CDS Global.

But first the sound-bites…

On whether we are living in the best of times or the worst of times: Oh the best of times, definitely. I spent 30 years in the payments world and they’re so many parallels to my current scenario.

On how she feels the industry has changed after the 2008 recession and the technological explosion: Well definitely the new technology has I think diced up or split up the consumer’s attention span because they’re so many different devices and access methods and so much competition for the consumer’s eyes.

On the major stumbling blocks the industry is facing: I think it’s finding the right balance of print and digital for the subscriber audience.

On the number and significance of CDS Global’s digital-only customers: Very few. Six titles only. Because they know how the print side works and they do it very well.

On the future of CDS Global: Speaking specifically for CDS Global; obviously, we have a very strong core business, so we need to maintain that business, supporting those 450 plus titles.

On her most pleasant surprise since joining the CDS Global team: Actually, it’s been the strength of the Hearst Corporation and our private companies, so it’s not as easy to do your due diligence when you join a private company. It’s really been impressive.

On whether she believes that one day digital’s revenues will surpass print: It’s like I said about checks; I don’t think they’ll die in my lifetime and I don’t think print magazines will either.

On what keeps her up at night: Obviously staying a step ahead of your clients, whether that’s technology-build or we’re doing a lot in terms of trying to learn how to use our data in a collaborative way to help our publishers find new subscribers, so I think there’s still work there to be done.

And now the lightly edited transcript of the Mr. Magazine™ interview with Debra Janssen, CEO & President, CDS Global…

Samir Husni: Being promoted to president and CEO of CDS Global must have been very exciting for you. And as Charles Dickens wrote: it was the best of times; it was the worst of times. Do you think we’re living in the best or the worst of times today?

Debra Janssen: Oh the best of times, definitely. I spent 30 years in the payments world and they’re so many parallels to my current scenario. In the payments world it was the pacing of physical paper check into an electronic transaction and obviously, we’re sorting out print and digital and it’s great. It’s an exciting time to find the right balance. I’ve been with CDS just a little over two years and it’s a great time to be a part of it and help figure out the balances.

Samir Husni: In 2008 when the economy busted and technology burst onto the scene; how do you feel the business changed after that?

Debra Janssen: Well definitely the new technology has I think, diced up or split up the consumer’s attention span because they’re so many different devices and access methods and so much competition for the consumer’s eyes. It really makes you stop and think. And I’ll say this several times: finding the right balance and then too it’s all about consumer choice. They’ve got so many different distractions now that trying to be the one thing that grabs their attention for longer than 20 seconds is a challenge these days. I always use a very similar parallel from my experience in the payments industry; I don’t think checks will retire in my lifetime and I think consumers have different preferences, different rhythms and cadences of their life that they fit their technology into or out of, if you will.

And the 30 years that I was in payments we never retired a single form of payment; we just kept adding more ways that people could pay. I think there are a lot of parallels to my current job and some people are going to continue to be old school or prefer to use the same methods they always have, some are going to dabble in the new, some are going to fall over right away into the new, but it never really tips over in one fell swoop. But clearly all the technology teams have us competing for consumer’s attention.

Samir Husni: The first thing that came to mind when you were talking about that is Harvard is the oldest university in the United States. So you have to choose between going to the old school or the new school. Old school does not necessarily mean bad school.

Debra Janssen: No, not all. I think a lot of it comes down to what consumers or subscribers of magazines are comfortable with. I tell people that I’m a little split myself right now. Unfortunately I think I’m reading less of my magazines because I’m trying to look at them in a variety of places, where in the past I had my print copies that came to the house and I could kind of monitor and police myself, making sure that I was getting through them each month. And I’ve tried different titles and things just because of my client base and wanting to see how they were doing with digital and I have to go to more places now to stay current on all my titles. I think some days I’m further behind now than before when I had my print copies.

Samir Husni: What do you think are the major stumbling blocks facing our industry today and specifically your industry?

Debra Janssen: As I said before, I think it’s finding the right balance of print and digital for the subscriber audience. Clearly there’s a ton of power in the content that I look at; we have 450 plus titles that we support and you look at the diversity across the titles and it’s absolutely outstanding and very compelling. I think trying to find that right balance so that you don’t lose your subscribers is important. And clearly if the content is good, the method in which they consume it is a personal choice.

As I look across all our customers, they’re in different phases of sorting it out and we have some of the larger publishers who have more resources and capacity to try more things and we have a lot of single-title publications; it’s just more challenging for them. People put their content out and they try to figure out how to be digital, so a lot of them lean on us significantly for best practices and insights that are coming from other publishers that we have across our entire book of business and I think getting there fast on as many fronts as you can to keep the subscribers engaged.

Samir Husni: Of those 450 plus customers that you have; how many are digital-only publications?

Debra Janssen: Very few. Six titles only. Because they know how the print side works and they do it very well. We have some very efficient clients and that’s where most of their subscriber base still is today and it’s like I said, not everybody gave up their checkbook and went to online payments, very similar parallels here, it’ll get sorted out over time, but it won’t tip over.

Samir Husni: With your experience seeing the entire client base; are you seeing a significance of digital subscriptions?

Debra Janssen: No, the majority of ours is still print-based.

Samir Husni: As you look toward the future; first, what do you see? And then, how are you preparing to meet that future as the new CEO of CDS Global?

Debra Janssen: Speaking specifically for CDS Global; obviously, we have a very strong core business, so we need to maintain that business, supporting those 450 plus titles. And we’ve done it for 42 years and we like to think we’re very good at it. We have a very high percentage of clients who have been with us for many years and we support across our entire business 159 million consumers on behalf of our clients. And we need to continue to do that very well day in and day out. And I’m highly confident because in the two years that I’ve been here I look at how well we do that.

(Chart provided by CDS Global)

The other opportunity that we have as a company which started several years back was to diversify our CDS Global business, so we have moved into the non-profit vertical most successfully. We have several large non-profits that were really repurposing the competencies that we’ve used in our media business, so managing a donor in this case, taking their money and processing their payments and then having an ongoing relationship with them. And so we have American Red Cross, American Heart, Make-A-Wish, Salvation Army; I think we have eight of the top 50 non-profits that we’re doing business with.

And then the other vertical that we’ve moved into is electronic payments for utilities, for bill payment. And they’re extensions of our capabilities we already have today. If you look at the number of bills, invoices and marketing solicitations that we’ve done in the media and publishing vertical, very applicable to other verticals, so we have a lot of very exciting things going on beyond media to really just leverage the competencies that we think we do very well. And it’s a nice way for us to grow our business outside the media vertical.

Samir Husni: You’ve been with CDS a little over two years; what has been the most pleasant surprise, besides being named CEO, for you?

Debra Janssen: Actually, it’s been the strength of the Hearst Corporation and our private companies, so it’s not as easy to do your due diligence when you join a private company. It’s really been impressive. It’s a very well-run company, very good rigor; they’ve made a lot of smart bets, in terms of diversifying their portfolio, obviously with the outsourcing business that we represent, but they’ve got cable and television; they’re now investing heavily in the healthcare technology space and newspapers; it’s just a fascinating organization and while it’s big in size, it’s very personable, in terms of its approach to working with its business units. So it’s really been pleasant to see and really great as the leader of one of their business units to be a part of the organization. That’s something that I’ve kind of uncovered as I’ve been in the company, because that’s hard to find out before you join.

Samir Husni: And what has been the most frustrating moment?

Debra Janssen: It takes a lot to frustrate me. So they’re haven’t been that many frustrating moments, maybe challenging. One of the challenging parts of our business is we have a lot of customers that are single-title magazines and they just have a whole different challenge, in terms of not only surviving who they are today, but migrating into the digital world. And that’s a challenge for us. But we ride the spectrum of size of clients. We have all the big guys and then we have quite a variety from there down. It’s good work, it’s just challenging because their requirements and needs are very different.

Samir Husni: We talked about the fact that we live in a digital age, but at the same time we’re still making more money from print than digital. Do you think that will change in our lifetime?

Debra Janssen: It’s like I said earlier and I’m a little biased coming out of my 30 years of payments, checks are still written, there are just occasions where that’s just easier for a consumer, or someone doesn’t take a card, that’s less and less, but still 46% of the payments made in the U.S. today are still cash-based. That kind of tells you that the whole world doesn’t tip over to online or digital and there’s something about holding that magazine with the content and the experience you have with it in your hands that clearly consumers still enjoy. It’s like I said about checks; I don’t think they’ll die in my lifetime and I don’t think print magazines will either. They’re there for different audiences and obviously it’s a core part of how we make money, so selfishly we hope it stays strong, but at the same time we need to be cultivating and expanding our digital services and offerings because there will be parts of our audience and customer base that want that. So we really need to ride on both sides.

Samir Husni: My typical last question; what keeps you up at night?

Debra Janssen: Not a lot. I’ve got a great team and we try to stay very focused so that we’re not lying awake at night. But I think in general, obviously staying a step ahead of your clients, whether that’s technology-build or we’re doing a lot in terms of trying to learn how to use our data in a collaborative way to help our publishers find new subscribers, so I think there’s still work there to be done. And clearly with a 159 million consumers in our database we have a lot of opportunity to help our clients. So it’s really just staying a step ahead of them and helping then to find ways to grow their business.

Samir Husni: Thank you.