MPA Speeches -- Jack Kliger AMC 2006

October 23, 2006

Jack Kliger
President & CEO
Hachette Filipacchi Media U.S.
Chairman
Magazine Publishers of America

American Magazine Conference 2006
October 23, 2006
Arizona Biltmore Hotel, Phoenix 

Thank you, Christie. I want to congratulate you and Nina Link - as well as this year's AMC committee - for putting together such a terrific program. A year ago, in Puerto Rico, I pledged we would focus on a number of key issues. We have done that, I believe, and made substantial progress. 

We are helping our industry's expansion onto new e-media platforms.

We are addressing key business practices in order to make our circulation efforts more transparent.

We are uniting and marketing our medium more aggressively to the advertising community.

We are helping to develop the measurement metrics that will enable us to participate more fully in the discussion around advertising results and effectiveness.

I want to address what I believe should be our industry's next priority, to ensure both our short- and long-term health as a business.

About a year ago, I was in a discussion with a cable TV executive and asked him whether his cable channel marketing efforts focused more on driving subscriber profitability or on building audience.

He thought for a moment and then answered, "Yes."

"Yes, we have to focus on both subscriber revenue and making sure we reach the audience levels necessary for our advertising selling efforts."

The cable television industry has been built, like the magazine business, on the dual streams of consumer and advertiser revenue. But frankly, for a host of reasons, they have done a better job at balancing the two to build the business.

I believe that for our industry today, the most important guiding principles must be achieving greater circulation profitability and, at the same time, developing the largest number of engaged readers.

Of course, most of us would say we’re already involved in doing that to varying degrees, but I believe we must make these an even more important part of our business model core. Too often, our industry’s strategy has been to get the largest number of copies into circulation, expecting low-margin circulation revenue margins would be offset by growing advertising revenue and profits. Those days are over.

If we are to thrive, it’s clear that our industry must generate greater profitability from the copies in circulation.

And at the same time, we must focus on developing the largest number of engaged readers, who are passionate about their magazines and responsive to the advertising that appears in them.

We can’t treat this as an either/or situation! Like the cable executive, my answer is YES to both. Yes to improving circulation profitability and yes to growing readership must be our top priorities in consumer-marketing strategy.

And for our distribution strategy to be focused first on these priorities, we have to operate on the premise that rate bases should follow, not lead, our strategy.

Often the push for efficient rate-base hasn’t encouraged business practices that promote either distribution profitability or readership development. Having rate bases held like a sword over the head of magazine publishers doesn’t encourage good business practices. And, at the end of the day, that doesn’t benefit the magazine publisher or those advertisers looking to maximize advertising effectiveness.

Over the last few years, we’ve been positioning magazines as the medium of reader engagement that leads to advertising results. This applies whether those readers pay for our product at the newsstand, subscribe at home, or pick up a magazine in a doctor’s office.

In fact, during the past decade, public-place distribution has grown as a source of readership for our industry. It can be an effective way to market our brands, a terrific product-sampling device, a strong generator of direct-to-publisher subscribers, AND it provides strong readership value to advertisers.

We must develop public place readership in the right channels at the right levels so that it continues to build readership. And our industry should embrace public place, value it, and charge for it!

But let’s face it: advertisers won’t give us a free ride on verified circulation, the largest piece of which is public place.

Research has shown that public-place distribution does generate engaged readership, and the magazine industry needs to effectively use public-place distribution, proving that it builds readership, and communicate that to advertising buyers.

And our own consumer marketing and advertising sales staffs need to value and sell the benefits of public-place readership to advertisers. Because if our own people sell negatively against other magazines based on their level of public-place distribution, how can we expect advertising buyers to value public place?

We need to embrace public place as an important source of readership. But even that is not going to win the day, because we must learn to operate in a changed environment, with a new level of demand for accountability.

All too often, magazine ad selling has focused almost entirely on making the sale and effectively stops when
the sale is made. Other media, like the Web, are still selling AFTER the ad is purchased, focusing on advertising results.

The magazine industry should not fear being a part of the advertising accountability discussion. We have a strong story with clear evidence that advertising in magazines drives Web traffic and produces measurable impact on brand familiarity and purchase intent.

But we must create the tools to move aggressively into the results part of the advertising discussion and compete effectively against other media in terms of ad-effectiveness measurement and ROI.

Advertisers need to understand that their demand for accountability also requires a new look at how they value magazine advertising. This value should not be based just on the number of copies in distribution but rather on ad effectiveness. A shift in focus to the value proposition by magazine sales people as well as ad buyers is as important for advertisers’ future as it is for ours.

So we must continue to push for the development of more timely and stable magazine-audience measurement, enabling us to relate advertisers’ investment to ad effectiveness.

We are looking at many opportunities in this area. And shame on us AND our suppliers if we DON’T fully utilize technology to help develop these measurement tools and metrics.

For any measurement of advertising results to be valid, it must include all the readers of our magazines – whether they are reading in an airport, at home, or at a salon.

Our strong brands, compelling, credible content, and engaged consumers are more in demand than ever. Technology not only gives us tools with which to measure our readership, it can also help us better understand our consumers and use that knowledge to create the products they want.

Magazines have an advantage because of our subscriber databases and the community that comes from readers’ affinity with our content.

But as we develop new brands and platforms, we should at the same time be willing to eliminate unproductive products without fearing that thinning the herd means we are signaling our industry’s demise.

Because closing a magazine is no more a sign of the death of the industry than the cancellation of a TV series means the shutdown of a network -- or a haircut is a sign that you’re going bald. Most of the time, it’s quite the opposite.

So let us take full advantage of the power of our brands. And let’s use technology to go “beyond the page” with our valuable content and expand the base of consumer and advertiser relationships.

Let us continue to market our medium and, while doing that, teach all of our representatives that they need to understand how to sell the power of magazines, as well.

Let us move aggressively to develop the measurements that enable magazines to be a full participant in the advertising- effectiveness discussion.

And let us protect our brand equity by focusing intensely on circulation profitability and readership development, getting to a place where those twin priorities are the litmus test for every copy we distribute.

I want to thank the MPA Executive Committee and Board for its hard work, which has shown impressive results this year; the Magazine Marketing Coalition for continuing the essential momentum in marketing our medium; and Nina Link and the MPA staff for their dedication in strategically navigating through a unique and difficult environment.

We have a tremendous opportunity to once again do what we’ve done before and reinvent our business, but first we have to reinvent many of our long-held beliefs and practices.

We have changed so many things for the better.

We are no longer threatened by digital media, we are figuring out how to use it to our advantage.

We are no longer fighting circulation transparency, we are addressing the right approach to it.

We are no longer debating whether to market our medium, we are discussing the most effective way to do so.

We are no longer reluctant to be a part of the advertising results debate, we are demanding to be a full participant in the advertising effectiveness discussion.

I’ve been in the magazine business for most of my adult life. And I’m not ready to end up my career watching our industry get marginalized and fade away. I’d rather be an agent of change than efficiently manage our decline. And I’d rather pave the way so the next generation of editors and publishers can have long and rewarding careers, where magazines are a renewable resource firmly ensconced in a seat at the big table.

We can make the most of our opportunities by going forward and doing those things necessary for our industry to change, to evolve and to thrive.

Thank you.