ABC Board Votes to Highlight Circ Variances

Circulation Management, May 1, 2003

Byline: Barbara Love

Acting speedily on advertiser concerns about the need for greater visibility of breakout variances in circulation numbers between the publisher's statement and the audit report, the Audit Bureau of Circulations board of directors voted at its March meeting to provide information in a more obvious manner.

At issue is not total circulation variance, which is currently included in the audit report, but information showing shifts in distribution streams from subs to single copy, which the report does not show. The primary focus has been on variance by total circulation.

A flurry of activity at ABC resulted in February after articles appeared in the trade press pointing out that a few very prominent consumer magazines vastly over-stated their newsstand numbers, while under-reporting subscription numbers, during the period covered in the 2001 ABC audit report.

Such variances can be critical for some magazines where single-copy sales figures are scrutinized by media buyers. "In a very competitive market, the growth in newsstand sales is proof to advertisers that a magazine has editorial vitality," says one large consumer magazine marketer. "Greater newsstand circulation gives a circulator bragging rights. Advertising is bought on the basis of whose newsstand numbers are going up, and editors are fired when they aren't."

Not that the variance breakouts weren't available, of course. The numbers (showing the single-copy and subscription variances) were there, "if you knew where to look in the reports and how to read them," according to Mary-beth Meils, a spokesperson for ABC. The information is available comparing the previous year's publisher's statement to the current audit statement.

What sparked the sudden, aggressive movement by advertisers to add new variance data to the audit report? A Woman's Wear Daily media columnist pointed to an over-reporting of single-copy sales and under-reporting of subscriptions for YM. Subsequent reports in Advertising Age, a bible for media buyers, also included Meredith's Ladies' Home Journal and Dennis Publishing's Stuff as having the same type of discrepancies. (See CM, March, page 9).

Ad Age called the absence of the data in the audit report a "loophole:" "Should a publisher's newsstand sales be overstated in ways that don't affect total circulation by 2 percent - perhaps, say, combined with under-reported subscription sales - no attention is called to it."

Teresa Perry, VP at ABC, and liaison to the consumer magazine committee, said advertising members started calling her about how the variances are reported only after Ad Age called publishers and media buyers in the course of preparing the article.

As soon as buyers raised the issue, ABC brought the issue to a new subcommittee consisting of representatives from both the publishing and advertising communities to address it.

The question was, "Do we need to increase the emphasis on what's in there?" says Meils. "The answer was yes." In March, the ABC board agreed to a First Passage for showing the more detailed information about variance between the publisher's circulation claims and the audit numbers. It is expected that ABC will make the decision final at the July board meeting.

Specifically, the proposed change in the audit report includes the difference between the publisher's statement claims and the audit figures together in Paragraph 1, Total Circulation, with the same breakdown of variance for newsstand and subscription. It will also be stated in Paragraph 4A, Circulation by Issues, showing variance by single copy, subscriptions and total for each issue. This change makes the variance "more concise" and "reader-friendly," according to ABC.

In the opinion of John Squires, executive VP for Time Inc., the variance reporting is "not a big deal." "The variance (audit report change) is just a nice accommodation to make to the buyers as publicly available information. It brings a new opportunity to make better comparisons. It's kind of an aid. The major agencies do all this variance reporting anyway. This makes the information more accessible to them."

But one circulator working on these ABC issues, who says the discrepancies reported "were big enough to drive a truck through," thinks the change is more significant than that. "The showing of discrepancies on an issue-by-issue basis creates a self-policing situation," she says. "No one is going to over-estimate newsstand sales and under-estimate subscription sales now. It's too transparent."

Donna Campanella, director-team leader, media, at Pfizer Pharmaceuticals, and ABC board liaison to the buyers' committee, "was very pleased that the publishers and buyers could discuss things and come to an agreement and a resolution so swiftly."

Another breakout of variance by subscription and single-copy sales in the quarterly ABC variance report, which provides information on magazines with total circulation variance of 2 percent or more, has been discussed, CM was told by an ABC board member. Perry confirms that such discussions have taken place, but says no such proposal has come before the board.