G+J: Spending Money To Make Money

Circulation Management, Sept, 2001

With plenty of support and funding from top management, Diane Potter and her staff are overhauling G J's consumer marketing practices for an array of recently revamped titles, shepherding the Rosie relaunch and new acquisitions, and developing new sources and partnerships. Needless to say, boredom is not a problem.

If there's some measure of quiet or not-so-quiet desperation in many consumer marketing departments these days, you couldn't prove it by G J USA Publishing. In those Manhattan offices, everything seems to be coming up Rosie--and not just because of the initial success of that much-publicized reincarnation of Mc Call's.

What's the "secret" behind what appears to be genuinely high morale in the G J quarters? In a word, change. Not so much in the consumer marketing staff--"There were a lot of really great people here" before Dan Brewster took over as president and CEO in May 2000, says senior VP, consumer marketing Diane Potter--hut in the top management ranks, the organizational structure and the general vibe.

Potter, a veteran of Time Inc., Times Mirror and American Express Publishing who was quickly recruited to G J by Brewster, her former Amex boss, isn't claiming that G J is immune to the industry's current circulation challenges. But she's clearly energized by being charged with re-evaluating virtually everything that circulation touches-and being given the testing budgets and other resources needed to actually make the needle jump.

"What's great about being here is the pace and the energy flow," she says. "We've got an almost entirely new roster of top executives, and our target is very clear: To double the size of the company within the next five years. There's a real sense of moving to a new place. A lot of that excitement has to do with the enormous focus we've put on revitalizing the editorial products during the past year. It's happening--you can pick up just about any of our magazines and see a real change from month to month. Plus, Dan's management style is to empower those to whom he's given responsibility. And there's nothing more exciting than that."

Potter, who holds a masters degree in business administration from Harvard, isn't given to hyperbole. Along with its management team, G J's product stable has indeed been reworked from top to bottom since Brewster's arrival.

In addition to joint-venturing with Rosie O'Donnell to revive the moribund McCall's, the company has redesigned and editorially repositioned four titles--YM, Fitness, Homestyle and Child-and updated the look of another, Family Circle. It acquired its first two business titles, Inc and Fast Company, from Mortimer Zuckerman for a reported $542 million-a move that's been Monday-morning-quarterbacked due to the subsequent economic downturn, but which Brewster views as a long-term investment in diversifying to even out cyclical market ad swings. G J also acquired subscribers from three folding titles. Jump's 400,000 subscribers were folded into YM (which has a 2.2-million rate base), and subscriber segments from Dads and Home Office Computing were added, respectively, to the Parents' file (2.125-million rate base) and the Inc file (650,000 rate base).

Then there's the newly formed launch-incubation program--certainly an ambitious undertaking, although perhaps not ideally timed. (The company recently back-burnered its first two launch ideas. Friday, a lifestyle title for women in their 20's to early 40's, was shelved after what was described as an "inconclusive" one-million-piece direct mail test last December, and a planned March direct mail test for the self-explanatory Real People was canceled.)

To be sure, there are significant hurdles in the path of Brewster's determination to push G J from sixth place among the nation's consumer publishing players to fifth or fourth. The division's previous CEOs have run up against management philosophy differences with German parent Bertelsmann AG. And several G J titles are struggling on the advertising front Ad pages for Fast Company and Inc dropped by nearly 60 percent and 50 percent, respectively, in this year's first half; Homestyle and Family Circle suffered 20-percent page losses; and Parents' pages declined by 14 percent.

On the other hand, even in a dismal advertising climate, ad pages at YM and Fitness leapt by 40 percent and 28 percent, respectively, during the period, and Child saw 4-percent growth. Rosie's first two issues in May and June surpassed McCall's' ad page performance for the same issues last year by 25 percent, though growth stalled on the July and August issues.

Along with most of the rest of the publishing world, G J is battling to maintain sales in a rocky newsstand scenario. Eight of its nine titles saw second-half 2000 unit losses, and four were particularly hard-hit: Fast Company (-20 percent), Child (-17.8 percent), Inc (-14.3 percent) and YM (-13.9 percent). Still, Fitness bucked the trend big-time, with a nearly 12-percent gain. And amid hard times for women's service books, Family Circle still sells more than 1.8 million copies per issue (although that average is down by about 144,000 from two years ago).