ABC adjusts rules on bulk circulation

Folio: The Magazine for Magazine Management, Oct 1, 1998 by Jeff Garigliano

Jeff, Garigliano, editor of Circulation Extra can be reached at Jeff_Garigliano@cowlesbiz.com.

Magazines that rely on bulk subscriptions will win one and lose one if a preliminary Audit Bureau of Circulations ruling is approved this November. On the plus side, the ruling would ease the restrictions on when bulk circulation--copies sent en masse to airlines, waiting rooms and other public places--can be counted as part of a magazine's paid file. However, the threshold for when a magazine would have to declare its bulk circulation would be lowered from 10 percent of the total file to 5 percent.

Bulk circulation is a mixed blessing for advertisers. Because these magazines are given to people who haven't demonstrated a strong desire for them by paying, skeptics question whether those people are as valuable as paid subscribers. But public-place magazines have far more readers per copy than traditional subscription issues. Think, for example, about the number of times a magazine on an airline might be thumbed through during its month-long life.

New York City-based Waiting Room Subscription Services, the major distributor to doctors' and dentists' offices, wouldn't give specifics about the size of its operation. But Inflight Newspapers Inc., based in Valley Stream, New York, did. As the major distributor of titles to most domestic airlines, Inflight estimates that it handles between 17 million and 20 million magazines a year.

And bulk circulation is not limited to waiting rooms and airlines. Many city titles send bulk subs to hotels in their areas. Memphis, for example, ships 16 percent of its total paid circulation of 2 1,000 to local hotels, according to the publisher's statement for the six months ending December 31, 1997. For Orange Coast, a California regional, 30 percent of its file winds up in the hands of unnamed visitors.

But whether bulk circulation is judged as a positive or a negative, most advertisers want to know when it's happening, and the ABC has rules about how bulk circulation is reported. Magazines used to be allowed to count these subscriptions-defined as anything more than 10 copies sent to a single address--as paid circulation, provided the purchaser paid at least 50 percent of the basic rate. That amount was calculated net of all promotion and distribution costs and any other expenses the publisher paid to get the magazines placed. (If you distribute through Inflight Newspapers, for example, the titles must be placed in special binders and shipped to Inflight's Long Island, New York, headquarters.) Under the new rule--which was given preliminary approval at ABC's July meeting and is likely to be finalized in November-those costs don't count against the 50 percent requirement.

While this makes it easier to count bulk copies, the ABC will require magazines to declare their bulk circulation if it comprises more than 5 percent of the total paid file.

A second look at requirements

It's probably some indication of the success of bulk subscriptions that they're now on the rise. P.O.V., a men's title, counts 36 percent of its paid subscriptions in the bulk category. Newsweek counts 15 percent, and Laptop Buyers Guide, 21 percent. "This originated a few years back," says Teresa Baird, manager of periodical field auditing for the ABC. "We were being asked to review a number of programs that were not qualifying. The staff felt uncomfortable denying some of these programs, but basically our hands were tied."

Baird says changes were reviewed by the Magazine Buyers Committee (made up of ad execs and media planners) and the Magazine Directors Committee (made up of publishers). Both sides approved them.

"I like this," says Dave Lecky, vice president for circulation at Hachette Flipacchi Magazines and chairman of the publishers committee. "I think you'll see more proactive descriptions on the publishers statement, where it's presented not in a negative light but in a positive light." Lecky downplays the stigma that some advertisers attach to bulk subs. "If there is a tremendous amount, maybe," he says. "But I think when a media planner looks at it, as long as it's explained, they can see that it's a sampling technique."

Sampling is one thing bulk subscriptions are ideal for. "The cards we put in those copies get response rates equal to or greater than newsstand copies," says Bob Cohen, CEO of ProCirc, a Miami-based consultancy.

If approved in November, the qualification change would take effect immediately, and the reporting change would take effect with the six-month period ending December 31, 2000.

Two preliminary changes

What qualifies

Old rule: Bulk subscribers counted as paid circulation provided they paid at least 50 percent of basic rate, "net of all other considerations" (such as promotional costs, charges to distribute the copies, list compilation, and so forth).

New rule: The promotional costs and other charges don't count against the 50 percent threshold required to count as paid.

How you report it

Old rule: Publishers were required to specify where their bulk circulation was going (e.g., "5,000 copies to pediatrician's offices") in paragraph 1 of the ABC statement only if it made up more than 10 percent of the title's total file.