Custom Made

Folio: The Magazine for Magazine Management, May, 2001 by Susan Thea Posnock

Scholastic also emphasizes the integrated marketing approach, using online and traditional tools, says Hugh Roome, executive vice president. For example, the company had a multiyear direct mail program (completed in January) with AT&T to help it retain customers. Scholastic's campaign targeted schools and enabled them to sign up to receive donated reward points from individuals--for example, frequent flyer miles--and then cash them in through an online catalog for products such as computers, printers, and so on. Over four years, the program peaked at 44,000 schools representing approximately 22 million families.

"It's several million dollars per year, and there was clear statistical improvement in the retention rate of customers who participated," says Roome.

At Scholastic, revenues from custom programs have tripled over the last five years, reaching $20 million annually for 2000, says Roome. With $2 billion in sales, he notes that custom publishing is still a small portion of the business, but it's growing. "We set a hurdle and really stopped doing projects less than $100,000," he says.

Challenges (and opportunities) ahead

Despite such progress, others warn that the economy's falling sky may burst the custom bubble--it just hasn't hit yet. Custom publishing contracts, which usually have a longer lead-time and cycle than regular advertising, may have just avoided feeling the brunt of the drop-off. "I think that, if the economy slows, the growth of custom will slow, but not to the same degree," offers Hachette's Berman. "New custom publishing opportunities are going to be slower, but I don't see current customers eliminating their programs." Hachette publishes eight custom magazines including Cadillac Vision and Century 21 House & Home, and Berman says it has grown from a couple of million to a multimillion-dollar business over the past five years.

One of custom's greatest advantages--providing clients with different and unique ways of engaging customers on a more personalized basis-is also a challenge. "Something different always requires some additional explaining and budgetary consideration from advertisers," says CMP's Braue.

And while custom publishing has come a long way, it is still perceived as being in the beta phase of its potential, with plenty of room for growth. That spells out big business opportunities for traditional magazine publishers offering integrated marketing solutions.

Says VS&A's Buchholtz, "Media all around is becoming more targeted, and custom publishing will continue to be a medium that advertisers who want to target their dollars will continue to rely on."

GAINING GROUND

Custom publishing has grown threefold in the last decade, and the opportunities are expanding in the integrated media marketplace.

* 70% of custom publishers entered the field after 1995. [*]

* Total custom expenditures are growing at more than 10% annually. [*]

* Custom publishers charge an average of $478,000 annually per title. [**]

* Third-party advertising in advertiser-supported publications averages nearly $800,000 annually. [**]