Custom Fit

Folio: The Magazine for Magazine Management, June 1, 2004 by Liz Borod

Byline: LIZ BOROD

It wasn't exactly a top-secret mission, but it was their first government assignment. The Magazine Group (TMG), a custom publishing agency in Washington, D.C., was honored when the U.S. Department of State hired it to create Hi magazine, a 50,000 circulation Arab-language book aimed at showing young men and women in the Middle East how much they have in common with their American counterparts. "It's so exciting that we can apply all the principles of custom publishing to create a magazine to help build understanding in the Middle East," says Richard Creighton, principal of TMG, which publishes 72 sponsored magazines. Being in Washington didn't hurt, but Jane Ottenberg, Creighton's wife and president of TMG believes the government turned to the specialty firm because "they were impressed by our infrastructure of specialists - prepress and production managers, editors and photo editors." She points out that 99 percent of the company's employees work in-house full-time. "Our competition would have hired freelancers."

Although most sponsored publications generate less buzz, these days, the once peripheral business of custom publishing is taking center stage. Last year, corporations spent $29.9 billion - a figure that has leaped 87 percent in the past four years - in marketing to customers through 115,764 custom titles, according to the Custom Publishing Council, a trade association in New York City. Throughout the recession, when ad dollars were scarce, custom publishing continued to grow by 5 percent to 10 percent a year. Since 1999, when the CPC began tracking the custom publishing business, to 2003, the number of sponsored publications has grown 20 percent and their average circulation has increased 37 percent, from 19,595 in 1999 to 26,860 in 2003. Custom pubs are thicker, too: the average book was 20.4 pages, up 56 percent from 13 pages in 1999, according to the CPC.

Realizing that magazine pages may never corral the advertising dollars they once did, publishers of all stripes and sizes have recognized that they need to include custom publishing in their roster of client services along with other media options. But the rules of the custom business vary in significant, yet often subtle, ways from those most traditional publishers are used to. "Custom publishing is the intersection between content and direct marketing. It's all about finding the right mix to ultimately drive the right customer behavior, which could be to retain, cross-sell, or up-sell to the customer," says Tim Hildebrand, president of Time Inc. Strategic Communications, a division of Time Warner.

While some companies like TMG specialize exclusively in custom publishing, most consumer magazine publishers such as Time Inc., Hachette Filipacchi, Hearst, Conde Nast and Meredith have already established substantial divisions devoted solely to custom products. Time Inc.'s Strategic Communications unit, for example, is nine years old, with 110 employees and 23 clients. The division's name was recently changed from Time Inc. Custom Publishing to reflect the varied marketing services, especially for online products, that it offers.

Although generally business-to-business companies are later to enter the field than their consumer counterparts, b-to-b publishers have recognized the potential and are also using custom publishing units to garner another much needed revenue stream. At Penton Media, an international b-to-b publisher based in Cleveland, the custom media division is "one of the biggest growth engines in the company," says Joe Pulizzi, director of Penton Custom Media.

And in this still fragmented market, b-to-b companies have "plenty of opportunities to exploit," says Andrew J. Buchholtz, managing director of investment banking at Veronis Suhler Stevenson, a merchant bank serving the communications industry. "It's a new revenue stream," says John Holden, vice president of business media services for American Business Media (ABM). "And heaven only knows, our members are looking for new revenue streams. Those sacred [ad] pages they were used to won't come back. The revenue will be there, but it will come through other products: Websites and custom magazines."

To help encourage b-to-bs to get involved in custom publishing, the ABM recently formed a committee on custom publishing, under the leadership of Thomas Corcoran, president of custom publishing at TMG and former president of Cleveland-based Adams Business Media and Huebcore Communications. Holden is urging his members to offer custom content services to their advertisers - before it's too late. "If they don't offer it, their competitor will. Custom media has become a part of the integrated marketing story."

It's not that advertisers are giving up on placements in non-custom pubs, but they want a range of choices. "Companies are moving away from the hard sell and toward the soft sell," says Chris McMurry, CEO of McMurry, a Phoenix-based custom publishing agency with over 110 clients, and chairman of the CPC. "They want to build a relationship with you, be your friend and help you lead a better life, with the idea in mind that if all that happens, you're going to like them and buy their products. Custom publishing lends itself well to these goals."