New-market smarts for publishers - marketing in the publishing industry

Folio: The Magazine for Magazine Management, June 1, 1993 by Barrie J. Atkin

Thinking of a start-up? You can avoid falling into a trap of your own making by reviewing the following 10 pitfalls.

Success in launching a new publication or entering a new market depends on many factors, including effective market analysis, hard work, good luck, smart timing and sufficient capital. But it also depends on avoiding common mistakes that have hampered--and sometimes torpedoed--other magazine launches.

Since you can't control every aspect of a start-up, it only makes sense to limit your risk where you can.

* Choosing the wrong editor. The choice of editor is a critically important decision--and therefore one where a mistake can be devastating. Far too often, an editor is hired because the new magazine concept was that person's idea, or because that person was persistent in his efforts or support of the idea. Neither is sufficient reason to assign the title of editor to anyone.

How to avoid: Write a job description for the editor's position. Is your in-house "champion" a good match? If not, search for the right person. It can be difficult to turn down someone who has put a lot of time and energy into the magazine concept. But if he does not have the vision and leadership to attract and keep readers, a different editor is needed.

* The fantasy model mistake. A detailed, three- to five-year financial model is part of a solid launch plan. But too often, the model is designed to reach specific corporate goals even though the assumptions to get to those goals may not be realistic. This can happen when modeling starts with the end point, such as a specific return on investment or break-even within a set number of years.

How to avoid: Document the reasoning behind all key assumptions. Are they reasonable and realistic? Is there any experience to back them up? Do some "what if" testing: What are the key assumptions and how confident are you that you can achieve them? Once you are satisfied with the model, have it and the assumptions reviewed by a relatively disinterested party.

* Assuming effort is equal to size. Some publishers assume that a small-circulation or small-revenue magazine takes proportionately less effort to launch and manage than does a large one. In truth, it takes almost as much effort and oversight to plan and start a small magazine (though usually less investment) as it does to launch a large one.

How to avoid: Identify how much time will be required for any venture. Recognize that there is a minimum amount of time needed to manage even small ventures. Then evaluate whether the potential return (or perhaps the experience gained) from the smaller venture can justify the required investment of time, talent and money.

* Doing too much that's new. By definition, a magazine launch is something new. But sometimes, the enthusiasm of the launch leads to doing too many new things at once--for example, depending on new channels of distribution, new advertisers and new readers--and then compounding that by hiring new staff who have not held similar positions in the past.

How to avoid: Established companies can reduce their risk by limiting the new components and building on existing strengths. Independent new ventures can limit risk by using proven people with knowledge of and relationships in the new market.

* Overconfidence based on past success. Success with previous launches can provide useful experience that is helpful to future new ventures. But it's no guarantee of success. Sometimes previous success leads to too much confidence and clouds a company's vision. People start to feel invincible and may lose touch with reality.

How to avoid: Identify the steps that made previous launches successful. Where appropriate, make sure that those steps are incorporated into the new project. Also, identify the factors that led to previous failures and take steps to avoid repeating them. Consider incorporating the same amount of analysis that you would demand if this new venture were being proposed by an outside source.

* 'The arrow is always up' mistake. Almost all financial modeling presumes steady increases in revenue from year to year. But the world works more on economic cycles, as well as sudden shifts. Suppose, for example, that you had launched a magazine on international travel in July 1990 (the month before Saddam Hussein invaded Kuwait). Your steadily increasing model would have been woefully wrong.

How to avoid: Identify any factors that could have a significant impact on your business, and estimate the likelihood that they will happen. Ask industry experts to assess where the industry is in the "business cycle." Be sure to include a worst-case scenario, go/no-go points and contingency options in your business plan.

* Too high a frequency. This is probably the most disastrous launch error after "Wrong choice of editor." Start-ups often take time to define their voice, establish readerships and build advertising pages. Too high a frequency puts pressure on the staff to produce the next issues, without time to consider feedback, read results or correct mistakes.