Editorial and the bottom line; editorial is not defenseless in the face of accusations that it is only an expense, not a revenue producer

Folio: The Magazine for Magazine Management, Jan, 1988 by John Fry

Editorial and the bottom line

Take a look at almost any publishing company's P & L ledger, and you'll see Advertising and Circulation on both the Expense and Revenue sheets. Not so Editorial. Editorial is listed only under Expense.

It is a common accounting assumption that editors spend money but generate no revenue. This belief has occasionally led to a kind of cynicism by which editors are perceived as being rather like eunuchs guarding the harem . . . only subtracting from the sultanate's exchequer and doing nothing to add to it.

In fact, at the very least, publishers do recognize that poor editorial quality adversely affects newsstand sales, subscription renewals and advertiser evaluations of magazines. But to what extent?

Editorial vitality, or lack of it, is like an invisible electromagnetic field surrounding a magazine's profitability: It's hard to measure how pervasive is its effect. But publishers struggling to maintain or increase their rate bases in the face of escalating costs of circulation acquisition, or spending heavily on promotion to increase their share of ad dollars, should be acutely sensitive to the true effect of editorial on those costs.

Meanwhile, what steps, if any, can editors take to make magazines more profitable?

"Whether or not ad revenues can be increased or circulation can be more cost effective, it's clear that the one department which has been ignored as a contributor to the bottom line is editorial," says Wendell forbes, deputy publisher of Guideposts. Forbes is also the former circulation director of Life and has been a strategy consultant to a number of leading magazine publishers over the years. I asked him to supply comments for this column so that editors can understand the circulator's point of view.

Benign neglect?

Because editorial is seen as a cost center, says Forbes, it's often treated with "benign neglect" by publishers who've come up through advertising. They may glorify editorial for its inspiring words, but they note that it doesn't produce income to offset its expenses, which typically run around 10 percent of a magazine's aggregate expenditures.

From an alliance

To create a circulation rate base designed to maximize advertising sales, publishers press circulators to sell more subscriptions.

"The circulation manager, because of the high net paids that he's forced to deliver, is victimized just as much as the editor," says Forbes. That's why there should be strong alliances in publishing between editors and circulators to stave off easy answers.

"On the other hand, you have to be careful about saying that a magazine is overheated--that it's pushing too hard for circulation for purposes of generating ad revenue--when the magazine may not be popular enough to stand on its own.

"I think the answer is halfway in between. Yes, we circulators may be pushing too hard, but the editor has to work harder."

Few editors are thrilled by the knowledge that circulators use sweepstakes or free clock radios to entice new subscribers, rather than the content fashioned by the editors themselves. Forbes counters, however, by saying that when circulation brings in new subscribers--new golfers, handymen, computer buffs--by whatever means and from whatever lists, then the editor's effectiveness as a proselytizer should come into play. The editor should be concerned with how to turn that new reader into a disciple of the magazine.

Working with circulation

The editorial/circulation alliance is one I've always found worthwhile. Editors can directly benefit from an interest in what circulation is doing. And if you as editor haven't previously shown such interest, I suggest you do. Should a particular mailing piece, for example, pull a remarkable 5 percent, read it carefully. Its content and images should influence--in a reasonable, balanced way--your thinking about what you put in your magazine.

Editors have occasionally been called upon to write circulation promotion pieces when publishers become frustrated with the efforts of pros. Indeed, an editor is inclined to wonder why someone else should write a piece selling his or her magazine when 1. the editor knows better than anyone else what the magazine is about, and 2. the editor also happens to be able to write. Right?

"Wrong," says Forbes, who echoes the opinion of his fellow circulators. And now take this, you editors who are aspiring promo writers: "I really don't think an editor should try to help the circulation department," Forbes continues. "Just don't hinder them by putting out a lousy product.

"Truthfully, though, it's fatal to have the editor write such copy. The copywriter has to fantasize . . . that's part of the selling process. The editor, on the other hand, has to deal with a much more realistic world of facts. Editors are too pragmatic when it comes to direct mail copy. That's why the two rarely coalesce."

Should editors have final approval over circulation copy? Yes, when it comes to statements of fact about the magazine and its content. No, if the editor objects to the approach, tone and offers in the direct mail piece. In cases where editor and circulator can't agree, the magazine's CEO should be the arbitrator.