SI fights ad slump; goes to selective edit - Sports Illustrated

Folio: The Magazine for Magazine Management, May 15, 1993 by Lorne Manly

For years, Time Inc. could count on Sports Illustrated to do two things: The annual swimsuit issue would elicit nasty letters from librarians across the country, and the magazine would rack up mind-boggling profits.

But the double-whammy of recession and corporate arrogance has taken the wind out of SI's ad sales in the past few years. Not only was the weekly unable to escape the beating the industry as a whole suffered, but two of its core ad categories--tobacco and liquor--shriveled as American lifestyles changed. Observers have noted that Time Inc.'s corporate sales structure, unveiled in 1991, exacerbated the trend by treating SI as a commodity.

The result: Ad pages plummeted 25 percent (2,982 to 2,208) from 1989 to 1992. Even last year's Winter and Summer Olympics didn't reverse the downward trend, as SI's pages declined 8.8 percent.

Time Inc. isn't taking the franchise for granted any longer. President Don Logan last year shifted corporate sales honchos Don Elliman and John Jay to publisher and ad director, respectively. SI publisher Mark Mulvoy was returned to his managing editor duties full-time. And the magazine is now fine-tuning its editorial approach and marketing its uniqueness, not just selling itself as another spoke in the Time Warner wheel.

A whole new ball game

SI is plunging into selective editorial and geographic editions, exploring new media opportunities here and in Europe, multiplying its special issues and slashing its consumer-promotion and subscription-solicitation costs. The weekly is developing new ad categories through innovative marketing partnerships and by sponsoring a traveling sports festival, in conjunction with several professional sports leagues, at Time Warner's Six Flags amusement parks.

The changes haven't yet translated into ad pages, which were down about 20 percent in the first quarter, according to the Publishers Information Bureau. Revenues rose 10 percent in the same quarter, says SI president and publisher Elliman. (SI execs argue that 1993 ad pages are actually flat, if the 1992 Olympics ad pages are taken into account.) But media directors are starting to take another look at the title. "Before, they were selling Time Warner as if it meant something, treating the magazines like a bunch of stands in a bazaar," says George Hayes, senior vice president and media director at McCann-Erickson. "Now it's much more clear that they're selling the magazine first and the rest is ancillary."

For SI executives, the key to sustaining the magazine's relevance and profitability in the future lies in selective editorial. "The world is moving toward targeted communication, segmentation is where every marketer is headed, and it's shortsighted to resist it," says Elliman. Adds managing editor Mulvoy, "We can't just sit here and do what we've done successfully the last 38 years."

This fall, some 700,000 copies distributed in states with Southeast Conference college football teams will contain an extra 10-page section on those teams. SI also plans to start two or three selective-edit sections that subscribers can request: A pro-football supplement focusing on a selected conference is likely to be first; golf, motor-racing, hockey and health and fitness supplements are also being tested.

Subscribers may not even have to pay more for the extra editorial. "If we get a 3 percent increase on renewal rates because subscribers like the magazine more, we don't need to charge readers a penny more," says Elliman. The same holds true if the targeted copy results in lower direct-mail acquisition costs or more advertising.

But testing has shown that readers are willing to pay more for additional topic-specific sections. An 8 percent increase in the subscription price (10 cents an issue) yielded a 12 percent increase in response. Even though a 16 percent rise (20 cents) resulted in a 6 percent fall-off in response, the magazine would still come out ahead in revenue.

The testing also highlighted a selective-edit pitfall. "We suspected going in that even though customization is very powerful, it doesn't overturn the law of direct mail: Keep it simple," says consumer marketing director Linda Warren. When subscribers were asked to write in the special sections they would like to see, response dropped 15 percent. Asking readers to affix stickers to the desired subject solved the problem.

Potential gold mine

SI also discovered--unintentionally--a potential gold mine, thanks to the University of Alabama's Sugar Bowl victory and an alert local distributor. (See FOLIO:, March 1, 1993, page 15.) Nearly one million extra copies of the regular and commemorative issues were sold, netting SI a profit of more than $1 million, according to Elliman. Using special issues as subscription premiums has also slashed direct-marketing costs. For example, a TV offer for a special Dallas Cowboys' issue and video (produced after the Super Bowl win) cut the cost per order by 60 percent, says Warren. And using SI-branded premiums, rather than the infamous shoe phones, not only builds SI's brand equity but can save up to $4 per order.