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Volume 6, Issue 3 Magazine
Medic: Is Your Operation as Healthy as It Could Be?
Magazine Medic: Is Your Operation as Healthy as It Could Be? Author Lou Ann Sabatier, principal of the Sabatier Consulting Group, has 25 years of experience in the publishing industry—13 years on the publishing side and 12 as a consultant working with consumer, trade, corporate and association publishers. Over the years, I’ve often heard that the highest failure rate for any new business is in restaurants ... followed by magazines. The current economy has forced more layoffs, belt-tightening, budget reductions and shuttered publications than are usual in the magazine business. This environment makes it even more critical that managers invest the time necessary to conduct a thorough assessment of all areas of operations. It’s essential to understand what’s truly happening—and why—to operate more efficiently, improve revenues and profits, and enhance employee morale and motivation. The following guidelines have been developed by the Sabatier Consulting Group for use in evaluating your publishing operation—a process that works best when it’s initiated and executed by a senior manager. Of course, the first step is to let all employees know that a company-wide evaluation is underway and that no one department or employee is being singled out. Assure them, too, that all responses will remain confidential. To accommodate regular job duties and give staff enough time to gather necessary data (including departmental organization charts, budget figures, job descriptions and salary information), figure on two to three months to complete the evaluation. Perhaps the most difficult aspect of the process will be maintaining objectivity. Try to step outside your own experiences as you evaluate individual departments and the company as a whole. In each area of operations, you’ll want to examine • Strategy—What’s the plan for the department? • Process—How is strategy implemented? What does the workflow look like? What resources are used? What’s working and what isn’t? • Systems—What technologies are being used? • People—How many are on staff in each department? Who does what? Who’s performing well? Who isn’t? What does the compensation structure look like? Plan to interview employees in senior, middle and lower management, in addition to staff level—asking essentially the same questions of each. While you’ll certainly be looking for a great deal of department-specific information, you’ll also want to ask those in each department some of the same questions: Have your responsibilities changed within the past year and, if so, how? Do these changes affect your job description? What are your department’s strengths and weaknesses? What’s on your “wish list”? That is, what do you think will help the department—and thus the magazine—run better, make even more money, etc.? Editorial Ask staff to assemble its mission statement, documented policies and procedures, editorial inventory, vendor contact list and copies of any contracts initiated and/or managed by the editorial department. This information can then be used to establish benchmarks in such areas as performance, reliability and perceived quality. You should be able to address such questions as • How closely are we following our mission statement? How does our title differ from the competition? • How well do we fulfill our readers’ needs? Do they talk about the magazine? What’s the buzz? Can they interact with it? Are we a throwaway or a keeper? Does the research still demonstrate a high percentage of reader involvement? • Are we editorially focused? Do we have signature columns, departments, editorial extras? Is it easy to locate stories and departments? • How’s our accuracy? Are we credible? Is the magazine carefully proofed? • Is the typography clean? What about paper stock and print quality? • How many editorial pages do we produce per issue? Per year? What’s our editorial ratio? What’s our cost per editorial page? • How’s our renewal rate (the acid test for editorial content and vitality)? Production Have your production staff provide copies of the annual manufacturing schedule, printing and other vendor contracts, and a year’s worth of prepress, print and paper invoices. What you’re looking for here is a solid understanding of the workflow, a clear separation of responsibilities between the production and editorial teams, a mechanism for frequent and methodical reviews of vendor arrangements, a system for verifying production-related invoices, and documented policies and procedures for vendor communications. You’ll also want to determine how much staff training takes place. Advertising Here, you’ll want to assemble a two-year history by issue, including rate cards; the number of display, classified and other pages of advertising; revenue figures (gross, agency commissions, frequency and volume discounts, etc.); percentage of sales by staff and by outside reps; relative market share for your magazine and its competitors; a schedule of special agreements with advertisers and rate card protection commitments; and a list of current, prospective and past advertisers (by category). You’ll also need a current media kit, all promotional materials and advertising research (including market positioning and competitor information). With this information, you’ll be able to see competitive rates; review your rate discount structure and determine whether or not your discounts are set for maximum profits; calculate gross and net revenues, particularly net revenues from your top 20 advertisers; measure your cost of sales as a percentage of advertising revenues; determine your average yield per ad page; identify the percentage of ad pages sold on contract; calculate ad/edit ratios; determine your market share, as well as your share of media trends such as events, cross-media ties, partnering and affinity marketing; measure category growth or decline; and assess staff morale/turnover. Finally, you should be able to answer the following questions: • Which categories of advertisers seem to be the least price-sensitive? • Who are our most—and least—loyal advertisers? • Who can use our magazine most? Who can use our magazine least? • How is all this communicated to our sales team and employed in their management? Circulation Circulation is a major factor in attracting advertising and there is added pressure for circulation to have a positive impact on the bottom line as well. Close analysis of circulation by source, by rates, rates by source, new subscriptions by source, cost of new subscriptions by source, profit and loss for new subscriptions by source, etc. is necessary in order to contain costs and enhance profitability. You’ll need to assemble this information plus the figures from the last two circulation audit reports, the competitor’s figures and newsstand data. The evaluation should also include an assessment of the circulation model runs if a model is being used. Key fulfillment data includes the subscription fulfillment vendor contract and the fulfillment invoices for the last 12 months. The analysis of this information should tell you the gross and net response rates for all promotions, pay-up rate and net response rate—all of which measure efficiency. It should also help you to understand long-term profitability and the average cost per order, conversion and renewal rates for every source, the average cost per renewal and the average profit/loss per subscription. Your goal is to encourage loyalty and repeat business, and to concentrate spending on sources that generate the highest renewals. Your newsstand analysis should focus on single copy sell-through rates, with the goal of putting marketing dollars and copies in outlets with the highest sales to enhance net revenue per copy. The circulation department is really the only operation in a publishing company that can measure every dollar it spends. There are only two reasons for circulation growth: the possibility of additional pure circulation profit tied to growth or a compelling ad sales reason to grow. It’s usually an either/or proposition. General & Administration This review is about overhead and cost containment. Be prepared to scrutinize all leases (rental space, equipment leases, etc.). The vendor list and contact information should be current. Administrative overhead, including employee benefits, should also be reviewed. Are there services that could or should be centralized/de-centralized/out-sourced? While comparisons between your magazine(s) and the standard can be very subjective, it’s important to note how your ratio of expenses to revenue stacks up against industry norms. Finance Financial reports give you an overview of your company’s performance. While you might not be able to identify the source of a department’s problems, the financial reports might pinpoint which departments are in need of the most help. The first step is to assemble the following documents: annual magazine profit/loss with line items by department; magazine profit/loss versus budget, with variance for past two years; any financial model runs done within the past six months; and the current budget, with an explanation of the budgeting process. (Is it zero-based? How long is the process? Who’s involved?) The analysis will involve statistics for operations, advertising, circulation, editorial production and distribution. While the bottom line is very important, there are also more subjective issues to be considered. Profitable publication are usually characterized by a good management team with an effective sales force, adequate staff support and resources, and strong renewal rates that indicate brand strength and brand awareness. Ultimately, you’ll want to document specific recommendations for each department within the company. We’ve often found that the greatest impact is created not by one or two major recommendations, but rather by several small recommendations in each area that collectively move the company forward. Too often, efficient management is identified with cost control. It’s easy to forget that the primary objective is not to save money, but to make money. This is particularly important when magazines are under pressure, as they are in today’s economy. Bob Boucher, former president and CEO of Gralla Publications, once said: “The way to deal with difficult times is to build more things that make money, not to hack away at the fabric of the company to deliver a temporary profit. There’s a major difference in attitude between the publisher who sees his job as reducing spending by 10 percent and the one who sees his job as increasing earnings by 10 percent.” For questions or more information, contact Sabatier Consulting Group at 703.536.2635 or Louann@sabatierconsulting.com. Quark 4 PDF Bug Believe it or not, settings made in Quark 4’s print dialog box affect how a PDF is made when using the “Export to PDF” command in the Utilities menu.
Here’s the offending scenario: If you have your print dialog set as above (note the RGB setting), Quark 4 will convert the colors of all your graphics and Quark items to RGB before Distiller does its thing. Fortunately, text remains 100 percent black. Quark 5 has fixed this by adding a “print colors” setting to the “Export as PDF” command—the settings in Quark 5’s print dialog don’t affect the settings for PDF creation. Hopefully, Quark 6, scheduled to ship in late June, will retain this fix. Is There a Resolution to a PDF? Those of you who have taken a peek at the Distiller “job options” when creating a PDF know that there is an option on the general tab that says “Resolution.” This may make you think (incorrectly) that when you create a PDF with Distiller, there is some kind of rasterization process going on that converts all the images and text to a particular resolution. That’s not exactly true. The value that goes there will tell Distiller to emulate the resolution of a printer if the PostScript code calls on it to perform a function, such as creating a linear blend. Think of a PDF simply as a container that holds everything you put into it. Therefore, PDFs can’t be defined exclusively as either RGB or CMYK. Saving any file as a PDF won’t fix anything. With the right job options, Distiller just merges all fonts and graphics together. Can You Really Believe Your Eyes? In our color management seminar, I always take some time to point out how susceptible we are to optical illusions and how surrounding colors affect our perception of objects. Well, this is perhaps the most unbelievable optical illusion I’ve ever seen. In this graphic, the squares marked “A” and “B” are the same shade of grey. I know you don’t believe me, so go ahead and take your scissors to this newsletter!
Leslie Johns: Going the Extra Mile In a role that demands efficiency, teamwork, extraordinary attention to detail and what she describes as a “painful” degree of accuracy, those who work with her say United Litho Estimator Leslie Johns has been a huge asset since joining ULI nearly three years ago. Sales and Marketing Vice President Wayne Peterson notes that Johns is “one of the most productive estimators I have ever seen in the industry,” and senior Account Executive Dave Lageman adds that, “from a quality standpoint, her estimates are the best United Litho has ever had.” A former production control specialist (read: estimator/planner/ scheduler/purchaser) at Hart Graphics in Austin, Texas, Johns says the key is to be “anal, accurate and psychic, with a flair for detective work.” The essence of her job is to figure out approximately how much it will cost a publisher to produce the piece he or she has in mind. Pretty straightforward—at least on the surface. But Johns goes out of her way to identify more cost-effective ways to achieve the client’s goals. “Sometimes,” she says, “I’m able to come up with possibilities the client hadn’t considered. One time, I re-imposed a title—I just thought of something the client hadn’t—and it ended up reducing the cost to the publisher by $300. We sold the job the very next day! It really makes me feel good when I come up with a new or different idea that helps a client save money.” Account Executive Julie Williamson notes that Johns frequently responds with more pricing options than were originally requested in order to provide the most economical scenario, and particularly appreciates her taking the time to thoroughly explain any special situations that may be reflected in the pricing supplied. “It allows us to point these things out to a customer before the customer points them out to us,” Williamson says. Mike Schumacher, also an account executive, praises Johns as a real team player. “Even when she was snowed in at home last winter,” he says, “she was doing rush estimates and coordinating with folks at the plant to get them faxed in time. I can’t say enough about her performance and attitude.” Not surprisingly, Johns is appreciated almost as much for her offbeat sense of humor as for the thoroughness of her estimates. Despite the hectic pace, Schumacher says, “she makes my job fun!” From the red beehive wig that set off her Halloween costume to the collection of 30+ toys she keeps in the “monster cube” she shares with estimator and forecaster Lori Bigham, Johns has a real knack for defusing the tensions inherent in juggling multiple priorities. “I love anything that makes an unusual noise,” she says, hitting her “panic button,” taking a swing at her executive punching bag and giving her new electronic 8-ball three emphatic thumps to set it off. “My toys help me get past the stress of the moment and onto the next crisis!” “Estimating has a very high burnout rate,” Bigham notes—particularly with a workload that frequently exceeds 550 estimates a month—“but Les is really entertaining. She’s able to break the tension and keep us on track.” An Extraordinary Service Experience: Mortgage Banking
Mortgage Banking, published monthly by the Mortgage Bankers Association of America and printed at ULI for more than 20 years, is one customer that definitely fills that bill, Garner says. Perhaps even more important, the admiration is mutual. Janet Reilley Hewitt, who’s served as the magazine’s editor in chief since 1989, exclaims, “ULI has wonderful management! Ken Garner and [Sales and Marketing Vice President] Wayne Peterson have been great to us. They’ve taken time out of their busy schedules to show us that they really care about us ... they’ve made us feel like Mortgage Banking is not just another magazine to them.” Hewitt has been particularly pleased with both the print quality and customer service she receives from ULI. “We make an investment in our artwork,” she says, “and it’s important that it look good. [Art Director] Sarah Hollander is a perfectionist—and she’s always pleased with the color and quality.” As far as customer service goes, Hewitt says, “It’s always been excellent! Customer service never lets us down. One year, our sales rep got in his SUV and drove our copies to a conference in New York in a snowstorm! The service we’ve received has always been above and beyond the call of duty.” Deputy Editor Lesley Hall seconds that. “The people at United Litho help us with every aspect of our production ... I can’t imagine what else they could do for us, other than to come to our offices and do our jobs. I really don’t feel like we have a client/vendor relationship ... it’s almost like we all work for the same company!” Most recently, that collaboration has extended to brainstorming ways to help the staff cut costs without sacrificing the magazine’s award-winning visual appeal. Hall notes that “ULI has found more creative ways [to reduce expenses] than we could think of”—including streamlining ad preparation with ULI’s fileWORKS® service. Hollander adds, “ULI always strives to be better—it’s never settled for being good enough. The team at United has worked with us time and again to help us find new ways to control expenses.”
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