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Product Name: Magazines
Product Description
Hearst Magazines, a unit of Hearst Corporation, is one of the world’s largest publishers of monthly magazines , with 19 US titles and nearly 200 international editions in as many countries , of these , Hearst publishes 19 monthly magazines in the United Kingdom through its wholly owned subsidiary , The Magazine Company Limited.
“It’s a little ironic that the very strengths that have defined magazines in the past—the connection, the positive environment for ads, the portability—are also the ones that will drive growth going forward.” –Cathleen Black, President, Hearst Magazines
If you could create the ideal medium for the 21st century, what would it be?
It would create engagement in a time of massive consumer attention deficit and would connect to the audience in a personal way—literally, a reflection of who they are. It would be mobile enough to allow consumers to use it when and where they choose, and it would be ad-friendly. In a time when some 80 percent of Americans say they are under siege by marketers—and increasingly armed with ad-skipping technologies—it would carry advertising that is invited rather than avoided. And it would have to work flawlessly with other media, allowing advertisers to create packages to reach consumers in multiple ways.
“There is really only one medium that does all that so seamlessly,” said Black. “Magazines. We are the only place in the media mix where all the dimensions of new technology and new consumers come together in a single package. It’s a little ironic that the very strengths that have defined magazines in the past—the connection, the positive environment for ads, the portability—are also the ones that will drive growth going forward. We just have to become better at doing the things we already do well.”
This translates into magazine profits, said Black, led by Cosmopolitan and O, The Oprah Magazine.
For Hearst Magazines, “better” is defined in four ways: refreshing or reinventing traditional titles; adding new ones; building new income streams; and doing everything at a lower cost and with greater productivity.
Black maintains that refreshing or revitalizing long-standing titles—including six that have been around for a century or more—is critical because they are the bedrock of the division. “At Hearst, we start work every day as one of the world’s great magazine companies,” she said. “Scale and reach create an advantage that is unduplicated. But it’s one that you can lose—particularly if you assume that your success in the past is any guarantee of success in the future. Today, even for the strongest brands, there are no guarantees. You have to innovate. And you have to invest for the future.”
Much of the innovation and investment centers on staying ahead of magazine consumers. Contrary to predictions, new media did not kill magazines but did change them. Readers are used to getting quick grabs of information, lots of movement and surprises. To compete, magazines have to combine that with the editorial depth and service that readers might not get on the Web but very much expect from their favorite magazines.
The best 2005 example of how to re-energize a traditional title might be Redbook, which was redesigned and re-focused on the world of young, married women. After drifting for a number of years, Redbook saw a 15 percent increase in advertising paging and a 2 percent circulation gain. Other strong advertising paging performers among established titles were, in particular, CosmoGIRL!; Country Living; Esquire; Good Housekeeping; Harper’s BAZAAR; O, The Oprah Magazine; Seventeen and Veranda.
Hearst also has ambitious plans to marry the power of its brands—both established and new—with the reach of the Internet. This year, the division generated almost 1 million subscriptions from the Internet. Top-performing titles include Cosmopolitan; O, The Oprah Magazine and Seventeen. “The Internet is a powerful subscription source, and we are going to invest in making the most of it,” said Black. “And that’s just for subscriptions. We want to invest in our digital strategy so we are well positioned to capitalize on the explosion of advertising revenue on the Internet. Seventeen and CosmoGIRL! are great test cases showing very impressive gains.”
Significant new product growth and profits are coming from global expansion, where Hearst has the experience, the base and the local connections to lead the industry.
The 176 total editions published by Hearst Magazines, Hearst Magazines International and The National Magazine Company in more than 100 countries worldwide include 57 launched since 1999. Major titles include powerful brand equities like Cosmopolitan—which just published its 56th edition, in Malaysia—and Harper’s BAZAAR (20 editions); Good Housekeeping (15 editions); Esquire (13 editions); Popular Mechanics (13 editions); CosmoGIRL! (seven editions); House Beautiful (three editions) and Redbook (two editions).
While international titles embrace a dizzying range of markets and cultures, the strategy is consistent. “When we look at a market,” said George Green, Hearst Magazines International president & CEO, “the first thing we ask ourselves is what we bring to the party. Do we have a brand that will mean something there? We also like to see a growing economy, strong demographics, low media penetration and a hunger for things American.”
Hearst Magazines International’s approach has produced very impressive growth, including a 21 percent earnings gain in 2005 and compounded 41 percent earnings gain since 2001. In addition to the Cosmopolitan Malaysia launch, additions in 2005 included Cosmopolitan in Norway; Esquire in Russia, Kazakhstan and Taiwan; and Harper’s BAZAAR in Thailand. Future expansion plans target less-developed countries, where both circulation and readership continue to climb. For example, in Russia, HMI’s joint venture publishes Cosmopolitan, Good Housekeeping, Harper’s BAZAAR, Esquire and Popular Mechanics and—under a license agreement—The Robb Report. Behind the U.S. and the U.K., Russia is now HMI’s third most profitable market.
Another priority is Spanish-language editions, such as Cosmopolitan, Good Housekeeping, Harper’s BAZAAR and Popular Mechanics, published in Mexico and Latin America, as well as in the United States. The U.S. Spanish-language edition of Cosmopolitan, published in partnership with Mexico’s Editorial Televisa, almost doubled its circulation in the past year, to 160,000. The Mexican edition of Cosmopolitan has had considerable success with its new, every-other-week publishing frequency.
Hearst’s position in the business and the power of its brands also create growth opportunities beyond its U.S. and international titles. The Hearst Group, for example, combines true customer solutions for major advertising clients with customized and integrated marketing services, including the publishing of customer magazines. Its large multi-magazine, corporate accounts contributed a 7 percent gain in paging for the year and a 10 percent increase in net revenue.
The sheer power of Hearst brands supports a growing business in brand development, which grew revenues 10 percent in 2005. Among the newest brand extensions: Country Living furniture and an expanding line of bedding, lighting, storage and other products; and mobile phone content including text messaging, wallpaper and ring tones from CosmoGIRL!, Cosmopolitan and Seventeen.
The division is also very active in its services businesses for other publishers. Communications Data Services (including Tower Publishing Services
in the U.K.; Comag Marketing Group; Periodical Publishers’ Service Bureau; and Indas Limited) produced a combined 5 percent gain in revenue for the year.
“One of the facts of life in our business today,” said Black, “is that advertisers want more for less. We are working on a lot of fronts to enhance the value of our products, but price will continue to be an issue. At the same time, we are facing rising paper costs and postal rates.
“We have a manifesto for 2006 and beyond,” she said. “We must be more productive, increase innovation, stimulate creativity and maximize the advances in technology.”
So from where Hearst Magazines stands, the magazine industry is a place of opposing forces. Challenge comes in the form of increasing competition, difficult structural changes—particularly circulation and distribution—and rising costs.
Opportunity comes in a unique and timely fit between magazines and the changing consumers that all media are trying to deliver to advertisers and readers. “There is no rising tide to lift all boats,” said Black. “Success will be selective. Our magazines that have the right editorial formula, right levels of productivity and ability to run tight organizations will be successful. We are not waiting for things to happen. We are making things happen. I like our prospects.”
Company Details
"In our third century, Hearst is continuing to place traditional media products alongside exciting new technologies in a formula that has consistently proven successful."
—Victor F. Ganzi
Ganzi began his career with Hearst in 1990 as general... more
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