You’ve probably heard it dozens of times. A salesman for Magazine X tells you the magazine has a hot new editor, a young hotshot stolen from the competition. 
   Her first issue came out six months ago, and since then X has been kicking up a storm at the newsstand, says the salesman. 
    Single-copy sales are up 15 percent in the first half of the year, according to the numbers X just filed with the Audit Bureau of Circulations.
    Is the salesman lying to you? 
    No—but he may not be telling you the whole truth, either. 
   The numbers a publisher turns in on a publisher's statement to the ABC purport to show the magazine's circulation for the past six months.
   They may, or they may well be significantly off-base, if not puffed beyond recognition. 
    In theory, at least, these errors, if you will, ought to be caught by the ABC and the publisher hauled in for a good tongue lashing and public censure.
    But in reality, this is not how things work. In the real world, the system can effectively hide more than it exposes. It creates, moreover, a sense of credibility where there ought to be far more wariness, say circulation experts.
    The ABC system is well-intentioned, they say, and the vast majority of publishers are diligent about filing statements that closely approximate the best circulation data they have.
    But the system has two major failings. First, the audit can come a year after the numbers are turned in, so any discrepancies are too old to be of much concern. Second, the way circulation is tallied tends to average out major discrepancies in a way that makes them seem so slight as to be insignificant.
    Such was the case with Harper’s Bazaar.
    An anonymous letter that circulated last week—sent, most likely, by one of Bazaar’s competitors—noted that the numbers Bazaar reported for its newsstand sales in the first half of 2000 were markedly higher than those released recently by the ABC in its audit report for the period.
    In its publisher’s statement, Bazaar claimed average newsstand sales for January to June 2000 of 169,300.
    According to the audit report, single-copy sales for the period averaged 142,300—an 18 percent difference.
    One might expect that such a discrepancy would have been flagged and brought to the attention of ABC members. It wasn't. Under ABC guidelines, Bazaar was entirely in the clear.
    Why is it important? 
    Because the February 2000 issue of Bazaar marked the much-watched debut issue of Kate Betts--the former protégé of Anna Wintour--whom Hearst recruited from Vogue to replace the late Liz Tilberis as editor of the long-suffering fashion title.
    The improved numbers had their desired effect. 
    None other than New York Post media reporter Keith Kelly cited Bazaar’s May and June newsstand sales as evidence that "Betts appeared to be on fire." Usually, Kelly is writing about people being fired.
    The anonymous letter-writer’s motives aside, the case serves to illustrate deep flaws that exist within the ABC’s two-tiered reporting system—flaws that publishers can, and almost certainly do, exploit to their advantage.
    The heart of the problem lies in a long, tangled distribution chain that makes ascertaining circulation numbers a long and laborious process, says circulation expert Dan Capell.
    Under its current system, the ABC can take nine months or more from the date an audit period ends to produce a complete audit. During this time, the agency verifies final sales numbers submitted by the publisher against records from retailers, wholesalers, and other links in the distribution chain.
    In order to produce usable numbers in a more timely fashion, the ABC has magazines submit a statement at the end of each six-month period. The so-called pink sheet becomes available to ABC members two to three months after the end of the period.
    However, publishers are required to submit the statement well before they know what their final newsstand and subscription totals for the period will be, says Capell. 
    Final numbers on newsstand sales can take 45 to 60 days to trickle back up the line of retailers, distributors and wholesalers; final numbers on subscriptions can take even longer.
     "You have no idea what your June newsstand is by July 30," he says. "You’ve maybe got a pretty good fix on May by then."
    Thus, the numbers the publisher turns in are drawn to a large extent from the publisher’s own informed guesswork, especially for issues that fall toward the end of the reporting period.
    The ABC does what it can to keep its members from guessing too optimistically. Those magazines whose initial estimates for total paid circulation are 2 percent or more above the audited total determined by the ABC get their names added to a variation report that goes out quarterly to all ABC members. 
    Any magazine that ends up on the list two years in a row will have a warning printed at the top of its next publisher’s statement; another year of bad reporting and the magazine can have its membership yanked.
    But that’s only for a deviation in total paid circulation, examined on a full-year basis. What’s to keep a publisher from, say, shaving a little off its subscription numbers and padding its newsstand sales? 
    Or pumping up the newsstand numbers for a few crucial months—for instance, following a redesign or the start of a big marketing push—and tinkering to make up for it elsewhere? And what’s to keep the magazine’s ad salespeople from using those doctored numbers when they go out on calls?
    "Not a thing," says Capell.
    Of course, anyone who wants to is free to sit tight and wait for the official audit report, then see how the two sets of numbers stack up. But that doesn’t happen often.
    "What is exploited is that it takes so long for the audit report to come out," says Capell. "Nobody’s paying any attention when it finally comes out."
    Capell says he doesn’t know how many publishers take advantage of the considerable wiggle room afforded by the ABC system for misleading reporting, but he says the vast majority of publishers fall within the 2 percent bounds, for their single-copy sales as well as for total paid circulation. 
     In the case of Bazaar, Hearst says that the 18 percent discrepancy was caused by disruptions in the national newsstand distribution system that made accurate forecasting of sales difficult.
    Capell says this is quite a plausible scenario, noting that many other magazines suffered from similar problems throughout last year. At any rate, Bazaar’s name did not appear on the variation report.
    For media buyers concerned about being fed skewed data, skepticism is the only defense. Be aware that just because a magazine is "reporting" certain numbers doesn't mean those numbers are final. And be wary of sudden gains, especially in newsstand sales, that are attributed to a new editor or redesign.
   Flawed though it may be, Capell says the ABC's dual-reporting system may be the best possible one--as long as everyone involved understands how it works.
    "Most advertisers and most ad agencies don’t even realize the pink sheet is an estimate—that’s the real problem."

April 30, 2001 © 2001 Media Life

-Jeff Bercovici is a staff writer for Media Life.

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