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era of subtraction
Building readership base with eye to ad recovery
By Jeff Bercovici
An economic downturn is a mixture of curse and blessing for magazine publishers.
On one hand, nobody likes ad page declines. But for those with the wherewithal to do so, the best time to jump out ahead of your competitors is when they're at their weakest.
That's exactly what Knight Kiplinger would like to do.
When long-suffering Individual Investor magazine finally closed its doors for good last month, Kiplinger, president of Washington D.C.-based Kiplinger Washington Editors Inc., bought its 432,000-name subscription list for a reported $3.5 million.
The names will be added to the circulation of Kiplinger's Personal Finance magazine in an attempt to give it a boost at what Kiplinger considers a critical moment for investment magazines.
"To say a shakeout is brewing in the finance category is kind of an understatement," says Kiplinger. "It's actually been gathering force all year. It’s pretty clear there aren’t enough committed subscribers and advertisers to support as many titles as there have been."
Individual Investor was the second finance magazine to go out of business this year, following Meredith's decision to suspend publication of Family Money in February.
And in the past week, Consumer's Digest Inc. has ceased publication of its own entry in the category, Your Money, along with the one-million-circulation Consumer’s Digest, with Time Inc. reportedly in talks to buy both circulation files.
Kiplinger says the shutterings were the inevitable result of an overcrowded category whose weakest constituents were for a long time propped up by a thriving economy and particularly a booming financial services sector.
"In the '90s the public's interest in investing and personal money management soared along with the stock market," says Kiplinger.
The result was what he calls an "explosion in financial media."
By that he means not just in the form of new magazines, TV shows, cable networks and web sites, but also in the form of beefed-up coverage of finance by business, news and general interest magazines and daily newspapers.
The result was an information glut.
"The supply of personal finance guidance expanded beyond the ability of the American people to support it all."
Then came the stock market bubble-burst, and the effect was that the universe of consumers with an attention span for financial news suddenly contracted, as Americans curtailed their investment activity.
As that happened, financial services firms cut back their ad spending considerably.
Through June, ad pages in the personal finance magazine category were down 23.9 percent, and ad revenue for the category was down 17.3 percent from first-half 2000, according to the Publishers Information Bureau.
Kiplinger's was alone in the category in keeping declines to single digits, with pages off 7.1 percent, to 382, and revenue off 4.9 percent, to $23.8 million.
Kiplinger says the smaller losses may have occurred in part because some of his advertisers, notably Fidelity, have, like the magazine itself, increased spending this year in hopes of increasing their visibility and grabbing up market share, in order to be ideally positioned when things pick up again.
With the subscribers from Individual Investor, Kiplinger says the magazine will be delivering a bonus to advertisers of about 370,000 on its rate base of one million.
A rate base adjustment, he says, is at least several months off.
"We're going to leave the rate base where it is for now while we live with the new subscribers a bit, get to know them, see how they renew."
He notes that the new subscribers cost Kiplinger's only around $9 apiece, far cheaper than they could have been acquired through direct-mail solicitation.
As for how many of the Individual Investor readers he expects to keep in the long term, Kiplinger declines to say.
"We modeled it conservatively, and we think we’ll be pleasantly surprised."
August 3, 2001 © 2001 Media Life
-Jeff Bercovici is a staff writer for Media Life.
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