Monday, April 18, 2011
Judge Judy Says...
A loyal reader of CoversSell.Com tipped me off to an article by Bert Archer from the Toronto Standard titled, The Ken Whyte Effect.

see link: http://www.torontostandard.com/business/the-ken-whyte-effect

The writer opens the piece by asking the rhetorical question: What’s the Ken Whyte effect? The author simply can’t understand why Ken keeps getting promoted at Rogers. Why is he confused? Well, because he has looked at some top-line ABC statistics, which is the evidence he uses to engage in a smear. After setting up the straw man, he quickly knocks him down by answering his own question: “Whatever it is, it’s clearly not higher circulation?” Well then, case closed right? Wrong. Very, very wrong.

As one reads on, the writer’s tone becomes quite chippy such as when he says, “But as Whyte’s numbers keep dropping, Rogers keeps promoting him.” It’s puzzling. So why the promotions? It’s a real noodle scratcher. The answer must be that Whyte has successfully ingratiated himself with daddy-type senior managers and “What daddy wants, daddy gets.” Nasty.

It reminded me of a recent episode of Judge Judy, when a younger brother sues his more successful older brother, basically because he is a jealous and petty jackass. As Judge Judy often says, “If it sounds like it doesn’t make sense, it probably doesn’t make sense.”

Are we really supposed to believe that Rogers, a publicly traded company, a well-managed corporate giant in Canada, is promoting someone who is driving the business into the ground? Is that really probable? Or is it more likely that Whyte is being promoted because, like most people who get promotions, he has earned it, by making his employer a lot of money? It’s a hard decision to make. I don’t know about you, but I’m guessing he is making his employer a lot of money. I suppose it didn’t occur to the Toronto Standard to ask why it is that Time Canada is no longer in business, rather than attacking Whyte?

Whyte took over Maclean’s in March of 2005. In those pre-great-recession days, all good circulators were told to deliver as many eyeballs as possible, as cheaply as possible, to justify an advertising-centric business model. This often compelled circulators to give away copies post expiration to help prop up the rate base. And circulation pros often turned to cheap, agency-sold subscriptions, with weak remit rates and poor renewal rates, to prop up the readership numbers. Good for advertising, but not good from a circulation profit/loss perspective. It all made sense when advertising sales were buoyant. But the new reality is, circulation profitability is back in style.

Since ABC statistics are being used as evidence against Mr. Whyte, let’s use ABC statistics to offer a more likely reason for why Rogers is promoting him.

The June 2004 ABC statement shows that Maclean’s was giving away an average of 21,435 copies per issue to subscribers post expiration. The Dec 2004 ABC statement shows that Maclean’s was giving away 17,309 copies per issue post expiration. Therefore, in 2004 the venerable weekly was printing roughly 1 million copies a year for which they were receiving zero circulation revenue. Printing, postage, and fulifllment costs would have been staggering.

Today, grace copies are rougly 4,400 per issue. That’s probably close to a million dollars straight to the bottom line, just by radically reducing freebies.

The June 2004 ABC statements show that Maclean’s was selling on average 7,252 single copies. The December 2004 ABC statement shows that Maclean’s was selling 8,874 single copies on average. That’s roughly 419,000 copies at a $4.95 cover price. So let’s call it $2,074,050 in gross retail sales before Whyte’s arrival.

Today, the June 2010 ABC statement shows single copy sales averaging 29,425 and the December ABC statement with single copy sales averging 20,460. That’s roughly 1,297,010 copies at a cover price of $5.95. Let’s call it approximately $7,717,209 in gross retail sales. That’s a 272% improvement, and millions more straight to the bottom line.

Don’t forget all the money that would be flowing in from increased insert card production from single copy sales, a source circulation professionals know generates great upfront cash and fabulous renewal revenue for years to come. My guess is that this highly profitable source of circulation is now replacing a large chunk of the low-efficiency agency-sold subs that circulators used to rely on like a bad addiction to appease the advertising department.

Let’s not talk about the money from Special Interest Publications that Ken’s team is now routinely cranking out. Oh, OK, let's. The Olympic Special sold over 109,000 copies at $9.95, generating $1,090,758 on gross newsstand revenue in 2010. The Royal Engagement issue sold another 40,000 copies at $6.95 for a cool $278,000. And the Newsmakers special is poised to sell another 23,000 copies at $7.95 for a little extra pocket change of $182,850. And, let’s not forget the University Guide which sold nearly 19,000 copies at $19.95 for another $379,050. Not bad, considering so many pundits wrote off Maclean’s when Ken took over the helm, claiming the brand, and the newsweekly genere, had lost its mojo. Really?

If I start imagining the money that is being earned on improved renewal rates, or the money that is being saved by not chasing inflated rate bases…the millions and millions are starting to make me dizzy and very green with envy.

Readers are prepared to pay for a quality product. Sure, top-line circulation numbers are down, but circulation geeks like me call that “managing down” the unprofitable circulation and “managing up” circulation profitability… big time!

I could go on, but I think if Judge Judy were reading this she’d likely say, “Case dismissed.”
- Scott Bullock
About Me
Scott Bullock

 
Scott Bullock is the the creator of Coverssell.com. Bullock has worked as circulation director for both consumer and B2B magazines including Toronto Life and FASHION.

Note to readers: some of Bullock's posts may refer to his clients.
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sebastianuk says:
nice...informative blog...
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