2006 folio show presentation - modeling your circulation
DESCRIPTION
Overview for financially modeling and managing your magazine circulation goalsTRANSCRIPT
Modeling Your Circ Target Plans
Paco Acosta, VP Consumer Marketing, American Media
Dennis O’Brien, Circulation Director, Taunton Press
Circulation Model
•Build in Layers
•Target - Rate Base– Natural or Assigned?
•Optimize Circulation– Maximize Profitability– Minimize Loss
Build in Layers
•Source Evaluation & Ranking– Historic Performance
•Take Recent Trends Into Account– Predicting Future Behavior
•Optimize The Use Of Each Source– Build Model in Layers
Source Evaluation
•Profitability – Over Time
•Volume – History, Tiers
•Risk
•Ranking
•Include both Subs and Single Copy
Source Evaluation
Fine Magazine ASSUMPTIONS:INSERTS - NS ISSUES: 7
CPM $169.37CASH % 41%
QTY MAILED 80,933 GOCOST 0.35GROSS ORDERS 1,222 COPY COST 0.78NET ORDERS 1,000 BILLING COST 1.04
CONVERSION % 44.6%GROSS RESP % 1.51% 1ST RENEWAL % 64.6%CREDIT PAYUP % 69.1% PURE RENEWAL % 75.8%NET RESP % 1.24% RENEWAL CPM $383.89
AVG # REN EFFORTS 4.872COST IN MAIL $13,707 FULF CPO NEW BILLME $0.22BACKEND COSTS $1,613 FULF CPO NEW CASH $0.22COST OF PRODUCT $5,460 FULF CPO RENEW $0.22TOTAL COSTS $20,781 NEW BUSINESS TERM1 % 83.0%Fully-Loaded CPO $20.78 NEW BUSINESS TERM2 % 10.5%Loaded CPO $15.32 NEW BUSINESS TERM3 % 6.5%
RENEWAL TERM1 % 72.0%REVENUE $28,996 RENEWAL TERM2 % 17.0%
RENEWAL TERM3 % 11.0%NET P/L AFTER 1 YEAR $8,216 REVENUE TERM 1 $29.95P&L / ORDER $8.22 REVENUE TERM 2 $49.95
Source RankingFine MagazineSource EvaluationEXAMPLE
Source Net OrdersPromo
CPMFully Ld
CPNO NPNS Yr1 NPNS Yr5Gross
ResponseNet
ResponseCredit Payup Bad Debt
INSERTS - NS 8,632 $169.37 $20.78 $8.22 $35.70 1.5% 1.2% 69.1% 1,913
INSERTS - SUB 4,104 $57.33 $22.09 $6.97 $35.55 0.5% 0.4% 73.4% 489
WEB 9,944 $88.89 $20.67 $8.01 $33.02 0.6% 0.6% 60.0% 0
AGENT 6,269 $0.00 $5.93 $6.46 $17.43 100.0% 92.5% 50.0% 470
PARTNERSHIP W/RN @ 35% - $0.00 $10.30 $4.13 $14.36 100.0% 100.0% 100.0% 0
INSERTS - SIP 1,520 $169.37 $51.58 ($22.51) $6.06 0.5% 0.4% 73.4% 0
DIRECT MAIL 5,061 $544.14 $75.78 ($45.83) ($23.53) 1.9% 0.8% 43.1% 6,600
PROMOTED NEW BUS COMBINED 35,530 $162.60 $27.43 ($1.31) $22.01 18.5% 17.0% 60.2% 9,472
RENEWALS 57,341 $383.89 $9.13 $19.24 $44.71 56.7% 55.5% 64.9% 6,003
SUBSCRIPTION 92,871 $185.10 $16.13 $11.38 $36.02 42.1% 40.8% 63.1% 15,475
NEWSSTAND 99,325 $423.83 $39.26 $9.39 N/A N/A N/A N/A N/A
Build in Trends
•Renewal Rates
•Insert Response Rates
•Web Orders
•Single Copy Sales
•Test Results
Optimize Circulation
•Use Ranking to “build” model to reach Target Circulation
•Other Sources:– Grace– Verified Circulation– Bonus Agents
•Maximize Profitability / Minimize Loss
Taunton Experience
•Natural Level
•Goal - Circulation Profitability
•Full P&L
•Shared Model - Finance/Circulation
•Circulation Forecast Determines Rate Base
Rate Base Management
•Back Starting
•Gracing
•Gap Analysis – How many orders do I need?– Ranked Sources Available?– Verified or Bonus?
Strategic Modeling
•Determine Leverage Points
•Price Changes
•Frequency Changes
•Rollout Test Results
Operating Profitability
•Why do I care?
•Advertising
•Editorial
•Postage/Distribution
•Manufacturing
•Over-head Items
Another Sample MagazineCirc Contribution
Another Sample MagazineAdvertising Contribution
Another Sample MagazineNet Operating Margin
Advertising
•Ad Pages
•Ad Rates
•CPM
•Promotion Expenses
Editorial
•Number of Edit Pages
•Edit Ratio
•Average cost/edit page
Postage/Distribution
•Subscription Postage– Periodicals vs. Standard Mail
•50% of my total circ must be paid at a nominal rate of 35% of basic.
– Pre-sort Discounts– Canadian Direct Entry is Cheaper!!– Is my mail getting to my subscribers in
time?•Red Tag
Manufacturing
•Total book size
•Total copies printed
•Average cost/m pages
•Average cost/copy
Key Metrics - Revenue
•Revenue/Copy– Sub Revenue/Copy– Newsstand Revenue/Copy– Ad Revenue/Copy
Key Metrics - Expenses
•Expenses/Copy– Sub Promo per copy– Fulfillment Expense per copy– Newsstand Promo per copy– Distribution Expense per Copy– Manufacturing Expense per copy– Ad Promo/Selling Expense per copy– Editorial Expense per copy
Key Metrics - Margin
•Sub margin per sub copy
•Newsstand margin per newsstand copy
•Circ margin per copy
•Operating margin per copy
Another Sample MagazineCirculation Key Metrics
Another Sample MagazineOperating Margin per Copy
Key Metrics - Other
•Minimum newsstand sales efficiency
•Minimum sub margin
•ROI
•Breakeven year
•Trend rate