NEW YORK — The magazine and advertising industries have expended an awful lot of time and brainpower of late rethinking the definition of paid circulation. To see why the term was so badly in need of clarification, one need only consider how many copies currently lumped under that heading are not paid for by the consumer, at least not in the usual sense.
That’s not easy to do. In the past, advertisers and media buyers often complained that the circulation statements issued by the Audit Bureau of Circulations seemed designed to conceal as much as they revealed. Publishers could distract attention from alternative circulation sources by reporting them in several different sections — or, in cases where the number of copies was sufficiently small, nowhere at all. That has become harder to do, and it will become even harder next year, when new ABC rules governing sponsored sales kick in. Under the new rules, only those copies for which publishers receive a net payment may be counted as paid. In cases where publishers are, in effect, paying the sponsors, the copies will be classified as “targeted” or “qualified.”
Consumer marketing experts say a large majority of copies sold under current sponsorship programs would not meet the new standards for paid circulation; magazines running such programs will have to decide whether to seek new sources, or lower their rate bases and try to sell advertisers on the value of targeted circulation.
In the most recent batch of reports, covering the first six months of 2005, publishers were for the first time required to report every copy sold through sponsorships, as well as through two related circulation sources: partnerships (typically involving a magazine subscription bundled as part of a product purchase or club membership) and loyalty-award programs (such as frequent-flier miles). Partnership and loyalty-award copies will continue to count as paid under the new rules, although advertisers have expressed reservations about equating them with more traditional paid circulation.
WWD combed through the most recent publishers’ statements for the 30 largest consumer magazines and the top beauty and fashion titles to see which rely most heavily on alternative circulation sources. As a general rule, the higher a magazine’s newsstand sales, the smaller its proportion of sponsorship, partnership and loyalty sales, and vice versa. The newsweeklies, those waiting-room staples, are particularly dependent: 22 percent of Time’s circulation of 4 million is provided by these three sources.
At the other end of the spectrum, newsstand-driven magazines such as Real Simple, Maxim, Cosmopolitan and O, The Oprah Magazine can apparently afford to make sparing use of alternative circulation — no doubt saving their publishers a lot of earnest discussions with skeptical advertisers.