Feature: Magazines Rev Up Revenue With Brand Extensions

No one needs reminding that 2009 was a horrible year for print. Overall, the industry was headed to shed nearly a fifth of its ad pages, although some are seeing their pages plummet by as much as 50 percent. And pages are unlikely to return to levels titles enjoyed in the past. To stay afloat, magazines are eagerly seeking new ways of growing revenue outside the traditional ad-based model.

Many of them are making headway in now-familiar ways—through their digital sites and by licensing their names on kitchen and other household products. In this special report, we profile three magazine companies that are extending their brands in less obvious ways—and making real money in the process. These efforts won’t entirely make up for those lost print ad pages, but it’s a good start—and a sign of the kind of thinking that’s begun to appear in all corners of the industry.

New York Media
When it comes to food, New York magazine knows the Big Apple. Its annual New York Taste event draws some 1,000 people who fork over $175 to $250 to sample food and drink creations from the city’s top (and often priciest) chefs and mixologists. For foodies who want a more hands-on experience, there’s the New York Culinary Experience, a cooking weekend with acclaimed chefs like Jacques Pépin and Marcus Samuelsson. This year’s Oct. 3-4 event drew more than 160 people paying $1,395—not shabby, considering the horrible economy.

Both serve up tasty profits for parent New York Media, according to New York publisher Larry Burstein. New York Taste was a money-loser until Burstein started charging advertisers for
sponsorships three years ago, then launched the Culinary Experience on the same model.
“It once was a value-added event that advertisers could participate in if they bought a certain amount of pages,” he says of New York Taste. “But it was so great, we decided to sell tiered sponsorships.” (901 Silver Tequila is now an official sponsor, along with Pepperidge Farm, of this year’s Nov. 2 event; Hoegaarden, Leffe and Stella Artois are participating sponsors.) A third event, New York Weddings, tied to New York’s twice-a-year weddings issues, also was converted to a paid from a value-added model. This year it attracted about 800 people paying at least $25 a head.

Virgin Atlantic is sponsoring this year’s Culinary Experience after supporting New York Taste two years in a row. Jim Mezoff, vp, marketing, North America, Virgin Atlantic Airways, says the event and its audience match Virgin’s target demo plus the airline’s desire to shift its marketing spend to more targeted events. “New York magazine and Virgin Atlantic share a common ethos in terms of the customers we attract,” he notes. “It’s a very optimistic event to be at, and that’s what we’re looking for.”

All told, the three events make up close to 5 percent of revenue at New York Media. But food has also paid off for the parent company online, too, with advertisers spending on flagship Nymag.com, and two new food verticals: national menu and restaurant search site MenuPages.com, which New York Media bought in July 2008; and food culture blog GrubStreet.com, which spun off from its New York roots this summer to add coverage of Boston, Chicago, Los Angeles, Philadelphia and San Francisco. Burstein says that together the sites are on track to supply one-fourth of the company’s ad revenue in 2009, helped by new online advertisers like Infiniti, Absolut and Bank of America. (New York Media doesn’t disclose revenue, but our estimate puts it in the ballpark of $70 million this year.) The digital slice is up from 16 percent in 2007 and well above the industry average, which PricewaterhouseCoopers puts at 8 percent. In a year when the magazine’s ad pages so far are down 32 percent, that’s a valuable lift.

Meredith’s magazines include some of the biggest in the industry in terms of circulation—but less than half (47 percent) of Meredith’s publishing group revenue (now called the National Media Group) comes from advertising. That’s in large part due to Meredith’s growing integrated marketing unit, which creates customized programs for advertisers using assets like custom publishing, direct marketing and word-of-mouth marketing. Since expanding beyond traditional custom publishing in 2006, Meredith Integrated Marketing more than doubled revenue to $175 million in the company’s fiscal year that ended in June.

Brand licensing is another growth area. Licensing revenue grew 14 percent to $25 million in the last fiscal year, driven mainly by the company’s expanded relationship with Walmart. The company is selling 1,500 Better Homes and Gardens-branded items through Walmart stores and planned to expand to Canada in the second half of this year.

Among other sources that bear watching are membership clubs that build on Meredith’s expertise in the home space. The company already has launched quilting and gardening clubs in the past year, and wants to create clubs in other categories, including woodworking.
Dave Kurns, director of business development, Meredith Interactive, says both clubs are profitable, with several thousand members signed up. Members of the quilting club, Inner Circle, pay about $63 for an annual membership, which includes a book, calendar, bag and poster, although that price will likely come down. The Garden Club, which charges about $10, includes special offers from advertisers and live chats with editors.

Like other magazine publishers, Meredith also is developing premium level Web content for which it can charge consumers. It recently rolled out Decoratinginspiration.com, where visitors pay $19.95 for three months to access thousands of home decorating images. The price includes a year’s subscription to Better Homes and Gardens. In June, it introduced BHGlifeinphotos.com, a scrapbooking site where visitors can create keepsakes like scrapbooks, photo books and digital movies. Meredith shares the revenue (the average order is $85) with its production partners.

The clubs and sites are still small in terms of membership and traffic, but Kurns hopes to grow them into a meaningful business in the next few years. “We’ve always had a very deep relationship with our consumers,” he adds. “We’re trying to increase touch points with them and develop new revenue streams…to weather the storms.”

In this housing economy, the home seems an unlikely place to seek, well, shelter. Yet Dwell magazine still is finding money to be made in the sector. The independent modern design title’s ad pages are off 45 percent to 525 this year through October, but attendance to its fourth Dwell on Design home show, held in July, shot up 30 percent to 15,500 at a time when foot traffic at big design trade shows was down as much as half. The event, which relocated from Dwell’s home base of San Francisco to Los Angeles two years ago, now contributes about 10 percent of the company’s revenue.

Dwell publisher Michela O’Connor Abrams says the idea was to create a show that, like the magazine, would attract consumers and tradespeople alike while creating a new revenue stream for the company.

“When I joined Dwell, I said, ‘What you’ve created doesn’t happen every day,’” Abrams recalls. “Pretty soon people will use Dwell as an adjective. When you have a brand like that, the opportunity is to build all these platforms around the community. It has removed the dependence on advertising—not as much as I’d love, but certainly in a demonstrative way.”

Russ Wheeler, president of Hansgrohe, a high-end bath fixture company and first-time sponsor of Dwell on Design this year, says the show is a good way to reach his target customer in a time of reduced ad budgets. “I think in a very short time they’ve really stepped up to the plate and proven they’re a destination,” he says. “We would rather spend money on a Dwell on Design than put an ad in the magazine.”

Another 10 percent of revenue comes from digital, which includes Dwell’s own site as well as the Dwell Partner Network, a collection of some 30 like-minded architecture and design sites that share links and content and reach 5 million monthly unique visitors. Dwell expects sales from the network to contribute $125,000 to its bottom line this year.

A smaller slice of revenue comes from Dwell’s prefab homes, which it sells
through licensing agreements with Marmol Radziner and Lindal Cedar Homes. Dwell also has a burgeoning business of doing sales and back-office work for other independents.

All told, Dwell derives 20 percent of its revenue from outside the print publication. Dwell doesn’t release revenue data, but we estimate it will pull in about $15 million this year. Abrams’ goal is to grow nonprint revenue to 35 percent in 2010 through Dwell’s existing sidelines in addition to a forthcoming line of Dwell-branded products for the home.     

Elsewhere in the Industry…

Home furnishings collections spun off from Hearst’s Country Living will account for 5 percent of the magazine’s revenue in 2009…

Rodale’s Prevention sold nearly 26 million Prevention-branded products in the first seven months of 2009, including books, DVDs and online subscription services…

Highbrow events like First Draft of History and the Green Intelligence Forum accounted for 15 percent of The Atlantic’s revenue, up from 2 percent in 2005…

People’s $1.99 Celebrity Tracker iPhone app was at one point Apple’s fourth-biggest seller since it launched in the summer, prompting the pub to greenlight at least two more apps in 2010, including a paid game app…