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Applying analytics to magazine sales at Hearst

It’s safe to say that analytics are no longer online news’ equivalent of fantasy baseball circa 1998: relegated only to the geekiest corners of the operation. News editors and executives not only know what kind of hourly, daily, and monthly traffic their sites get, but they can tell you who’s their best referrer and what stories will predictably provide a pageview explosion. (Of course there’s still a debate on what role those metrics should play for news organizations.)

But what about on the print side? Specifically magazines: When it comes to newsstand distribution, the numbers are largely a guessing game. And when you’re spending millions on printing and delivering magazines, that’s an expensive guessing game.

“There’s a lot of waste, in a sense,” said Charlie Swift, vice president of database strategy and marketing for Hearst Magazines. “You may put out 10 copies, sell 4 and 6 get tossed.” The flip side, of course, being when you don’t stock enough magazines at locations where they sell out. Distribution has largely been based off previous sales at given locations, but variables can come into play, such as where magazines are placed (near the checkout vs. on a newsstand) and demographics in an area (or as Swift told me: “If you’re selling Cosmopolitan in a retirement community, that’s probably not a good idea.”).

“We believe there’s a way to make [distribution] more efficient by putting analytics behind it,” Swift told me.

All of this is why Hearst held a competition to see who could build a better analytics model to predict newsstand sales for magazines. It’s a Netflix Prize-like approach to figuring out how well a magazine will sell at a given location, based off historical sales data. There were more than 700 participants in the competition, and last month Hearst and the Direct Marketing Association awarded a team $25,000 for their formula, which generated magazine sales estimates that were nearest to actual newsstand figures. Swift said they’re looking at how they can adapt the model to distributing different titles.

They’re hoping analytics can be a way of becoming more efficient and saving money — starting by wasting less paper. According to figures provided for the competition by the National Center for Database Marketing, less than 40 percent of all copies are sold, and the magazine industry saw close to a six percent drop in newsstand sales between 2009 and 2010. Swift said using analytics benefits readers “if we can be more efficient as an industry and take costs out that are not adding to the customer.”

What’s almost ironic about magazines getting turned on to analytics is that they’re historically known for holding on to information about readers from home subscriptions, direct mail, and surveys. Swift knows this better than most; his job is a relatively new position created at Hearst specifically to look at metrics. Like many organizations, Hearst’s magazine division is in the process of building a unified customer database that ties together information like bill payments, web visits, and promotions received.

Aside from the economic benefits of getting better data, Swift said he thinks magazine publishers realize the cost of storing and managing information has gone down. They’re also taking notice of how analytics are used in making decision for news sites. “The web changes the culture too,” he said. “There’s too much information to absorb — you have to process it, have to let analytics drive it in ways.”

Photo by YoungDoo Moon used under a Creative Commons license.

                                   
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  • http://www.chateaudesclans.com Thomas Schreckinger

    I had the opportunity to work in ad sales at Hearst Magazines for five years between ’89 & ’94. Back then sales & marketing management went to extensive lengths, when orienting sales people, to say that while Hearst Magazines is first & foremost an editorially driven organization it has impressive talents & capabilities in the distribution arena. This was an important point to “take in” because @ the time I was involved with newsstand only distributed magazines. To that end, our media and marketing clients always expressed curiosity as to what our magazines’ “sell through” was & we were prepared, with substantive/ multi faceted responses, to answer such questions that, @ the end of the day, were not only true but made sense particularly when presented correctly. It is great to see that Hearst’s tradition in ensuring a productive approach towards selling magazines @ point of sale is in step with current industry practices. I would expect nothing less!

  • JS

    That’s great. Who won? And what’s the model?

    x.

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  • Mehtakrishna

    A^3. Won you can hear them at Ema seminar center on may 19