Why such high relative ROI for magazines?
The evidence that magazines are an effective advertising medium is well established (my Proof of Performance report for FIPP is full of such information), but there are also other, less recognised, factors explaining why magazines yield such high relative ROI compared with other media. All media are subject to diminishing marginal returns, and frequently there is under-investment in magazines.
In general, as more ad expenditure pours into a given medium, the sales generated by the last tranche of money becomes less than the sales generated by the same amount of money spent earlier. Eventually the situation is reached where spending yet more money in the medium produces little effect or even no effect at all.
By that stage, it would have been better to have spent the last amounts of money in a different medium which was still producing good returns for additional expenditure.
Under-investment in magazines
The position often arises where advertising budget has been heavily spent in television and online, with little left over for other media including magazines. Yet campaign analyses are increasingly finding that television (in particular) has reached a relatively flat section of its diminishing returns curve, while magazines with their low level of expenditure are still on the steeply rising part of their curve.
What this means is that if the last portion of the budget allocated to television was spent in magazines instead, greater net sales would be generated. The relatively small loss of sales from TV advertising due to the switching of that money would be much more than offset by the extra sales generated by that money being spent in magazines.
In other words, there was under-investment in magazines.
Increasing evidence from around the world
This is not just theory. There is increasing proof from post-campaign evaluations, conducted in ever more sophisticated ways.
The most recent example to come to my attention is from Australia. Magazine Publishers of Australia launched last month an analysis by Nielsen titled Econometric Modelling Study: 3 FMCG Campaigns. It examined real advertising campaigns for three brands, taking account of the ad expenditure in each medium and the incremental product sales attributed to each medium. On aggregate, magazines yielded the highest ROI of all media used (TV, online, online video, outdoor). In these campaigns, magazines were shown to have contributed 10 per cent of the incremental sales contrasting with 66 per cent by TV.
Nielsen calculated the rate of diminishing returns for each medium, and then modelled true contribution by each medium. They found that magazines' contribution to incremental sales was 23 per cent (and only 56 per cent by TV). This implies that the campaigns had under-invested in magazines to a significant extent.
An earlier example, and partly an inspiration for the Australians, was the Magonomics study by PPA in the UK. This was a ground-breaking study in several ways. Among others, it worked with media agency Mindshare who found that, aggregating results across 77 fmcg campaigns that the agency’s group had run, magazines had the highest ROI of the seven media used (including TV). In a separate analysis which modelled optimum allocations between media, it was shown that sales would have increased measurably if magazines had been given a higher share of expenditure. It went on to calculate that the money allocated to magazines needed at least to double before magazine ROI fell to the same level as TV ROI – due to magazines moving along its diminishing return curve to a point where it became more shallow.
Instructively, the Nielsen modelling in Australia came up with an analysis which implied giving magazines more than double its actual share of budget which neatly fulfilled the ‘at least double’ rule suggested in the UK.
Clearly, under-investment occurs in both hemispheres.
Here are a few further studies, among many, proving magazine efficiency in advertising campaigns:
It is worth adding that in all these studies it was crucial that the right input data was fed into the models, and I am thinking particularly of readership accumulation data. It is essential that the data allocates the ad exposures delivered by magazines through time in a realistic way, week by week, otherwise the pattern-matching of the models will not be able to match the weekly sales figures with the right weekly ad exposure figures.
I conclude with comments from three of the studies mentioned:
More like this
In November 2018, we co-hosted an Insider event with FIPP in Argentina and Chile about the role and value of digital editions. Given the Latin American venue, I decided to use a local coming-of-age tradition - a quinceañero - the 15th birthday milestone when a girl transitions from a child into a young woman in the community.11th Apr 2019 Opinion
The acceptance of the need to turn data into valuable information has reached a tipping point and will accelerate in the next three years, writes Thomas Howie, COO of events software platform Evessio.11th Feb 2019 Opinion
Rumours of the death of print media have been greatly exaggerated. While online publications have been experiencing tremendous growth in recent years, the fact is that 58 per cent of subscribers still describe themselves as primarily print-oriented, and 60-80 per cent of publisher revenues are still generated from print. It’s true that the majority of print-first subscribers are older, but that doesn’t mean younger audiences won’t pay for print. They will, and they do.16th Jan 2019 Opinion
At UPM Communication Papers we have a long history of demonstrating responsibility for the environment. But few people know that our sustainability agenda extends to also include a commitment to taking care of people and society throughout the value chain whilst simultaneously creating value for our customers through delivering products with high sustainability credentials.26th Nov 2018 Opinion
For publishers, AI-driven tools have largely been used for editorial purposes, to write articles on themes like sports scores, weather forecasts and real estate sales. For example, Reuters uses an AI-based tool called NewsTracer to sift through millions of tweets in real time, to flag potential news stories, for its journalists. UK-based Reach does something similar, using an AI-based tool called Krzana to monitor 60,000 online sources to alert journalists to breaking news, and Forbes has tested an AI-based tool to draft stories for contributors. Publishers have also leveraged artificial intelligence to power content recommendations, to edit homepages, and for translation.10th Jun 2019 Features
For over 50 years, Rolling Stone has been iconic in its coverage of music and popular culture, political journalism and commentary. From the Beatles' Magical Mystery tour to Shawn Mendes, Rolling Stone has covered the greatest rockstars, the hottest celebrities, the biggest political stories. Called a 'counterculture bible' by The New York Times, the magazine has launched careers, defined what was cool, inspired a rock song, been embroiled in controversy, and over the last two years, found a new home with Penske Media Corporation.17th Jun 2019 Features
Despite popular belief, subscriptions and paywalls will not be the silver bullet most digital publishers have been waiting for. Instead, publishers should be exploring innovation in digital advertising formats, said Jessica Rovello, co-founder and CEO, Arkadium, USA, at this year's Digital Innovators' Summit in Berlin. She proposed four new formats as a good place to start.17th Jun 2019 Features
Martha Stone Williams, CEO of World Newsmedia Network, discusses how the media industry must adapt to embrace innovation, how data and measurement must be the cornerstone of strategy and direction, and successful media firms implement a culture of experimentation.10th Jun 2019 Features
Condé Nast International today announced the launch of Vogue Business Talent, a curated recruitment platform for professionals seeking opportunities with the world’s leading fashion brands. The new platform, launching with selected opportunities in London, New York, Paris, Milan and Hong Kong forms part of Vogue Business, the online B2B publication launched in January 2019.12th Jun 2019 Industry News
Visit our Youtube channelFIND OUT MORE
FIPP newsletters allow you to keep up with industry trends, research, training and events across the worldFIND OUT MORE
What’s happening now, what’s coming next