Tuesday, July 29, 2008

ABC Board Cuts Audit Costs for Newspapers, Freezes Rates for Magazines

ABC Board Cuts Audit Costs for Newspapers, Freezes Rates for Magazines
Magazines may also see audit rate reductions as early as November.
By Chandra Johnson-Greene
In response to the newspaper industry's ongoing revenue struggle, ABC announced that it will reduce audit costs by almost half for some U.S. and Canadian newspapers, while freezing costs for other newspapers and most magazines.

ABC previously announced in March that U.S. newspapers with paid circulation below 50,000 would have the option to be audited every other year beginning in April 2009, raising the eligibility ceiling from its current 25,000 level. This week, the ABC board agreed to advance this timeline by six months, to Oct. 1, 2008, and expand the option to Canadian newspapers.

The board also gave its initial approval to rules allowing all U.S. and Canadian newspapers with paid circulation between 50,000-75,000 to have this same biannual audit option next year, beginning April 1. To take advantage of this, a newspaper's most recent audit cannot contain an adjustment of more than 2 percent and its third-party circulation cannot exceed 5 percent of its total paid circulation.

Newspapers with circulation between 50,000-75,000 will also be required to participate in ABC's Preprint Projection Center, a free online tool that allows publishers to provide confidential circulation forecasts to help advertisers better plan media purchases and insert-printing requirements. All newspapers are still required to file six-month publisher's statements, with top-line numbers reported in ABC's FAS-FAX report.

The ABC board also approved a new flat-rate billing model for field audit services for fiscal 2009, effectively freezing audit costs for most other ABC newspapers and magazines.

"ABC has typically billed publishers based on an hourly rate," said Michael J. Lavery, ABC's president and managing director, in a statement. "Our new structure uses a flat rate based on the most recent ABC audit. By streamlining some aspects of the audit and automating more processes, most publications will be able to accurately forecast and control their costs."

According to Teresa Perry, SVP, publisher member audit and report processing services, ABC, titles that have "too much versatility" during their auditing periods will be continued to be billed at the hourly rate. The bulk of those titles would be found in the non-paid category, she told CM.

Audit Rate Reductions for Magazines Too?

While the forecast for the magazine industry doesn't appear to be as bleak as it is for newspapers, will the board consider reducing costs for them as well? According to Perry, the answer is yes.

"The liaison committees, which are so frequently developing ideas [to address the concerns of the magazine industry], have been reviewing options for some time now," Perry told CM. "They've been taking a look at what reporting elements are important and are required by the advertising environment, as well as which ones are aged or no longer relevant. All of this is being reviewed on a cost-benefit ratio."

Perry says that such reviews have been taking place for the past four months and that changes could be seen as early as November, but most likely in early 2009.

Other Board Actions

The ABC board also agreed to allow consumer magazines to test new circulation marketing programs while working with ABC to determine the appropriate audit procedures. Circulation generated during the one-year test period would be reported as verified or analyzed non-paid, as appropriate.

"We trying to encourage publishers not to shut the door on new marketing opportunities just because the audit process is unknown upfront," says Perry. "Traditional sources, such as direct mail, may not be as available, so it's wise to explore non-traditional sources and to partner with others they may not have the audit structure."

The board also voted to adopt a new multimedia publisher's statement for business magazines. The new optional report, available for the Dec. 2008 reporting period, allows publishers to report print circulation, Web site activity, e-newsletter activity and pass-along receivership in a single ABC statement. The board also agreed that, effective immediately, paid Web site subscriptions could qualify as paid digital editions of business magazines.

The board elected five new directors at its recent meeting, which took place on July 23-26: Irene Grieco, manager of media investment and strategic partnerships at Unilever US; Suzanne Silber, group director of strategy at OMD; Bill Stabile, senior director of brand and marketing communications at Siemens Corp.; Lindsay Valk, senior vice president of analysis and planning, consumer marketing, Hearst Magazines; and Brenda White, senior vice president, Starcom Worldwide.

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