League Table: Customer publishing leagues

The AA is not the only new advertiser showing interest in custom
publishing.

Recent launches include titles for a diverse range of clients, among
them PC World, Vision Express, Prudential and lastminute.com. No longer
the poor relation of news-stand publishing, customer magazines are
evolving into a fully fledged marketing medium in their own right.

This impression was confirmed by a Mintel report released earlier this
year that valued the sector at £344m in 2004, up from £220m
just five years earlier. The growth has continued into 2005. 'The past
six months have been one of the most active new business periods I have
seen,' says Mike Potter, co-founder of Redwood and now chairman of Seven
Publishing, publisher of news-stand title Delicious. To make the most of
this upturn, this year his firm purchased Sainsbury's Magazine publisher
New Crane, which is soon to be rebranded Seven.

Significantly, the Mintel report concluded that the sector's growth is
more than a short-term phenomenon, estimating that it will be worth
£531m in 2009, a rise of 36% when the effects of inflation are
discounted. Alex Finer, creative director of The Publishing Agency,
points out that about 50 companies in the FTSE 100 have launched a
magazine. 'That means 50 have not, so the sector is still relatively
underdeveloped.'

It is surprising, therefore, that Interpublic Group this year withdrew
from customer publishing. The Publishing Agency was formed in July when
a management team bought out Interpublic-owned Just Customer
Communications in the UK and two US publishers.

The deal effectively ended Interpublic's involvement in customer
titles.

Integration breakdown

Grahame Lake, former managing director of Just and now a director at PSP
Communications, believes Interpublic's decision reflects a failure to
integrate publishing into its other activities. It is a failing he
believes is shared by rival marketing groups that have bought publishing
arms. 'They have had years to integrate publishing into their marketing
services offering, but there is no evidence that it has happened,' he
argues. 'The networks lose patience and focus their business
elsewhere.'

His views are shared by Toby Smeeton, former client services director of
Just and co-founder of new agency Sunday. 'The big networks are working
toward multimedia delivery, but in the UK that is not sustainable,' he
says. 'Marketing managers here buy expertise in each discipline, not
generic ability.'

Naturally, this is an argument that customer publishing divisions owned
by other marketing services groups do not accept. Ian Sewell, commercial
director at Redwood, points out that his agency works closely with
Omnicom sibling BBDO on some pitches. However, he accepts that
integration has not been easy. 'It is a cultural thing - it takes time
for people to work together,' he says. 'We are all run as separate
businesses, but we are getting there.'

Industry action

Interpublic's decision notwithstanding, customer publishing agencies
from all backgrounds enjoyed strong growth last year. Driving this
uptake over the long term is marketers' willingness to experiment with
other media as traditional channels fragment. In the past 12 months,
this has been helped by a concerted effort by the Association of
Publishing Agencies (APA) to make a strong business case for customer
magazines.

'The big story this year has been the resurgence of the APA,' says Mick
Hurrell, planning and business development director at Wardour. 'It has
been transformed from a publishers' club into a very active
organisation. It has really changed the dynamics of the industry.'

The centrepiece of the APA's activity this year has been the 'Advantage
Study'. Unveiled in March, this was 'the most important thing the
industry has seen in the past 10 years', according to Patrick Fuller,
managing director of Haymarket Network, part of Marketing's publisher,
Haymarket.

The report, conducted by Millward Brown, set out to prove the
effectiveness of the medium as a marketing tool. It tracked magazines
from a number of categories and found consumers read customer titles for
an average of 25 minutes, dispelling the myth that freely distributed
magazines are simply ignored. It also demonstrated an average 8% sales
increase as a result of a customer magazine, and a 32% jump in brand
loyalty.

The 'Advantage Study' is not intended as a quick fix. It is an ongoing
project that will deliver new results every six months to chip away at
marketers who have previously ignored the medium. It is already bearing
fruit, according to Jason Frost, managing director of Publicis Blueprint
and chairman of the APA. 'The study has given us a huge fillip,' he
says.

'There are now 20 world-famous brands that did not have a magazine
before talking to us.'

Broadened horizons

As it grows in confidence, the industry is expanding its client base -
retailers, financial firms, car marques and charities now routinely use
the medium. One area growing rapidly is the public sector, and the past
year saw the creation of the COI's first customer publishing roster; 15
shops made the cut.

The government's publications include a title for Visit London through
John Brown Citrus Publishing (JBCP) and The Sharp End, a magazine for
the police published by Square One. Several other titles are in the
pipeline.

According to COI director of publications Andrew Prince, government
departments are turning to magazines to deliver complex messages. As a
result, roster agencies can expect plenty of pitches in the future.
'Magazines are a growing niche for the COI,' he says. 'There is greater
interest within government, as it is seen as a positive communications
channel. Customer publishing is gaining momentum as people increasingly
understand what it can and cannot do.'

In contrast, the FMCG sector has not grown as quickly as expected. A
year ago, when Procter & Gamble launched Mustard, a lifestyle title
promoting its brands, there was much talk of FMCG being the next major
growth area for the medium. But Mustard never made it past the first
issue, and there has been little, if any, activity from other consumer
goods firms.

'An FMCG magazine won't work unless people know who the brands belong
to,' says Andrew Hirsch, chief executive of Mustard's publisher, JBCP,
who believes that the magazine failed because P&G refused to talk about
itself. 'Mustard didn't work because it didn't say where it had come
from. The brands in it were very strong, but there was no message from
P&G itself. People thought that it was just a supplement of the Daily
Express (in which it was distributed).'

Despite the failure of Mustard, many agencies feel that FMCG still has
great potential, especially now they are armed with the results of the
'Advantage Study'. 'Suppliers are concerned that retailers have their
own media,' says Publicis' Frost. 'They want their own ways to build
loyalty. Magazines are something they will look at more in the
future.'

As well as attracting new clients, agencies have succeeded in expanding
existing contracts. This often involves extra publications, but a
growing trend is for publishing agencies to supply content for other
channels, principally online.

Publishers have a chequered history when it comes to the internet.
Several had their fingers burned during the initial dotcom boom,
investing heavily in digital content, but finding that clients turned to
online specialists to build their websites.

Redwood, for example, set up a dedicated web division, which it
subsequently had to close.

Now, however, there is a feeling that clients have their online presence
in place, and are looking to publishers to provide imaginative
content.

One example is provided by Haymarket Network's recent four-year deal
with Manchester United. The publisher already produced the club's
match-day programme, but has now taken over United magazine and,
significantly, its website, too. 'Anyone can build a website, but you
have to fill it with good content,' says Haymarket's Fuller. 'More and
more solutions are a combination of online and offline.'

Not everyone is convinced. JBCP's Hirsch believes the margins in
internet work are still too thin for it to be a major growth area.
Digital content, he believes, will remain an add-on to existing
relationships. He believes the real opportunity lies in the blurring of
lines between customer publishing and direct mail. JBCP now publishes an
insert that accompanies Orange phone bills, a publication that serves as
a piece of direct mail. 'Direct mail spend is 10 times the size of
customer publishing spend,' he says.

'If just 10% of that DM spend moved to customer publishing, our industry
would double.'

Specialist Publications has adopted a similar strategy by developing a
'mini-mag' format, which is cheaper to produce than a full-blown
magazine but more compelling than a mailshot. It is already used by
Kwik-Fit, and will be the format for the AA's magazine. AA retention
communications manager Sam Day sees the publication as a 'sophisticated
piece of direct mail'. It is a marked change from the organisation's
previous publication, a glossy lifestyle title which relied on selling
ads.

One potentially exacerbating problem for the industry is pricing. There
is a feeling that clients are squeezing margins, putting smaller
agencies at risk. 'The industry needs to shape up in terms of pricing,
or a lot of agencies will go to the wall,' says Brian Grant, chief
executive of Redactive. 'We are a competitive business, but you have to
have a decent margin.'

His sentiments are echoed by Haymarket's Fuller. 'The next challenge is
to recognise that we are not an industry in which creativity is
irrelevant,' he argues. 'Creativity and success go hand in hand, and it
comes at a price.'

There are steps afoot to tackle the issue. An APA working party chaired
by Richard Proctor, co-owner of 21 Carrot, is exploring ways to showcase
the industry's creativity, and has toyed with the idea of a dedicated
creative awards.

According to Proctor, the industry needs to focus on more than return on
investment. 'We would like to find a measure that relates to brand
meaning.'

Publishers are not the first to find themselves having to prove the
value of creativity. But doing so may be crucial if the APA's ambitious
targets are to be met. Its goal is to expand the industry so that it
commands 7% of total marketing spend by 2010 - double its current share.
There are certainly challenges ahead, but if the momentum of the past 12
months can be maintained, it would be foolish to bet against it doing
so.

TOP CUSTOMER PUBLISHING AGENCIES

Agency Net t'over Net turnover %
2004 2003 chg
(pounds) (pounds)
1 John Brown
Citrus Publishing 48,700,000 50,100,000 -3
2 Redactive Media
Group 25,200,000 23,500,000 7
3 Haymarket Network 19,100,000 20,500,000 -7
4 Publicis Blueprint 11,984,000 7,796,000 54
5 New Crane n/a 9,222,000 n/a
6 River Publishing 8,510,000 7,575,000 12
7 Ink Publishing 7,121,939 4,689,560 52
8 Square One Group 4,912,404 2,756,267 78
9 Newsdesk Media
Group 4,359,875 n/a n/a
10 The Publishing
Agency* 4,000,000 n/a n/a
11 The Illustrated
London News Group 3,793,000 3,210,000 18
12 The Big Agency 3,400,000 2,800,000 21
13 Wardour
Communications 2,880,187 2,523,959 14
14 Rare Publishing 2,572,000 2,514,000 2
15 Axon Publishing 1,953,625 1,315,611 48
16 Think Publishing 1,761,608 1,055,549 67
17 Atom Publishing 1,730,000 1,160,000 49
18 Redhouse Lane 1,596,446 1,381,682 16
19 Zone 1,588,000 1,434,000 11
20 Origin Publishing 1,554,000 1,488,000 4
21 PSP Communications 1,323,435 1,171,111 13
22 Northstar 1,171,000 823,000 42
23 Brooklands Group 813,000 708,000 15
24 Crimson Impact 669,785 587,983 14
25 21 Carrot 595,000 668,000 -11
26 Wrap 430,000 336,000 28
27 Alchemy Worx 391,000 315,000 24


Agency Int'l t'over Int'l t'over % Print/ Staff
2004 2003 chg online
(pounds) (pounds) (%)
1 John Brown
Citrus Publishing n/a n/a n/a 95/5 200
2 Redactive Media
Group n/a n/a n/a 100/0 107
3 Haymarket Network 10,200,000 7,500,000 36 93/7 98
4 Publicis Blueprint n/a n/a n/a 96/4 125
5 New Crane n/a n/a n/a 100/0 74
6 River Publishing n/a n/a n/a 100/0 68
7 Ink Publishing n/a n/a n/a 96/4 70
8 Square One Group n/a n/a n/a 100/0 40
9 Newsdesk Media
Group n/a n/a n/a 98/2 50
10 The Publishing
Agency* 2,000,000 n/a n/a 80/20 50
11 The Illustrated
London News Group 200,000 205,000 -2 90/10 47
12 The Big Agency n/a n/a n/a 95/5 43
13 Wardour
Communications 127,416 127,416 0 85/15 38
14 Rare Publishing n/a n/a n/a 75/25 32
15 Axon Publishing n/a n/a n/a 100/0 15
16 Think Publishing n/a n/a n/a 95/5 25
17 Atom Publishing n/a n/a n/a 100/0 10
18 Redhouse Lane n/a n/a n/a 95/5 60
19 Zone n/a n/a n/a 40/60 20
20 Origin Publishing 200,000 250,000 -20 100/0 170
21 PSP Communications n/a n/a n/a 96/4 8
22 Northstar n/a n/a n/a 100/0 12
23 Brooklands Group n/a n/a n/a 100/0 91
24 Crimson Impact n/a n/a n/a 90/10 6
25 21 Carrot 625,000 590,000 6 100/0 5
26 Wrap n/a n/a n/a 100/0 7
27 Alchemy Worx 10,000 60,000 -83 0/100 10


Agency

1 John Brown Citrus Publishing
Founded 2002. Privately owned. Chairman David Gilbertson; CEO Andrew
Hirsch. Consumer (90%), B2B (5%), internal (5%). Clients include
BSkyB, Orange, Waitrose. Member APA. www.jbcp.co.uk.
2 Redactive Media Group
Founded 1981. Privately owned. CEO Brian Grant. Consumer (40%), B2B
(60%). Clients include Chartered Institute of Personnel &
Development, Chartered Institute of Purchasing & Supply, Royal
British Legion. Member APA. www.redactive.co.uk
3 Haymarket Network
Founded 1997. Privately owned. Chairmen Kevin Costello, Tony Schulp;
managing director Patrick Fuller. Consumer (81%), B2B (17%),
internal (2%). Clients include Toyota, Manchester United, British
Army. Member APA. www.haycustpub.com
4 Publicis Blueprint
Founded 1999. Subsidiary Publicis Groupe. Chairman John Wisbey;
managing director Jason Frost. Consumer (90%), B2B (10%). Clients
include Asda, Debenhams, Prudential. Member APA.
www.publicis-blueprint.co.uk
5 New Crane
Founded 1993. Subsidiary Seven Publishing. Chairman Mike Potter;
managing director Seamus Geoghegan. Consumer (100%). Clients include
Sainsbury's. Member APA. www.newcrane.com
6 River Publishing
Founded 1994. Subsidiary River Group. Chairman Michael Williams;
managing director Nicola Murphy. Consumer (100%). Clients include
Holland & Barrett, News International, Superdrug. Member APA.
www.riverltd.co.uk
7 Ink Publishing
Founded 1994. Privately owned. Chairman Sebastian James; managing
director Jeffrey O'Rourke. Consumer (100%). Clients include CNN
International, easyJet, Virgin Express. Member APA.
www.ink-publishing.com
8 Square One Group
Founded 1992. Privately owned. Director Simon Chappell; commercial
director Sean King. Consumer (78%), B2B (20%), internal (2%).
Clients include Waterstone's, Direct Line Insurance, Home Office.
Member APA. www.squareonegroup.co.uk
9 Newsdesk Media Group
Founded 1997. Privately owned. Chairman Anthony Hilton; CEO Alan
Spence. Consumer (7%), B2B (93%). Clients include Airbus, Holmes
Place Health Clubs, Export Credits Guarantee Department.
www.newsdeskcomms.com
10 The Publishing Agency*
Founded 2005. Privately owned. Chairman Kirk Cheyfitz; CEO Simon
Kelly. Consumer (60%), B2B (30%), internal (10%). Clients include
Lexus, Home Office, Bluewater. Member APA.
www.thepublishingagency.com
11 The Illustrated London News Group
Founded 1985. Subsidiary Sea Containers. Managing director Lisa
Barnard; commercial director Fay Delavault. Consumer (87%), B2B
(12%), internal (1%). Clients include Orient-Express Hotels,
VisitBritain, South West Trains. Member APA. www.ilng.co.uk
12 The Big Agency
Founded 1997. Privately owned. Chairman Peter Gould; managing
director Ned Dean. Consumer (100%). Clients include Motability,
Department for Transport, London Borough of Hammersmith & Fulham.
www.big-agency.com
13 Wardour Communications
Founded 1996. Privately owned. Chairman Nick Mayhew-Smith; CEO
Martin MacConnol. Consumer (15%), B2B (50%), internal (35%). Clients
include Camelot, UBS, RSA. Member APA. www.wardour.co.uk
14 Rare Publishing
Founded 1986. Subsidiary Chime Communications. Managing director Kim
Conchie; client services director Carolyn Tree. Consumer (70%), B2B
(30%). Clients include Somerfield, Teacher Training Agency, BMI.
Member APA. www.rarepublishing.co.uk
15 Axon Publishing
Founded 1994. Privately owned. Editorial director Paul Keers;
publishing director Ellen Brush. Consumer (80%), B2B (20%). Clients
include Conran, Marks & Spencer, University of Luton. Member APA.
www.axonpublish.com
16 Think Publishing
Founded 1999. Privately owned. Managing director Tilly Boulter;
publishing director Ian McAuliffe. Consumer (80%), B2B (15%),
internal (5%). Clients include Ramblers' Association, Royal Parks,
CPRE. Member APA. www.thinkpublishing.co.uk
17 Atom Publishing
Founded 1996. Privately owned. Chairman Maria Round; managing
director Stephen Quirke. Consumer (30%), B2B (70%). Clients include
Norwich Union, Royal Institute of Chartered Surveyors, Open
University. Member APA. www.atompublishing.co.uk
18 Redhouse Lane
Founded 1988. Privately owned. Managing director Jeremy Redhouse;
client services director Fiona Corey. Internal (100%). Clients
include BAA, Royal Bank of Scotland, EDF Energy.
www.redhouselane.com
19 Zone
Founded 2000. Privately owned. Chairman Lord Tom Chandos; CEO James
Freedman. Consumer (74%), B2B (26%). Clients include Channel 4,
lastminute.com, Fremantle International. Member APA.
www.zonecontent.com
20 Origin Publishing
Founded 1997. Subsidiary BBC Magazines. CEO Kevin Cox; managing
director Andy Marshall. Consumer (90%), B2B (5%), internal (5%).
Clients include HMV, UGC Cinemas, Waterstone's. Member APA.
www.originpublishing.co.uk
21 PSP Communications
Founded 2002. Privately owned. Managing director Peter Moore; client
services director Grahame Lake. Consumer (99%), internal (1%).
Clients include Kia Motors UK, British Heart Foundation, Great
Ormond Street Hospital. Member APA. www.pspcom.com
22 Northstar
Founded 2003. Privately owned. Managing director Mark Beazleigh,
editorial director Mark Walton. Consumer (100%). Clients include
Mazda Motors UK, Fat Face, Mappin & Webb.
www.northstarpublishing.com
23 Brooklands Group
Founded 1992. Privately owned. Managing director Darren Styles;
client services director Matthew Jenns. Consumer (100%). Clients
include Renault, Channel 4, Nissan. Member APA.
www.brooklandsgroup.com
24 Crimson Impact
Founded 2001. Privately owned. Managing director David Lester;
publisher Sean Collins. Consumer (22%), B2B (77%), internal (1%).
Clients include KPMG, IBM, Department of Trade & Industry.
www.crimsonimpact.com
25 21 Carrot
Founded 2000. Privately owned. Principal directors Richard Proctor,
Clare Weatherall. Consumer (100%). No clients given. Member APA.
www.21carrot.com
26 Wrap
Founded 1999. Privately owned. Chairman Bernard Johnson; managing
director Roger Wilsher. Consumer (20%), B2B (80%). Clients include
Telewest, Workspace Group, Institute of Revenues Rating & Valuation.
Member APA. www.wrapcom.com
27 Alchemy Worx
Founded 1999. Privately owned. CEO Dela Quist; client services
director Andy Gray. Consumer (70%), B2B (30%). Clients include NTL,
Sainsbury's Bank, Carphone Warehouse. www.alchemyworx.com

* 2004 figures refer to Just Customer Communication



SARBANES-OXLEY-AFFECTED AGENCIES

Agency Turnover Turnover % Staff
2004(pounds) 2003(pounds) chng
Cedar Communications 18,819,540 17,579,842 7 90
Forward 13,557,588 14,170,452 -4 100
Redwood Publishing 41,022,354 55,520,278 -26 187
Specialist Publications 1,925,481 2,143,858 -10 25

AGENCY

CEDAR COMMUNICATIONS
Founded 1992. Subsidiary Omnicom. MD Clare Broadbent. Cons (90%), B2B
(10%). Clients incl Tesco, BMW. Member APA. www.cedarcom.co.uk

FORWARD
Founded 1985. Subsidiary WPP. CEO Sarah Wyse. No work breakdown given.
Clients incl Tesco, Ford. Member APA. www.theforwardgroup.com

REDWOOD PUBLISHING
Founded 1984. Subsidiary AMV BBDO. CEO Keith Grainger. Cons (86%), B2B
(14%). Clients incl Boots. Member APA. www.redwoodgroup.net

SPECIALIST PUBLICATIONS
Founded 1969. Subsidiary Omnicom. MD Niki Webb. Cons (60%), B2B (30%),
int (10%). Clients incl Peugeot. Member APA. www.specialistuk.com

Source: Companies House data provided by Willott Kingston Smith



TOP 5 FOR GROWTH - BIG AGENCIES

Agency Net turnover Net turnover Change
2004 (pounds) 2003 (pounds) (%)
1 Square One Group 4,912,404 2,756,267 78
2 Publicis Blueprint 11,984,000 7,796,000 54
3 Ink Publishing 7,121,939 4,689,560 52
4 The Big Agency 3,400,000 2,800,000 21
5 The ILN Group 3,793,000 3,210,000 18

Note: does not include agencies affected by Sarbanes-Oxley Act



TOP 5 FOR GROWTH - SMALL AGENCIES

Agency Net turnover Net turnover Change
2004 (pounds) 2003 (pounds) (%)
1 Think Publishing 1,761,608 1,055,549 67
2 Atom Publishing 1,730,000 1,160,000 49
3 Axon Publishing 1,953,625 1,315,611 48
4 Northstar 1,171,000 823,000 42
5 Wrap 430,000 336,000 28

Note: does not include agencies affected by Sarbanes-Oxley Act

THE SARBANES-OXLEY EFFECT

For companies affected by the US Sarbanes-Oxley Act, which restricts the
financial information firms are allowed to make public, we have used
Companies House data provided by Willott Kingston Smith. Unlike other
Marketing league tables, these agencies have not been listed within the
main table. This is because customer publishing agencies are ranked by
net turnover, which excludes print and distribution costs passed on to
the client without mark-up. This information is not available at
Companies House.

As no fair comparison with the rest of the agencies is available, the
four Sarbanes-Oxley-affected agencies are listed alphabetically in the
table presented opposite.