What,
Me Retrench?
Your
Guide to Cost-Cutting Without Lopping Off Heads
FROM PUBLISHING
TRENDS (SEPTEMBER 2002)
Now
that synergy’s been debunked, and good old Thomas
Middelhoff has been spun off, the publishing world
has settled down to the rather more prosaic task of
whittling away at its already bare-bones cost structure.
“It’s clear there is retrenchment,” as one public relations
executive says, but it’s not always clear — as in the
case of Random House’s belatedly acknowledged
“companywide cost-restructuring program” — what trenches
are getting hacked across whose budgetary back yard.
For many publishers, creative cost-cutting has become
something of a fine art these days, as they snip their
expense reports into origami in search of those elusive
economies, all the while trying deftly not to lop off
their own colleagues’ heads.
“All
of us here are very carefully looking at every line
on our operating expenses,” explains Stephen Rubin,
President and Publisher of the Doubleday Broadway
division of Random House. For starters, he’s cut back
dramatically on the free copies he sends out to what
he dubs his “big mouth” list, which can save some considerable
pennies in postage, plus the cost of the books themselves,
over a year’s time. Taking aim at the unit’s many magazine
subscriptions was a no-brainer, he adds, and the number
of people deployed to conventions has been reeled in
as well. The belt-tightening is closely monitored by
the group’s business manager, who dispatches monthly
reports to each department, and to date the division
is “way ahead” of its self-imposed targets. “The best
news in all of this is that no one feels put upon,”
Rubin says. “On the contrary, it’s a little bit like
dieting. We all feel better, to say nothing of virtuous.”
Other publishers are doing more than just nipping and
tucking. Simon & Schuster, for example, has
outsourced its returns operation to Arnold Logistics,
according to VP Corporate Communications Adam Rothberg.
“They not only have a state-of-the-art facility for
processing returns, doing it more efficiently and economically
than we could, but they also have a better system for
reconciliation of invoices,” he says, admitting that
this system was “somewhat of a black hole before.” The
company has also signed a long-term agreement with Quebecor
for exclusive production of a number of book formats,
which is expected to bring “significant savings” on
production costs, as well as adding further savings
when the partnership is rolled out to S&S’s supply
chain operation. Filling up that capacious Bristol,
PA distribution center has been another target, and
in the last six months S&S has added distribution
clients Andrews, McMeel and Millbrook Press
to the roster (for fulfillment and billing only). Finally,
tighter timelines for sales conferences have allowed
the publisher to eliminate more than a week’s worth
of time over the course of the year. As Rothberg says,
“That’s a significant chunk of change.” Alas, heads
will occasionally roll. The announced restructuring
of S&S’s Touchstone and Fireside imprints
has eliminated one senior editor and three associate
editor positions. Under Executive VP and Publisher Mark
Gompertz, the group will now publish original trade
paperbacks and hardcovers — as well as reprints from
other houses — almost exclusively. Paperback conversions
previously handled by the Trade Paperback Group are
now to be published under their own name by the publisher’s
four hardcover imprints.
Meanwhile, over at Holtzbrinck, some fancy digital
footwork has helped the publisher save a bundle on sales
conference costs. Alison Lazarus, SVP and President
of the Sales Division, reports that St. Martin’s
has nearly zapped the entire cost of one of its three
annual sales conferences by converting it into an entirely
long-distance affair. Equipped with Power Point marketing
presentations, CD slide shows of jacket art, and audio
tapes of editorial pitches — along with the usual gamut
of catalogs, tip-sheets, and manuscripts mailed to reps
prior to the conference date — the company now schedules
a time for field reps to phone into the home office,
where a core team of publishing, marketing, and sales
personnel runs through the program (no editors allowed,
though). Those phoning in are told to have their laptops
cued up, and are instructed to hit the mute button on
their headsets (no barking dogs allowed, either), and
with speakerphones at the ready, “the technology works
very well,” Lazarus says. Since materials have been
digested before-hand, discussion centers around marketing
tactics and not on desperate note-taking, as is too
often the case at conferences. The tele-linked congregation
whips through 700 titles in three days, starting at
10 am so that West Coast reps have time for an eye-opener
or two. The phone conferences cost a mere 5% of a regular
sales conference, and though reps still crave their
“face time” at the other two annual dates, Lazarus reports
that “everyone is enormously relieved.” What’s more,
reps seem to be more talkative over the phone than when
lolling in front of a conference center podium, which
improves productivity all around.
When it comes to promoting “cost consciousness,” it
seems even corporate synergy can have a certain utility.
Dan Harvey, SVP Publishing Director for Putnam,
sees opportunity in a new Pearson-wide initiative
to facilitate various design, production, and research
functions that used to be outsourced by each division
of the company. As the worldwide program is just being
made available to PPI, Harvey admits that the details
are still a bit fuzzy, and no one’s enumerated all the
ways in which this new centralized system will work.
“We’re just beginning to think of how we’re going to
use it effectively,” he says. But some of the targeted
areas include promotion, for which PPI will have in-house
access to short-run printing facilities, which should
make producing posters, sales kits, postcards, or even
easels more affordable. Pearson also has licenses with
a number of stock houses, making access to artwork easier
and cheaper. The impact will be felt in both book jacket
design and in the design and production of promotional
materials. Book productions, however, will not be affected.
Nor can Harvey see any change in headcount. “We’re pretty
lean,” he says, “and have been for some time.” Reinforcing
that sentiment, John Schline, Penguin Putnam’s
VP of New Business Development, adds that the publisher
has launched two new imprints — Bill Shinker’s
Gotham Books and Adrian Zackheim’s Portfolio
— with no increase in back-office staff.
Shipping
expenses were the object of a full frontal assault at
Columbia University Press, says President and
Director Bill Strachan. They studied their actual
shipping costs, comparing them to the flat fee they
charged customers — and adjusted to make sure they were
breaking even. Then they deliberately bumped shipments
down from two-day to three-day delivery (when appropriate),
and regularly examine the rates of UPS, Fed
Ex, and the USPS to ensure they’re getting
the best deal. And for those who revel in the pecuniary
minutiae of office appliances, Strachan says they looked
at the number of printers in the office, and as the
units were replaced, bought combination copier/laser
printers, thus saving substantially on — yes — toner
costs.
‘Less
Is Definitely More’
Those
on the other side of the ledger book — especially publicity
and advertising firms — are unambiguous about the falloff
in business. “Marketing has really been dialed back,”
says George Fertitta of advertising firm Margeotes,
Fertitta + Partners, which has worked with McGraw-Hill,
Hearst, and other publishers. “Almost no one
has been spending even the kind of money they spent
just a few years ago. It’s basically fallen off the
planet in terms of anyone doing any real marketing efforts.”
The clients who are spending, Fertitta says, have jettisoned
the layered marketing plans of yore to focus on simple
and direct tactical missions for specific titles or
geographic targets. As part of the larger triage efforts
hitting the media landscape, clients are also running
bigger ads fewer times (a strategy working quite well
for anyone with a hankering for outdoor advertising,
what with the major billboard glut). The upshot is that
many publishers are coming around to a “classic packaged-goods
marketing approach: understanding who your target audience
is, what category you’re in, and what your unique selling
proposition is.” But by Fertitta’s standards, cutting
out the fluff may actually improve publishers’ marketing
chops. “Book publishers’ advertising has always been
so cluttered,” he says. “Everybody’s trying to put in
as much copy as they can. Today less is definitely more.
It’s much more effective to have one simple idea.”
Radical simplification is also under way when it comes
to advertising online. “Two years ago there was an Internet
component to any largish budget of $75,000 and above,”
says Denise Berthiaume, President of Bennett
Book Advertising. The Internet contribution now?
Nil. Unless it happens to be thrown in gratis with a
package deal, she says, “I can’t really recommend it.
The dollars are so few and so carefully husbanded now
that I need to make sure my clients are getting absolutely
the most bang for the buck.” That means spending is
almost entirely devoted to print media, a reasonable
strategy, Berthiaume says. “For literary fiction and
nonfiction, honing in on the bigger urban markets and
focusing on print is a wise thing to do.”
Not everyone’s digging trenches, however. “Actually,
no,” says Paul Feldstein, Managing Director of
Trafalgar Square, when asked if he’s been rolling
up the company carpets. “We’ve been expanding, and just
went to a second shift in the warehouse. I guess we’re
bucking the trend.”
©2002
Publishing Trends
