Your Guide to Cost-Cutting Without Lopping Off Heads
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.”