The Economist takes on the world
When Marjorie Scardino tells people she works for The Economist, they sometimes ask, ``Which economist?'' It's a question Mrs. Scardino has to answer less frequently as people become more interested in international business and look for a perspective different from what they get in American newsweeklies.
The Economist magazine, or newspaper, as it likes to call itself, is one of those British institutions the educated and elite of the world seem eager to embrace. Its circulation has grown from 131,000 in 1975 to 330,000 in 180 countries - without offering solar calculators to attract readers.
``We take the attitude that The Economist is for people who want a global perspective,'' says Scardino, the president of North American operations of The Economist Newspaper Group. ``It's not for everybody, so we have never given away shower radios or calculators to improve our circulation.''
In the last few years the magazine has tried to go beyond just covering the world: It has begun aggressively marketing itself to the world.
Last year, The Economist started advertising in other publications, in what Scardino calls a new venture, ``to see if we've underestimated how many people might be interested.'' This year the company is considering direct-mail and telemarketing efforts.
The magazine's advertising pages have increased, as well. Through the first nine months of 1987 the magazine ran 35 percent more pages than it did for the same time in 1986, according to the Financial Advertising Report in Larchmont, N.Y. This went against a trend of declining advertising pages and special-rate deals in the advertising industry.
On the production side, the magazine began printing in the United States seven years ago, while a third edition started printing in Singapore in 1983. In 1986 new video-composing and satellite technology allowed the editors to design layouts and use features that up to that point were unattainable. Last July the magazine was redesigned ``to clean it up,'' Scardino explains. At the same time, a regular section on Asia was added, along with expanded financial coverage. In the future, Canada is slated to get more attention.
The Economist seeks the reader who participates - who makes business and policy decisions, writes letters to an editor or congressman, writes books, or makes speeches.
``Unquestionably managers are reading it every week,'' says Michael Callahan, the managing director of the advertising and public-relations firm Doremus & Co., London.
``It's an important magazine that busy executives read, because it has timely information, excellent distribution, and a strong, financially oriented news roundup,'' he adds.
The magazine also seeks, or finds, a person with education and a high household income. In a readership profile based on a 1986 study by Erdos & Morgan Inc., The Economist's average American subscriber had a household income of $118,000, while its readers outside North America had an average $97,699. Both groups of readers predominantly have university degrees. In addition, the profile notes that ``the overwhelming majority of The Economist subscribers are men,'' or 88 percent in America and 90 percent for the world edition.
``The category of people with lots of net worth is growing in the US,'' Scardino observes, ``and there are more and more people who aspire to be in that category.''
The US circulation stands at 130,000, which has grown from 55,000 in 1980 with little marketing or advertising effort, Scardino says. The magazine spends on advertising ``a fractional amount of what it costs us to produce it,'' Scardino says, not elaborating.
For the first nine months of 1987 the magazine ran ads in other magazines, says David Laird, the advertising director. Then it ran a three-month campaign in trade publications, citing a study that concluded that institutional investors read The Economist. ``The challenge,'' Mr. Laird says, ``is to make ourselves indispensable.''
The Economist, which costs $98 a year, has a high renewal rate; 65 percent of its readers have been subscribing three years or more. In the US, 92 percent of the magazine's readers subscribe, compared with 50 percent in Britain. Scardino says Britain is much more of a newsstand market.
Last July, when the magazine's price rose from $85, the magazine offered subscribers a special rate: They could renew for two years at $85 a year. Forty percent of those asked to renew did, Scardino says.
``Their circulation growth is a good sign, and the renewal rate is a good sign,'' says Bruce Thorp, a media analyst at Provident National Bank in Philadelphia. ``A good solid circulation should attract growth. If they can maintain it, or grow it slowly, they can hold onto an advertising base.''
How well the magazine maintains its advertising rates in an industry that is having a hard time holding rates will determine how successful the magazine is, Mr. Thorp says. Two-thirds of The Economist's worldwide revenues come from advertising and one-third comes from circulation, according to Scardino.
``It's a pretty well-run book,'' says Mr. Callahan of Doremus, ``although perhaps it could stand some improvement in its advertising-to-edit ratio.''
The advertising industry is seeing a lot of discounting and special deals, Thorp observes. ``This is hurting advertising revenues, and it's often the case a magazine can't generate money. For the last few years - and this is expected to continue in 1988 - there has been a lagging demand for advertising space. So what's typically happening to magazines is that costs go up more than revenue.''
Because the company is privately held, profit and revenue figures are not made public. But Scardino does say that revenues ``have grown steadily over the last seven years that we've been printing here. Our profitability and our margins are growing. The magazine is extremely healthy, which is partially why we want to grow more.''
Daniel McCarthy, managing editor of the Financial Advertising Report, says the number of advertising pages in The Economist grew dramatically last year. FAR tracks advertising in 12 periodicals, including Forbes, and the Wall Street Journal.
``The Economist has outperformed the market, at 35 percent, while the group as a whole experienced a 10 percent increase in advertising pages for the first nine months of 1987,'' Mr. McCarthy says. ``Based on talks with The Economist, the increase is based on aggressive marketing and advertising.''
The magazine, McCarthy adds, is trying to position itself to bring in bank advertising. ``This position is justifiable, because their institutional advertising has paid off,'' he says. ``It can sell on its international scope and its international circulation. It says, `You come to us and you'll reach the international community.'''
The ability to reach this community draws readers easily, helped by a dose of good writing, wit, and anonymity. ``The magazine is not an American magazine with an international edition,'' Scardino says.
Although the magazine is edited in London, and some of the British style of writing comes through, Scardino says it does not rely on any one national perspective. But the British style does have appeal, she believes. ``The British tend to put in opinions and analysis, whereas American journalism is a bit more rigid about that,'' she notes. The configurations of the magazine may differ on occasion, depending on the audience. ``Sometimes the covers may be different, if it's too British,'' she explains.
In one instance last July, the British edition differed from all others. A review of the controversial book ``Spycatcher,'' by Peter Wright, about the British intelligence agency, was withheld from that edition only. The magazine ran a blank page with a box in the middle saying, ``...In all but one country, our readers have on this page a review of `Spycatcher.' ... The exception is Britain, where the book, and comment on it, have been banned. For our 420,000 readers there, this page is blank - and the law is an ass.''
The magazine's 50-member staff is not identified; there isn't even a masthead. ``This anonymity lends to getting more to the issues rather than getting sidetracked in the personality,'' Scardino says. ``We take the view that The Economist is its own person and that everybody stands behind every article.''
The magazine's headquarters is in London, its editor is from South Africa, and the staff comes from all over the world. Stringers supply a lot of copy. ``Because we don't have bylines, we can get away with having somebody whom you would recognize otherwise writing,'' Scardino observes.
The magazine, founded in 1843 by James Wilson, a banker and Parliament member, came out supporting free trade and free enterprise. Mr. Wilson's son-in-law Walter Bagehot took over as editor in 1860 and became a leading journalist. Today the Financial Times has a 50 percent, noncontrolling interest in the magazine, with families and other interests holding the rest.