default-output-block.skip-main
BoF Logo

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

Hearst UK Bets on the Brand

As the market for print magazines shrinks, the British arm of the global publisher is ramping up brand extensions to make money off the back of titles like Cosmopolitan, Good Housekeeping and Men’s Health.
The Good Housekeeping Institute's cookery school | Source: Courtesy
By
  • Kate Abnett

LONDON, United Kingdom — In a basement in London's Soho, a team of women are employed to rub dog hair into carpets and then vacuum it up. They apply lipstick and then kiss wine glasses, wait two hours for them to dry, and wash them in a dishwasher. They run load after load of washing and bake batch after batch of fairy cakes. They put waterproof jackets into a bathtub and blast them with a showerhead.

This is the headquarters of the Good Housekeeping Institute (GHI), a brand extension of Good Housekeeping magazine, which tests and reviews products from dishwashers, to vacuum cleaners, to laundry detergents, ovens, waterproof clothing, make-up and televisions. Companies pay to have the GHI test their products hoping to earn its “GHI approved” sticker to use in their marketing. (About 75 percent of the 2,000 products tested by the GHI per year make the cut. Hearst declined to reveal the product testing fees.)

Launched in 1924, two years after the magazine itself, the GHI is the oldest brand extension of Hearst Magazines UK, which publishes the UK editions of magazines including Elle, Cosmopolitan and Men’s Health. The GHI is wholly owned and run by Hearst UK, rather than a licensing agreement.

In 2014, the institute moved into a new headquarters that features an event space, which companies can rent for dinners or product demos. There is also a cookery school, which is open to the public (courses cost £25 to £180 per person). Today, the institute makes up 30 percent of Good Housekeeping’s revenue, compared with about 20 percent back in 2012. “This is probably the biggest brand extension in our history,” says Judith Secombe, group publishing director of Hearst Made, the publisher’s content partnerships division, and former group publishing director of Good Housekeeping.

Magazines are no longer magazines — they are brands.

Publishers have used brand extensions to make money for decades — putting their magazine names on products and services from clothing to credit cards to restaurants. But, as advertising sales slide and circulation figures drop, this effort has accelerated. Last year, only 60 UK magazines grew their sales, out of 442 audited by ABC. Across the magazines ABC surveyed, circulation was down 4 percent year-on-year in the last six months of 2015.

“It’s all bound up with falling sales through print across the board,” says Barbara Rowlands, director of the magazine journalism MA at London’s City University. “There’s still this real difficulty in making print pay.”

“The focus on [licensing] for us as a business has increased over the last couple of years,” says Anna Jones, chief executive officer of Hearst Magazines UK, a subsidiary of US-based publisher Hearst Magazines. “If you love a brand and there’s a sensible area of expansion, it’s licensing.”

Since 2014, Hearst UK has launched licensing ventures including House Beautiful and Country Living-branded furniture ranges, which together sell an average of 1,000 pieces a week, according to Jones. Cosmopolitan launched a branded fragrance in a deal brokered by IMG Licensing, which represents several Hearst titles in product licenses outside the US. Men’s Health introduced branded frozen foods, beef jerky and vitamins, through UK brand licensing consultancy Golden Goose. The frozen food range shifted 8,000 units in its first week, according to Hearst, while Men’s Health vitamins had the strongest share gain in the UK dietary supplements market last year, accounting for 4 percent of dietary supplements retail value sales, according to market research firm Euromonitor International.

While some deals come to Hearst through a licensing company, others are borne out of advertising partnerships, such as the furniture deal with DFS: “They said, ‘This is our strategic issue, can you help us with it? We think there’s a market here that we’re not getting,’” says Jones.

Other ventures go further afield. In February, interiors magazine ELLE Decoration UK launched a styling consultancy for commercial property developers. In January, Hearst UK launched a co-branded MA degree in art and design at the Cambridge School of Visual & Performing Arts. Last month, Country Living magazine launched an online dating site for 45-plus men and women, in a revenue share agreement with The Dating Lab.

It’s all part of a greater strategy to diversify revenue streams. At Hearst UK, orders came from the US business to move from “monthly to moments” — reflecting the fact that monthly titles don’t pay like they used to offline. In 2012, Good Housekeeping had a “very profitable business,” according to Secombe, and the biggest circulation of any UK lifestyle title. “But any way you look at the numbers over time would suggest that unless we changed the way we communicated with our audience, our ability to maintain that position would be difficult,” she says.

“We’ve completely transformed the Hearst business in that we’re very clear what the role of the monthlies is, in terms of that print product, but we’re overlaying that with a suite of multichannel products,” she adds, citing digital and brand extensions as the big pushes."

While there is a clear correlation between ramping up brand extensions and declining print revenue, the effort is also born out of the fear that as print advertising sales have dropped, digital ad spend has not picked up the slack, despite readers shifting to consume more content online. “There’s still a question mark over how you make money through digital,” Rowlands says.

It's all part of a greater strategy to diversify revenue streams — monthly titles don't pay like they used to.

But brand extensions don’t always work. In 1999, Cosmopolitan launched a yoghurt, linked to a survey by the magazine that claimed 65 percent of Brits had used food products to enrich their sex lives. The product disappeared from shelves within 18 months. “It didn’t go down at all well,” says Rowlands. “If your product is perfect for your brand, it’s okay. But if it’s not, it can actually do quite a lot of damage.”

It’s also a big investment. Hearst UK’s brand extensions have been accompanied by the appointment of a new head of commercial operations last May, as well as major marketing rollouts, such as a £1 million (about $1.4 million) media campaign to launch Men’s Health vitamins.

According to Anna Jones, the success of brand extensions comes down to carefully selected commercial partners and products, brand trust, and the involvement of high-level editors. “As long as the products feel natural and authentic and work for the consumer, it works very well. Our consumers trust our brands in terms of the recommendations,” she says. “The [Hearst] teams where it’s working very well for us are very collaborative and they work in partnership with the brand.” The editors of House Beautiful and Country Living co-designed the DFS furniture range, while Kim St. Clair Bodden, senior vice president and editorial director of Hearst Magazines International, who has worked at the publisher for over 30 years, worked on the Cosmopolitan fragrance, which was developed by the publisher’s international arm.

Hearst declined to reveal detailed financials, but said that its licensing and brand business grew 33 percent year-on-year in 2015 and is projected to grow 45 percent in 2016. In October, the Guardian newspaper reported that Hearst UK had recorded a 31.5 percent fall in pre-tax profits from £12.7 million to £8.7 million in 2014 (in 2013, profits also slid by 26.6 percent). In 2014, operating profits dropped by 60 percent to £5.2m, and revenue fell 5 percent to £296 million.

Last month, Condé Nast, which already has education colleges, restaurants, and products including Teen Vogue bed linen to its name, announced a “Vogue Living” furniture range with furnishing brand Dorya. According to the publisher, this is the first licensing partnership to kick-off the Vogue Living lifestyle brand, with more on the way.

In September, Hearst extended its licensing partnership with IMG into the US (previously, it covered brands including Cosmopolitan and Harper’s Bazaar outside of the US), paving the way to roll out products like the Cosmopolitan fragrance in its largest market. And the extensions keep coming: the first Harper’s Bazaar-branded café will open in the UAE this year.

“Magazines are no longer magazines — they are brands. The print magazine is just one slice,” Rowlands says. For now, print magazines remain the flagship product for publishers, she says, though it’s not difficult to predict a future in which this isn’t the case. “This is a really, really important block in their business models,” she says of brand extensions. “It’s a business no-brainer.”

Editor's note: This article was updated on 11 May 2016. A previous version of this article misstated the title of House Beautiful magazine.

Related Articles:

Drinks at GQ?

American Vogue Publisher Talks Strategy Shifts

Condé Nast Transforms Style.com

Refinery 29, Dazed and i-D Battle for Millennials

© 2021 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.
CONNECT WITH US ON
Building a DRC Challenger Brand
© 2022 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions and Privacy policy.
Building a DRC Challenger Brand