Budgeting in Uncertain Times
One of the scariest phrases a magazine publisher will ever utter about a budget is, "I don't know." But more and more publishers are becoming comfortable with those words for 2010.
"Budgeting is often more wishful thinking than science," admits Knight Kiplinger, arguably one of the brightest minds in the business and editor-in-chief and president of the Washington, D.C.-based Kiplinger, which publishes The Kiplinger Letter, Kiplinger's Personal Finance and Kiplinger.com, among others. But despite acknowledging budgeting's elusiveness, like most industry luminaries he relies on proven strategies to help predict the unpredictable.
Here, Kiplinger and other leading executives share their tips to help you budget for 2010.
1. Rely on historical data to predict subscription revenue.
Using his publications as an example, Kiplinger says subscribers can be more reliable than other revenue sources. "Budgeting has never been harder. And the only thing that can be predicted with any reasonable certainty is the subscription sales program for Kiplinger's Personal Finance magazine and the Kiplinger letters. … We can use our own historical data for new order response rates in direct mail and renewal rates for current subscribers. Then we adjust them a little up or down based on our assessment of the economic climate, price sensitivity, etc.
"Newsstand sales for our magazine are tougher to predict," Kiplinger says, "because they are very dependent on such variables as the economic mood in a given month, our cover designs and cover lines, our competitors' covers, and the competence of wholesale distributors and retailers."
2. Prepare for advertising sales being the most difficult to foretell.
Kiplinger says this is because "they are even more variable by the business conditions of our major advertising accounts, their ad budgets and the public demand for what they are advertising. The last few years, another variable has been severe distress and consolidation in financial services and automotive, two of our major categories."