Circulation audits, a “must” for Latin American and Hispanic publishers
For both U.S. Hispanic and Latin American publications, circulation audits are considered crucial to gaining legitimacy and ad dollars. Still, the number of audited publications remains small. According to Western Publications Research, in the U.S. Hispanic market 125 of the 1,089 publications are audited. In Latin America, increased pressure from advertisers is driving more publications to get audited. Still, only three countries – Brazil, and to a lesser extent Mexico and Argentina – have well-established auditing companies and a majority of audited publications. Although audits lend legitimacy, circulation numbers can be manipulated and, as many industry veterans point out, tell only part of the story.
The limitations of audits
Rafael Rivas, circulation manager at Latin Finance, points out that many advertisers and agencies rely on the headline numbers and make understandable but somewhat naïve assumptions about what those numbers really mean. “The reasonable assumption is that a paid circulation of 80,000 means 80,000 individuals have decided to purchase that publication, or it has at least been purchased on their behalf, but there are many ways to boost that paid number – and by tens of thousands – with little effect on the average price paid,” says Rivas.
The ‘check swap' is one way that paid numbers can be manipulated. As Rivas explains it, a company, “AA Inc,” orders and pays a publisher for 10,000 magazines. Publisher Inc. enters the orders as paid. Publisher Inc. is then billed by “BB Inc,” an affiliate of AA Inc, for marketing or advertising services at a fee close to the price of 10,000 paid subscriptions. AA Inc receives the magazines, the publisher increases its paid orders in a way that meets audit bureau criteria, and then pays a fee for “services” rendered to BB Inc., completing the circle. Fortunately, there are items on the statement that would indicate to advertisers that this may be going on, for example the relationship between the number of third party sales and the number of qualified paid orders. Looking carefully at the audit statement is only one part of an advertisers work.
As Rochelle Newman, CEO of Enlace Communications, points out, “Numbers help in a directional sense when doing cross-medium comparisons or comparing publications, but it's important to really know about consumer behavior.” Newman says that in this sense, less doesn't always mean less. “You could reach a small number of very influential people and that could mean more than reaching twice as many of the wrong eyeballs.” Audits of business titles, subscription-driven and home-delivered publications include verification that recipients fit into the category the publication claims to be reaching. This is still fairly general information. “A smart advertiser will use this information as a departure point to find out which ‘corporate executives,' for example, are receiving the publication,” says Rivas.
Are all auditing companies created equal?
In the U.S., where a number of recognized auditing companies compete for publishers' business, there is a definite hierarchy among auditing companies, which leaves some publications, including the controlled circulation free weeklies so prevalent in the US Hispanic market, at a disadvantage. “There's definitely a scale,” says Greg Anthony of American Minorities Media. “ABC is the preferred company, but any audit is better than not being audited.” Andre Chalonec, media buyer at LatinVox, says that the agencies he works with will accept audits by any one of the five main auditing agencies – Audit Bureau of Circulations (ABC), Bureau of Publication Audits (BPA), Certified Audit of Circulations (CAC), Circulation Verification Council (CVC) and Verified Audit Circulation (VAC). But some publishers have experienced otherwise. “Before advertisers will even talk to you, they want to see who's auditing you,” says Johnny Yataco, publisher of The Washington Times, one of only two controlled circulation US Hispanic weeklies audited by ABC. Kirk Whisler, president and research director of the Latino Print Network, says that different auditing companies have specialties within the market. “If you're a large daily or one of the 400 top consumer magazines in the U.S. you have to be with ABC. If you're a B2B, you have to be with BPA. For the controlled circulation weeklies and smaller papers, CAC, VAC and CVC have come in to fill that role.”
Despite their association with false circulation claims at newspapers including Tribune Co.'s Hoy, ABC retains its position at the top of the list of preferred auditing companies. Media buyers can't explain exactly why ABC is so much better than the others – it's the oldest, has all of the major publications as members, it's not-for-profit (so are BPA and CAC). It just is. While everyone wants to get audited by ABC, not everyone can. It's the most expensive of the auditing companies, making it difficult for smaller and independent publishers to foot the bill. And ABC's membership requirements currently prohibit entry of most controlled circulation weekly publications. Although two Latino-owned Washington D.C. free weeklies – El Tiempo Latino (circ. 30,000, recently bought by The Washington Post Co.) and The Washington Hispanic (circ. 35,000) – were able to get audited as “consumer magazines.” “Some people said that it wouldn't matter who did the audit,” says Washington Hispanic publisher Johnny Yataco. “But we decided to go with ABC—even though it was more expensive—because we wanted to have the best.” Yataco says that the investment has paid off in the form of increased interest from advertisers.
Trevor Hansen, vice president of Gemstone Communications and Ethnic Print Media, which hired Circulation Verification Council (CVC) to audit all 70 of the papers in their newspaper network, agrees that ABC is the preferred auditor. “The advertisers we talked to would have liked to have ABC audits for our publications, but since that wasn't an option, CVC was the preferred company.”
Another consideration is whether the auditing company is not-for-profit and overseen by a board of advertisers, ad agencies and publishers (ABC, BPA and CAC), or whether it is a for-profit company (CVC and VAC). Some media buyers say that not-for-profit status lends legitimacy to an auditing company's stamp of approval. Trevor Hansen of Gemstone Communications argues that CVC, maybe because it is a business, sees the audit as an investment and feels that the publisher should get a return on that investment. Not in the form of an undeserved pass – CVC has failed publishers who applied for audits – but in the form of education and support for publishers on how to improve their reporting and how to market audits to advertisers and media buyers. Some not-for-profit auditors say that getting involved in marketing crosses the line between objective third party verification and promotion.
Are Latin American pubs held to the same standards?
According to Grace Palacios, CEO of Charney/Palacios and Publicitas, because of restricted budgets ad agencies have been putting more pressure on Latin American publications to get audited. “Advertisers want to see audits in order to substantiate their purchases,” explains Palacios. She says audits have become increasingly important over the past few years due to restricted ad budgets. “Advertisers had to make sure they were getting what they paid for.” Palacios says that Brazil, and to a lesser extent Mexico and Argentina, are the countries where most of the major newspapers and magazines are audited – Instituto Verificacion de Cirulao (IVC) in Brazil audits 380 publications, Instituto Verficacion de Circulacion (IVC) in Argentina has 152 member publications, and Instituto Verificacion de Medios in Mexico audits 143 of 612 publications currently in circulation. In other areas of Latin America, some major accounting firms also conduct audits, but they aren't as reputable. BPA Worldwide currently audits about twelve publications in Latin America, mostly panregional business magazines and publications that are interested in attracting international advertising.
BPA Worldwide began auditing Latin American publications in 2001, and although the number of Latin American pubs audited by BPA has not grown over the past few years, Black says that is because BPA has focused on other parts of the world that seemed more financially viable. Based on recent interest and inquiries, Black expects to see a lot more audits in Mexico and Latin America. “If pressed, I'd say that in the next 12-24 months BPA could have an office in Latin America, which would cut down on the cost of audits.” Right now, Latin American publishers have to pay part of the auditors travel costs and a fee for the extra time involved in traveling to another country. Black said he wasn't sure where in Latin America BPA offices would be based, but said most of the activity in the region is in Mexico, Costa Rica and Brazil.
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