Latin America's economic crisis does not frighten Harvard Business School Publishing. Its flagship publication, Harvard Business Review >HBR), is venturing into Latin America's troubled waters with two full-fledged monthly editions in Spanish and Portuguese—both scheduled to be published on November 10. HBR has partnered with Impact Media, giving the Chilean publishing company exclusive distribution rights in Latin America for the next ten years.
HBR Latin America is the first full Latin American edition in Spanish of an English language business magazine. Other English language publications, such as The Wall Street Journal, Newsweek and The Economist, have a presence in the region mostly as branded syndications – content from English editions is translated, edited and then inserted in local newspapers and magazines. Derek Marlin, responsible for Latin American licensing agreements at Time Inc. International, explains that in recent years he has seen an increase in HBR's content syndication activity in many Latin American publications. “This, obviously, was the prior step to a full launch.”, Marlin adds.
Ricardo Zisis, founding partner and current president of Impact Media, asserts that HBR Latinamerica was launched in mid-November with a total circulation of 47,000. The Portuguese edition in Brazil has a circulation of 20.000. The Spanish edition has a total circulation of 27,000 split between Mexico (15.000), Chile (4.500), Argentina (3.500) and the rest of Latin America (4.000). “We concentrate heavily on the main markets,” Zisis explains, “reaching a critical mass very attractive to advertisers. Argentina is undervalued today for obvious reasons, but we expect the circulation there to grow later.”
Harvard Business Review's English edition, with a circulation of 240,000 copies, already sells 7,000 issues to Latin American clients. According to HBR's Boston-based business development
editor John T. Landry, HBR does not expect existing subscribers to switch to the new Latin American edition. Landry states that in the first phase of the project the Spanish and the Portuguese editions will have exactly the same content. “Approximately 70%-80% of the content will come directly from the English edition of HBR and the rest will be written by professors from
Latin American business schools and universities”.
Both the Spanish and Portuguese editions are being printed in Chile and then sent to local distributors in Brazil, Mexico and Argentina, and directly, through a logistic company, to the rest of the Latin American countries. Subscription sales are expected to be the most important element of magazine sales. Impact Media's Zisis says that initially he “thought newstand sales would be negligeable. But the early feedback from the market, specially from Brazil and Mexico, let us expect that around a 9%-10% of our circulation will be sold at newsstands, more or less as HBR in the USA.”
HBR Latin America, expects a major source of financing to come from advertisers targeting business class consumers. According to Zisis, “by the third year of operations, circulation will be contributing 46% to net revenues (revenues less cost of sales).” HBR Latin America already has an interesting list of advertisers lined up. Mexico is one of its main advertising markets, along with Miami-USA. Panregional advertising is planned for Brazil and Chile. Zisis claims that “the list of clients that have already bought pages in Mexico is impressive”. We have already sold 244 pages in that single market.” The client lists include Mastercard, Absolut, Scotia Bank, Banamex, BMW, Apple, American Express, Intel, Mont Blanc, Microsoft, Jaguar, Ford, Lincoln, LG, Motorola, Telmex, UPS, Avaya, Telcel, Banorte, HP, Mercedes Benz, Sony and AT&T.
The marketing challenge
Marketing a publication in Latin America's vast region is a challenging task for even the most savvy publisher. “First of all,”explains Zisis “we are distributing most of the 47,000 copies to a very select data base for three months. At the end of that period we will invite them to subscribe, and
go forward to a new set of people. This database has been collected mostly from alumni of the top Business Schools in Latin America. This is the crème of Latin American executives, and the most likely to convert to subscribers.” HBR Latinamerica's marketing strategy also relies on agreements with top financial institutions to put HBR in contact with their top clients. “Besides,” says Zisis, “some companies have already bought bulk subscriptions for their best clients, helping us to reach potential subscribers.” Zisis adds that HBR Latinamerica will also develop direct mail inititiatives in the first quarter of 2003, and will begin (already) this year to test the use of e-marketing to attract new subscribers.
When asked by Portadatm about the future launch of a Spanish edition for the US Hispanic market, Zisis replied, “We are studying this alternative together with Harvard Business School Publishing. We are both aware that there is a lively and growing Hispanic publishing market for many kinds of products, including one such as Harvard Business Review.”
Changes in Spain
Harvard Business Review publishes an edition in Spain — Harvard Deusto Business Review (HDBR) —with a circulation of 3.500, entirely through subscriptions. Recently, HBR's relationship with its Spanish partner has changed. According to John Landry, Business Development Editor at HBR in Boston, “the magazine was published by Deusto in Bilbao through a license with HBR from the 1980s until 1993 when the license agreement expired. Since then it has been published independently —without material from HBR —by Deusto, using mostly material written by Spanish academics”. Landry states that earlier this year HBR signed a new agreement with Deusto, now part of the Barcelona-based Planeta publishing group. The new version of HDBR, containing almost 100% HBR articles, was launched in September of this year. The new franchising agreement gives Deusto exclusive rights to HBR content in Spain for three years, and states that HBR will receive 6% of HDBR's total net revenue. Because the magazine already existed, HBR will receive only a share of the incremental increase in revenue. Landry did not want to dis-close the exact numbers.
The franchising agreements HBR has made in Latin America and Spain are structurally similar to the agreements it has made with publishing houses throughout the world for its Japanese, Chinese, German and Hungarian editions. The national publishing houses pay HBR a flat fee which can amount to several hundred thousand dollars. According to Landry, in the case of Deusto the amount paid to HBR is “considerably below US $100,000 because it is a publication which has already been launched in Spain and now is simply modifying its content.”