What now for world’s biggest magazine brand?

Twenty-one years ago, the world’s most successful magazine editor stepped down. In a dazzling 32-year reign, Helen Gurley Brown had transformed the pre-internet fortunes of Cosmopolitan and its publisher, the Hearst Corporation. It was a stunning second career for the former advertising copywriter who had written the 1962 bestseller “Sex and the Single Girl”. She had no journalistic experience when, aged 43, she pitched her idea of a new-style young women’s magazine to Hearst. You can imagine the rolling eyes as Brown told the group of middle-aged executives bluntly: “Before I wrote my book, the thought was that sex was for men and women only caved in to please men. But I wrote what I knew to be true—that sex is pleasurable for both women and men.”

Her vision morphed into a plan to turn the 80-year-old former literary magazine Cosmopolitan upside down and pick up where

The book that started it

her book left off. It was a radical idea for the magazine then best known for its family-oriented novels and short stories. Like many general interest publications, it had suffered from the 1950s growth in TV audiences and advertising revenue that marked America’s consumer boom.

Once so profitable

The old Cosmopolitan had once been super-profitable, with a circulation of 1.7m and $5m of advertising back in the 1930s. It had even branched out into Hollywood movies. Those were the halcyon days when the intensely-political Randolph Hearst made more profit from his magazines than from his infamous newspapers. He had bought Cosmopolitan for $400k in 1904.

But the early-century success, when Mark Twain, Somerset Maugham and H.G. Wells were regular contributors, was worlds away in 1964 – 13 years after the founder’s death – with the legendary magazine losing $1.5m a year and circulation below 800k, the lowest in half a century. Symbolically, even as Brown was lobbying Hearst’s sceptical CEO Richard Berlin and his colleagues, Cosmopolitan was being shunted from Hearst’s New York headquarters to rented space above a car showroom, to make way for more successful magazines.

So, unbeknown to Brown, her revolutionary vision for a “new” Cosmopolitan actually became the company’s only realistic alternative to closing the magazine altogether. But she still had to fight for her plan to turn it into a publication that spoke to the changing attitudes and appetites of young women. It would be a magazine for people like her: women with strong desires for men, independence, sex and equality. No mention of families or children.

In July 1965, Helen Gurley Brown became editor-in-chief of Cosmopolitan – and launched it into publishing history.

Taking over what had been a magazine stuffed with novellas and book-length novels, she had a clear view of how television drama and inexpensive paperbacks had replaced magazines in meeting the fiction needs of most Americans. She also knew how to capture the hearts and minds of readers with “How to Make Good at the Beach”, “How Girls Really Get Husbands”, “The Ostentatious Orgasm”. The magazine instantly set itself apart by discussing sexuality upfront for women who could and should enjoy sex without guilt. Her first issue in July 1965, featured an article on the contraceptive pill (“Oh, What a Lovely Pill!”) which had become freely available five years before.

An instant hit

The “new” magazine was an instant hit. And, just three years later, copy sales were up

It was once a literary magazine

50% to more than 1m, and advertising had doubled to 64 pages per month on the way to more than triple that within 20 years. What had been America’s biggest loss-maker was on the way to becoming its most profitable magazine ever. It quickly became Hearst’s biggest earner, tapping into an America which had seen an 80% rise in single households, mostly in cities.

By 1972, Brown had more than doubled the circulation – from 780k to 1.7m. What spoke loudest to her anxious bosses, though, was the way that advertisers too became captivated by the magazine’s ground-breaking content. Ad revenues rose spectacularly from $60k to $430k per month in that first seven years. She was Cosmo’s tireless, workaholic, across-all-the-detail editor-in-chief, tripling the monthly magazine to 300-400 pages. Total advertising revenues leapt from $600k in 1964 to $3m in 1969, $9m in 1974 and $48m in 1985. Its average advertising yield was said to be 10% above traditional women’s magazines as advertisers paid a premium to reach the highly-valued readership. Ad pages soared from 354 in 1965 to 2,300 twenty years later.

Cosmopolitan’s dynamism was cemented by the way it became one of the few US monthlies to generate the majority of its circulation through single-copy sales on news-stands. It emphasised the way that Cosmopolitan had become a personal (and badge-wearing) purchase for the fast-growing group of working young women in an era when most US magazines were delivered to family homes with the mail. Copy sales had reached 2.5m by 1976. Ten years later, they were 3m. All this for a magazine whose cover price had increased by 50% (from 50 to 75 cents) in Helen Brown’s first five years. The news stand sales created huge momentum and profits at the start of what became a 30-year, pre-digital golden age for magazines everywhere.

Few magazines have ever been as closely identified with a single editor-in-chief as Cosmopolitan was with the woman who became known as “HBG”. But, despite its obvious success, the seeming obsession with sex provoked consistent opposition including from young Hearst family shareholders, politicians and even feminist organisations.

Sex sells

Brown mixed humour with serious advice and tub-thumping as she told readers “Good girls go to heaven, bad girls go everywhere”. She was unapologetic about her own brand of sexy-feminism: “Cosmo is feminist in that we believe women are just as smart and capable as men and can achieve anything they want. But it also acknowledges that, while work is important, men are too. The Cosmo girl absolutely loves men!”

Millions of readers identified with her controversial encouragement of women to use both brains and sex to make it to the top. She told them over and over again: “A job is where the money, the success, and the clout come from. It doesn’t matter where you start, what matters is starting and hanging in.” She spoke from the heart: “I’ve never worked anywhere without being sexually involved with somebody in the office.”

But Brown always had to contend with Hearst executives who were constantly on edge over what they saw as the risqué content – even after Cosmopolitan had become their most profitable magazine. Brown’s 1972 decision to introduce a male nude centre-fold gave them sleepless nights. But their own Esquire magazine understood it better: “If, at times, Helen Gurley Brown and her magazine are offensive, it is only because almost every popular success is offensive. She is demonstrating, rather forcefully, that there are over 1 million American women who are willing to spend 60 cents to read not about politics, not about the female-liberation movement, not about the war in Vietnam, but merely about how to get a man.” The Times of London described Cosmo as “bigger than a magazine… a brand, an empire, a state of mind”. And the money kept rolling in.

Going global

In 1972, the magazine went global. While Hearst had had a magazine business in Britain for decades, the company’s decision to launch Cosmopolitan in London kicked off a determined campaign to internationalise its magazines. The first UK edition sold-out its 350k copies at 20p. And the following year, it launched in Australia on the way to a sprawling international network which peaked at 65 magazines.

In 1997, at the age of 75, HBG was forced to step back from the US magazine, instead, to become editor-in-chief and cheer-leader of the international editions and their editors. She made the most of her almost “advisory” role and left it to her friends publicly to lament the decision to push her upstairs, ending a reign which had begun before most of her readers were born. With circulation of 2.5m and annual US profits of $50m, US newspaper columnist (and former Cosmo staffer) Liz Smith said: ”It wasn’t broke; why did they try to fix it? This woman is a legend. I think the Hearsts are nuts.”

But, nine years later, Frank Bennack, Hearst’s most successful chief executive and only the fourth since the founder’s death, set the record straight. He described the company’s new Manhattan headquarters – brilliantly built on top of Randolph Hearst’s Art Deco building at a cost of $500m – as having been paid for by Helen Gurley Brown. It was not really a joke: ‘her’ magazine had made some $1.5bn of profit for Hearst in the 42 years since it had been ignominiously moved it out of the headquarters. Now, it was the company’s flagship, with pride of place on the 38th floor of the Norman Foster-designed Hearst Tower – and tens of millions of worldwide readers.

The first ‘billionairess’

Brown had finally been recognised as Hearst Corp’s first “billionairess”. As Bennack said when she died in 2012, aged 90: “Helen Gurley Brown was an icon. Her formula for honest and straightforward advice about relationships, career and beauty revolutionized the magazine industry. She lived every day of her life to the fullest and will always be remembered as the quintessential ‘Cosmo girl.’”

Cosmopolitan had become not just Hearst’s most successful magazine, often making more profit than the dozen or so other magazines combined, but also the engine of corporate growth. Its profits helped to fund the investments in TV, digital and business information which would propel the media group into the future.

Cosmopolitan ‘built Hearst Corp’

The magazine’s US copy sales grew every year before peaking at 3m in 1983 and then levelling off at 2.5m. In 1996 – the year before Helen Brown stepped down – its US advertising revenue was $156m. But that was only part of the story. Cosmopolitan also became, arguably, the first global magazine brand, published all over the world in dozens of languages.

A few of its international editions (like the UK) were wholly-owned but most were published either in joint ventures or under licence to local publishers in countries large and small. The international partners were able to benefit from the Cosmopolitan brand, high-quality photography and content, and international advertising deals especially with fashion and cosmetics companies. It was an international licensing model which had been pioneered more gingerly by Conde Nast’s Vogue right from the early decades of the twentieth century. But Hearst’s famously light-touch management powered the Cosmo expansion in the 1990s to make it a global brand, alongside hundreds of editions of sister magazines including Good Housekeeping, Esquire, Harper’s Bazaar and Elle. In 2005, its advertising-packed Russian edition became the country’s first international women’s magazine in the post-Soviet era, with a circulation that quickly reached 1m.

Good partners

In some ways, the magazine’s international success mirrored Hearst’s easy approach to partnerships, alliances and joint ventures that would characterise its expansion across all media. Diverse partnerships with the likes of Disney, Oprah Winfrey, Verizon, Gruner & Jahr and Scripps have helped to define the modern Hearst Corporation.

Cosmopolitan can still claim to be the world’s biggest young women’s magazine brand with a global audience of 120m across print, digital and social platforms. It is now published in 56 countries and 26 languages, including two digital-only editions in Japan and Taiwan, and has almost 80m monthly uniques and 49m followers on social media. It’s heady stuff but profits of the legendary magazine (like most others) are now shrinking, as illustrated by fading fortunes in Cosmo’s first three countries:

US: The engine of Helen Gurley Brown’s success was the news-stand. It gave her ultra-quick sales growth and – equally important – the high-margin profits denied to most other American magazines. Indeed, for Hearst, it felt like the return to earlier times before low-price TV promotion, postage and subscriptions helped scale-up magazine advertising revenues throughout the US. Low-cost subscriptions of many magazines have since been used to sustain a “rate base” and the chase for advertising. This is clear enough with Cosmopolitan whose advertising in 2008-13 fell by 22% to 1,400 pages. (source: Statista). The US magazine’s news-stand sales have collapsed from 1.6m (53% of the total circulation) in 2010 to just 227k (8%) in 2017 (source: Alliance for Audited Media). The consistent rate base of 3m during the past seven years clearly only tells part of the story. Beyond the public statistics are the ways that the decline of Cosmopolitan is revealed by Hearst’s own management. In his annual letter to staff last month, Hearst Magazines’ president David Carey’s only mention of Cosmopolitan was to record that the company had “re-acquired” its tiny edition in Spain. Even the bold claims about Hearst’s explosive SnapChat scores failed to mention Cosmo whose 3m+ daily views had started it all. The Cosmo-free manifesto came after Hearst Corp’s CEO Steve Swartz had noted that the magazine business (still delivering more than $200m of profit) “needs more change”. He hoped the division – once all about Cosmopolitan’s own profit – would get “a shot in the arm” from the $230m acquisition of the Rodale magazines including Men’s Health, Runner’s World, and Prevention. Again, no mention of Cosmo, among the comments on various magazines. To reinforce the point, the headline-grabbing Cosmopolitan 100 luncheon of power women in New York was renamed the Hearst 100.

Cut-price and less sex in UK

UK: The Hearst insiders who commented on their bosses’ Cosmo-free annual letters also latched onto Swartz’s assertion that Hearst magazines “need readers to pay more for the product”. Perhaps that is why the company’s executives are much less inclined now to boast about the claimed progress of Cosmo’s UK edition. Just 18 months ago, Hearst UK was trumpeting a 60% increase in circulation for its revamped magazine “smashing the overall trend of decline for monthly women’s magazines”. But, like so much of the try-hard euphoria in disrupted media, it was not even half the story. In the decade up to 2014, the magazine had declined even faster than its peers among glossy women’s monthlies: circulation almost halved from some 450k to 250k. The radical ‘turnround’ plan was to reduce the cover price from £3.80 to just £1 and then to pump out up to 100k free copies to health clubs, shopping centres, universities and travel outlets, a process described artfully as ‘dynamic distribution’. The result was a return to an audited circulation of more than 400k, but a reduction in copy sales revenue of more than £4m – a lot to make up in a declining advertising market. In the event, the magazine has succeeded in killing off (in print anyway) its close competitor, Conde Nast’s Glamour. But it has, perhaps, also ensured its own unending losses. A bitter pill after 45 years of publishing in the UK.

Australia: The Sydney-based edition is an interesting history. It was launched in 1973, a few months after media titan Kerry Packer pre-empted it with a new competitor, Cleo, after Hearst had snubbed him and granted the Cosmo licence to a rival. Ultimately, Hearst was forced to accept Packer after he bought Cosmo Australia, which he continued to publish alongside Cleo. Awkward. The Aussie relationship was eased, though, by Cosmo copy sales that reached an amazing 300k – greater market penetration and also better profit margins than in either the US or UK. But it all came crashing down in 2016 when the Aussie circulation fell to just 43k – 75% down on the previous year. The upshot was the unravelling of the joint venture with Bauer, which had bought the former Packer magazines group for an over-the-top A$500m in 2012. Hearst was forced expensively to compensate the German publisher so it could switch the Aussie edition of Cosmo from a 50:50 JV into a no-risk licence.

Going down

Those are the creaking realities of the world’s biggest magazine brand. It’s a long way from the 1960s when Cosmopolitan dominated the agenda of its readers with original content and a style all of its own. That’s why its current challenges are so instructive for a magazine market now being crunched by falling revenues and readership.

In a world where there is more media than consumers have time to consume and more places to put advertising than there is advertising, the Cosmo disruption is far from self-inflicted. But print media everywhere is certainly paying the price for over-estimating its value to readers and simply not understanding the extent to which many have become mere aggregators of content that is either more freely available or not highly-valued anyway. Digital services, starting from iTunes, have conditioned media consumers to pay only for what they actually want, rather than mixed-up bundles of content that most suit the provider.

As with newspapers, magazine readers increasingly value only distinctive and exclusive content. This will drive advertiser polarisation towards the extremes of either mass market or specialist, targeted media. Many mid-size media brands will be squeezed. That – rather than technology – is why so much online content will never be profitable. Traditional media must face up to the reality that their heritage may give them few in-built advantages in the digital era. It’s a case for reinvention not for aimlessly transferring printed content to the wide-open web. The sheer level of digital competition will inevitably shrink the profits even of relatively durable magazine businesses.

Digital split

The $11m-revenue Hearst Corp, which has long since ceased to be dependent on print, has a clear view of the trials of legacy media and has the strategic patience of a private company. Three years ago, Hearst Magazines re-located its digital developments to a separate New York building under its own disruptor Troy Young, who had become global president of Hearst Digital Media in 2013.

Young, who was previously president of tech and advertising firm Say Media, created a new digital team for each magazine, with the site editors reporting to him, not to the magazine editors-in-chief. You can imagine the gnashing of teeth. Ahead of most of Hearst’s publishing rivals, he also built an impressive unified content management, ad sales and data analytics platform. This facilitates content sharing and also the creation of new multi-source products and services. Recently, Hearst opened a 26,000 sq ft video and multimedia studio. It is notable that Troy Young’s so-slick web sites (like Cosmo’s) often bear little resemblance to the printed magazines. He predicts that a full 50% of all Hearst Magazines’ content would soon be video, 30% already is.

For all the big-scoring web initiatives (15bn video views last year, for example), Hearst’s digital people would argue that, in many cases, they could do just as well by creating new pure-play brands with none of the baggage of print, and they have started to prove that with Sweet on SnapChat, and Delish recipes. The fact that Hearst Digital Media has reportedly been profitable for three years serves only to underline the systemic problems of Cosmopolitan magazine:

  1. Many of the international editions are now losing money or close to it. The UK’s apparent swing towards eventually being a free magazine is unconvincing. Its new emphasis on events is interesting, even if some seem suspiciously like camouflage for the magazine’s ‘dynamic distribution’ (free circulation). Insiders suggest the US magazine will eventually be the only profitable version of Cosmopolitan. Hearst UK has been saying it wants to generate 20% of its revenue from product licensing, compared with 5% currently. But, for all the diversification into licensed merchandise like cars, lingerie, hosiery, bags, swimwear, bedding, soft furnishings and eyewear ranges, books and events, the brand’s long-term success will depend on its media. In disrupted times, it is logical that Cosmo bosses should encourage scatter-gun diversification, but it risks distracting them from the task of reinventing the indispensable core business.
  2. The Cosmo brand has always been a bit confused, not least by publishing editions in all kinds of countries, many of which are less tolerant of the magazine’s trademark sexual content. But the challenges of the brand might best be illustrated by its star UK editor Farrah Storr who says: “Sex is not just what this brand is anymore.” She has banished all those cover lines on “100 ways to get an orgasm”. Try telling that to the US team whose cover this month is awash with “Sex that rocks” and “Sex toys for him”.

    Never far from controversy

    This emphasis on sex has long been a live debate for Cosmo publishers who, for example, use the word ‘love’ (rather than sex) on the web site’s top page, not least to placate the cosmetics advertisers on which the magazine depends. Further, the feminists who were always uneasily critical of HBG’s upfront approach to sex, might be more decisive at a time when such content is, well, almost everywhere on the web. Cosmo’s recent strategic response in the US and UK has been to get political. But the whole idea of backing election candidates in diverse countries creates obvious risks to the brand. Closer to home, Victoria Hearst (grand-daughter of the Hearst founder) has been leading long-standing campaigns to get retailers to cover-up displays of what she describes as a “pornographic” magazine, and to stop selling it to under 18s. It’s a recurrent theme that now stings a little more.

  3. If you want another little measure of how difficult it will be to rebuild Cosmopolitan more broadly in a post-magazine world, just Google it. You will get an unrelated Las Vegas casino, some restaurants and hotels, and a popular cocktail among the listings. It highlights the challenges for a brand which was once content with its role only as a printed magazine.

But Cosmopolitan can be fixed. It is still a strong media brand. Its future must be in the provision of practical information, entertainment, e-commerce, and self-improvement through the whole range of digital services, events, and packaged information (in digital or print). However, the list emphasises the need to invert an organisation that, like so many others, remains dominated by print people and processes.

Hearst Corp is one of the world’s largest diversified media groups and generates profits of more than $1bn. Its rising success signals a determination now to turn its magazine brands into strong future-proofed businesses. Perhaps the clue comes again from CEO Swartz who is calling for Hearst Magazines to be “re-set”. Some insiders believe that this pressure to cut traditional costs and start growing again will lead the company now to reinvent its brands as “digital first” so that print becomes an ancillary service – after a century of being the only thing that mattered. Nothing now seems so logical as to anticipate a world where, in so many cases, printed magazines will become (more or less) the ‘content marketing’ for expansive digital and retail brands. Hearst’s 2013 decision to separate digital from print was key to creating the skills and resources necessary to create competitive new businesses. Now, there is an even better reason to bring them back together – under fresh-thinking digital management. They should start with Cosmopolitan.

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