Case Interview Questions #00066: Your client Elle is a major fashion magazine that focuses on women’s fashion, beauty, health and entertainment. Hachette Filipacchi Media, the publisher of Elle Magazine recently has been offered by a printing company a proprietary new process called “selective binding” which enables publishers to customize the pages included in readers’ magazines based on demographic data known about the reader. For example, an ad in Better Homes & Gardens for lawn chemical services could be placed only in those issues going to subscribers who live in houses and not to those living in condominiums or apartments. In this way, advertisers can focus their communications on the demographic segment they are targeting.
As a consultant to Elle, would you advise your client to take advantage of this new process and offer selective binding to its advertisers?
This is a pretty straightforward “launching a new product” case that can be solved by cost-benefit analysis framework. Elle magazine would want to consider offering the new service to its advertisers if it would be able to enhance its earnings by being able to charge its advertisers a premium for being able to more exactly and efficiently target the demographic segment they want to reach.