Super Marketing in Comic Books

Comic Books of the 50s and 60s were the depository of childhood dreams, and the advertising was aimed at kids' adventureous and inquisitive nature. Many included offers for exotic items that rarely lived up to their elaborate descriptions and claims. Here's a collection of favorite ads, from Sea Monkeys to X-Ray specs.

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The Comic Book is Dead -- Long Live the Comic Book!

A survivor of the “comics wars” explains what’s happening in the industry today
Market Overview – “A five-headed monster
There are now four popular formats for the “comic book,” an antiquated term from the turn of the last century, when publishers collected newspaper comic strips into periodical form. Today there are still sales of physical comic books, although smaller, with less content, they are still a saddle-stitched periodical. The new graphic novel is a perfect bound paperback containing a sequentially illustrated self-contained story. The trade paperback is also a perfect bound paperback, but containing an anthology of previously published serial stories. The most influential paperback format is an import from Asia, called Manga (pronounced MANG-AH). Manga is the Japanese term for “comic book,” with longer serial stories in digest size paperback form.

There are two primary channels of distribution for comic books in North America. The “direct market” is a market space consisting of about 3,000 comic book specialty shops, generating more than half the industry’s sales, with the remainder from “newsstand” periodical distribution, the traditional consignment method of distribution for magazines, and the consignment based bookstore sales. Diamond Comic Distributors, the world’s largest distributor of English speaking comic books and the sole distributor to the Direct Market channel, recently became a bookstore wholesaler of graphic novels and Manga.

The comic book publishing industry still suffers from many decades of devastating forces in legislation, idiocy, and greed. Unfortunately, there are still decisions made without thorough understanding the significance and ramifications of these events.

The Speculator I can honestly say that if it wasn’t for those creative and colorful words and pictures in the comics of my youth, I wouldn’t be an author today. Yes, as a child, comic books taught me the joys of reading and creating, but also introduced me to the idea of profits. My first profitable business transaction was at ten-years-old, when I sold a comic book I bought off the newsstand for fifteen cents to a fellow collector for a whole dollar. I was able to buy six more comic books with that money. Suddenly, collecting seemed very cool.

In 1987, Glenwood Distributors was the largest of eight direct market distributors. My company, NOW Comics, was about a year old at the time, and Glenwood accounted for about 50-60% of our orders. When Glenwood suddenly filed for bankruptcy, they crushed many small and midsized publishers. If it were not for a secured loan to keep my company alive, NOW Comics would’ve died as well. Glenwood felt the pressure of the insidious “black-and-white glut” of the 1980s -- the result of a mass of rampant speculators hording multiple copies of premiere issues of all new black-and-white comic books for future resale. In the1990s, publishers manufactured “special issues,” and the market became oversaturated by speculators hording multiple copies, creating a false sense of value, again, until the industry collapsed. The most innovative small and midsized publishers felt the economic hardship again, with companies such as Acclaim, Defiant, Innovation, NOW and Eclipse ceasing operations.

The Speculator is one of the heads of the five-headed monster. The lessons learned from the late 1980s and again in the mid-1990s, indicate that speculators gobble up comic books not to “read,” but “collect,” or “invest,” creating perceived value from a lack of supply for high demand. There is no interest in the books, or art form, just investing for a big payoff, and when it doesn’t come, they all leave.

Marketing and Distribution
The comic book industry is an oligopoly, with the “Big Two” companies (Marvel Entertainment Group, Inc. and DC Comics), consistently controlling about 60% of comic book sales (see By the Numbers), each battling for a bigger chunk of the pie. Image Comics and Dark Horse Comics are about another 15% to 20%, and the remaining 300+ companies struggle for the residual 10% to 15% or so. These percentages haven’t changed much in over 20 years.

Up until the early 1990s, there were several direct market distributors, all relying on Marvel’s products as their lion’s share. When Wall Street speculators realized Marvel Comics had a stranglehold on the market, they instantly initiated a plan for total domination [insert echo]. They would crush the competition completely by buying one of the distributors, and funnel their products exclusively through that single distributor. Hero’s World Distribution was the third largest, but they lacked the international infrastructure, and their plan failed miserably.

Diamond Comic Distributors was the largest, with about 50% of the retailers buying through them. DC Comics, Dark Horse and Image Comics signed exclusive contracts with Diamond, and shortly thereafter, after Hero’s World demise, took over Marvel’s distribution, thereby changing the direct-market from several healthy distributors to only one monopolistic titan. At least, this is how others see Diamond’s position, but I see it more realistically. Diamond was the only company financially strong enough to survive Marvel Comics’ ludicrous attempt at total domination [insert echo]. Diamond wasn’t and/or isn’t the enemy – they happen to be the only distribution survivor of the Direct Market. If Diamond had folded there wouldn’t be any direct market at all. This is very important to understand because Diamond Comic Distributors kept a channel alive which creates a lower barrier to entry for publishing comic books and thus, expanded the marketplace to more than just superhero comics. The only other game in town at the time is the traditional consignment newsstand market. My experience with the newsstand market as a new periodical publisher drained all my resources, but it was the single most important (and expensive) marketing strategy NOW ever initiated. NOW Comics signed for newsstand distribution with Warner Publisher Services in 1988. It took months of discussions between me, the best magazine consultants in the industry, who I hired on a monthly retainer, and the key executives at Warner Publisher Services. We presented a commitment for eight monthly titles like THE REAL GHOSTBUSTERS, SLIMER, SPEED RACER, and THE TERMINATOR, and an exceptional shipping record for them to accept. They provided us with a low-risk (on their part) 5% advance on the consignment for about one million printed comic books per month, until the fifth issue, where the 5% advance turned into a percentage of a percentage of the estimated final sales figure. Meanwhile, the printer made close to half a million dollars, and I was still waiting for my settlement monies from Warner. The risk is on the publisher, and an undercapitalized publisher has little chance of success (more on this in my book How to Self-Publish Your Own Comic Book, Watson-Guptill, 1997).

The only reason the comic book industry evolved and grew out of its stigma from the 1950s is due to the Direct Market. I’ve been publishing NOW Comics (as a book publisher this time) for about a year. After a decade, I’m sorry so report that the industry hasn’t improved, even with the onslaught of the Japanese invasion of Manga. Even at its peak in 1993, the U.S. comic book industry is still a fraction of Japan’s Manga market. In 1995, the total number of issues for comic magazines reached 1.6 billion issues in Japan, with an additional 708 million comic books published and many published outside Japan, all over the world. The Japanese have not had the glaring obstacles we deal with in this country. They have embraced visual storytelling in print, retained its respect, and evolved into an international cultural giant. Anime and Manga include stories from all walks of life, from school kids to romance to golf, while in the U.S., the only enduring characters in the U.S. are the superheroes (about 80% of all comic books in North America since the 1980s). Realistically, superheroes are only a niche market and not the mass market. In North America pre-1950, there were hundreds of romance, horror, and sports comics, and they sold in the millions as well.

The second head of the five-headed monster is the marketing machine for comic books in America, or actually, the lack thereof. It’s not just about the overpowering forces of the oligopoly, or the lack of support and enormous expense of newsstand distributors, but the channel of marketing the comic book as an entertainment choice for the consumer like movies, games and music. Where are the posters of Jessica Simpson or Tony Hawk holding a graphic novel or comic book with a caption supporting comic books as a reader’s choice? This is why I always believed that Mr. T’s personal support for MR. T & THE T-FORCE was more important to the entire industry, than to NOW Comics. Who cares if the comic book lacked backbone? Mr. T probably did more for the comic book itself in 1993 than anyone.

Changing how our country looks at comic books will not happen if we continue to find comic books on rickety racks labeled “Hey, Kids! Comics!” in your local comic book shop, typically structured to service the collector or superhero crowd. Comic book shops are social gathering places -- a powerful variable mostly ignored in many retail marketing strategies. They should create an environment that doesn’t steer away new costumers, but entices them to return. You’ll find the most successful comic shops are welcoming gathering places for events. Comic shops sell the most imaginative pop culture products anywhere, with publishers supplying displays, posters, giveaways, etc – all the elements for attracting people, but rather than create an inviting social environment for people to return and explore, they pile up boxes and books, and display the most valuable collectibles on the wall behind the counter like a swap meet. This is why many comic book shops who service the collector are losing out to an eBay Store.

The Super-hero as Super-villain
There are five segments in the comic book (the 32-page, 6 5/8” X 10 ¼” periodical) industry: superheroes, horror, science-fiction/fantasy, adult, and children's comics. By far, the largest category is the "superhero" group, which accounts for an estimated 80% of the total domestic market. The market leaders are Marvel (X-MEN, SPIDERMAN, THE HULK, etc.) and DC (SUPERMAN, BATMAN, FLASH, etc.). This segment attracts a large, affluent audience comprised mostly of males between the ages of 15 and 39. These buyers, particularly the teenagers and collectors, are among the most avid and loyal buyers of any in the entire entertainment industry. Despite the graphic depiction of violence in some of these books, they are mostly, "good wins over evil" stories and considered tame by most parents, as compared to television and film.

The second largest category consists of horror, which can include graphic violence and gore at various levels, depending on the publisher and product scope, and science-fiction and fantasy comics. The primary buyers in this category are young males and females aged 10 to 29.

The third category is sexually suggestive material or adult humorous themes, which is a smaller category for adults 18-years and older, although not as small as children's comics. These are "G-rated" titles whose main appeal is to elementary and middle school readers of both sexes. Many titles in this group are licensed properties, considered popular with children. Competitors in this group are few, published by Disney, Dark Horse, DC, Marvel and Archie Comics. This category accounts for less than 5% of the market, because the industry leaders have moved from newsstand distribution to the comic specialty shops, where the superhero is king.

Many new comic book publishers believe they can “create the next Image Comics,” but Image Comics, originally founded by seven comic book artists, wasn’t an innovation, but a superhero fan-following built by their careers at Marvel Comics. NOW Comics’ fans rarely came from the direct market devotes, but from outside the comic book industry by introducing new stories of non-costumed superhero characters and concepts like RALPH SNART ADVENTURES, SPEED RACER, MARRIED WITH CHILDREN, REAL GHOSTBUSTERS, THE TERMINATOR, THE TWILIGHT ZONE, and FRIGHT NIGHT. This wasn’t an exclusive NOW formula. Other publishers have had great success with HE-MAN AND THE MASTERS OF THE UNIVERSE, THE TRANSFORMERS, STAR WARS, STAR TREK to name a few. Yes, these are licensed characters with an existing audience, but most (at least in respect to NOW Comics) were not originally comic book readers and thus, expanded the marketplace.

I didn’t pick up my first comic book at a comic shop or even bookstore when I was nine-years-old. I discovered them in the grocery store while shopping with my parents. NOW Comics’ fans have told me over the years that they bought their first NOW Comic book from a gas station in Rhode Island, a drug store in Georgia and a newsstand in Arizona. They were a non-superhero NOW Comic, and they weren’t in a comic shop, which only averaged about 40% of NOW sales. That’s why the superhero is another head on the five-headed monster. It’s been limiting the audience for comic books for decades. Licensing
In addition to the sales of the physical products, the sale of ancillary rights of the characters and stories generate many more millions. Examples I’ve learned over the years include that fact that the SUPERMAN peanut butter used to generate more revenue for DC Comics, than the sale of the SUPERMAN comic book (about 98,000 copies in the 1980s), and the first BATMAN movie generated more money for DC Comics than publishing BATMAN as a comic book for fifty years. Of course, thanks largely to the SPIDER-MAN and X-MEN movies, Marvel Entertainment Group, Inc., the same company once in Chapter 11 bankruptcy, is now cash rich, solidifying their comic books as a continued bestseller (see By the Numbers). Today’s filmmaking technology transcends the stories once limited to the comic book artist’s imagination, and the public loves it, so much so, that we even have CHARLIES’ ANGELS and JAMES BOND doing outlandish “superhero” stunts and tricks. Comic books have evolved from exclusively print into a multidimensional form of entertainment. Comic book characters are now far more popular than comic books.

Unfortunately this is a problem for the comic book publishing industry. What happens when the horse breaks loose of the carriage? The carriage just sits there and rots. Licensing is another head of the five-headed monster. Hollywood extravaganzas only benefit the intellectual property itself, and its publisher, and not the comic book publishing industry as a whole

Sigmund Freud believed that the super-ego is "the vehicle of the ego ideal by which the ego measures itself, and whose demand for ever greater perfection it strives to fulfill." It’s link to childhood narcissism, or the belief in one's own perfection. As adults, we understand that we can’t be perfect as human beings, but that doesn’t stop us artists to strive for perfection in our work, or demand perfection from others. However, according to Freud, this behavior, if left unchecked can lead to narcissistic neuroses such as megalomania. In an industry desperate to keep creative talent from leaving to make more money elsewhere, and evaluates talent based on their sales power and hordes of fans demanding autographs, megalomania at one point or another runs quite rampant.

When running a company, that company becomes its own entity. It is a child that requires nurturing and guidance. As the executive, you can make a self-indulgent choice, or choose to feed the need of another, but how will that effect the organization? What is more important, your fiduciary responsibility as an executive to the company, or to anyone else, including yourself? Sometimes, in an entrepreneurial environment that decision makes itself, because you’re sitting on a burning platform, and it becomes one crisis after another.

The creators who continue to promote bad experiences are hurting the industry as a whole, and not the individual target. It’s this kind of word of mouth that escalates and exaggerates problems and situations inside such a small industry, keeping influential and promising outsiders from participating, and insiders from staying. During the 1990s, while helping IBM produce a certification exam, I uncovered a confidential study about word of mouth. IBM reportedly spent millions of dollars to uncover that a person will tell up to three other people about a positive experience, but up to thirteen people about a negative experience. This is why more people hear about negative experiences, because not only does it fuel an emotionally-charged, powerful word of mouth, but sales of the publications that sell it. This is why the NATIONAL ENQUIRER is the best selling periodical in America.

Unfortunately, the press uncovered a way to feed on the industry by selling more newspapers and/or magazines with “dirt,” or disparaging, negative stories of the industry, individuals or companies. That’s fine if the gossip stays in the hands of the incestuous purveyors of the industry.

However, Marvel Comics, through their hardship in the 1990s, became national news. The Wall Street Journal, The New York Times, Hollywood Reporter, and The Financial Times lambasted Marvel as dying in Chapter 11 bankruptcy, when it was the Wall Street tycoons, Ronald Perelman and Carl Icahn battling for control. The business details are boring journalism and the public prefers only symbiotic catastrophes in the form of a car wreck. This is why megalomania is the last head on the five-headed monster.

The bad press over the past decade of declining sales, the death of the Comics Magazine Association of America, and Marvel’s bankruptcy hasn’t hurt Marvel Comics today, with their publishing sales being less than 10% of their overall revenue, and millions in cash in the bank. It’s only hurt the comic book publishing industry, as we knew it, which is now under a major transformation much like the automobile industry in the 1970s. That’s the bad news. The good news is that there is room for a new champion, with adequate funding or infrastructure and invite one of the smaller players under their wing. This is a new era and new space, with opportunity to start from the ground up, attracting new readers, creating new characters and elevating the comic book publishing industry to new heights, before Marvel Entertainment Group decides that, like a Walt Disney Company, they don’t need to publish comic books any longer.

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Tony C. Caputo has written professionally for 20 years, with his 136-page graphic novel entitled VESPERS®, being the first in a new series. His non-fiction instructional books include HOW TO SELF-PUBLISH YOUR OWN COMIC BOOK (Watson-Guptill) and VISUAL STORYTELLING: THE ART AND TECHNIQUE (Watson-Guptill), with an introductory essay by Harlan Ellison.

He has ten years as a successful entrepreneur in both the entertainment and technology arena and has helped build five companies within the past fifteen years. He’s also written articles, white papers and business plans and is a speaker and trainer at conferences about Internet technologies and Visual Storytelling.   

Tony C. Caputo has a long visual storytelling history, from writing to illustrating to directing. In the 1980s, he was the founder of NOW® Comics, a multimedia company that published comic books, children's periodicals, trade paperbacks and home videos of such characters as SPEED RACER, THE TERMINATOR, THE REAL GHOSTBUSTERS, MR. T & THE T-FORCE, THE TWILIGHT ZONE and THE GREEN HORNET. He wrote scripts for FRIGHT NIGHT, SPEED RACER, THE TWILIGHT ZONE and THE TERMINATOR and illustrated various covers.  

Besides writing from his home studio in Illinois, he also serves as a Senior Consultant for Intellisys Technology, and trainer for MicroHard Technology Institute, with offices in Singapore, India, Australia and the USA.

More about Tony C. Caputo at http://www.visualstorytelling.com and http://www.tonycaputo.com. You can contact him at info@tonycaputo.com.


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