Outlook: Magazine Industry Still Licking Its Wounds
Advertising sales and circulation executives across all magazines, including business and trade, hope advertisers and consumers read somewhere the news that the economy is on the mend. Till then, all parties concerned are advised patience and unity.
"Publishers, advertisers and advertising agencies must continue to keep the lines of communication open, particularly in a challenging economy that continues to impact performance across multiple industries," said Mike Lavery, president and managing director of the Audit Bureau of Circulations, Schaumburg, IL.
The industry will continue to play defense on multiple issues plaguing it for the past several years.
Take the Internet. For many circulators, the Web channel largely has failed to generate adequate income as readers refuse to pay for information online, unless the publication is highly branded with unique content like The Wall Street Journal Online.
For most publications, the issue of differentiating content between the print and Web channels is unresolved. Spam legislation adds another layer of concern. Frequency of e-mail blasts still worries publishers wary of eroding their lists' responsiveness, and privacy and opt-out questions are as alive as ever.
Finally, increased security measures like filters and firewalls, particularly in governmental organizations, have raised bounceback rates for online newsletters.
The print scene is equally ugly. Not only do fewer people read magazines, but overall newsstand sales are falling amid excess distribution, broken infrastructure and unsatisfactory subscription and renewal rates. Moreover, advertisers and auditors like ABC and Business of Performing Audits International are pressing publishers for more newsstand and subscription sales disclosure. Publishers are worried about new reporting requirements and downward pressure on ad page rates.
Auditors have some just cause for their demands. The lawsuit last year involving the fudging of Rosie's circulation figures cost not just owner Gruner + Jahr's credibility, but also the industry's. The same publisher is being questioned for overstating YM and Fast Company newsstand circulation numbers.
Martha Stewart Living, too, has suffered from the legal brouhaha over the founder's alleged insider stock trading.
Single-Copy Sales Fall
Every circulator also will cite single-copy sales as a major area of weakness. The market system for distribution is ineffective. Too many copies are on newsstands as publishers strive to maintain their rate bases, the circulation guaranteed to advertisers.
For some reason, U.S. publishers cannot persuade advertisers like their British counterparts to charge for ads based on historical delivery over the prior six months. It makes sense to charge on what was delivered and not what is expected to avoid overcirculation on newsstand and subscriptions.
Another pinprick is the magazine industry's lack of pricing power. U.S. readers are conditioned to low-priced magazines and free content online, as well as repeatedly ingratiating requests to renew for a marginal amount.
Some say that 2003 was the worst year in recent memory for newsstand sales. Yet even as newsstand sales slid 10 percent to 15 percent, the same number of copies was put on newsstands. It does not help that one retailer now has undue influence on single-copy sales -- Wal-Mart Stores Inc., which has banned FHM and Maxim from its stores and covered Cosmopolitan with strips.
Similarly, the subscription agent channel presents challenges. New ABC audit rules, the end of large agents and the switch to online agent selling at discount prices are playing havoc.
Expect the situation with direct mail to stay the same as well. Circulators will continue to confront rising costs, mailbox clutter, evolving consumer behavior and the near-impossible use of sweepstakes.
Jay Bower, president of ad agency Crossbow Group, Westport, CT, likens last year to the Dark Ages.
"There was over-reliance on controls," he said. "Publications drastically cut back on testing grids, relying instead on tried-and-true packages and campaigns. Marketing was cutting to the chase. Copy was shorter and sweeter. Graphics were more restrained. Offers were stronger. [Also, there was] impatient management. ROI thresholds got higher while performance waned, forcing publishers to move more quickly to cut or cease circulation of struggling publications."
That said, magazines continue to launch as others close, searching for new niches or unmet needs. Some industry observers expect ad spend on magazines to double from last year and even match year 2000 levels.
New titles for 2004 include Condé Nast Publications' Cargo, sibling Fairchild Publications' Vitals and Time Inc.'s Cottage Living. And Time Inc.'s People Select will target the same audience as Condé Nast's Vanity Fair.
Condé Nast, whose Steven T. Florio recently stepped down from his high-profile president/CEO position, is one of the few major publishers that counted 2003 as its best-performing year.
Meanwhile, Ziff Davis Media is starting its gadget-lifestyle consumer magazine Sync, and Primedia plans a rival version, Connected Living. Future Network introduced Mobile PC. And AARP The Magazine is now on sale at Barnes & Noble and sibling B. Dalton's bookstores. It is reaching aging baby boomers via another channel for the nation's largest circulating audited magazine.
Notable entries from independents this year include Revenue for online affiliate marketing news, The Green for black and Hispanic golfers, Epic Media's Everything for Men and American Thunder for NASCAR fans.
From the trade journals, there is the new Obesity Management title from Mary Ann Liebert Inc. for healthcare professionals.
Number of Titles Down 9.1 Percent
According to Oxbridge Communications' National Directory of Magazines, the number of print and online titles dropped 9.1 percent to 17,670 in the United States and Canada in 2003 from 19,436 in 2000. As expected, business and sports suffered most -- 510 business and industry titles for last year, down 28 percent from 708 in 2000 (and 25.3 percent lower than 1993's count of 683). Sports and sporting goods titles had a worse fate, down 64 percent from 864 in 2000 to 311 in 2003.
Conversely, college and alumni titles more than doubled to 1,013 in 2003 from 444 in 2000. It has become the largest magazine category, followed by medicine's 937. Oxbridge has tracked 711 titles in religion/theology and 616 in regional interest.
In terms of growth since 1993, titles on brides, football, dogs and golf proved most popular. The number of bridal magazines rose 148 percent to 77 in 2003 from 31 in 1993; football was up 147 percent to 84 titles in 2003 from 34 in 1993; and dogs' books were 123 percent higher last year at 89, from 40. The number of golf magazines grew 88 percent to 109 in 2003 from 58 in 1993.
This phenomenon is evidence that print media is under no lasting threat. New publications threaten old bastions, but established players have their own solutions to competition and waning public interest.
Consider some examples. Harper's Magazine is seeing a boom in single-copy and subscription sales, partly because of a backlash against President Bush and partly because of better newsstand presentation. A revamped Web site is drawing in cost-effective subscriptions, too.
For People en Espanõl, an editorial redesign has enabled the 11-times-a-year Time Inc. Hispanic publication to raise circulation, ad sales and subscription price for this year.
On the business-to-business side, Dutch media giant VNU aims to use the Internet to open international markets for its controlled-circulation publications. Like many of its type, it may customize content to segmented audiences online. And it already has found success with single-advertiser sponsorships in online newsletters.
Expect more publishers to employ VNU's online tactics. Those bolder are testing paid digital subscriptions. Publishers like The New York Times are charging for Internet archives, and the Financial Times and London's Times are charging for all online access.
Observers also tip their hat to Time Warner Inc. for placing the online content of its print publications like Time and People behind walls so only subscribers and buyers of newsstand company titles as well as users of Time Warner-owned AOL can read that Web content.
Crossbow Group's Bower advises publishers to test smarter, especially ideas that have the potential of affecting return on investment in double digits. Understand subscribers through tracking surveys and online dry tests. Call five active and lapsed subscribers a week. And get loyal subscribers to recruit people like them on the title's behalf.
Bower also sees a resurgence of direct mail. Fewer components and less hyperbole will continue to define successful creative this year. And no-nonsense appeals will continue to generate better response at lower cost.
"Spam laws will restrict usage of e-mail as both an acquisition and retention media, forcing publications to renew their understanding and usage of snail mail. There will be even greater focus on renewals," he said. "It will get even more expensive to acquire new subscribers, so publications will focus even more intensely on novel ways to maintain their subscriber base."