• by Erik Sass , Staff Writer @eriksass1, December 4, 2009

How can magazines get a little of the old roar back?

The closing of Gourmet and three other titles in October, following a strategic review of Condé Nast's business by consultants from McKinsey, is yet another reminder of the magazine industry's woes - the latest victim carried off by a rising tide of red ink. As the wretched year of 2009 circles the drain, is there any way for magazines to stop the flood or even turn the tide?

Clearly the recession hasn't been kind to any part of the media business: Even Internet advertising - the wunderkind of previous years - has taken its financial bumps in 2009. But there is just as clearly a hierarchy of hurt, a pecking order of peril, with online at the top, cable TV advertising and out-of-home on the next rung down, broadcast TV and radio below that, and then finally print, at the very bottom of the ladder, almost submerged in the flood of red ink.

For a while, magazines could at least reassure themselves that they were faring better than their cousins in the newspaper business: While early signs of trouble for newspapers emerged in 2005, with the first declines in national print advertising, magazine ad pages continued growing into the first quarter of 2007. Indeed, magazine publishers breezily dismissed any attempt to compare their business with newspapers. Magazines are different kinds of products, they explained, saving them from newspapers' vulnerabilities.

Where most big daily newspapers deliver national and international content that's substantially the same (that is, a commodity), magazines are true brands, each with its own unique content and advertising proposition, they argued. News magazines, delivered once a week or once a month, were never about breathless daily updates, but offered more meditative, thoughtful, big-picture analyses. Meanwhile, enthusiast magazines offered advertisers self-selected, highly engaged, and precisely delineated readership - along with a perfect content environment for ads relevant to each niche category. In this light, their cpms were actually quite reasonable, they noted: A sporting goods advertiser, for example, could reach 50,000 young male adults ages 18-34 more cheaply through a small-ish enthusiast title than through newspapers.

In retrospect, this confidence looks like complacency. Rather than viewing newspapers as a cautionary example of what might lie ahead, magazine publishers - at least in public - seemed to expend most of their energy listing reasons why magazines weren't at all like newspapers, and thus safe from the threat of Internet competition. As one industry representative put it in 2005: "Paper-based magazines are a timely and timeless medium." Of course it's always easy to convince yourself of the value of your business, like the horse dealer who assured saddle-makers in 1907 that "nothing ever will be invented that will compare with the horse ... The motor car is only a fad." But for all the real and alleged differences between magazines and newspapers, it seems increasingly probable they will share the same fate. There are a couple reasons to think so.

First of all, there are undeniable similarities in long-term advertising trends for both magazines and newspapers; only the timing has differed. Like a roller coaster click-clacking up to the peak before the plunge, total newspaper revenues (including print and online) reached a record $49.4 billion in 2005. The drop of 0.3 percent in 2006 was the first moment just after the peak, when the cars haven't begun accelerating but you can see the abyss opening before you.

The first screams of terror came in 2007, when total newspaper revenues dropped eight percent, and by 2008 - when they fell a further 16.6 percent to $37.8 billion - most people were probably wishing they'd never got on the ride in the first place. So far, 2009 is on course for a 25 percent drop to $28.4 billion. Compare this to the performance of magazine ad pages, starting a year later: After peaking at 246,147 in 2006, according to the Publisher's Information Bureau, total ad pages slipped 0.6 percent in 2007, 12 percent in 2008, and 27 percent in the first three quarters of 2009. From 2005 to 2008, newspaper revenues tumbled 23.5 percent; between the first three quarters of 2006 and the same period in 2009, total magazine ad pages have fallen 31 percent.

Of course the similarity of these curves doesn't prove that they represent the same phenomenon, namely a permanent, long-term decline due to competition from the Internet - but historical data supports this belief. Basically, the crucial shift occurred around the years 2000 to 2001: In the few years preceding the recession of 2001, online advertising was still perceived as a novelty, whose small share of total media spending was a rounding error for the titans of print. But when the economy began to recover in 2002, the performance of newspapers and magazines was noticeably stunted, while the new medium soared.

This is best illustrated by comparing historical growth rates in the print media with annual changes in GDP. In the glory days of 1970 to 2000, there were only three years when percentage growth in newspaper revenues failed to beat gdp, meaning that newspapers "lost" only 9 percent of the time. Magazines, while not quite as strong, still performed well in this period as well: from 1970 to 2000, ad page growth failed to beat GDP in 12 out of 31 years, losing 39 percent of the time. However, the period from 2001 to 2009 - the period following the advent of Internet advertising - presents a starkly different picture: In this nine-year period, newspapers beat GDP only twice, meaning they lost 78 percent of the time, and magazines turned in the same results. Thus, print media had failed to keep pace with baseline economic growth for the better part of a decade. (Further evidence of this trend: A quarter-by-quarter comparison of ad pages and GDP shows that ad pages headed south in the second quarter of 2007, six months before the onset of the current recession.)

Magazine publishers are quick to point out that their medium, unlike newspapers, has retained its audience, and even seen increases over the last decade, and this fact is confirmed by an analysis of audience data for 70 leading consumer magazines from Mediamark Research and Intelligence, including Better Homes & Gardens, Bon Appétit, Esquire, Good Housekeeping, Martha Stewart Living, National Geographic, People, Playboy, Rolling Stone, Sports Illustrated, Vanity Fair, and Vogue. According to MRI, between spring 2004 and spring 2009, the total audience for these magazines increased 4 percent from roughly 588 million to 612 million. This increase in overall audience came despite significant decreases at titles included such as Reader's Digest, down 25 percent to 31.8 million; Time, down 10.5 percent to 20.7 million and Newsweek, down 9 percent to 17.7 million.

While this analysis certainly testifies to magazines' continued appeal for readers, the data merely throws into starker contrast the medium's woes on the advertising front. Over the same time period, ad pages for the same 70 titles increased until 2007, but then suffered the same accelerating decline as the rest of the industry, with a 10 percent drop in 2008 and a 22 percent drop for the year-to-date in 2009. This juxtaposition of audience and ad pages makes it clear that publishers who talk about audiences are missing the point, because the issue isn't readership, psychographic segments, or reader engagement at all: It's the simple nature of the print medium, which remains static, with no real potential for interactivity and therefore measurability along the lines of online media.

This isn't really surprising considering the example of newspapers: Although their circulation and readership has indeed declined (in contrast to magazines), newspapers still reach tens of millions of American adults every day. Yet advertising revenues continue to plummet, with losses out of all proportion to declines in circulation. An analysis of figures from Audit Bureau of Circulations shows that between the first half of 2005 and the first half of 2009, total circulation for 125 big American newspapers declined about 14 percent, from 27.1 million to 23.3 million, while over the same period, print ad revenues plunged from $22.2 billion in the first half of 2005 to $12.2 billion in the first half of 2009 - a 45 percent decrease, over three times the percentage decline in audience. In other words, simple issues of readership and reach are obviously no longer in the front of advertisers' minds.

What can magazines do to retake some of the ground lost over the last couple years? Clearly, measurement is key, and although there isn't much potential for incorporating interactivity into print products, the magazine industry has won praise from media planners for moving from the old-fashioned opportunity-to-see metric to actual ad exposure, most notably with MRI's inclusion of AdMeasure data on ad perceptions with its issue-specific ratings. Julian Baim, MRI's chief research officer, said the metric details "how many people saw an ad in an actual issue, the impact this ad had on their attitude towards the brand, and what actual actions they took as a result." Ideally, this will "place magazines on an equal, if not an even better, footing with other media with regard to accountability." What's more, MRI has begun fusing its magazine data with ratings for other media - for example, online ratings from Nielsen and Netview -"enabling magazines to generate net, unduplicated reach for the two platforms," as well as Nielsen's TV ratings. The overall goal, according to Baim, is helping agencies "use these data in media mix modeling to tease out the effect of each medium in its ability to move the needle on sales."

Jack Hanrahan - a print media veteran who spent decades at big-name agencies like Leo Burnett and omd, and is now a consultant as well as the editor of CircMatters, a newsletter about the magazine business, - was hopeful that new metrics from the likes of MRI, Mendelsohn and Affinity would help lure advertisers back to magazines. "I think the strengths are very real: In terms of eyeballs on advertising, the magazine medium has a very strong proposition, and research to back it up." On that note, he praised all three research outfits for "delivering products that their customers really seem to want" - but added that media buyers and planners have shown themselves a fickle lot. "The agencies tend to ask for lots of stuff, and then they don't financially support it, which makes it difficult to sustain." Here he recalled the initial response to MRI's issue-specific data: "MRI went ahead and some publishers supported them, but at one point there were only about three agencies subscribing. Everyone agrees that new approaches to ratings research are critical, but when it does come, there's often too little support."

On that note, Hanrahan said a lot of legwork by publishers will be needed to get the industry headed in the right direction, including a sustained push to present advertisers with increasingly precise (positive) data. Failing that, he conceded, "I worry that some of the current drop-off could be a permanent decline."

Looking to the future, he was more optimistic about the prospects of new digital delivery systems, including the new generation of e-readers now hitting the market, which promise to rejuvenate magazine brands from the perspective of readers and advertisers, while also helping lower overhead: "None of these things are widespread right now, but there are alternatives becoming available in terms of the production and distribution of magazines, the acquisition of subscribers, and so on, which hold out the promise of lower costs." Hanrahan noted that digital editions will allow publishers to expand their engagement with consumers: "Already on the net, and with the new devices, the publisher can connect with subscribers outside of renewal time, which is traditionally the only time print publishers really communicate with their customers outside of the magazine itself." That's important, he added, because "Marketing to people in the interim is potentially a big source of new revenues."

While creating measurements that can compete in an online world may be key, publishers still have to remember that they are not online when it comes to reader experience and pricing. Every roller coaster has its secondary, albeit smaller, climbs.