• by Michael Shields , December 17, 2004

While the magazine business appears to have pulled itself out of a deep advertising hole in 2004, with pages on the rise for the last seven months and counting, planners have a message for publishers: don't raise your hopes about raising your rates.

Magazine executives hope to cash in on the long-awaited recovery by seeking their first significant calendar year rate increases since the magazine ad market took a dive in 2001. With the exception of ultra hot magazines, or titles operating in categories with acute demand, most annualized deals have been essentially flat for the past several years. But given the tightening of the magazine ad marketplace, especially the sustained increase in demand for advertising pages, publishers have been aggressively pushing for rate hikes on their 2005 deals, for the most part unsuccessfully, say media buyers contacted by MDN

On average, buyers say the major consumer magazine publishers have been seeking rate card increases of about five percent, but say they have been writing deals for rates that are even with or up only modestly over 2004 prices. On the bright side, calendar year deals at least are getting done early and in an orderly fashion and do not appear likely to stretch into next year as they have for the past several years.

"A lot of publishers are trying to get [big increases]," said George Janson, managing partner, director of print at Mediaedge:cia. "I bet a lot aren't getting them. Next year is still a big question."

Most agency print executives are reporting very minor rate increases for 2005, in the low single-digit range if that.

"For some endemic business, they are probably getting low levels of inflation," said Ben Jankowski, senior vice president-group account director at MPG. "But I don't think this year will be dramatically different than last. There is just not that much enthusiasm in the market."

Both men expressed some doubt over how much revenue had actually come back into the marketplace this year, suspecting that many magazines were offering deep discounts.

"You have to look at how profitable pages are, and what expense they are going to get them," Janson said.

"Rates are so much more negotiable," added Jankowski.

And because of the depth of the magazine market, even in an improved economic climate, magazines can be played against each other.

"On a magazine-by-magazine basis there are successes," Janson said. "Look at Lucky, Real Simple, and O. But there is no magazine that is a must buy. That's bargaining leverage."

Agencies also appear more reluctant to make many long-term commitments than in years past, particularly in a market where inventory is rarely an issue.

"We tend to sign long-term contracts with publishing houses that we do a lot of business with," said Pattie Garrahy, CEO of PGR, while adding: "It is not always beneficial."

Janson said that agencies can also afford to hold off on commitment until the last minute. "What's changed the most is that we are planning and buying later than ever," he said. "We are in the marketplace now, and we used to be done by September. No one is in position to make a full-year deal. That is why so many January issues look like pamphlets."

Added Garrahy: "I think long-term deals to lock up inventory are a thing of the past unless there is an exact position you have to have."

Janson predicts that magazines won't see a full-on bounce-back until the second half of next year. Most believe growth will continue to be gradual.

"The supply and demand variable [for magazines] is so fluid," said Jankowski. Magazines don't have big mood swings like TV."

While Jankowski said that the last few month of climbing ad pages are a sign of health for the business, he doubts there will be a return to the explosive growth of the late 1990s. "I don't think there is ever going to be a big recovery."