Mags Face 4th Year Of Flat Rate Deals, Buyers Call It 'Almost Obscene'
This would mark the fourth consecutive year of little or no advertising rate growth for magazine publishers, which experienced softening demand following the advertising market crash in 2001, and the Sept. 11 attacks just as big advertisers were negotiating their 2002 rate deals.
"It's almost obscene the way we are pushing magazines for negative rates, or at the very least, holding them to flat rates," says one top buyer. "This marks four years in the row that we are squeezing more and more out of magazines."
The buyer said the only exception to negative or flat rates is if advertisers provide "bonus pages," which she said is "effectively the same thing as a rate adjustment."
The problem, says media buyers, is that publishers are confronting rising production, distribution and printing costs, especially as the price of energy increases due rising oil costs. "It affects everything, petroleum is used to make ink, print and deliver magazines," noted another print buyer, who says the pleas have nonetheless fallen on deaf ears. "Our clients have rising costs too, and they need to find as much efficiency in their media buys as they possibly can."
Publishers would not specify exactly how their 2006 rate negotiations are going, but they indicated it varies by client, and depends on the "base" of their 2005 deals, implying that bigger advertisers who increase their share of advertising with a publication are likely go get better deals.
"I would say that they are going well, it feels very much like the last couple of years in terms of negotiation with the bigger advertisers," acknowledges Jeff Hamill, senior vice president-advertising sales and marketing at Hearst Magazines. "We're probably 65 percent done with the bigger players and we're pretty much satisfied with them."
To take the focus off of absolute rates, Hamill says publishers have been trying to steer negotiations in the direction of added value elements that can drive better advertising results (see related story in today's edition).
"One thing I would say is that there's more conversation about than ever is the interest in putting together integrated marketing programs as part of these marketing negotiations. I'm sure it's the emphasis on using print to customize the conversation with the consumer. I think the big advertisers and media buyers believe it," says Hamill. -- Michael Deibert contributed to this story