• Mediaweek, Wednesday, August 8, 2007 10:30 AM

As publishers start talking with clients about ad commitments for 2008, they are dealing with rising postal and fuel costs, while their rate bases are flat or shrinking. And while that could encourage them to try and get the usual 4% to 6% CPM increases, media buyers are unlikely to give in. With so many choices, some buyers say they will accept little or no increase unless magazines can show some value and accountability.
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"With multimedia competition and the plethora of choices out there, to hold pricing, they're going to need to step up," says Serge Del Grosso, director of media planning at Lowe New York. "It's not just a question of building the audience, but what else can each magazine put on the table." The industry might be able to handle that challenge if it was not facing higher costs, like the double-digit fuel cost hikes that have boosted the price of paper, printing and distribution which make up nearly half of their expenses. Plus, the Postal Regulatory Commission has bumped up the average cost of mailing a periodical by nearly 12% this year -- on top of a 5.4% across-the-board increase in 2006.

"We've got major paper and postal increases, and all the big agencies will be asking for little or no increase," said J.P. Kyrillos, publisher of American Express Publishing Corp.'s Food & Wine. For the industry overall, "we're going to be asking for 5% to 6% increases, and we have very real cost increases," he continues. "Some advertisers understand that, and others, they don't want to hear it. They want to see zero increase. It gets a little frustrating."

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