Tensions mounting between magazine publishers and major print buying agencies erupted Tuesday afternoon at two separate industry events: a closed-door meeting of the Consumer Magazine Committee of the American Association of Advertising Agencies; and a panel discussion featuring top print buyers at the Fall Folio Show in New York. The Madison Avenue outpouring follows a similar bitch session among publishers during the recent American Magazine Conference in Rancho Mirage, CA, where publishers complained agencies have been unnecessarily raking them over the coals - especially where the minutiae of their Audit Bureau of Circulations statements are concerned. Interestingly, Steve Moynihan, senior vice president and managing director of print savvy shop Arnold/MPG and Folio panelist said he was the only ad agency executive in attendance at the AMC, which didn't exactly embrace the input of Madison Avenue. It was the excessive griping by publishers that got ad agency executives going during Tuesday's AAAA committee meeting, said Audrey Siegel, senior vice president and director of client services of TargetCast TCM, a member of that committee and a Folio panelist. During the Folio panel, agency executives and a top publishing industry consultant all agreed significant changes must be made at both agencies and among publishers if the magazine industry is ever going to break television's stranglehold on share of mind and market. One of the problems, said Zenith Media's Steve Greenberger, is that at many agencies, television is planned separately from magazines. If they were being planned at the same time, he said the five gross ratings points available from a daytime TV show could be increased by the 15 points available from a magazine that targets the same audience. Greenberger said that if media planners started working that way, there would be an immediate realization of print's power. As an important first step in that process, Greenberger called for the development of a weekly "rating points" reporting system for magazine audience delivery. He said such research, while crude, is currently feasible and would enable agency planning departments to plan and manage magazine buys in conjunction with TV. But because the planning and buying cycles of television and magazines don't mesh, the agency people said a lot of those opportunities are lost. Valerie Muller, a media consultant and former Mediacom executive, said that media is being planned backward and that print's impact is being considered on a monthly basis and not always as it accumulates. Publishers have a big role in changing the way things are done. Publishers need to put down their collective feet, enforcing deadlines and tightening inventory. They also need to have to focus on getting the proper value from readers, agencies and advertisers. "If every agency were to value their publication and believe in them, the agency side, we would believe in it, too," said TargetCast's Siegel. She said that the agencies began to ask more and more and yet no one said no. And, Siegel added, magazines have to realize who the real competition is. "To break out, stop looking at other publications as your main competitors. They're not. The 90 percent [of market share] that's going to other media is your competition," she said. What would agency people like magazine publishers to accomplish? The top of the wishlist included steps that would speed up the process, including: weekly delivery of data (compared to the 18-month wait for circulation numbers), timely delivery and timely deadlines. Muller said that publishers have to be more accountable and agile. She said magazines need to be as quick as television in accountability and faster than the two months' lead time that many magazines require to place an ad. Until magazines become more agile, the dollars earmarked for other media - particularly television - will never shift to print. MPG/Arnold's Moynihan said the lead time really hurts magazines. He said the slowdown in ad pages that traditionally occurs in January has less to do with the post-holiday doldrums than the fact that clients' budgets aren't set until October and there isn't enough time to make a buy. "January is not an option for me with print," Moynihan said. TargetCast's Siegel noted that television, either scatter or spot, can be purchased in the short term, buying in December for January. You can also do that in newspapers and radio but not in magazines for the most part. "Print is tough because you've got an eight to 10-week lead time. That makes it hard," she said.
When trying to sell an agency on a magazine, publishers might have a secret weapon: The editorial department. While planners and buyers recognize the need for the long-held separation of church and state in the magazine industry, they also say the editorial side can embody the passionate connection of the magazine to its readers, its very reason for being. And that's an important selling point when it comes to snagging an agency's interest in a particular magazine. "God bless salespeople but I'll take an editor any day in understanding the voice of a magazine," said Steve Moynihan of Boston-based MPGArnold. Moynihan spoke Tuesday afternoon as part of a panel on magazine buyers' during the Fall Folio Show in New York. Moynihan said that it's important for agencies to hear from the people who can discuss the magazine's mission and why it exists. A lot of times that's someone from the editorial department, who can talk about the magazine's voice and other aspects. He said that there's plenty of data available to planners from syndicated services but it's up to magazines to tell why they're the best buy. Highlighting the research and ignoring the magazine's special qualities isn't the best way to sell, he suggested. "We're going to do the research anyway, because we don't believe you," Moynihan quipped. Even the prosaic business-to-business magazines would do well to inject personality into their pages, said one buyer. Caroline Riby, media director at Roberts Communications in Rochester, N.Y., said that B-to-B titles do a great job on circulation data and other marketing relationships but have missed the boat when it comes to understanding the readers themselves. "You seem to know your audience on the business-to-business side but not as people," Riby said. B-to-B titles need to start thinking like consumer books, knowing readers' passions and interests, down to the detail of what they prefer for breakfast. Riby said that B-to-B needs to entertain like a consumer title, too, recognizing that the readers' busy lives mean that magazines must find ways to combine business and pleasure. Few people have extended time for both these days, she said. "Nobody says business-to-business has to be all business," Riby said. That starts with hiring journalists who eat, drink, breathe and dream the business they're covering, Riby said. "That passion will come back to your readers," she said. And make your editors stars. "Let us know about them. It makes us bonded to the publication," Riby said.
Following weeks of finger pointing over an alarming decline in network TV viewing by young adult males, evidence is mounting that the cause of the problem actually is young adult males themselves. They simply aren't watching network TV as much as they used to. The findings, which come from an exhaustive internal analysis conducted by Nielsen Media Research, as well as an independent study by Interpublic's Magna Global USA unit, counter assertions by the major broadcast networks that Nielsen is to blame. When ratings for men 18-24 - a troublesome and fluky demographic to begin with - began plummeting this season, the networks claimed it was sloppy research on Nielsen's part, not the appeal of their own programming, that was at fault. In a report sent to clients on Tuesday, Nielsen asserted, "Young male viewers are, in fact, watching less primetime television this year than last." Nielsen said the primetime fall off ranged from 8 percent to 12 percent, though total day viewing among the demo is actually up slightly over last year. Nielsen attributed at least part of the decline to changes in media usage patterns by young adult males, noting, for example, that video game usage among young males has risen in primetime. It also noted that there have been increases in DVD usage. And while the client white paper didn't says so, Nielsen executives said they believed young males also are engaging in other new media activities, including the Internet, all at the expense of network TV. It's clearly at the expense of the broadcast networks, they say, because there has not been any corresponding decline in viewing to cable networks. And while Nielsen was not explicit about the cause for these shifting viewing patterns, Steve Sternberg, senior vice president-audience research at Magna didn't mince words in his report, asserting, "It's the programming, stupid." After exploring several scenarios, Sternberg said the agency concluded that the viewing decline is real and that young men simply are tuning at network TV because it is not as appealing to them. "Young viewers don't watch television simply because it's there," said Sternberg. "You have to put on programs they want to watch - just like any other group of viewers, maybe even more so. And at least through the first month of the season, there is not much on network television geared to young men." Actually, Nielsen Tuesday said that had begun to change by the second month, when Fox's coverage of post-season baseball brought back young males in droves. In fact, they appear to have stayed there for the first week following the end of the baseball season. If they weren't being sampled properly or if the ratings decline reflected an actual decrease in overall TV usage by young adult males, Nielsen executives said it's not likely that the networks would have seen a surge in the demographic during Fox's baseball coverage. How well the networks will be able to hold on to that rebound isn't clear, but if they don't, it's clear that they will be shelling out an awful lot of makegoods to compensate advertisers for failing to meet ratings guarantees. While the networks are loath to guarantee against an explicit 18-24 year old demo, that subset is a key component of the broader and commonly guaranteed men 18-34 demo, which is beginning to feel the effects of the younger male slide. The reason: due to population shifts, men 18-24 represent a greater share of the men 18-34 demo and they tend to watch less TV than their older counterparts. That's not something that is likely to change, barring a breakthrough in network programming strategies. As a result, the supply of young adult male gross rating points is bound to erode, which theoretically should drive advertising costs for buying the demo through the roof. For its part, Magna says this is nothing new, noting that men 18-24 have always been a "fluky" demo. In fact, Magna noted that in two of the past eight years (1996 and 1998) primetime usage among men 18-24 has actually been lower than this year (see data below). Not everyone is convinced. Network executives continue to maintain the falloff is extraordinary - to extraordinary to be accounted for by natural changes in consumer behavior. "TV use is habitual behavior and habits are hard to change," said Alan Wurtzel, president-research at NBC, adding, "I do think we'll find out there was something wrong in the methodology" "It is our feeling that the whole question of the decline in the 18-34 viewing demographic is an extraordinary situation," added Dave Poltrack, executive vice president-planning and research at CBS. "We have never seen a decline of this significance before." "The [TV viewing] behavior of the general population doesn't really change," concurred Gale Metzger, president of Statistical Research Inc. and head of the SMART TV ratings lab, as well as a series of CONTAM (Committee on Nationwide Television Audience Measurement) studies, he said proved that fact years ago. In fact, Metzger suggested the real problem with young men is an ongoing issue of cooperation rates, especially in households where young men are still living at home with parents who may have opted into the Nielsen sample. Men 18-24 Primetime Usage Trends Year Weeks 1-4 Season-March 1993 26.9 27.5 1994 26.2 27.5 1995 25.3 26.3 1996 22.5 24.9 1997 23.8 25.0 1998 22.6 23.3 1999 23.2 23.8 2000 24.1 25.8 2001 24.4 24.6 2002 25.3 25.4 2003 22.9 ???? Source: Magna Global USA analysis of data from Nielsen Media Research.
The world's largest agency holding company acknowledged Tuesday that the pace of its acquisitions has slowed in recent months following the June purchase of Agency.com. "There's an awful lot of opportunities out there to do acquisitions. We've just been very deliberate," said John Wren, president and chief executive officer of Omnicom. "The pace is really dictated by our strategy." Wren said that Omnicom's strategy hadn't changed but it involved taking the time to find firms that would serve its largest 250 to 300 clients and add to the holding company's portfolio and figure in its future growth. Omnicom is the parent company of OMD Worldwide and PHD. Earlier Tuesday, Omnicom announced that earnings rose double digits in the third quarter on the strength of higher advertising spending in the United States. Omnicom reported a 14.7 percent increase to $2.02 billion in third- quarter revenues. Advertising, which made up 41 percent of the revenues, grew 12.7 percent to $844 million in the third quarter. CRM, which was 35.4 percent of revenues, grew 19.8 percent to $717.7 million. Specialty communications and public relations, each about 11 percent of revenues, also grew in the quarter. More than half of Omnicom's revenues came from operations in the United States. New activity continued strong, said Chief Financial Officer Randall J. Weisenburger, citing more than $1 billion in new business in the quarter and $3 billion so far this year. Wren sounded positive about the advertising economy's prospects in the new year. "I think that you're seeing a more bullish attitude," Wren said. Wren, like his counterpart at WPP Martin Sorrell, said that clients spent the last several years focused on costs. "The companies that are going to be successful going forward are going to have to focus on their revenue," Wren said.
WPP Chief Executive Officer Martin Sorrell sounded a generally upbeat note on the outlook for advertising as his holding company's quarterly growth accelerated on the strength of media buying units Mindshare and Mediaedge:CIA. Third-quarter revenues rose to a record $1.7 billion, up 11 percent compared to the same period last year. Organic revenue, which does not include the boost given from acquisitions or foreign exchange rates, was up more than 1 percent during the quarter. Revenue from advertising and media buying rose 15.2 percent to $818 million in the third quarter, which not only includes Mindshare and Mediaedge:CIA but other WPP agencies like J. Walter Thompson, Ogilvy & Mather and Red Cell. While individual revenue data from Mindshare and Mediaedge:CIA wasn't released, WPP has said previously that the two media buying agencies led the growth out of the recovery. Sorrell said Tuesday that both were doing well. The advertising economy, particularly in the United States, would continue in the recovery that has been registering since September 2002 in "uninterrupted but muted growth," Sorrell said. "I would be very surprised if it doesn't continue into the fourth quarter," Sorrell said. He predicted 2004's economy would improve with the presidential elections, the Summer Olympics in Athens and the Bush Administration's "priming the pump in front of the election." Sorrell said that while the recovery isn't to the extent that the industry saw in the 1990s, he said it's stabilizing and improving. He noticed a change in emphasis at companies from cost control to top-line growth, and said that would have implications in advertising and marketing. "I think clients are turning their focus from the cost management to looking at the top line and that organic growth is critically important," Sorrell said. That doesn't mean that everything is rosy in the long-term. In a statement released along with the earnings, WPP suggested that 2005 could see the return of inflation with deficit spending in the United States and the United Kingdom. Sorrell didn't discuss that on Tuesday's conference call with Wall Street analysts though he has sounded that concern in previous appearances.