• by Frank Saxe , January 9, 2003

According to just-released figures from the Publishers Information Bureau, the magazine industry closed the books on 2002 with a 4.8% increase in revenues, while at the same time the number of ad pages fell 3.2% compared to 2001. The mixed report card mirrors the feeling in the minds of many of the industry’s most successful. Despite a growing trend line, few are ready to say the advertising recession that has plagued the industry for nearly two years is finally over.

“There is no question that it was a difficult year, but it looks like the worst is behind us,” says Rebecca McPheters, president of New York magazine consultancy McPheters & Co. In terms of ad pages, the most dramatic decrease in spending in 2002 came from technology spenders, falling 17%, while spending increased in eight of the 12 major advertising categories. Pharmaceutical spending helped fuel the Drugs & Remedies ad category to a year-end 11.5% increase, the largest increase of any.

Among the hottest magazines of 2002 was Emap’s FHM, which closed the books on 2002 with a 108% increase in advertising revenues over the previous year. “It all came together,” says publisher Dana Field. “In a down economy, you have media directors looking very closely at the facts. We delivered huge bonuses and strong circulation, and the ad community pays attention to that.” FHM’s reward was fourfold increase in auto dollars, plus “huge” increases in liquor and package good advertising, which Field credits to the title crossing the one million mark in circulation.

Real Simple, which spawned a series of imitators by year’s end, posted a 119% increase in ad revenues last year, as the number of ad pages in the Time Inc. title jumped 68%. Gruner & Jahr’s defunct Rosie magazine also closed the year with one of the best advertising report cards. Taking its final December issue into account, Rosie’s ad revenues grew 80%. And despite legal trouble in its namesake’s personal life, Martha Stewart Living posted a 5% increase in ad pages.

A particularly hard hit segment was business and financial magazines. BusinessWeek, Forbes, Fortune, and Worth all closed 2002 with lower ad numbers. The big exception was Business 2.0. And a big exception it was. The Time Inc. tech-heavy business title saw ad pages and revenues grow nearly 120%. “A lot of people are happy that the year is over. I look back and I’m happy at the great progress we’ve made,” says publisher Lisa Bentley, adding, “We’ve been very fortunate that we’ve been up in advertising revenues and at the newsstand.” She credits changes made by editor Josh Quittner, who joined Business 2.0 last Spring. Bentley says they broke new business from financial and auto companies, as well as the cash-strapped telecommunications firms. The trend appears to be continuing into 2003 with Business 2.0 snagging its first-ever buys from Apple, Land Rover and Mercedes.

Despite the strides the industry has taken, optimism is still in short supply. “There are certain positive signs, but I’m also hearing that first quarter is a little slow,” says McPheters. According to PIB, December ad revenues were up 20%, and while the first several months of the year are typically slow and the recovery is broad-based, she says it will take some time before anyone is willing to declare the ad recession over. “I think we need to be into the second quarter to be comfortable that we’ve effected a trend.”

Biography publisher Tom McClusky, whose magazine closed 2002 with a 7% increase in revenues despite a 12% drop in ad pages, is among the most bullish. “I think the ad recession is over,” says McClusky, predicting, “The worst is behind us. 2003 will be a decent year.” The highbrow entertainment title has posted a 63% increase in ad revenue in its first two issue for 2003, and McClusky is forecasting low double-digit growth for the year.

FHM just closed its March issue, and it will be the second biggest issue in the magazine’s American history, and its April issue has made its budget with two weeks left to sell. Even so, Field is cautious. “We’re doing incredibly well, but it is true advertisers are still booking issue-by-issue. There is still a lot of caution out there. There are flat budgets and furious negotiations going on.”

Much of what happens in the coming months will depend upon what happens with the economy and whether America is involved in military action overseas, say most. Says McPheters, “I don’t think there will be a huge sigh of relief until we get further into the year, to see that the strength we are seeing now has continued.”