While consumer magazines continue to report ad revenue gains on the declining page sales, those estimates are based on published rate cards before discounts are applied.
"I guess my questions are: Is there anything positive that the mag business can take out of these numbers? No. Pages are down. The revenue numbers are inflated. And is it time for publishers to accept that there's a new reality in their business, rather than just saying 'it's a temporary slump'," chided Rebecca McPheters, president of McPheters and Co., a leading magazine industry consultancy.
In October, magazine ad pages fell 3.2 percent, bringing the year-to-date tally to -0.2 percent.
In a statement, Ellen Oppenheim, executive vice president and chief marketing officer of the Magazine Publishers of America (MPA) attributed the downturn to "concerns over the war and economy," which she said affected advertiser confidence during the summer when most of the magazine buying decisions for October were made.
The problem, suggested McPheters, isn't so much the underlying value of magazines to advertisers as it is the way magazine publishers seek to build their own market shares.
"Publishers shouldn't accept it as a new reality, but rather should quit coveting their brothers' pages and go after the money being spent on TV - where fragmentation and increased clutter have seriously impacted effectiveness," she challenged.
While many publishers have embarked on such magazine effectiveness studies, and while the MPA has also commissioned its own research on the topic, magazines continue to suffer an ad effectiveness gap relative to certain other media, especially TV. This comes despite the fact that leading media industry thinkers, including consultant Erwin Ephron and academic John Philip Jones maintain that magazines are extremely effective at generating even short-term sales results, so long as they are budgeted at advertising weight levels that are equivalent to television.
Ironically, that may be even more difficult for many magazine planners to advocate for 2004, given the skyrocketing costs of magazine ad pages. According to a MediaDailyNews analysis of the PIB data, the average magazine ad pages cost has risen 8.9% this year, far higher than the average rate of U.S. ad cost inflation in 2003. In fact, the ad page rate inflation has been rising at double-digit rates in recent months, just as buyers and sellers have been embroiled in ad rate negotiations for 2004 calendar year deals.
In those negotiations, agency executives have been holding out for little or no increases, while publishers have been seeking significant single-digit hikes in their rate cards.
Despite predictions of a moderate boost in the U.S. ad economy during 2004, the outcome of those rate negotiations could further deteriorate the magazine industry's ad page volume, which hasn't seen a gain since 2000.
Pages, Revenue, Revenue Per Ad Page
Ad Pages Ad Dollars $/Page
October -3.2% +6.6% +10.1%
September -4.5% +6.3% +11.2%
August -2.9% +8.9% +12.1%
July -0.2% +7.9% +8.1%
June -3.2% +8.5% +12.1%
May +2.3% +11.2% +8.8%
April -2.3% +8.5% +11.0%
March +9.1% +11.6% +2.3%
February +1.8% +10.2% +11.4%
January +4.8% +9.5% +4.5%
10 Months -0.2% +6.6% +8.9%
Source: MediaDailyNews analysis of data from the Publishers Information Bureau.