• by Michael Shields , August 4, 2004

Improvements in the housing and auto markets are expected to help trigger a long-awaited rebound for consumer magazine advertising. The home furnishings and automotive categories, driven by a strong housing market and several new car launches this fall, will be key in fueling growth for the consumer magazine business this year, according to Veronis Suhler Stevenson's 2004 Communications Industry Forecast & Report, released earlier this week.

Overall, the acceleration in spending in the second half of 2004 is expected to produce an increase of 4.3 percent in ad dollars to $11.7 billion for the year.

Following two years of decline, magazine ad spending crept upward just 1.8 percent to $11.2 billion in 2003, two points lower that VSS's prediction of 3.8 percent made last year at this time.

While the industry should enjoy modest and much-needed growth this year, better news remains years away, according to Veronis. The investment bank projects that the market will continue to grow from 2003 to 2008--increasing at a compound annual rate of 6.2 percent, compared to 1.3 percent during the 1998-2003 period.

Yet this recovery will be more gradual than those in the past. Magazine advertising growth is not expected to surpass gross domestic product (GDP) growth until 2005. (In the past it has been typical for magazine ad spending to outpace the GDP's growth). And this growth will be less potent than what followed the 1991 recession, as a result of the evaporation of dot-com and technology ad dollars and an increasingly competitive ad market.

As part of its justification for portraying a brighter future for the magazine business, VSS credits the industry for undertaking research initiatives and marketing campaigns designed to better sell the effectiveness of the medium. In addition, publishers' increasing openness to pursuing ad opportunities that go beyond straight insertions has helped.

Yet another effort undertaken by publishers to sharpen their product for advertisers is the refinement of circulation figures, including measures to weed out less committed readers. These moves have led to reduced circulation overall, and have cut into publishers' circulation revenues.

Per-issue subscription circulation declined 1.2 percent to 301.8 million in 2003, and Veronis expects that trend to continue. And it's not just subscribers that are disappearing, but also newsstand buyers. As more consumers flock to wholesale clubs and self check-out rather than traditional supermarkets, single-copy sales have taken a hit, slipping in a 2.6 percent decline to 49.5 million in 2004.

While subscription figures are down, their decline has been offset to a degree by higher prices. The average single-copy price for magazines increased 4.0 percent to $3.12 in 2003, and the average annual subscription price increased 0.5 percent to $23.26. The combination of higher prices and circulation dips yielded a small (0.4 percent) drop in total spending to $10.0 billion in 2003--which should reverse itself this year, as spending is predicted to move up 0.4 percent.

On a more positive note, local magazines--which Veronis defines as local market publications or regional purchase of national magazines--exhibited noteworthy vigor as advertising expenditures grew 3.9 percent to $1.9 billion in 2003, ahead of national advertising growth.