Neil Ascher: I think that some of the trickle-down of having a very weak upfront TV market laid expectations with clients that prices should be going down regardless of the media type. I’m not sure it’s an oversupply of magazines, myself.
Serge DelGrosso: I don’t think it’s about the excessive supply. It’s about the relevancy of the magazine to the time and how discerning a magazine’s readers have become, and whether or not they’re loyal.
Taylor: Thinking of books such as Mademoiselle, which folded last year, does a recession kill off titles that were relatively weak even in a better economy?
DelGrosso: Yeah, and then you have to look at it case by case. Were Mademoiselle revenues just on a downward spiral for the last 10 years? Then it’s an indicator of an inherent weakness. But the folding of the Industry Standard was just an obvious result of the fact that its base dried up.
Ascher: I think it goes back to relevancy to the reader, as Serge said. [For instance], Lucky is a niche that didn’t really exist as a full publication. There might have been bits and pieces here and there. Same for Real Simple. [The magazines backed by] Oprah and Rosie and Martha Stewart all had the benefit of capitalizing on a strong personality. So if people are interested, they will gravitate toward it.
Taylor: What do you see in the readership trend? Gary Capreol: I think magazines represent only about 3% of the average week of the average adult. And that’s pretty flat over the last 10 years, or even more than that. Whereas the decline there has been in newspapers and recently radio…I think that’s a result of the Internet.
DelGrosso: I have a slightly different take on the usage question. The issue is that media consumption is not a zero sum game. In fact, data exists that says consumers are actually creating a 29-hour day versus a 24-hour day by multitasking, multiple uses of media. And the Internet is certainly a driver of that. So I think it’s not that one media, Internet, is replacing or displacing another, it’s that there are more choices.
Taylor: The "laddie" books such as Maxim are very popular right now. Do your advertisers buy any ads in there, or is there some concern for content? Ascher: We place a couple of different clients in there. In one case their target is men 25 to 34 and in another case their target is men 21 to 29, with various qualifiers, and that’s the appropriate environment in which to reach those readers. Capreol: Yeah, I’d think there’d be more concerns with the more traditional men’s magazines like Playboy and Penthouse versus the Maxim of today.
Taylor: In a recessionary environment the money tends to go to the first- and maybe the second-tier books. Is it getting harder to be the third or fourth magazine in a category to survive?
Ascher: I think that is true. In a more robust economy where people are willing to spend more money and perhaps take a few more risks, why not, if you can afford it, try to be in another environment that gives a slightly different perspective? But when people are being more concerned and conservative, I think you’re right, people do tend to go back to the leaders.
DelGrosso: Part of that, and this is probably a universal statement across client categories, is the leaders in any given category are going to be preferred because they’re going to be able to give the best deals because of the volume that they manage.
Taylor: If you have advertisers looking at Time, Newsweek, and U.S. News & World Report, it’s pretty obvious what the third-tier book there is. What kind of justification is there for buying U.S. News & World Report as opposed the other two?
Capreol: I think it depends on the category and your objectives. U.S. News is a different type of book; it reads as a different type of audience. From a financial services perspective it’s probably better than Newsweek or Time in that it’s more affluent.
Taylor: Do you think there are more magazines still to fold before we’re back in an environment where ad revenues are increasing again?
Ascher: I don’t personally see any of the really significant magazines folding. Might there be some third-tier magazines folding? Perhaps. On our side, at least here at Zenith, our clients’ budgets are not down. And from the publishers’ side, at least from what they’re telling me, it may not be so much that the dollars are up, but they’re being booked longer away from close.
Capreol: I think it goes back to cash flow and clients just watching their committed dollars versus canceled dollars much more closely. And at the end of the day here [at Bates] we’re seeing increases in spending versus last year.
Taylor: Do you guys have any sort of read on what quarter we’ll see pages starting to increase?
DelGrosso: In general — I don’t know about magazines in specific — but the second quarter ’02, current quarter, will demonstrate a turnaround in terms of the overall advertising economy in spending.
Ascher: I think Zenith is a bit more conservative than what Serge was offering, but we also think that certainly by the fourth quarter of this year we’re going to begin to see the turnaround in the market.
Taylor: How predictive is the network upfront for the magazine business?
Capreol: From our perspective here, last year we were writing a lot of decreases in our upfront spending, but on the magazine side it was a different animal. It was flat to slight increases, and I think the reason with magazines was that they didn’t increase their premiums the years before when the economy was strong, like the networks did. So it wasn’t a payback, so to speak, on the magazine side like there was on the network side.
Ascher: I think that’s true, and I also think that while there’s no direct correlation, there does seem to be some expectation from clients that if pricing is going down in one media type, why isn’t it going down in all media types?
DelGrosso: We’re taking about fundamentally different marketplaces. Closed inventory versus open inventory. So magazines have traditionally been heavy discounters and the fluctuations year to year have never been as wild. As a predictor of overall economic trends related to advertising, yeah, if the network marketplace ends up being strong, it’s probably a good indicator that there’s more money in media in general, which should benefit publishers. It will be interesting to see if there are straight-line correlations between the two. Probably not.
Taylor: If you look at tech titles, like Red Herring, there doesn’t seem to be light at the end of the tunnel. Do you think there’ll be more technology pages out there anytime soon?
Ascher: I personally don’t think so. One of our clients in the high-tech industry who spent a reasonable amount of money last year — until the middle of the year when the price of their stock dropped like a 20-pound rock — they’re not spending anything this year.
Taylor: Let’s look at cross-media deals. What’s the reality as it pertains to magazines?
Ascher: I think that there’s a lot more written about it than actually occurs. I think it is something that a lot of clients are becoming interested in, and as the vendors get their act together and figure out how to cooperate internally, it will become more and more prevalent.
Capreol: And I would add to that that it really [should be] a win/win position for both sides. The publishing company should get something out of it as well if it’s going to become a true integrated partnership. DelGrosso: I totally agree with Neil, there’s a lot of talk, but is there a lot actually being done? There are some big, high-profile deals that are being written that are in the press, but does that translate into additional business for publishers’ being part of major cross- media deals? I don’t know about that. Will TV networks, especially cable networks, generate more business as a result? Probably. But individual magazines that are often planned and bought on very specific criteria, are they going to reap the benefits of cross media? I don’t know.
Ascher: We recently did something with Meredith that used several of their titles and their local TV stations and some other direct mail things. And the reality was we probably would have bought about four Meredith titles. They really wanted us to add some pages in a fifth title. As part of making the whole deal come together, we agreed to give them pages in that book that they wanted them in.
Taylor: Well, who is usually driving the bus on these deals? Media companies or advertisers?
Capreol: I think it’s definitely our side of the fence, at least from my perspective.
Ascher: Think back to whenever it was that Time Inc. merged with Warner Brothers. They were talking about this 10 years ago, 12 years ago. They never were able to do it. It’s only because now the clients and agencies are saying, "How can I get the most value out of my media spend?"
DelGrosso: I think the impetus for creating cross-media connections has to be grounded in the needs of the client, the needs of the business and how that’s going to be served. I think the media companies have acknowledged that they need to be able to deal with the agencies against those objectives so they have … created these units. News Corp. One, NBC Connect, Viacom Plus ... these have all been created to establish a dialog with agencies that are asking to have that dialog.