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Magazines Reconsidering Ad Rates


Michael G. Earls has big plans as he reintroduces Appellation magazine next month: a new name, Wine Country Living; an added editorial focus on homes, cooking, culture and lifestyle, as well as wine and travel; and a drive to double the rate base, the circulation guaranteed to advertisers, to 100,000.

One change, however, is not planned: higher prices for ad pages. Wine Country Living will charge the same rates as its predecessor.

"We're moving this forward slowly and making sure we're safe doing it," said Mr. Earls, president and publisher at Appellation L.L.C. in Sonoma, Calif. "We don't want to alienate anyone with aggressive moves at this point."

Mr. Earls's caution is emblematic of attitudes among executives at media companies as they determine what to charge for ad pages and commercial time in the important fourth quarter and the start of 2002. The economic slowdown that has already diminished demand among marketers is being made worse by the effects of the terrorist attacks.

The result is "what is proving to be the softest advertising market place ever," Joe Mandese, editor of Media Buyer's Daily, an industry newsletter, wrote on Friday.

The big broadcast television networks are in a "scramble to save" the fourth quarter, the trade publication Mediaweek reported last week, trying to avoid steep cuts in commercial prices. In radio, Gary Fries, president of the Radio Advertising Bureau, prescribed steps to reverse ad revenue declines that included enlisting senior managers to "return to the front lines" and sell spots.

The sagging market has emboldened the buyers advertisers and the agencies that represent them to resist price increases, and even to demand significantly lower rates.

Pricing, particularly for print, "has gotten very much out of whack," said Jon Mandel, co-managing director at MediaCom in New York, the media services division of the Grey Global Group.

"A rising tide raised all the ships and a lowering tide is lowering all the ships," he added. "Unfortunately, some in the print world will find they're stuck in the mud."

Mr. Mandel will discuss the outlook for advertising as a member of a panel at a general session today of the American Magazine Conference. The conference, at the Sheraton Hotel and Towers in Midtown Manhattan, is sponsored by the Magazine Publishers of America and the American Society of Magazine Editors.

Several publishers say they realize buyers are behaving like the hard- nosed customer in the Meineke commercials who declares he is "not going to pay a lot for that muffler."

"Costs have gone up dramatically in the last year," said Steven T. Florio, president and chief executive at Condé Nast Publications in New York, the division of Advance Publications that operates magazines like Architectural Digest, GQ, Glamour, Gourmet and Vogue. "On the other hand, if we passed all those costs on to the advertisers, we wouldn't sell much advertising."

That is why Condé Nast is raising ad rates 4 percent for 2002, compared with an 8 percent increase in 2001. The increase is "fair for us as a company," Mr. Florio said, "and fair and marketable to the advertising community."

One magazine, Forbes, has decided against raising ad rates for 2002 after two years of what James S. Berrien, president at the Forbes Magazine Group in New York, called "very aggressive increases."

"Let's face it, this is a competitive market place," Mr. Berrien said, "and this is the year for us to take an aggressive pricing strategy in the other direction."

"At a meeting with Steve and Tim, I said, `I'd like to go with a zero,' " he added, "and Steve said, `It's the capitalistic thing to do: an economic stimulus package.' " His references were to executives at the parent, Forbes Inc., Steve Forbes, president and editor in chief, and Timothy C. Forbes, chief operating officer.

A Forbes competitor, Fortune, plans "a very modest increase" in ad-page rates, in the low single digits, said Mike Federle, publisher in New York, "the most modest we've taken in my six years here."

"We respect the times and everything our advertisers are going through," he added. "Next year is not the year to be bold coming off the blocks." Fortune is part of the Fortune Group division of Time Inc., owned by AOL Time Warner.

Advertisers are "re-evaluating their media buys," which will make 2002 "very challenging," said Stephanie George, president at InStyle magazine in New York, a Fortune sibling in the Time Inc. stable.

Still, "they'll want to place their dollars where they know the biggest payoff is," she added. "That's when the cream rises to the top."

InStyle will raise ad rates 10 percent, Ms. George said, but will also raise the circulation rate base 6.7 percent, to 1.6 million.

Normally, the circulation gains, coming as many other magazines lose readers, would have led InStyle to try raising ad rates even more, "but not in the year we're heading into," she added.

Another magazine increasing both ad rates and the rate base for 2002 is The New Yorker, another Condé Nast publication. Its ad rates are going up 10.5 percent as the rate base goes up 6.3 percent, to 850,000.

"I don't think anyone can say going they're feeling very bullish," said David Carey, vice president and publisher at The New Yorker. "It's going to be a tough six months."

Heading into Sept. 11, Mr. Carey recalled, his ad pages were down about 3.5 percent from the corresponding period in 2001. But since then, he added, "we've given a fair amount back because travel and retail" two ad categories hit particularly hard by recent consumer anxieties "are the drivers in the fourth quarter."

As a result, Mr. Carey estimated that The New Yorker would end 2001 with a decline in ad pages of 12 percent to 13 percent from 2000.

Still, "some travel business is coming back," he said. "We've just had some airlines book some branding advertising in December." He is also cheered by the circulation growth the rate base increase is the second in five months and the subscription renewal rate of 76.5 percent, "the highest in our history."

"We're going to be in business for a long time," Mr. Carey said, "not just for the fourth quarter of 2001 and the first quarter of 2002."

That long-term perspective, though, contrasts markedly with the increasingly short-term perspective taken by marketers.

"More clients are choosing to wait until the last minute to make financial commitments to advertising," said Karen Jacobs, senior vice president and director for print investment at Starcom Worldwide in Chicago, a unit of the Starcom MediaVest Group media services division of the Bcom3 Group. "They're not necessarily spending less money, but there's less willingness to let go of the money," she said.

Ms. Jacobs described the current preference as "just-in-time media buying," echoing the term used to describe the cost-saving parts-delivery strategy pursued by makers of products like automobiles.

But will there be more last-minute media buys, made just in time to salvage this year and 2002 for the media companies? Time, last minute or not, will tell.

 

By STUART ELLIOTT, The New York Times October 22, 2001

Copyright © 2001 The New York Times Company. All rights reserved.

 

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