As the new year promises to begin with flat or declining print budgets, magazine publishers’ profits are likely to be eroded along with page totals as clients force them to work harder than ever to win their business.
Buyers said they are demanding, and getting, flat or reduced rates and free events in addition to pages, in what one executive termed “open season on negotiations.” Other tactics include putting off buys as late as possible to put pressure on publishers.
Eric van den Heuvel, director of media solutions at The Gate Worldwide, said that with his print budgets flat across the board, he is paying rates that are 5-10 percent below what clients paid last year in some cases. Van den Heuvel added that publishers hope to sweeten the pot by adding high-profile speakers to an event or otherwise tailoring an event to the client.
“Publishers are more concerned about share and are more willing to concede price for share,” he said. “They’re being very open that they’re leaving this back door open. There’s a lot of the ‘we will work with you’ kind of comments, more than we heard in the past.”
Another buyer, who was not authorized to speak for attribution, agreed that clients will be pushing more for freebies, which could even extend to magazines’ Web sites—real estate that advertisers have traditionally paid for. “It’s going to be a buyers’ market for print,” the buyer said.
With smaller budgets to work with, buyers said they expect to buy fewer titles next year. And while flashy, buzz-generating units like ads that light up or play music will continue, some publishers said they saw less demand for costly creative executions. At the same time, interest in ads that push traditional editorial boundaries is growing.
Publishers, of course, are not happy about the current state of negotiations, which one major magazine publisher, speaking on the condition of anonymity, described as an “irrational demand on prices.”
Some buyers have asked for rate cuts of as much as 90 percent, said the publisher, who added that already this year, some agencies had taken an “increasingly unethical turn,” backing out of prior page commitments midyear but demanding to be forgiven the usual penalty of not fulfilling their contracts.
That tactic could be self-correcting, though, as publishers who have been burned are likely to be less accommodating of those clients on the next go-around. And, those buyers will be less likely to make large commitments, to avoid that experience, buyers and sellers said. “Those who have missed don’t want to go in so bullish again,” explained one buyer, who asked not to be named.
Still, the prospect of fewer ad dollars being spread across the industry means that publishers aren’t asked to bend on rates alone.
Vicci Lasdon Rose, publisher of Wenner Media’s Us Weekly, said she is getting more requests from advertisers for free taxitops, billboards and events in exchange for page commitments. “There’s so much more demand on us to be their promotional vehicle,” she said.
Some insist they are willing to stand firm to preserve profits, however. Carlos Lamadrid, publisher of Hachette Filipacchi Media’s Woman’s Day, said he is insisting on, and getting, higher rates. “I don’t need pages—I need rates going up,” he said. “In a book like mine, where we have high circulation, rates become very, very important.”
Beyond haggling over rates, publishers also are looking to sway marketers with integration pitches. Ben Madden, publisher of Alpha Media Group’s Blender, said he will target spirits and consumer electronics companies with offers that “push the integration needle,” without compromising editorial integrity.
Publishers also are stepping up efforts to demonstrate accountability. Scott Crystal, president of TV Guide, which was just bought by private equity firm OpenGate Capital, said he planned in 2009 to offer more engagement guarantees to advertisers of the sort the title offered NBC this year when it promised the network that its ratings would go up after TV Guide promoted its programs.