After a Heady 2005, the magazine business stalled in the first half of 2006, with fewer new launches and ad dollars flowing to magazines. And while magazines could benefit from tight broadcast inventory during the fall election season, a migration away from print and continued newsstand woes will temper their growth in the years ahead.
Circulation accountability pressures, online competition and high costs of launching new titles have sent publishers into a period of self-examination, observes Brenda White, vp/director of print investment for Starcom Worldwide.
"I do think you're going to see fewer launches because publishing companies can't take the risks anymore," she says. "I think [they're] going to give new brands less time to succeed."
The tempered climate also has cast a shadow over advertising. Magazine ad sales in the 12 biggest ad categories slowed to 5.2 percent in the first four months of this year vs. 7.7 percent in the year-ago period, according to Veronis Suhler Stevenson's media industry forecast.
Partly offsetting a sharp decline in automotive advertising is a gain in travel, telecom, pharmaceuticals and food. Jonathan Barnard of Zenith Optimedia points to growth in the financial and service categories: "Real estate is really strong at the moment, but you have to wonder how that can last, especially the high-end real estate." Nonetheless, Zenith predicts ad revenue will increase 6 percent in 2006 as magazines target their audiences geographically, clean up their circ numbers after last year's scandals and launch new titles.
Veronis' more moderate outlook calls for ad spending to hit 4.1 percent this year, followed by 3.7 percent and 3.4 percent in the subsequent years, as marketers follow consumers away from print to more measurable media.
Publishers are drawing more advertiser and consumer spending to their Web sites by offering Web content in more varied formats. Between 2005 and 2010, Veronis looks for online ad spending to rise at a compound annual rate of 38.1 percent to top $1 billion by 2010.
Magazine circulation, meanwhile, remains challenged. Publishers struggle to grow units as people spend less time with magazines and more time with other media, including digital. Moreover, analysts are waiting to see whether publishers will move to alter magazines' rate bases, since new Audit Bureau of Circulations rules have gone into effect for first-half 2006 that require publishers to break out verified copies that go to public places such as doctors' offices. No one is quite sure how these new rules will affect publishers' circulation strategies.
Accountability is gaining focus. Readership.com, a new online magazine audience measurement service from McPheters & Company, will provide detailed information on readership levels, audience accumulation, demographics and engagement for magazines and newspapers on an issue-by-issue basis. The service, set to launch this fall, reports magazine readership data in a timelier fashion than traditional measurement offerings and could change the way ads are sold while letting publishers quickly see how readers respond to a given issue's content.
Despite initiatives to improve methods to track audience, the relative difficulty in measuring magazines will hurt their ability to compete with other media. "If you go back eight or 10 years, you have so many notable launches," says Peter Gardiner, chief media officer, Deutsch. "You have O, the Oprah Magazine and Teen People, Real Simple. [Now], advertisers are having a harder time recognizing the return of advertising. The medium is in major retrenchment. There's just not been major innovation in the past couple of years."
Starcom's White sees progress, however, as publishers move toward becoming marketers of content on multiple platforms rather than just sellers of ad pages.
"I think we're at a place of taking a step back and reassessing all the different brands that they have out there and thinking about how strong is my brand going to be with multiple distribution formats," she says. "I feel right that publishers are starting to make some changes and offer the goods."
Lucia Moses covers magazines for Mediaweek.