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Special Report: Magazines

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NEW YORK Tanned and rested after their summer vacations, publishers face a chilling reality for the year ahead: The leading forecasters call for ad spending at consumer magazines to grow but at a less-than-stellar rate, as marketers continue to shift ad budgets to digital platforms. Weak auto commitments continue to hurt the bottom line. And if the economy continues to weaken, despite the Fed's interest-rate cut, still more belt-tightening could be on the way for an industry already nickel-and-diming.

ZenithOptimedia is the most bullish, predicting magazine ad revenue will grow 5 percent in 2008, after rising 3.3 percent this year versus 2006. Meanwhile, Veronis Suhler Stevenson expects 4.2 percent growth in 2008, following an increase of 3.2 percent this year. PricewaterhouseCoopers forecasts more modest growth of 2.8 percent, following similar gains this year.

Pharmaceuticals should help publishers make their numbers, with drug launches ranging from weight-loss remedies to anti-aging products seeking marketing support. Growth is also expected in the tech category, with some advertisers said to have a backlog of product launches.

"Direct-to-consumer magazine advertising is proving to be successful for [publishers], with all the restrictions put on [advertisers]," said Leo Kivijarv, vp, research, PQ Media, which partnered with VSS on its forecast. "We think they'll spend more on custom publications than consumer magazines, but it'll still be a strong category for magazines."

Automotive continues to be a troubling category for publishers, with no turnaround expected. The domestic auto market is still struggling, while some worry that ad spending for imports, which so far have been the category's savior, will also soften.

Looking at titles by category, celebrity magazines still seem to have some room for growth, although price increases across several weeklies and fierce competition from major players on the Web could temper results.

Women's fashion/beauty books and others that trade in luxury and fashion/cosmetics ads also are holding their own, as clients still favor the glossy printed page over the Web. That fact has been a boon to new titles including Condé Nast's Portfolio and Forbes Magazine Group's ForbesLife Executive Woman.

Meantime, the industry has endured a number of upsets of late, with a dozen or so high-profile titles, including Meredith's Child and Condé Nast's Jane, biting the dust. Other players, including American Media Inc.'s Star and Time Inc.'s Time, have adapted to the reality of high circulation costs and advertiser demand for targeted circ by trimming their rate bases.

Publishers continue to adapt by launching podcasts, online video and other digital products and combining their print and online sales forces. Those who don't risk losing business trickling to the Web and other media. ZenithOptimedia forecasts magazines' share of total ad spending will decline to 12.1 percent by 2009 from 12.5 percent in 2007, as the Internet's share rises to 9.4 percent from 7.4 percent.

Buyers like Serge Del Grosso, exec vp, director of media planning at Lowe, New York, are demanding that publishers demonstrate the value of online components. "We're looking at publishing companies that have a very strong and growing digital presence, and we're looking at an integrated RFP," he said.

While magazines have made progress adapting to the digital world, many observers agree they have work to do translating content to the Web and selling it in conjunction with print.

There's reason for optimism. Increasingly, print in combination with the Web can be a powerful purchase driver, said Jennifer Neal, senior vp at PHD.

"Magazines are becoming more 360, and they're even being smarter about creative units," she said. "The biggest challenge, I think, for the publishing houses is, how do you figure out how to incentivize the sales team? Right now it's still siloed."

Said Kivijarv: "Even though the magazine industry has become more active online, the question is, did they get into it too late? And will the ad dollars they're generating online be able to make up for what they're losing in print?"