Media Outlook 2011: Print

After slogging through their worst year in decades, print media sellers finally had reason to feel better, if not ecstatic, this year. The industry started to repair itself from the carnage of 2009, with ad declines lessening and fewer publications closing. And the Apple iPad fanned publishers’ hopes that, after failing to make a meaningful business from their Web sites, they could finally make a buck off their digital content.With new leaders just taking over at the major magazine companies (and under pressure to overhaul their business models), there’s a feeling of change and progress in the air. “There’s renewed energy and more focus on the expansion of digital and content,” says Brenda White, svp, publishing activation director, Starcom USA. “2011 will continue to be a test-and-learn opportunity.”The iPad sold more than 3 million units within 80 days of its April rollout. And while Apple has the market all to itself now, it’s expected to grow as rival device makers release copycat products in the months ahead. Next Issue Media, a publisher-backed e-reader consortium, predicts that U.S. newspaper and magazine companies could realize $3 billion in consumer revenue by 2014 from sales of interactive publications on such devices. (When taking into account potential cannibalization of print subscriptions, NIM estimates the incremental revenue at $1.3 billion.)“It gave publishers something to be excited about,” says Tim Corrigan, a partner at Pricewaterhouse-Coopers, of the Apple tablet computer. “Digital distribution is clearly where the market is headed, and the market is soon to have multiple options. It makes the product look beautiful online, which is different from what we’ve had over the past couple years with the e-readers that aren’t graphically enabled. It’s leading the industry down the path and giving them options they heretofore haven’t had.”The enthusiasm has spread to advertisers too. As one buyer says, “I’m having less conversations about, ‘Are magazines dead?’ than last year.”Such tablets are far from becoming a meaningful source of revenue. Publishers and Apple are still wrangling over who will own information on subscribers to digital editions, information publishers consider crucial to selling renewals, upselling readers other products and selling advertising. The entry of other devices could solve this problem, but for now, consumer and advertising revenue are likely to stay small until publishers can sell subscriptions on a broad scale and demonstrate engagement levels to advertisers.Meanwhile, the heart of the business, print advertising, remains challenged as audiences and ad spending continue their years-long migration online. For this reason, forecasters predict the market for consumer magazines to continue to decline this year and expand only modestly in the next few years, assuming the shift in spending to digital platforms continues.The outlook remains much worse for newspapers as readers drift to mostly free Internet sources. The market has already shed 38 percent of its revenue since 2005, and PwC projects that newspapers’ total revenue will fall another 16 percent over the next three before beginning a modest rebound in 2013. Papers are expected to keep losing classified ad share to the Internet, while nonclassified will continue to be depressed by declines in readership and fierce competition from other local advertising sources.Even at magazines, whose readership has stayed relatively steady, sellers still struggle to stand out from other ad platforms like social media or TV that get more love from advertisers. “What keeps me up at night is too much of a pendulum swing toward digital and broadcast,” says Mark Wildman, svp, sales & marketing for Bonnier Corp., the publisher of enthusiast titles including Popular Science and Saveur. “We’re shifting strategies, but [print] is where the lion’s share of our revenue comes from.”Given that print advertising remains the lifeblood of the industry, publishers will continue to try to serve advertisers with never-been-done print ad formats and packages that integrate print, online, events and other platforms. Barry Lowenthal, president of The Media Kitchen, says he expects to see increasing sophistication in the types of deals publishers put together for advertisers. “2011 is going to be the year when you start seeing magazines develop compelling and meaningful cross-platform packages,” he says.Next year also will likely see a lot of action on the consumer revenue front, as the recession has made publishers painfully aware that in the chase for ad dollars, they’ve gone too far in discounting their content to readers. Publishers will continue to look for ways to charge consumers more, either through subscription pricing, online paywalls or other consumer-paid content, from iPad apps to newsstand specials. The New York Times’ anticipated online pay structure, for one, will be closely watched as a proxy for the rest of the industry—and an indication of whether publishers can retrain consumers to pay for what’s long been free.

Performance Marketing

Media Outlook 2011: Print

Lucia Moses

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Lucia Moses