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Coversheet of an Online File Download From The News, Feature and Data Web Site of Advertising Age Title of the attached .pdf file: THE AD AGE 2004 MAGAZINE CIRCULATION REPORT A Troubled Industry Seeks New Solutions AdAgeSPECIALREPORT 3.15.04 Puzzle will take time Publisher with a plan Hearst Q-and-A On AdAge.com INSIDE Hard choices await publishers How Time ‘s efforts are paying Black tackles reader, circulation Download the Magazine PDF, looking for a fix PAGE S-2 off for publisher PAGE S-6 and competition issues PAGE S-14 use QWIKFIND AAP44R March 15, 2004 | Advertising Age |S-2 AdAgeSPECIALREPORT MAGAZINES Circ model cries for hard choices How magazines got in a which its Publishers Information Bureau tracks, and circulation numbers from the Audit Bureau of Circulations finds a marked drop in jam, and a bevy of hard circulation’s slice of the revenue pie. According to MPA, circulation accounted for 37.7% of choices for getting out magazine revenue in 2002, down from 53% in 1992. (This is admittedly an inexact science, as By JON FINE all the ABC-audited titles aren’t audited by PIB, but nevertheless presents the broadest universe o paraphrase Ernest Hemingway, of magazine numbers available.) magazine circulation got into its Now let’s return to 2002. According to Mr. current mess two ways: gradually, and Loeb’s presentation, the stampsheet players’ Tthen very suddenly. volume totaled just 7 million that year, after “Gradually,” because newsstand sales of taking hits at the end of the century from legal magazines have been on a long, slow decline actions. This happened while consolidation of for around a quarter-century. magazine wholesalers and changes in the “Very suddenly,” because that’s how retail landscape put newsstand sales under quickly the biggest source for magazine severe pressure, which accelerated declines. subscriptions dried up. In the 1990s, In 2001, an ad recession began a years-long stampsheet players like American Family clampdown. Belt-tightening procurement Publishers, 50% owned by Time Inc., and procedures came to marketing in a big way; GRIES SCOTT Publishers Clearing House supplied enormous media buyers were forced to justify anew each volumes of subscriptions to subscriber- dollar spent on advertising. ALL ABOUT WANTEDNESS hungry publishers, then all but disappeared. A new wave of marketers and media buyers The solution to circulation woes, however, grew adept at reading the fine print of magazine DONNA CAMPANELLA will in no way come very suddenly. Various circulation statements—which, starting in 2001, Director-team leader, media, at Pfizer tactics have been tried, and publishers are still required greater detail from publishers in looking for ways to repair the damage. The exchange for broader rules on what circulation “WE DO AN ANNUAL print meeting with all of our magazine reps. I said to them, ‘If you have any stakes go beyond lost circulation revenue, to could be counted as “paid.” Magazine publishers issues or you consider bringing [circulation] down, don’t be afraid to let us know. We are more marketers skeptical about magazines’ value as were left with oversized rate bases, no easy interested in quality, and if that’s the right thing to do, then fine with us.’ an ad medium craved by consumers. means to fill them and no upside on the ad front. “We look at wantedness. Everything is wantedness. How do people want [the magazine], and what Given stampsheets’ impressive ability to This brings us to 2004. An ad recovery are they willing to do to get it? We like to see, first of all, that a magazine achieved rate base. But then generate subscriptions, the tactic’s demise was remains just out of reach. On the circulation more important is [whether a magazine made rate base] issue by issue. Because we may have some a body blow to the magazine industry. In a side, the first half of 2003 left many brands that are in some [magazines] across the year. It doesn’t help if overall the magazine is presentation to 2002’s American Magazine publishing executives wincing. And then the delivering but we see huge variables in months that we are advertising. Conference, Michael Loeb, Synapse Group second-half numbers came in. “Big is not what it used to be anymore. Think about it: When magazines had huge circulations, there president-CEO, said that channel’s volume of were three networks and 50% shares [of TV audience for key programs]. Just like fragmentation in subscriptions hit 80 million around a decade HORRIBLE NUMBERS the TV industry, there are so many special-interest publications. Smaller circulation is not a bad thing. ago, or more than 25% of the industry’s total “The most horrible set of numbers I’ve ever And large isn’t bad as long as it’s targeted and as long as it’s delivering audience.” subscriptions. That let publishers scale back seen, and I’ve been tracking [circulation] for on other sources—like direct mail, which 25 years,” says Dan Capell, editor of the required constant tinkering and faced industry newsletter Capell’s Circulation Rosie did little to inspire faith. simple or easy. There is no one silver bullet to increasing paper and postage prices anyway. Report. “Seventy percent of magazines were The current circulation model “is broken, magazines’ circulation woes. There is, also, no In the ’90s, AFP and PCH allowed down in newsstand sales,” Mr. Capell says, for publishers and advertisers,” says Karen cheap way to do it. The solutions involve publishers to keep circulation high without adding that it was the largest drop-off he’d Jacobs, exec VP-print at Publicis Groupe’s arduous trial and error among several options. much effort, and they reaped advertising based seen by at least 10 percentage points. Starcom MediaVest Group, Chicago. There’s the Web, though publishers admit on big audiences. Perhaps those rate bases were The push toward do-not-call legislation “Circulation directors get focused on it hasn’t lived up to its high expectations. a bit bigger than a rational market might threatens significant volume of subscriptions delivering the wrong goals. By that I mean the There are promotional strategies on the dictate, but it was easy to nab more subs from sold through that channel. And while it publisher goes out and makes a rate-base newsstand side, which are expensive. Some the stampsheets whenever they were needed. appears to be an isolated case, the testimony of promise and then the circulation director has publishers are investigating alternate placement And these easy subs changed magazines’ a former Gruner & Jahr USA Publishing to deliver, no matter what it takes, because of magazines in non-traditional retail locations, revenue mix. Data-crunching by the Magazine circulation executive that the company God forbid they underdeliver.” though this is more of a niche-player move. Publishers of America based on ad revenue, knowingly overstated newsstand sales of So what’s the way out? Nothing that’s See OVERVIEW on Page S-10 If a publisher wants to jack up average subscription price, the Northwestern University, has thus far elicited a wary response HIGH PRICE TO PAY fastest way to do it is to opt for a quick call to what are called “cash from many advertisers. They’re reserving judgment until more field agents,” who supply subscriptions for a price—albeit with no detailed data covering specific magazine categories are HOW BADLY do they want it? guarantees of where those readers are or what they may do to a released. In theory, “wantedness” is marketers’ Holy Grail of reader magazine’s demographics. Renewal rates of such subscriptions Still, some media buyers are stepping back from linking accountability. And many say the best way to measure it currently are virtually non-existent. wantedness to the average-price-paid figure. is by average price paid for subscriptions. ANOTHER MEANS: stop selling long-term subscriptions, “We do not spend a whole lot of time with average price paid. “It’s not the total story,” says Michael Browner, executive which often involve getting extra years at a slightly discounted We haven’t found it to be, yet, a really useful thing to look at,” says director-media and marketing operations at General Motors Corp. rate. Or sell eight copies, rather than 12, for a year’s subscription Karen Jacobs, exec VP-print at Publicis Groupe’s Starcom “But it’s the easiest thing to measure right now.” price. Both techniques ultimately drive up average price paid. They MediaVest Group, Chicago. A mere mention of “wantedness” rarely fails to evoke heated also significantly increase circulation costs, executives say. BUT A MORE jaundiced view is espoused by Robin Steinberg, comments from magazine executives. But a better way of The first wave of a multiyear study, released last October by who buys for Pfizer as VP-director of print at Aegis Group’s Carat knocking down its value is to point out, as some publishers do, that the Magazine Publishers of America, found no correlation North America, New York: “How are we supposed to evaluate the “average price paid” statistic can be manipulated fairly easily between price paid and reader involvement. The research, wantedness when a consumer’s annual subscription can be and in ways that bring in the least desirable readers of all. called the “Reader Experience Study” and conducted by purchased for less than a CD or a movie ticket?” —JON FINE March 15, 2004 | Advertising Age |S-6 AdAgeSPECIALREPORT MAGAZINES Time’s tactics show a way out CIRCULATION SAMPLER “Free is a pretty powerful word,” Mr. Initiatives such as sharp Wolfe notes.

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