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Economics

Economics

By the Project for Excellence in Journalism

Magazines publishers looking for good news on the advertising front did not find it. For the most part, advertisers and readers continued to fall away in 2007.

Over all, in the 250 magazines analyzed by the Publishers Information Bureau, ad pages were down slightly — .6% — in 2007, compared to a tenth of a percent drop in 2006.

Three news magazines — The Economist, The Week and the New Yorker — managed to buck the downward trend, adding pages and revenue, while blending focus on both their print and online products.

The most closely watched news magazine experiment in 2007 has so far failed to produce hoped-for results. In an attempt to stem ad revenue and circulation losses, leaders Time and Newsweek slashed their rate cards and made over their looks. Yet early signs show the decline in ad dollars continues for both.

With worsening economic indicators and the slow exodus of readers and advertisers, turning around the dispiriting pattern that started in 2005 for magazines as a whole seems more and more unlikely.

News Magazine Ad Pages

Over all, of the nine news magazine we examine, ad pages were down 1%, as were ad dollars, by nearly 5 percent. A closer analysis reveals some individual successes among more niche publications.1

All three of the big newsweeklies lost ad pages in 2007.

At Time, ad pages fell 6.9% and ad dollars 18.3% and Newsweek saw a 6.7% drop in ad pages with a 1.8% decline in ad dollars, numbers that put both magazines precariously close to previous lows in 1990 and 2001, respectively.

U.S. News and World Report was not far behind, with a 4.6% drop in ad pages and a small — 1% — increase in ad dollars.

Time and Newsweek, which have experienced especially hard times with double-digit percentage declines in 2005 and a relatively flat 2006, took steps in late 2007 to try to change direction.

First, both magazines initiated major redesigns, with Time putting its efforts into an online and print overhaul.

Both magazines slashed their ad rates, which are based on promised circulation. With some fanfare, Time cut its circulation by 600,000. Late in December, Newsweek quietly followed with a cut of 500,000. It is too early to tell if the lower rate bases will draw advertising back.

Will Time and Newsweek give up on their circulation strategy? It is unclear how the leaders will adapt if ad pages continue to fall away and dollars move into Web-based media.

Three of the six other news magazines we analyze fared better.

The Economist and The Week – both benefiting from sizable circulation increases — continued to add advertisers. At The Economist, which has made no secret of its intentions to hit 1 million in U.S. circulation, ad pages grew by 8.5%, with a 24% increase in ad dollars.

The Week continued its success with a 5.3% increase in ad pages and a 15.8% jump in ad dollars.

A change in publisher at the New Yorker three years ago appears to have helped the magazine get back on its feet after a rocky 2006. Heading into 2008, it is on a path toward aligning its growing readership with ad revenue.

Louis Cona, the former publisher at Vanity Fair, took over at the New Yorker after the departure of a highly successful leader, David Carey, in 2005. The following year was an especially rough one, with an ad page drop-off of 13%. But Cona may just have needed some time to settle in. In 2007, the New Yorker increased its ad pages 4% and ad dollars 10.6%.

The National Journal saw minuscule improvements, with ad pages growing by 0.1 percent and ad dollars by 5.8 percent. So far, at least, there is no discernible effect from its 2007 partnership with NBC News to field “mobile campaign bureaus” to cover the Presidential candidates, a move aimed at broadening its online and broadcast exposure.

Following flat numbers in 2006, Jet posted a bigger loss in 2007, with ad pages falling 4.8% and ad dollars dropping 4.6%.

At The Atlantic, where much effort has gone into building a livelier Web site, the number of ad pages barely budged from 2006, with a 1% drop. The magazine saw more ad dollars come in, though the rate slowed; in 2006, ad dollars went up 16.6%, but in 2007, the increase was only at 7.9%.

As part of its online focus, the Atlantic is hiring more ad sellers and announced in 2008 it will drop Web subscriptions and open up its site for free. The goal: More traffic and more advertisers.

Over all, these wide-ranging strategies — individual magazines tinkering with online identities and rethinking their established print brands — suggest the industry is still piecing together the ad revenue puzzle.2

Footnotes

1. While the ad dollar and ad pages figures will be discussed in this chapter, the ad pages are the more concrete figures that indicate financial health of a magazine. The total dollar figure is calculated by multiplying the rate given on the rate card by each publication by the number of ad pages. This is an inaccurate representation of actual ad revenue because advertisers rarely, if ever, pay the rate given on the rate-card. Therefore, it must be noted that experts in the industry say that actual revenue is often half what the ad dollars are reported to be.

2. All ad revenue and ad page data from Publishers Information Bureau report January 2007-December 2007 vs. 2006.