Fighting For A Piece Of The Pie

Folio: The Magazine for Magazine Management, June 1, 2004 by Susan Thea Posnock

Byline: Susan Thea Posnock

Magazines can't take much comfort from this year's TV upfront season - the advanced sale of 75 percent to 80 percent of prime-time slots that occurs every spring. As the networks pulled out the stops with extravagant star-laden presentations of next season's lineups, it was hard to get a sense of where the advertisers' budgets were going. Ad execs were expected to spend anywhere from 3 percent to 5 percent more (according to The New York Times) to 3 percent to 5 percent less (according to Adweek) than last year's record-breaking $9.3 billion. That compares with average upfront growth rates of 10.7 percent between 1987 and 2002 - and actual spending increases of 4.2 percent for network television.

The rising cost of TV time means magazines' slice of the pie is more likely to shrink. Lowe Worldwide Executive Vice President Michael Neiss estimates that TV costs per thousand will rise 5 percent this year. Declining costs wouldn't necessarily help publishers, either. For one, they have to wait until September for advertisers to figure out how to spend what they're not allocating to TV. Even then, magazines will compete with newspapers, Websites, outdoor and direct marketing. "Magazines kind of get the crumbs that fall off the table," Neiss says.

Those crumbs keep getting smaller. According to TNS Media Intelligence/CMR, total ad dollars spent on magazines (consumer and b-to-b) in 1999 were $21.4 billion and $23.5 billion in 2003, versus $27.7 billion for television (broadcast and cable) in 1999 and $34 billion last year.

But hope may reside in the old saw: if you can't lick 'em, join 'em.

That doesn't mean creating an upfront for magazines as some have suggested, says Neiss. That's because broadcasters have a limited inventory of advertising slots, so when every episode of "The Apprentice" is sold, advertisers are out of luck. But they know that publishers can simply add more pages to a magazine. "There's no incentive for advertisers to lock in ahead of time," says Neiss.

But advertisers are growing weary of the upfront, as it forces them to commit to programming that may not deliver the promised results. CIBC World Markets says ABC is expected to owe more than $100 million in make-goods, because its shows didn't hit the promised audience levels.

"Most think it's an idea that's outlived its usefulness," says Debbie Solomon, senior partner and group research director for Mindshare, a global media ad agency. In March, the Association of National Advertisers (ANA) released a report showing that 56.6 percent of marketers are dissatisfied with the process and 47 percent think network pricing is unfair. One sign of growing displeasure: ANA and the American Association of Advertising Agencies convened a group of 40 advertisers, agencies and sellers for an unprecedented Network Upfront Discussion Group at the end of April.

Magazine publishers can take advantage of this impatience with TV. "To the degree that the frustration of the upfront is driven by paying more for less audience, advertisers are looking for solutions," says Ellen Oppenheim, executive vice president and chief marketing officer for the Magazine Publishers of America. "According to accountability studies, when magazines are increased as part of the media mix, advertising ROI increases."

Neiss says the best way for publishers to compete is to create integrated programs. By forming partnerships that include events, custom publishing and Web activity, publishers can create more of an ongoing commitment. "Advertisers are looking to break through the clutter," says Oppenheim. Integrated marketing can be a big help because consumers can experience the brand differently, depending on the media being used.

Including TV in the mix has helped Time4Media approximate locking in ad dollars for the coming year. It has partnered with the Outdoor Life Network (OLN), a 24-hour cable network devoted to outdoor enthusiasts that reaches about 60 million homes. "This Happened to Me," a program based on editorial from Outdoor Life magazine aired 13 episodes on the network last fall.

"It was incrementally helpful," says Tom Ott, group publisher of the Outdoors group (publishers of Field & Stream and Outdoor Life). "Advertisers could get a spot on each of the 13 episodes and repeats, and it was tied to a magazine buy and a Web component, which led to new or incremental advertising in the magazine." The program brought in brand-new advertiser Pemmican from ConAgra Foods, as well as additional magazine ads from Smith & Wesson, the National Shooting Sports Foundation and gun maker Benelli. Ott says each of the deals, arranged as sponsorships, were worth at least several hundred thousand dollars.

A new show based on F&S's "Sportsman's Notebook" is being developed and a second season of "This Happened to Me" is slated to run in October. Ott says the group also gets a certain amount of inventory on the network that it can offer to advertisers in the magazine. "Being able to package commercial time helps us drive bigger and better advertising deals into the magazine," he says. "It's in the best interest of publishers to work with television, not against it."