Of Readers and Revenues

Folio: The Magazine for Magazine Management, July 1, 2003

Byline: JOE MANDESE

As the print ad marketplace continues to recover, magazine ad revenues appear to be growing faster than the rate of ad page costs. That's a good thing for advertisers and publishers alike. While the average cost per ad page increased 7.3 percent, to $75,341, during the 12-month period ending in April for magazines tracked by Publishers Information Bureau, total ad revenue for those magazines increased 9.5 percent.

That increase was due to organic growth in the number of ad pages sold. Through that same period, the books in PIB's database increased their ad pages by 2.1 percent, reflecting more demand from marketers.

These are positive trends. Unlike the rise in magazine ad costs that occurred at the height of the recession, the rate of magazine ad inflation is now more consistent with what's going on in the rest of the U.S. media marketplace. That was what seemed to be happening in 2001 and 2002, when ad rates were going up in the face of rate cuts in other media, especially television and radio.

But if the recently concluded upfront ad buying for the 2003 to 2004 TV season is any indication, magazines may begin to look like an even better bargain during the next 12 months. The average cost per thousand for network TV shows rose well into the double digits. And because of exceptionally high sellout levels, the limited ad time that remains unsold in the coming TV season will likely fetch even higher prices.

Meanwhile, new data from Mediamark Research, Inc. seems to suggest that marketers may also be getting more price elastic when it comes to the underlying value of magazine advertising. MRI's data, when compared with ad revenue data for the same period from PIB, indicate advertisers are paying much more per reader reached than they did a year ago.

MRI data shows that for the 12 months ending in April, the magazine industry averaged $13.95 in ad revenues per reader, a 12.4 percent gain over the same months in 2001 and 2002 (see table below). While that reflects a greater yield for publishers, it indicates advertisers are paying more to reach readers than they did a year ago. The jump also reflects an adjustment from last year, when the average cost per reader declined 8.3 percent for the 12-month period through April 2002.

Meanwhile, MRI and PIB data shows a considerable range in the readership yield. Not surprisingly, the smallest, most targeted titles tend to generate the highest revenue per reader. Barron's and Inc., the titles with the smallest audience bases, generated some of the highest ad revenue - $42.28 and $67.78 per reader, respectively. Mass-circulation titles like Reader's Digest ($5.93 per reader) and National Geographic ($1.39 per reader) were among the lowest ad revenue yields.

Ad costs per magazine reader are on the rise.

Bigger isn't necessarily better: Smaller titles command top ad dollar per reader.