New rivals for magazines? Catalogs and directories vying for ad pages; catalogs also competing for newsstand space

Folio: The Magazine for Magazine Management, Nov, 1987

New rivals for magazines?

Ads may be slumping in magazines, but they're on the upswing in catalogs and Yellow Pages telephone directories. Some publishers are concerned that the two media may compete with magazines. Although the two are still a long way from stealing the print media crown, a few recent trends bear watching.

In the last year, an increasing number of catalogs--particularly widely distributed, upscale vehicles--have begun to carry national display advertising from outside sources. Although that advertising was valued at $2.5 million in 1986, at least one source expects this revenue to reach $25 million next year. What's more, some 200 mail-order catalogs are slated to move into 76,000 newsstands nationwide this winter, right next to magazines.

Since the breakup of AT&T, the proliferation of Yellow Pages directories (more than 6,200 from 200 publishers) has also sparked competition for both regional and national advertisers. In 1986, national advertisers spent between $650 million and $750 million with Yellow Pages publishers. Today, ad revenues are growing at 11 percent annually, as is the percentage of national advertising carried in those directories.

Although those figures seem paltry compared to magazine revenues--$5.4 billion for consumer and $2.7 billion for business in 1986--it's clear that marketers of directories and catalogs are taking an aggressive swipe at the bread and butter of magazine publishing.

Catalogs: Aggressive marketing

The distinction between catalogs and magazines is blurring, asserts Jay Walker, chairman, Catalog Retail Corporation, and the main force behind recent developments in catalog marketing. Because readers are steeped in ever-improving magazine design and production quality, catalogs have been forced to upgrade in order to survive. And, like magazines, catalogs cater to the vertical, special interests of consumers: Where magazines concentrate on the entertainment and information side of that interest, catalogs, says Walker, focus on the purchasing needs.

It's only logical, he reasons, for catalogers to find advertisers who want to be associated with specific catalog products and readers. "Ads are part of what people like--and are accustomed to--reading,' he says. To that end, Spiegel, The Sharper Image and Bloomingdale's By Mail have carried ads for Courvoisier cognac, Corvette cars and The Wall Street Journal.

"They not only help pay the bills, but they add a little ambiance to some catalogs,' says Walker. This year, he expects ad revenues to quadruple to an aggregate of $10 million in nearly 40 catalogs.

Not all catalogs are eager to carry advertising. Tiffany's, for one, has refused ads so that readers may focus wholly on Tiffany products. And catalog consultant Richard Hodgson sees no threat to magazines, likening catalog advertising to billboards, posters and other supplementary forms: "It's just another way to reach an audience.' He notes that catalog distribution isn't measured by an audit bureau or syndicated research, and he doubts that money spent on catalog advertising would displace funds budgeted to magazines or other media.

Indeed, he says, advertising in catalogs is nothing new; some catalogs featured national ads more than 50 years ago, and Montgomery Ward carried outside advertising regularly a decade ago. He does, however, credit Walker for selling catalog advertising with never-before-seen intensity.

Yet he believes catalogers will abandon advertising as a novelty when faced with the choice of being a publisher or a merchandiser. Magalogs, he argues, have historically been shortlived because they tend to divide readers' attention. As a result, response to merchandising suffers, he says.

Pushing out magazines

The space given to catalogs on the newsstand appears a more real threat, he says. A major national magazine distributor, Curtis Circulation Company, has agreed to distribute some 200 catalog titles on 76,000 newsstands. Although those catalogs are not likely to displace profitable, established magazines, Hodgson believes they may push out new magazines, special issues and one-shots, which depend on newsstands for exposure.

For catalogers who have tapped out their best mailing lists, the newsstand offers another way to reach buyers. Theoretically, a person who buys a catalog from a newsstand will buy from the catalog. An early test with the Waldenbooks chain, where wire catalog racks were placed next to newsstands, resulted in the sale of 100,000 copies each month at $1 to $2 cover prices. (Each catalog also featured a $5 discount coupon on the cover.) With Curtis handling distribution, Walker expects unit sales to reach 10 million catalogs next year.

Hodgson, however, is skeptical about whether newsstand sales will be profitable for catalogers. Because catalogers must pay for the newsstand space--the retailer, distributor and Catalog Retail Corporation divide the cover price--they must recover their investment through product sales. It's still questionable, he says, whether catalogs are converting newsstand buyers.