Hitting the ad page wall; business press revenues are growing, but pages are not. Can the industry recoup the ad page growth of yesteryear?

Folio: The Magazine for Magazine Management, May, 1989 by Jean Marie Angelo

Hitting the ad page wall

The data on the business press chart a dangerous trend. Revenues are up, but pages are flat. Business magazines with page counts that are growing are most likely increasing market share at another title's expense. Have we run out of pages to be gained? It is a scary question, with no simple answers.

The business press leaders are perhaps "myopic," says an executive at a major business publishing company who prefers to remain anonymous. "What is happening in the business press today is almost like what happened in the American steel industry. Salespeople were told to go out and sell against other plants, when the actual competition was the plastics industry and the Japanese," says this source. "Publishers are so competitive amongst themselves that they are not seeing other ways of generating revenue. The industries are screaming to the business press: 'You have to change or you are going to die.'

"It is easy to blame the problem on rate negotiation and leave it at that. But what is rate negotiation saying? It is saying we are competing against other magazines. Cutting them down. We have to say, 'Our competition is trade shows and telemarketing.'"

Complicating the problem of identifying the competition, some consumer magazines are coming after business press dollars. Witness what has happened in the office products industry.

Today, office products generate $100 billion annually, up from $40 billion in 1985. Yet business magazines in this field are losing advertising pages to the general business titles--Forbes, Fortune and Business Week. Although the office products business has been booming, the cumulative total of advertising pages for three of the office products titles was down 21 percent in 1988, compared to 1985.

For foreign companies, it is a problem of image. Foreign companies are now an important component in the U.S. business world, says an executive for a vertical office products title. Most office products hardware--calculators, copy machines and facsimile units--are produced by Japanese companies. "Prestige and image are important to the Japanese. Even though our magazine may generate more responses for them, we don't have the glamour of a Forbes or a Fortune. This is a shortsighted philosophy. If pages dry up for the business titles, then titles will fold and there will be less coverage of these products. The loss of editorial will impact everyone else. Maybe we haven't done as good a job at selling our benefits," she says.

The experience of this one business magazine market reflects a problem pervading the industry at large. "The business press field is a mature market," says Arthur Rosenfield, president of Business Development Group, a consulting firm that has conducted a sweeping study of the business press. "Our advertisers are just paying more for the same goods," he says. "If McDonald's were selling fewer hamburgers, you can bet they would be worried."

Rosenfield has analyzed select magazines listed in 140 of the categories that are part of the Standard Rate & Data Service's (SRDS) business directory. The statistics quoted in this article focus on the top 79 markets. The analysis is by no means all-inclusive. Several large categories--entertainment, for example--are not evaluated. Other categories, such as medical, are only marginally represented. And the totals of pages and revenues are compilations of figures supplied by Patterson Advertising Reports, C-Systems, Rome Reports, Gallagher Reports and miscellaneous sources. Still, the study, which tracks the ad pages and estimated revenues for 516 magazines (by and large the top titles in their categories), reveals overall trends.

Although ad revenues for these 516 magazines have grown from $2.177 billion in 1985 to $2.603 billion in 1988, pages have dipped. The page total was 431,350 in 1988, down from 482,173 in 1985, notes Rosenfield.

The net result is that publishers are making more gross revenue per ad page, an average yield of $6,034 in 1988. This compares to a yield of $4,515 in 1985.

Although much of the revenue growth in the business press is attributed to the data/computer titles, SRDS category 5A, other sources generally support Rosenfield's conclusions. (Without including these computer magazines in the mix, revenues for the magazines that Rosenfield analyzed drop to $1.948 billion for 1988. Ad pages come to 361,943 for the year.)

ABP estimate

The Association of Business Publishers (ABP) issues its own estimates of all the U.S.-based business magazines that have at least a quarterly frequency: a total of 2,725. Ad pages came to 1,845 million in 1987, down slightly from the previous year. Ad revenues, however, grew by a healthy 10 percent in 1987, for a total of $3.5 billion. What is more disturbing is the growth rate of pages versus revenues during the past 25 years. Percentage page growth for business magazines has been essentially flat since 1979. During the mid to late 1970s, pages grew by 8 percent and 9 percent from year to year, and have not surpassed 5 percent any year since, according to ABP figures.