And now, the good news

Folio: The Magazine for Magazine Management, June 1, 1991 by Tom Ryder

The current downturn is only a brief pause in an unprecedented bull market that is more than 20 years in length.

  Consider these facts,
  In the last 20 years
-  1. The number of magazines has more than doubled.
  2. Ad pages have increased 125 percent.
  3. Advertising revenues have grown by almost 500 percent.
  4. The average consumer magazine rate of
     profit has increased almost six times.
  5. Magazines have gained advertising share
     relative to television in each five-year period since 1975.
  6. Audited circulation per issue has grown by
     more than 45 percent.

Aren't you tired of hearing how tough things have been in our industry? True, we are in the toughest 18-month period I have experienced in my 25 years in the magazine business. Ad pages have declined. Weak magazine franchises have folded. Staffs have been reduced. And we are seeing the beginning of a consolidation of the industry that is affecting some of its major players.

It's been scary. And I've had days when, for the first time in my career, I would have preferred to have been selling falafels on 42nd Street and Broadway.

I suspect my colleagues in some other fields feel exactly the same way-those in real estate, for example. Or the retail business. Or the car business. or the travel business. What about beverage/alcohol? Mainframe computers? Network television? The advertising agency business?

The fact is, that for much of American business, these past months have been a great time to be a Carthusian monk.

But for those of us in the magazine industry, there is a big difference. The current downturn represents what I believe is a brief pause in an unprecedented bull market that is currently more than 20 years in length.

Consider these facts. In the last 20 years, the number of magazines has more than doubled. Advertising pages have increased by 125 percent, while advertising revenues have grown by almost 500 percent.

The average consumer magazine rate of profit has increased almost six times. And magazines have gained advertising share relative to television in each of the five-year periods since 1975.

Last but not least, audited circulation per issue has grown by more than 45 percent. On this point, it is important for you to know that although we are in an advertising recession, we are absolutely not in a reader recession. There is not one scintilla of evidence to suggest that total readership is down, and there is solid anecdotal evidence to suggest that in these difficult times, educated consumers are reading magazines more. And keep in mind that magazines, unlike most businesses, have two revenue streams and that consumer, or circulation, income is more than 50 percent of the total.

The good news to come

I have a few predictions about what lies ahead:

1. The business turnaround will come more slowly that expected, but will be in hill force by the fourth quarter of the year. We will have a great Christmas. And 1992 will be a sensational year for magazines and for the advertising industry.

2. Despite the business turnaround, major consolidations will continue to occur, leading to bigger, stronger media companies and fewer small companies.

3. We will fully enter the age of micromarketing as advertisers insist on greater accountability for their ad dollars. The emphasis will be on tighter targets and getting buyers closer to the cash register. This will be the most important change in media in the next 10 years. Beneficiaries of this shift will be special interest media and local media. Particularly hard hit will be national mass market media.

4. Group advertising buys and multimedia buys will both go out of fashion.

5. Magazines will do much more individualized editorial, creating extraordinary target marketing opportunities.

6. Cost per thousand against targets will cease to drive print media decisions. It will be replaced by a trend toward deeper relationships. The relatively inexpensive creative costs of print, compared to broadcast media, will greatly fuel the use of print in the age of micromarketing.

7. Magazines will grow as sources of information, and will begin important new services related to fax machines. Computers will store and sort the information, but will not infringe on magazine franchises for at least 10 years. Computers in the home will largely cease to exist as stand-alone machines, but will be incorporated into television sets. That, ultimately, will change the way we think about magazines.

8. Bargaining for the price of advertising pages will continue, but the balance will begin to shift to more powerful publishers who will be less interested in selling pages and more interested in obtaining margins.

Merchandising, or value-added programs will, however, become more important. And some publishers will create unique competitive advantages with their special skills.

9. Yes, a huge interest will finally develop in the so-called mature market-but there will never be a mature market magazine category, simply niches within other special interest categories.