On the advertising front, the advance buzz is that March pages are... drum roll... flat. Well, next to double-digit declines, flat is indeed a good thing. Based on its tracking of 173 monthly titles, Media Industry News (MIN) reported that the month’s 10,857 ad pages will match March 2009’s. Factoring in declines in January and February, MIN pegged first-quarter ad pages as down 5.7%.
First-quarter ad stats from Publishers Information Bureau’s 250 member magazines aren’t out as of this writing, but if the same basic patterns hold, Q1 will look positively upbeat next to 2009’s quarterly losses (-25.9%, -29.4%, -26.6% and -21.6%, in calendar order), which left ad pages down 25.6% for the full year. Those were on top of PIB-recorded 2008 quarterly losses ranging from 6.4% to 17.1%, for an overall ’08 ad page decline of 13.8%.
And while the nearly 22% decline in PIB-title Q4 ’09 ad pages may not be cause for celebration, somewhat hopeful signs were seen in a 9.8% page gain in the important food category and a slowing of declines in some other major categories (automotive, in particular).
Newsstand strife
The newsstand scenario is considerably murkier. In second half ’09, audited titles lost 8.6% in units and 5.7% in dollars, according to John Harrington’s New Single Copy analysis. That’s actually an improvement over audited-title unit / dollar declines of 14.4% and 5.4% in 2008’s second half, and 12.4% and 9.9% declines in first-half ’09.
However, as Harrington points out, nearly 77% of audited titles showed no average per-issue unit gains in 2H ’09 vs 2H’08. And total newsstand titles (non-audited included) did a bit worse in 2H ’09 than audited titles on units (-10.3%), though a bit better on dollars (-3.3%).
Full-year ’09 units were down 12.9% for all titles and 10% for audited titles (dollars down 8% for both), Harrington estimates, versus 2008’s full-year unit declines of over 11% for both audited and all titles and dollar declines of 3.2% for all, 0.6% for audited. Ugly? Yup. However, let’s not forget that 2009 included huge losses resulting from a major distribution interruption in the first half. Without that blow, 2009’s losses might well have been noticeably smaller than 2008’s. (Again, it’s all relative.)
As for 2010, the dynamics underlying overall retail trends remain decidedly mixed. Some positive movement in consumer confidence levels continues to be counterbalanced by determination to minimise discretionary / impulse spending, decrease debt and increase savings. As we know, US newsstand sales were stable for several years prior to the recession, and based on historic patterns, consumers will be inclined to resume higher magazine purchasing levels as the economy improves. However, shifting retailer strategies are likely to pose the biggest obstacle to the category’s ability to recover.
Category out of favour?
The grocery and other mass retailers that account for the lion’s share of magazine category sales are not only losing traffic to “value” formats and slashing product SKUs to “optimise” assortments, but accelerating their emphasis on consumables and de-emphasising many general merchandise categories that are experiencing softness.
While profit margins of course matter, increasingly, display and assortment decisions are being driven by category growth performance. This puts magazines in a less-than-optimum competitive position at this juncture, threatening mainline displays and visibility, as well as intensifying the battle for front-end space.
The loss of hundreds of titles that have been folded or taken off the newsstand has already contributed significantly to current category volume declines. More than 80 titles with newsstand sales ceased being audited in 2009’s second half, accounting for $70 million in lost dollar revenue and 11 million in lost units, or about one-third of total unit declines, per publishing consultant Baird Davis.
While Davis notes that less competition / clutter is likely to benefit remaining titles, it’s hard to believe that their gains will outweigh the cumulative impact of lost titles on overall category sales – particularly if, in addition, retailers elect to rashly reduce title assortments, move mainlines to low-trafficked areas within stores, or shift checkout space to other categories on the basis of short-term display pay-outs.
There are sound business reasons for retailers to work with the magazine category during this trying period, rather than thwart its recovery and feed a downward spiral. Magazines not only deliver strong profit margins; they actually do have a uniquely strong bond with consumers, and the ability to help sell other products in stores. The question is whether the industry can muster the resources / will to work expediently with individual retailers to address how the category can contribute to their specific strategic goals.
In short, 2010 print trends may see some relief if the economy cooperates — but the struggle to reinvigorate traditional revenue channels (while investing in new ones) very much continues.
