Ad page, readership declines becoming worldwide trend in magazine business, despite significant success in digital

Editorial is driving digital transition, but advertising innovation will be necessary for new digital initiatives to succeed

A magazine executive told me two years ago that they “just were not seeing it” – “it” was ad page declines, readership declines, and the trend towards digital media. The publisher, from Europe, had called me to ask about tablet penetration numbers, as more and more often he was getting internal pressure to build tablet editions.

“I just don’t see why we need to do this when I don’t see many tablets in public, and our readership and advertising numbers continue to look good,” he said (after all this time I’m sure I’m paraphrasing). Today, this same publisher is producing tablet editions, but also seeing weaker ad and readership performance – the same trend seen two years ago with U.S. publishers.

Ad page declines are more and more a worldwide phenomenon. The latest Standard Media Index report for magazines in Australia, for instance, shows ad pages down 8.4% in April, though there were mitigating factors that made the numbers look worse than they may otherwise have been.

seo_cw_productAustralia is not the only country seeing ad pages declines, of course. Future plc released a profit warning two months ago, quickly followed by the news that CEO Mark Wood would be stepping down, to be replaced by the CFO. Not surprisingly, word is now that Future will be facing more layoffs, despite downsizing headcount nearly 40 percent since 2006, according to MediaWeek.

Looking through rose colored glasses, one could honestly claim that magazine publishers have made great strides with their digital transition, many producing excellent tablet and mobile editions. But the creation of digital editions is seen by many as merely adding expenses, and at a time when costs need to be cut, not increased. Much of the blame goes on underperforming digital newsstands, discoverability, fragmentation and over saturation, and other factors outside the purview of magazine offices.

But one trend, that this website warned about in 2010, is that the drive to create new digital products is mostly being initiated by the editorial side of things, with advertising playing catch up. Few magazine publishers delayed creating their digital editions until they had new commitments for tablet advertising. Instead, many publishers saw tablet editions as a way to maintain their rate bases, and created hybrid editions where the print ads were reproduced pretty much unchanged in their digital editions, while they reformatted their editorial content for better reading on mobile devices. Others created replica editions, motivated by the same goal – maintaining their rate base.

The ad community can certainly shoulder some of the blame here: few agencies embraced tablet editions as a place to create new interactive advertising. Many ad buyers and creatives that concentrate on print, and there are fewer of them, see the digital side as outside their area of concern – though more and more ad agencies are beginning to integrate their approaches.

NYT-InnovationMany publishers are beginning, reluctantly, to realize that they have made a big mistake by seeing the creation of new digital media products as mostly an editorial concern. The new NYT Innovation Report, for instance, specifically lists improved collaboration between editorial and the business side as one of its recommendations. The report is cautious in its language, knowing the attitudes of many journalists towards ad-edit collaboration.

But one questions I consistently ask big newspaper and magazine publishers is if the ad department was part of the team when a new digital product was created. More often than not, the ad side of the business was approached long after all the decisions were already made.

There are many reasons why digital editions have proved to be a disappointment to many in the industry, but placing the blame on one factor seems ill-advised. Many magazines are recording very impressive digital edition circulation – The Economist, for instance, with its 67K+ digital circulation. And new digital magazines have launched in droves and are never counted when media reporters slavishly report the latest AAM audit numbers – without counting these new publications the digital circ numbers appear far lower than they actually are.

But, like it or not, advertising is still important; and for many magazines, advertising is just as important a part of the content as editorial (think B2B or computer, music or other consumer magazines). Publishers foolishly thought that if they built they (advertisers) would come. They didn’t. This remains a part of the problem, maybe the biggest part.

One thing that was supposed to correct this was the rise of new ad networks. I remember a conversion with Chris English (Tablazines) early on about this topic, and English was excited by the concept that he might be able to use ad networks to drive some incremental ad pages for his new digital magazines. Networks would be of assistance in some circumstances, but it will still be up to publishers, agencies and their clients to really drive significant new revenue into the platform.

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