MediaVest, an influential media-buying agency with clients including Coca-Cola, has told at least eight publishers that it will no longer count iPad and other tablet circulation toward their magazines' circulation guarantees, people familiar with the situation said.
The move could undercut the amount of money publishers get for ad pages, which remain their most important revenue source, even in decline.
Publishers were skeptical about the motivation, with several executives calling it a media-agency tactic to fetch lower rates for their clients. But it echoes demands that media buyers made back in 2012, when they argued that "the time has come for rigorous transparency and accountability" -- and separate circulation guarantees for print and tablet editions.
Magazines charge print advertisers based on the paid circulation they guarantee, a figure called rate base. Cosmopolitan, for instance, promises advertisers a rate base of 3 million copies per issue, meaning it will deliver an average of 3 million copies for each issue over a six month period.
In the first half of this year, Cosmo averaged paid and verified circulation of about 3,019,778 copies, according to its report with the Alliance for Audited Media. But more than 154,000 copies, roughly 5%, were digital editions. Without them, the magazine would not have met its rate base. Most titles face a similar scenario.
MediaVest, part of the Starcom MediaVest Group division of Publicis Groupe, declined Ad Age's interview request and instead offered a written statement. "We always strive for the highest levels of accountability on behalf of our clients," a spokesman wrote in an email. "With this move we look to deliver on that goal."
Beginning with January 2015 issues, MediaVest plans to negotiate separate terms for print and digital editions, according to a document sent to publishers in October. The document, according to several people who have seen it, states, "MediaVest will no longer be accepting digital edition, tablet, or third screen copies as part of paid print ratebase."
That doesn't mean MediaVest will stop buying ads in digital copies. Instead, the agency plans to negotiate separate rates for digital editions. To that end, MediaVest is demanding publishers provide a detailed report on each ad, including the number of unique readers who viewed the ad, the total number of times it was viewed, the number of times each unique reader viewed the ad, the average time spent with the ad and the click-through rate per ad to an advertiser's website.
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And it's asking publishers to break out the data by platform: Apple iOS, Android or Amazon.
There are no current industry standards around advertising measurements on digital editions. Publishers are providing their own data -- which comes mostly from third-party research firms -- though not to the level that MediaVest has requested.
It's a tough negotiating tactic from MediaVest and one that will likely impress cost-conscious marketers looking to squeeze as much value as possible from their agency and media partners. But magazine publishers said they were frustrated, even apoplectic about the matter. It denigrates print and puts downward pressure on rates, an executive said.
Consumers do, in fact, pay for the digital replica editions that are counted toward rate base, publishers argued, just like print editions. If media-buying agencies continue to question paid circulation, publishers suggested, maybe buyers will next contest magazine readers according to their region or income because they might be perceived as less likely to, for instance, not buy a Prada handbag.
Questioning paid media in a world where most media is free is illogical, they argued.
MediaVest is also putting caps on other sources of circulation, such as the subscriptions that some consumers get for accruing reward points rather than mailing in a subscription card.
Digital editions represent a small, but growing portion of magazines' circulation mix. They comprised just 3.8% of magazines' total circulation through the first half of 2014, according to the Alliance for Audited Media, which tracks media circulation. That's up for 3.3% the prior year.
Although the portion is small, it's now the difference for many magazine between meeting rate base and missing it.
One executive speculated that MediaVest's move could cause some magazines to slash their rate base by as much as 10 to 15%. Conde Nast's The New Yorker, for instance, topped its rate base of 1,025,000 by an average of 24,430 copies, but more than 89,000 of its circulation is comprised by digital editions.
Time magazine beat its rate base of 3.25 million by an average of 36,467 copies through the first half of 2014. About 61,000 of its copies are digital replica editions.
A Time spokesman said tablet editions have little bearing on where the magazine sets its rate base because they represent such a small percentage of overall circulation. Representatives from Hearst, which owns Cosmo, and Conde Nast, owner of The New Yorker, did not respond to Ad Age's requests for comment by press time.