U.S. Staffs Too Big; ASME Rules Irrelevant to Shopping Mags

An Interview With Hearst's Cathleen Black

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Also see: A Special Report on Magazine Circulation

Cathleen Black, president of Hearst Magazines.
NEW YORK (AdAge.com) -- Magazines continue to reel from a sustained ad downturn, with the industry posting ad page declines in January and February.

Providing an inside to view to the beleagured industry is Hearst Magazines President Cathleen Black. Her publishing career spans newspapers (including a stint as publisher of "USA Today") as well as magazines. "Advertising Age's" Jon Fine discussed the challenges faced by her company as well as magazines in general.

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Advertising Age: Magazines in general had a disappointing fourth and first quarters, advertising-wise. Why?

Cathleen Black: We've talked about this internally a million times. A lot of advertisers just haven't felt steady confidence about their own businesses. And advertising budgets are cash expenditures, and I think they have sat on it wherever they could. If they felt just a little bit unsteady, or if they're publicly held and have to go face Wall Street, it's an easy place to find tens of millions of dollars.

AA: At the same time newspapers -- your old stomping grounds -- seem to be turning around a little quicker.

Ms. Black: Well, it's very immediate. It's tomorrow. When [retailers] know they didn't do well on a weekend, they can turn something around in 48 hours. An automotive dealer can run an ad in a couple of days.

AA: What are the ramifications on magazines with this just-in-time media buying?

Ms. Black: Every magazine publisher would tell you that the amount of change going into what used to be thought of as an official closing date for a magazine is incredibly flexible. Our editors, every time I say this, they're all shaking their heads. You know, 20 pages can come in, 20 pages can go out, and they're not all the same 20 pages. Everyone's got to do a lot of adjusting. In the old days you made an advertiser feel incredibly guilty if you gave him a three-day extension for his copy. But it's just the space that we live in today. We live in a just-in-time state of affairs.

AA: Since you came to Hearst [in 1996], how have magazines place in the media culture changed?

Ms. Black: Magazines have to fight harder. But I was in the newspaper business for 12 or 13 years, when every headline was "Would anybody ever read a newspaper anymore?" What would new media do ... would everybody just read online? And a thousand years ago when I was at magazines and cable first came out, [people] said, "Oh, my God, cable will put magazines out of business." But there is no question that there's a lot of product out there. You need only to walk by some newsstands to realize that. It's one of the reasons that we were very interested in launching a Lifetime magazine, because we figured we could have the halo of the Lifetime brand, it was going to be very important today.

AA: Is there something you think that hasn't been communicated?

Ms. Black: We're always asked to prove the effectiveness of print, I think in a different way than ... if you look at the television numbers. I mean, it's amazing that advertisers are still willing to pay higher prices -- you know, $2.5 million for commercials [on the Super Bowl], and half of them bombed. What did the $2.5 million get them?

AA: Well, we're still talking about them.

Ms. Black: But if you went out to the consumer, they may name one or two and forget the rest of them. We need to do a stronger and better job of continually showing why the combination of television and magazine advertising is the most effective buy. The data is there. Am I going to tell you that that's an easy sell to an advertiser who's totally sold on television? No. But look at the fashion community. Look at the beauty business. They have by and large built their brands on the effectiveness and that continuity and consistency of their message [in print]. It's really compelling, the experience that one has in sitting down and reading a magazine in one sitting or multiple sittings. And all you need to do is get 10 people and to have them talk about their TiVos. I suppose advertisers in television behind closed doors are trying to sit and think through what the impact of TiVo is going to be. Anybody I know who's got TiVo is like an evangelist: "I can't believe you don't have it yet. You've got to. You'll be able to look at any program in 22 minutes."

AA: One way marketers are dealing with TiVo is product placement. Is there any comparable mechanism for magazines?

Ms. Black: Our response to that is being able to create event-type marketing, you know, working with the marketer to do something in-store or something that's in the magazine that is a completely created product. The sales side of broadcasting, I don't believe, by and large, has ever had to do most of this.

AA: We've seen the rise of one magazine -- Conde Nast's Lucky -- that, in the eyes of some, blurs the line between ads and editorial in ways they find distressing. How significant are the concerns of the likes of the American Society of Magazine Editors with regard to Hearst's upcoming shopping title, Shop Etc.?

Ms. Black: They are not significant. We are looking at Shop Etc. from a completely different point of view. We are saying, "This is not a magazine about readers. It is for shoppers." The more interactive we can make it, the more retail-oriented, then the more it's a useful tool for the shopper. What ASME wants and what their rules are is irrelevant to Shop Etc.

AA: Don Logan told Ad Age late last year Time Inc. would launch, or at least test, several new magazines in '04. How about you guys?

Ms. Black: We've got some stuff in the petri dish but nothing that we're going to be public about at this point. We want to make sure our shopping magazine is off on its right legs and looking good. But I'd love to be putting something out in 2005.

AA: You recently changed the top editor at Lifetime, and I get the sense from talking to advertisers that there was some confusion ...

Ms. Black: Right.

AA: Where should Lifetime magazine be?

Ms. Black: What we need to do, even more, in the pages of the magazine -- and it's only four or five issues old -- is make that experience, that connectivity, that sort of girl-friendliness of the television network come real in the ways to the reader. We want it to be packaged and presented in an even prettier, more open, more contemporary-looking format. What we don't want to do is have another magazine in the traditional women's magazine. We wanted to break out of that category and be seen more in the newer lifestyle magazines.

AA: Like Real Simple?

Ms. Black: Right, that's the look. I don't think Lifetime was well-executed enough. We were a little women's service and a little lifestyle, and we want to go more toward the newer women's lifestyle. The taste level of women all over the country has really been raised and they expected to be treated in a certain fashion.

AA: I recently chatted with an international head at a top magazine company, and I asked him about the disparities of staff levels between American and European magazines ...

Ms. Black: Oh, God, what was his answer?

AA: Basically, he said you have to look at the size of the circulation, you have to look at the size of the territory covered, and that it made sense for American magazines to have significantly larger staffs. You've pointedly noted how European staffs are much smaller than American staffs. What do you think of his notion?

Ms. Black:I wish we could get [staff levels] to where it actually is in Europe. But what you have is a fundamental difference. Revenue around the world is so much more limited because of the size of the circulation of those magazines, it is never an option to have 25 people on a staff. Monthlies [overseas] don't generate that kind of money. And I think there is far more ... multitasking isn't exactly the right word. But if you don't have a lot of levels of responsibility, an individual takes more responsibility. Maybe our editors would say we go further in terms of copy editing. And we may. I haven't been really successful in trying to [convince others] that we will produce this with fewer people.

AA: [MPA Chairman] Tom Ryder made that sound like an imperative for this to happen at last year's American Magazine Conference.

Ms. Black: What I do think will change over time -- not tomorrow but over time -- is that we'll increase productivity as a result of technology. For example, Hearst is about 20% of the way there on bringing pre-press in-house. To which somebody in a European magazine would say, "Where have you been?" I want to push initiatives that can make our magazines be produced more effectively and more efficiently. I'm not saying the advertising staff is efficient, either, but if you sat in an editorial office for the course of three days you wouldn't need to be [management consultants] to figure out there are too many hands touching [copy] too many times, too many pieces of paper with notations in the corners. ...

The whole productivity issue is a very interesting one. You've got all kinds of teams of people here working on productivity issues. We created a new role. The idea was to start sharing best practices across the system because the magazines operate really quite autonomously. But we want to move smart thinking from place A to place B to say, "They're doing it this way. Do it this way, it'll move through the system four hours faster." I read recently the CEO of Cisco said productivity is the next biggest issue.

AA: In terms of?

Ms. Black: If you don't have the ability to raise prices the way that somebody did in the 1980s and the 1990s, you're going to have to find it somewhere [else]. Magazines will unfortunately encounter another postal increase. Our advertisers are not real empathetic [to magazines' price pressures]. But can we produce the magazine more efficiently? Can we cut days out of the distribution cycle? Can we think about shared production departments? To be a smart CEO today you've got to be able to look at things and say, "Are there ways we can do it better while never impacting the quality of what you're putting on a page?"

AA: Last year a lot of big magazines all seemed to be taken by surprise by weak newsstand sales. Is this trend continuing?

Ms. Black: Trying to put it in a nutshell, whether people will return to the newsstand in the ways that have been bankable -- I would suggest that it's unknown. On the other hand, Oprah is averaging 950,000 copies a month. It's over a 40% increase over the year before. Cosmo has reached 1.9 million, 2 million copies [on the newsstand], so it's able to sell. You've got a lot of just different things going on, and a tough economy.

AA: Once we separate out the Oprahs, is there a change in consumer behavior?

Ms. Black: I don't think we know that at this point. I do think there's too much product duplication. There's not enough uniqueness out there. Or in a very down economy if people are in the supermarket one less time a week. You've lost that clear chance to pick [new consumers] up.

AA: Hearst's Good Housekeeping and Redbook.

Ms. Black: I don't think it's the product at all. There are times when the cover or the coverlines just miss. Sometimes a celebrity falls out at the last possible second, or their movie gets moved. And you can't get the celebrity you want. This goes on all the time. The people responsible for getting cover celebrities, they'll be bald in three months because they are pulling their hair out.

AA: Can you stop using celebrities on the cover?

Ms. Black: We talk about this internally constantly. The answer is we don't know. We are in the world of celebrity everything and one would like to imagine it will run its course. But your guess is probably as good as mine as to when the winds begin to shift.

AA: You tested last year a non-celebrity cover for Good Housekeeping.

Ms. Black: It did very well. And Country Living had never put a food picture on the cover and around the same time they put this gorgeous layered cake on the cover. It was one of the best-selling issues of the year. Everyone once in a while [you] can really strike the exact right note. [But] if you look back to what Vogue started three, four years ago, with maybe one or two issues with a celebrity on the cover ... practically overnight, there's a celebrity on every cover. The models didn't sell.

AA: Are magazine brands transitioning to a time win which key titles, once established, are less annuities than more perishable products?

Ms. Black: There are magazines tied to celebrity personas. They're on the cover every month. I don't think we've moved off our belief that investing in a brand over a period of time will bring more resonance and have a stronger ad and reader franchise over a period of time. Look at Cosmo. Now, it's an international franchise. I don't think we've seen yet that the momentary hit has that kind of staying power.

AA: But as for a shortened shelf-life?

Ms. Black: I don't think there's necessarily any proof to that. People put up Rosie as an example. But [Martha Stewart Living]has significant competition in Real Simple. Certainly her legal difficulties have added to that a lot, but Real Simple has given it a huge run for its money. With the persona approach, you have to have someone so unbelievably unique and special, and a person that a reader will aspire to be. Like Oprah [Winfrey]. They admire Oprah, and Oprah is serious businessperson. You can do business with her, and she is predictable.

AA: So what happens to that magazine if Oprah gets hit by a bus?

Ms. Black: I don't know! Having just celebrated all of her 50th birthday celebrations from Chicago to Santa Barbara, I wish her a fantastic next 50 years, at least, and not just because of our partnership.

AA: Everyone talks about magazines' need to sell better against other media instead of each other. How can this be accomplished, when mag sales reps' instincts are to beat up on the competition, and ad buyers do the same from their side of the desk?

Ms. Black: We are in a very unique situation, because we are competing head to head. [Television] programs don't. It's the card we're dealt.

Our great selling point is to say the combination of print plus TV, or cable, is the most effective ad message. There are studies after studies that assert that. But what happens is we have to prove our effectiveness when we are 5% of someone's overall budget, which is nearly an impossible task.

AA: You've mentioned the level of details marketers want from magazine circulation, and you've likened what they wantto Coca-Cola telling Pepsi about marketing strategies.

Ms. Black: You've got it exactly right. But it really is about the changes that marketers want on the [Audit Bureau of Circulations] statement, which we would suggest is far too demanding. It's like saying, "How do you do it and what do you do and what are your pricing strategies?" Circulation is a lot about pricing strategies, what we -- or Coca-Cola or Pepsi -- would call sampling. We need to put our copies into the hands of potential readers. Unfortunately, no magazine is going to spend $50 million to launch a new product.

AA: Hearst has done many joint ventures. How do those ventures work out, for example with Smart Money, which has seen high-level turnover lately, and what happened with Talk?

Ms. Black: We have editorial control of Marie Claire. It is joint on Smart Money [with Dow Jones & Co.] And in my eight and a half years, there's never been any real editorial issues.

The way one goes into a partnership, you have to have a shared vision. You have to understand what you are getting into and what your partner expects about editorial content. Of course, Oprah is going to know what's on every page, as she should. The idea that we "have a contract" is irrelevant. If the person whose magazine it is named after doesn't like what's in the magazine, then we didn't have the right conversation to begin with. Which I always thought about Gruner & Jahr and Rosie [O'Donnell]. When [former G&J CEO] Dan [Brewster] used to say [editorial control] is in the contract -- it's her name on it! Come on, guys!

On Talk, Hearst came in long after that joint venture was created with Tina [Brown] and Ron [Galotti] and Miramax. We were never there in the beginning. That's always a challenge.

AA: [Good Housekeeping editor in chief] Ellen Levine says you have a motto in your company: It's better to beg for forgiveness than ask for permission.

Ms. Black: Only for me. They can't do it.

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