AD AGE 300 ONLY RATE HIKES ALLOW MAGAZINES TO MOVE AHEAD

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Magazine ad page growth has fallen under an El Ni¤o current of unpredictability.

The stream bed is thirsting again in 1993 after a veritable deluge in ad pages broke a two-year dry spell in 1992.

Growth in ad pages last year rose only 0.6% compared with 4.3% in '92. But due to a 7.4% average advance in rates, advertising still came out ahead, up 6.7%, according to the Ad Age 300 report.

Magazines ranked by gross revenue in this fifth annual report range from perennial leader TV Guide at $966.6 million to No. 300 Motor Boating & Sailing at $13.6 million, the same book ends from the previous year.

A dozen magazines fell from the list, largely because of reduced revenue. Only two, Lear's and Golf Illustrated, left because of closure.

As in the past, circulation trends favored the subscription side. Of total circulation revenue, paid subs accounted for $5.7 billion, up 3.6%, and newsstand sales, $2.4 billion, up 2.9%.

The average subscription count increased 5.4% vs. 0.1% for single-copy sales. While hardly earth-shattering, the latter is a considerable improvement over newsstand declines of 4.5% in 1992 and 3.2% in 1991. Prices for both circulation tiers advanced 5%.

Consumer magazines nearly overpopulate the Ad Age 300, accounting for 219 of the publications and 84% of $19.4 billion in total revenue.

Industry trends as a result are heavily influenced by the consumer side, particularly three consumer categories: newsweeklies, women's magazines and general editorial. Together they account for half the revenue generated by the Ad Age 300.

Newsweeklies

Newsweeklies didn't create much of a ripple in 1993. The nine charted in this report grew a collective 1.5% in total revenue to $3.8 billion, or about a fifth of the AA 300's revenue. Newsweeklies account for six of the top 11 spots: No. 1 TV Guide, No. 2 People, No. 3 Time, No. 4 Sports Illustrated, No. 7 Newsweek and No. 11 U.S. News & World Report. But half showed revenue declines. The ad pond was relatively still as pages declined 0.3% although rate increases salvaged advertising by producing a 3.3% gain.

TV Guide seemed in the right spot. It brought advertisers back into the publication in 1992 by dropping rates 7.6%, and in 1993 kept them there in spades despite a healthy rate increase.

The News Corp. magazine boosted pages 10.4% and total advertising 16.6% in 1993, a feat Suzanne Grimes, national ad director, attributes to a new editorial package that carries a more "authoritative" voice, new business categories (drugs & remedies, entertainment and video releases), marketing of 10 special issues and a new regional management approach to ad sales that has enhanced planning.

The magazine wasn't as successful on the circulation end where revenue declined 2.7%, all from an average decline of 579,000 in weekly single-copy sales that left the newsstand count at 5,310,098. Subscriptions advanced 2.6%.

Demographics peculiar to the newsstand-older buyers with less disposable income than subscribers-plus regional differences form a rampart hard to breach by national magazines like TV Guide.

The publication plans to combat the issue this summer by focusing on pricing, both geographically and seasonally, for its 114 editions and using part-time merchandisers in distribution channels. With many supermarket checkout counters closed during the week, these "merchandisers" make sure TV Guide is stocked at counters that remain open.

The publication is attacking the newsstand after building its subscriber base through direct-response advertising (11 million pieces in 1993), introduced to the magazine two years ago by then newly hired VP-Circulation Charles Davis.

No. 2 People fared better than most at the newsstand, but not because it attracted more readers. Credit rests with a 30-cent price hike. People sold 68,000 fewer copies each week, although like TV Guide, the Time Warner publication padded its subscriber base, by 0.4%. People needed dollar growth from circulation's two-tiers to advance in total revenue, because a 6.3% decline in pages produced an 0.2% decline in advertising.

Circulation remains critical to newsweeklies, accounting for 50% of their gross. Slippages in newsstand and subscription sales socked Time Warner's other heavy hitters, No. 3 Time and No. 4 Sports Illustrated. Ad pages at both dropped, although advertising at Time grew 0.4% based on higher rates.

Women's magazines

Women's magazines, besides weighing in with the largest contingent at 32, was one of the more successful Ad Age 300 categories with total revenue of $2.8 billion, up 5.7%. The group recorded 8.1% growth in advertising on higher rates even though pages dip 0.7%. Circulation revenue advanced 2.8%.

Good Housekeeping, No. 9 on the Ad Age 300 list and the segment's only representative in the top 10, parroted the women's sector ad trends by advancing 6.8% in advertising, the product of a 9.4% decline in pages and a 9.7% boost in rates.

Hottest product in the category, Advance Publications' No. 124 Allure, grew 53.9% in pages and 49.1% in total revenue. Also scoring high on the growth chart were Gruner & Jahr Publications' No. 97 YM, up 36.2% in total revenue, and No. 156 Cooking Light from Time Warner, up 30.1%.

General editorial

General editorial, comprised of 23 magazines ranging from No. 5 Reader's Digest to No. 256 American Legion Magazine, is the largest category by revenue to chart growth in pages, albeit an barely perceptible 0.08%.

Total revenue advanced 3.1% in the category traced to a 5.1% growth in circulation revenue-the component that accounts for about 55% of the group's total, the highest share among the Ad Age 300's leading categor-ies.

With circulation sluggish at many of the titles in the category, advertising is delivering growth. RD, for example, increased advertising 9.1% in 1993 after a blistering 24.5% growth in 1992; circulation revenues advanced only 0.3% in both years. Circulation revenue still outpulls advertising at RD by three to one.

No. 6 Parade was far from being an example of ad growth in 1993-advertising dropped 8.6%, the product of a 14.2% decline in pages and 6.1% growth in rates. But it still pulls more dollars from advertising than any publication in the U.S., $410.7 million in 1993.

The Advance Publications magazine also has the largest circulation, at nearly 37 million.

Business publications

Trade publications-even more reliant on advertising than the consumer side (circulation is controlled for many trade publications on the Ad Age 300)-registered only a 0.2% growth in pages. With higher rates, that increase pushed advertising 11.8% ahead of 1992 levels. Total circulation revenues rose 6.4%. Circulation generates $1 for every $6 coming from advertising among the trade books.

The biggest and the fastest growth category in business publications remains computers, represented by a contingent of 26 magazines led by No. 10 PC Magazine, one of seven computer publications in the Ad Age 300 from Ziff Communications.

Revenue from computer magazines advanced 19% to $1.7 billion, placing the category fourth in revenue among all categories, consumer or trade.

The category, drawing 88% of its revenue from advertising, experienced advertising growth of 19.1% on a 7.8% boost in pages. Publishers have to be pleased with circulation numbers as well. Circulation dollars rose 17.7% as paid subs grew 18.8%.

Among the larger computer magazines, CMP Publications' No. 42 CRN/Computer Reseller News outpulled the rest in revenue growth at 39.8%, all from advertising; ad pages rose 13.1%.

The No. 1 magazine in the computer reseller channel, CRN has capitalized on the rapid growth in that market traced to manufacturers seeking to capture the "knowledge" component (the reseller as opposed to the end-user) in the increasingly sophisticated market.

A new entry to the computer category is 1993 startup Windows Sources, No. 229 from Ziff Communications.

Two other startups made the magazine list their first year: Taste of Home, No. 274, from Reiman Publications; and No. 218 Cross Stitch & Country Crafts from Meredith Corp. Both are totally circulation driven. SmartMoney, a Hearst Corp./Dow Jones & Co. joint venture startup in late 1992, made the chart its first full year, reaching No. 260.

The travel retail category rose to No. 2 among the trades based largely on ad revenue growth of 14%, a figure matched by the category's lead publication, Reed Elsevier's Travel Weekly. The year's results brought a euphoric response from TW's Publisher William Scott: "Fare wars in 1992 drove all of us crazy. Airlines stopped advertising, and advertising dried up. Before that there was that little thing called the Gulf War when nobody wanted to hop a plane to Europe much less see Auntie Mame in Kuwait."

The medical & surgical category met its Waterloo in 1993. Previously the No. 2 trade category in revenue, it slipped to No. 4 as pages slid 23%.

"Fear of price controls associated with the healthcare reform packages brought before Congress made pharmaceutical companies rethink their ad budgets," says Brian Barker, advertising business manager of Annals of Inter, published by the American College of Physicians. Stepped-up advertising of ethical drugs in consumer ad channels also diverted funds from trade to consumer, he adds.

A decline in pages pushed Mr. Barker's publication off the Ad Age 300 in 1993. But a burst in ad sales through May has placed Internal Medicine on a 10% growth track for the year-likely enough to return IM to the list. The reason for the uptick appears to be that Congress seems to have cooled its heels on blanket price controls.

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