The average negotiated discount for the 33 magazine categories tracked by Advertising Age rose to 29% in 2000, up 2 percentage points from 1998.
But the average number of pages required to qualify for a rate card discount dropped by two pages to 4.8 in 2000 from 6.8 in 1998.
While a few categories managed to stem the erosion felt by their rate cards, they were mainly those that benefited from macro-economic forces (such as the business titles) or those that simply have done a better job of upholding their underlying rate card integrity (Conde Nast Publications). The vast majority of consumer magazines, however, have grown considerably more flexible than just two years ago.
The findings may surprise some -- including veteran publishers -- but group publishers who previewed the results did not take issue with the findings, though all suggested their publications did better than their category's averages.
Meanwhile, the glaring elasticity in most magazine categories has many on the buying side wondering whether print has outgrown printed rate cards.
"Frankly, I don't know why some publishers even bother with rate cards," said Deborah Solomon, senior partner-group research director for MindShare in Chicago.
"The magazine industry is evolving," added Neil Asher, senior VP-director of communications planning and print services for Zenith Media, New York. Mr. Asher said he believes rate cards will soon be as much of an anachronism in the magazine field as they are in the network TV business.
"Network rate cards still exist," he said. "If you could get anyone to show them to you, you'd laugh anyway, because they bear no semblance to reality."
That appears to be the case for many magazine categories, as well. Consider the women's service category. A buy in the Seven Sisters and their various younger step-siblings cost half as much as what their publishers originally stated prices to be in 2000. That compares to an average discount of 47% two years ago.
But the newsweeklies category hasn't fared much better. With an actual price that is 49% off rate card in 2000, newsweekly publishers have lost 10 percentage points in their price negotiations since two years ago, when an average buy was discounted by only 39%.
Dave Long, Time Inc. president-media sales, was a little surprised by the severity of the change, but he did not dispute Advertising Age's findings. While he was reluctant to discuss the practices of colleagues in the newsweeklies category, Mr. Long maintained that as far as Time Inc. titles are concerned, "I can tell you that [during] the period from 1998 to 2000, Time Inc. titles have remained consistent and stable" in their rate levels.
Mr. Long's surprise is well-founded. Newsweeklies theoretically should have been affected by some of the same positive economic factors driving business titles and other consumer media, including one of the most expansive economies ever and the emergence of new high-demand ad categories, especially dot-coms.
But the reality is magazine rate negotiations have had an insidious impact on the integrity of published rate cards for all mass circulation categories. The simple truth is that mass, in an open marketplace, translates into bulk, which is really just another way of describing commodities as an excess of supply.
Those categories that can demonstrate their particular reach to a finite supply (an important target audience) have found strong demand that has upheld or, in some cases, increased the integrity of their published rates. Those that have not, where a glut of publications has artificially expanded supply, have not.
AUTO MAGAZINES CRASH
This was the clear case in the automotive magazine category, where the rate structure has literally crashed, becoming nearly half as valuable as it was to advertisers two years ago. In 2000, an automotive magazine ad page in this survey sold at 45% less than its published rate card, which compares to a 26% discount in 1998.
By contrast, such categories as children's, teens, African-American, music, hobbies, regional lifestyle and city/state magazines have done a good job maintaining their rates, with most actually reducing their average discount from two years ago.
"I'm heartened that we've been able to maintain our yields and increased the commitment that it takes to get a discount," said S. Christopher Meigher III, CEO of Quest Media, which competes in the city/state category.
The commitment from advertisers to which Mr. Meigher refers is the number of pages an advertiser must buy to qualify for a publisher's rate card discount. In the city/state category, for example, the rate card discount remained at the same 23% level it was in 1998, but the number of pages marketers are required to buy to qualify for that discount actually rose by two to 5.8 in 2000. Mr. Meigher sees this as an inherent sign of strength for the category, because of the overall decrease in the number of page commitments required by the magazine industry over the last two years, from 6.8 to 4.8.
PRODUCTIVITY OF MEDIA BUYS
A positive development cited by Mr. Meigher for publishers is the trend among marketers and their agencies to switch emphasis from traditional cost and impression measures to ones based on the productivity of media buys and the return on ad budget investments. By developing better ways of merchandising and, in the case of Web/print convergence, cross-merchandising their relationship with readers, Mr. Meigher said smart publishers can prove their worth with marketing results that take them out of the rate card discussion altogether.
But the overall trend in consumer magazine publishing has been toward greater "commoditization." In fact, a development that should have been a positive influence on magazine ad rates has been the shift by some large package-goods marketers from TV into print. However, it seems these marketers have merely swapped one cost-effective media option for another. The move, according to buyers, was driven by economics and these bulk audience buyers simply shifted to print to control costs.
"You're going to see variances by brands and [ad] categories, too," said Ms. Solomon. Ironically, she noted, it may not be the biggest advertisers that always get the steepest discounts.
"A lot of the time, publishers are more willing to make better deals with smaller advertisers to get them into the book," she explained. "But most publishers can't give that same enormous discount to an enormous advertiser because it would cost them too much money."
If Ms. Solomon is correct, then it suggests Ad Age's findings may be conservative because mainly print buying groups at the largest agencies representing the biggest advertisers were polled for the survey.
Some magazine publishing categories have been adversely affected by factors relating to a particular advertising category.
For every high-tech boom, there has been one with eroding demand for the magazine industry. Consider prescription drug marketers. Two years ago, the Federal Trade Commission dramatically liberalized the rules for advertising on TV, including how prescription drug disclaimers were made available to the public. The relaxation of those rules has had a strong impact on titles that had a heavy share of budgets from pharmaceutical marketers. It has forced them to accept dramatic discounts, or even worse, freebie giveaways of so-called "disclaimer pages," those carrying the text-heavy boilerplate descriptions of drug side effects that are required by FTC.
THE VALUE OF BUZZ
Of course, many individual titles -- usually hot newcomers -- have been exempt from these downward pressures. And what they lack in unique audience delivery, media buyers said they make up for with lots of buzz.
Take a title such as the new O, the Oprah Winfrey Magazine. Anita Peterson, director of media strategy and negotiation for DDB Worldwide, New York, said its publisher rarely uses the word "discount."
"In the case of O, it's because of who Oprah Winfrey is," she said. "And that's not something you're going to find in another magazine."
Finally, buyers note that a big factor holding up the rate integrity of some magazine publishing categories is the strong will and fortitude of the publishers in those categories to preserve their rates. This has been especially true in the women's fashion/beauty, travel and epicurean categories.
"It all comes down to two words," said Ms. Solomon. "Conde Nast."