Although it is early in the annual rate ritual, executives on both sides of the negotiating table speak of a general status quo because of the realities of a sustained slow business environment. "We're seeing moderate increases. Nothing unexpected," said Eric Blankfein, VP-director of planning for Horizon Media, New York. Last year Mr. Blankfein took a more combative approach, saying that publishers "gotta share the pain" of recession-wracked marketers.
Publishers often seek aggressive increases, in part, according to buyers, to provide padding for rate negotiation. Despite a strong TV market, magazine advertising remains relatively weak and leading buyers have said they will exert pressure on magazine rates. That has prompted publishers to be more conservative after factoring in cost increases.
Conde Nast Publications, arguably the industry bellwether in rates, is repeating this year's 4% increase, compared to the 8% increase it sought in the ad-mad summer of 2000 for the following year. "This is a tough ad marketplace," said Steven T. Florio, president-CEO Conde Nast. "We looked at the postal [rate] increase, we looked at just what's happening across the board with costs, and we felt this was as aggressive as we could be." The company's titles include Vogue, Vanity Fair and Glamour.
"We're not headed the wrong way, but we're not aggressively heading the right way," said Jack Kliger, president-CEO of Hachette Fillipacchi Media U.S., referring to the economic climate. Hachette, publisher of Woman's Day and Elle, is discussing with its advertisers cost-per-thousand increases of 4% to 5%.
Other key indicators of the magazine world:
Hearst Magazines is moving aggressively, in context. The company's stable of magazines, which includes Cosmopolitan, Good Housekeeping and Esquire, seeks CPM increases of 5% to 6%, with the exception of titles like O, The Oprah Magazine and CosmoGirl that have significant rate-base hikes planned.
Wenner Media's Rolling Stone is clocking in with a 4% CPM increase, while Us Weekly looks to tack a CPM increase of 3% atop a 10.5% rate-base hike effective in January.
Time Inc.'s People magazine is going out with a 5.25% increase. As for its nearest corporate siblings, Teen People is at 5.3%, and Real Simple seeks 1.9% atop a 33% rate-base hike. Elsewhere in the company, Business 2.0 is not changing rates, while Fortune Group Publisher Mike Federle estimated Fortune would seek at 3% to 5% raise, compared to an increase of just under 3% in '02.
Gruner & Jahr USA Publishing's titles, which include Family Circle, will average a 5.1% increase, said Chief Marketing Officer Cindy Spengler, but increases at business titles Inc. and Fast Company look to be significantly below that.
Forbes remains undecided, but will seek a CPM increase for '03, said Forbes Magazine Group President Jim Berrien, after keeping rates flat for '02.
Estimated CPM increases* proposed by major publishers:
Conde Nast Publications: 4%
Gruner & Jahr USA Publishing: 5%
Hachette Fillipacchi Media U.S.: 4% to 5%
Hearst Magazines: 5% to 6%
*Does not include rate base increases