MAGAZINES EXPECT TOUGH -- BUT UP -- YEAR: AD PAGES RISE 3% THRU MAY; WORRIES OVER AUTO, RX

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Magazine publishers expect the second half of 1998 to be as tough as the first. But while they don't predict they'll repeat 1997's growth rate, the industry is on track for an up year.

Despite uncertainty in two key categories -- automotive and direct-to-consumer advertising of prescription medication -- and new worries over a shift of the "milk mustache" budget to TV, the industry is holding its own. Ad pages in the first five months rose 3% compared to the same period last year, to 95,217, according to Publishers Information Bureau. Full-year '97 pages rose 5.1% to a record 236,840.7.

The gains are coming mostly in such categories as direct response, food and apparel. Direct response pages were up 9.5% to 11,024.67. Prepared foods were up were 39.2% to 717.85; dairy, produce meat and bakery goods, up 20.5% to 1,334.33 ad pages. Apparel accessories were up 39.7% to 629.79; and footwear up 15.4% to 1,444.9.

In addition to the auto and drug categories, ads for cosmetics and beauty products are soft.

"The beauty category is troubled by fewer new-product launches this season, but I believe that is going to change going into the fall. That's a business that is very dependent on the promotional calendar . . . on new-product launches," said Magazine Publishers of America VP-Marketing Christine Miller.

A GOOD SIGN

She said the gains in direct response are a good sign because "it is an indication of how effectively magazines work. They don't use us if it doesn't get them business."

Ms. Miller said although DTC drug ad pages are down through May, she said the category was up in that month, which she optimistically interpreted as a sign the funds shifted from magazines to TV could be coming back.

"The losses are occurring more in general interest and entertainment publications, where advertisers are shifting to TV to get eyeballs," she said. "Many other drugs being advertised are seeking specific audiences" through niche magazines.

Prescription medications dropped 19.4% to 2,043.36 pages.

Conde Nast Publications turned in a healthy first-half performance, with pages up 16% counting its new cross-title supplement Currency and 13% without it. Exec VP Catherine Viscardi Johnston anticipates the second half will be up 4% to 5% for the company, leaving full-year page counts up about 10%.

"I think second half will be tough," she said. "There's been a lot of turmoil in core industries for us, like automotive for Chrysler and General Motors having pulled back. But Ford is moving ahead dynamically for us. Our core beauty accounts are planning some big launches in the fall but no big increases.

"But being up anyway in rough market is good, and if we end this year up 9% or 10%, I'll be ecstatic."

`CAUTIOUSLY OPTIMISTIC'

Michael Clinton, Hearst Magazines exec VP-corporate marketing, said the auto, fashion and drug categories all remained strong in the first half for Hearst's titles.

"Beauty was soft, but that was really the only soft category and it's due to retail being soft, fewer launches and some consolidation in the field," he said. His outlook for the second half: "cautiously optimistic."

Hachette Filipacchi Magazines Exec VP John Fennell said ad pages there were flat for the first half at 9,557. He attributed that to sluggish spending by GM and Chrysler, as well as the Asian economic crisis. But he is optimistic about the second half.

Time Inc.'s Dave Long, president-media sales and marketing, said that company had "a really robust first half considering auto accounts are down from a year ago. But they have really returned to historical spending levels," he said.

AN ABERRATION

That echoed a note sounded by several publishers, who said the category's unusually strong 1997 performance was something of an aberration.

The DTC category, he said, "has not been the disaster everyone predicted. The category as a whole is down slightly, but the DTC business plays into magazines' hands so beautifully to what we do well, which is deliver large amounts of information."

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