For the full year of 2003, Martha Stewart Living-which, according to one financial analyst, still generates more than half the company's revenue-recorded a 34.6% ad-page drop, the biggest among the top 100 magazines. For the first two issues of 2004, according to Media Industry News data, ad pages fell 29.9%, to 110.
"I certainly don't see any improvement in advertising," said Jamelah Leddy, who as VP-research at Seattle's McAdams Wright Ragen nonetheless has a "recommend" rating on the stock.
An analysis of full-year 2003 figures from TNS Media Intelligence/CMR show a wide range of blue-chip advertisers that severely cut spending in the flagship magazine but boosted spending in competitors. Johnson & Johnson more than halved its spending in Living last year to $2 million, but increased its spending by 66.1% in Meredith Corp.'s Better Homes & Gardens and almost tripled spending in Time Inc.'s Real Simple. Jones Apparel Group, which owns labels such as Nine West, cut its spending in Living to zero from $2.2 million in '02, but more than doubled its spending at Real Simple and Hearst Magazines/Harpo Productions co-venture O, The Oprah Magazine.
A long list of other top marketers went dark in the flagship after spending over $1 million in '02, including Apple Computer, Pfizer, Home Depot, and American Express Corp.
Suzanne Sobel, exec VP-ad sales and marketing and publisher of Martha Stewart Living, would only answer written questions submitted through a spokeswoman. "It is still our expectation that some of the advertisers mentioned are planning to advertise" in the magazine or elsewhere in the company in '04, she said.
But the company will have to work hard to regain its previous standing among advertisers.
"Maybe some of the Martha halo doesn't burn as brightly, and now it's just a pure media buy," said Jon Mandel, co-CEO of Grey Global Group's MediaCom. Another media buyer, when asked what advice to give a marketer thinking of advertising in an MSLO property, said, "I would stay away from it."
Consumer indicators, while not cheerful, are less grim. Her syndicated TV show, "Martha Stewart Living," saw household ratings decline to 1.1 from 1.3, according to Nielsen Media Research, although a shift to late-night segments did not affect ratings among adults 18 to 49. The company is filing circulation figures for the last half of 2003 that show a decline of 3%-but this comes atop a 21.8% decline for the last half of 2002. Rate base was cut 22% to 1.8 million effective this year.
Some suggest the business may have hit bottom, especially if Ms. Stewart's legal travails end well. "Most clients at this point have their strategies well set," said Karen Jacobs, exec VP-print, Publicis Groupe's Starcom Mediavest Group, Chicago. She said either "they've decided it's not an issue ... and there's a good reason to be there" or "they've been on the sidelines" where they'll stay until trial is over.
The company does still have its supporters among certain advertisers. One beauty media buyer, who did keep advertising in Living, succinctly said, "I don't think there's a negative rub-off."