SKY-HIGH PAPER COSTS LIFTING MAG AD RATES

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Pushed by soaring paper prices, magazine ad rates will jump 5% to 10% in January, industry executives predict.

"You can't absorb the kind of material increases we've had in the last 12 months and not have it reflected in the ad rates," said one magazine company president. Over the past year paper costs have risen 47%.

Already this year, there have been a smattering of mid-year price hikes. Money and Entertainment Weekly recently pushed through minor ad rate increases for the fall.

Most publishers so far have been more likely to follow the example of Martha Stewart Living or the Ziff-Davis flagship PC Magazine that tied a 7.8% ad rate increase in September to a similar jump in rate base to 1.1 million-holding the cost per thousand steady.

Media buyers, who have just gone through the wringer in the upfront TV market where ABC, NBC, CBS and Fox demanded-and received-rate increases averaging 20%, are in no mood for another jumbo increase in print. "They [magazine publishers] are fooling themselves if they think because the TV market is up 20% that they can get 10% increases," warned Page Thompson, exec VP-U.S. media director at DDB Needham Worldwide, New York. "There are too many options in magazines. I can buy around the 10%."

"There is only one entity that is a sellers market," said Mike Samet, exec VP-director of media at Young & Rubicam, "and that's network television-all the other media are elastic."

Still, with magazine increases predicted to be in the 5% to 10% range, it could set up some complicated negotiation sessions with media buyers this fall. In print, some big ticket advertisers in the past were able to command deals that were nearly 50% off the rate card.

One publisher who is under the gun said that rate cutting has not stopped but "it hasn't gotten any worse this year."

Industry executives say that even a giant advertiser such as Procter & Gamble Co. was able to extract only 1% to 2% price concessions in its latest negotiations with the women's service magazines.

From the paper producers, there are already rumblings of yet another price hike coming in October-marking the fifth price hike in five quarters.

"I thought that I was finished with paper increases for this year and now I hear that we might be getting hit with another one in October and another one in early '96," said one top publishing executive. "The ad rates should be going up 14% to 15%-that's what the financial guys will say," continued the executive. "The marketing guys will probably scream and say that would be too hard a sell. Ultimately, we'll probably be up in the 8% to 10% range."

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