Harold Shain Exec. VP-publisher Newsweek The price is right Most-often named factors that make any magazine valuabe as an ad medium, among media buyers eho have elected to place ads in magazines (chart) NEW RULES LIVEN UP THE RATE-CARD GAME NO RETURN TO SYSTEM OF A DECADE AGO; NO ESCAPE FROM NEGOTIATED FARE

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After scaling back print schedules for several years, advertisers have re-embraced magazines at a pace not seen in a decade. But while magazines are getting fatter, publishers and advertisers are still locked in a tug-of-war over rates.

Through September, magazine ad pages rose 5% over the previous year-to-date period, according to Publishers Information Bureau-the highest increase since 1984.

Despite the gains, publishers still face pressure on profits. Advertisers and agencies continue to demand rate concessions, and the negotiating climate will intensify as publishers attempt to raise rates next year.

"Negotiating is still a big part of the picture," says Ira Weinblatt, former senior VP-director of print media at Saatchi & Saatchi Advertising, New York.

"Just because the economy is improving doesn't mean you will start giving your budgets away," says Mr. Weinblatt, who recently left the agency world to teach.

"Every piece of business is negotiated," says Harold Shain, exec VP-publisher of Newsweek. "I don't believe we will ever return to the industry we were 10 years ago."

Those discounts can be quite sizable. According to one media buyer who asked not to be named, discounts for newsweeklies and women's service magazines are running at "30% or above when a book is going for ... equal share of advertising [versus competing titles] in a category."

But while straight rate-card sells may be long gone at most titles, some publishers now create rate cards in anticipation of negotiations.

"The media are now reading the smoke signals from agencies and clients when we design rate cards and discount programs," says Jeffrey Cunningham, publisher of Forbes. "The rate card has been written with the memory that we had to come down to X percent last year because we lost business."

Though inflating rate cards may seem like a logical way for magazines to protect profits, some media buyers warn publishers not to request excessive rate hikes next year.

"Some magazines are talking 5% and 6%, and I have heard numbers as high as 8% to 10%," says Frank Smith, VP-group supervisor of print services at Young & Rubicam, New York. "Every year, they say postage, paper and ink are going up and those are the factors of doing business. But there was no postal [rate] increase in '94."

"We are hearing 4% to 6% rate increases for next year," says Valerie Muller, exec VP-operations at DeWitt Media, a New York-based media buying service.

Those with circulation gains who can demonstrate they are putting additional dollars into distribution will pass off higher rates, she says. But, she adds, "those who just say I'm passing on costs, won't."

Even publishers whose magazines are thriving expect to continue fighting with advertisers over rates.

"You still have to do a real good job of justifying what your price is," says Jack Haire, publisher of Time, whose ad pages rose 8.1% through September, according to PIB.

Time recently conducted a telephone survey of media buyers to assess how they define a magazine's value. Of more than 100 buyers surveyed, 43% said good rates and cost-per-thousand readers make a magazine valuable. Only 30% cited editorial quality, while 24% named circulation.

"[An ad rate] may not be as important a distinction for niche magazines, but in the larger-reach world, it's still very important," Mr. Haire says.

Perhaps nowhere else in the magazine world are rates more important than in the the women's service category, known for intense rate negotiations.

In June, shortly after announcing plans to buy the New York Times Co. Women's Magazine Group, which includes Family Circle and McCall's, John Heins, president-CEO of Gruner & Jahr USA, said he sought to reduce the high discounts given by those titles. That tough stance raised some eyebrows.

"They have never competed in a category as competitive as the women's service category," Ms. Smith says of Gruner & Jahr. "If they take on a non-negotiable stance with those magazines, they will have some difficulties."

The company may already be backpedaling. A Gruner & Jahr spokeswoman says the company plans "to do business in the same way the field does. You can't go into a field and go contrary to the way business is done."

G&J would be smart to act cautiously before overhauling the ad strategy on Family Circle and McCall's. Four of the five remaining Seven Sister titles-Hachette's Woman's Day, Hearst Corp.'s Redbook and Meredith Corp.'s Better Homes & Gardens and Ladies' Home Journal-experienced ad page gains through September, though their percentage gains were smaller than G&J's new books. Only Good Housekeeping showed a loss in this period.

Even though the release of new domestic automobiles and the conversion of many prescription drugs to over-the-counter products is fueling much of the ad growth among the Seven Sisters, these titles are still looking for ways to contain negotiated discounts.

"If we can offer the most quality we can, it well help to [counter] the highly commoditized" negotiations over rates, says Alan Waxenberg, Good Housekeeping publisher.

For example, the Hearst title is now offering advertisers who run in a special section point-of-sale sign-age in Grand Union and Sav-On drug stores for an additional $2,500.

Good Housekeeping, which saw a 1.6% drop in pages through September, will likely face an even tougher year in 1995 now that Revlon has pulled its ads from Hearst. Those factors underscore the title's need to maximize ad revenues.

Publishers in all categories are turning to creative marketing programs for advertisers, as a way to soften the blow of discounts.

"At the moment it's difficult to get leverage," says Newsweek's Mr. Shain. "We are putting together added-value programs to get away from discounts."

Both Newsweek and Forbes are targeting technology advertisers for value-added offerings.

Mr. Cunningham hopes to convince a computer manufacturer to pre-package Forbes-created CD-ROMs inside its hardware. Forbes would provide the company with access to one of its proprietary databases, in exchange for a minimum ad commitment to the magazine. Newsweek also recently announced plans for a technology tour for advertisers.

Conde Nast Publications, which has always emphasized value-added programs, is now even better equipped to create these offerings at a corporate level.

When Jack Kliger became senior VP-corporate services in April, he beefed up the creative staff in his department, reducing its dependency on staff on the individual titles. The move apparently is paying off for all parties involved. Mr. Kliger was promoted to exec VP last month partly due to his corporate sales efforts.

"Not only are there marketing programs being proposed like crazy, but they are being cashed in on," says Beth Fuchs Brenner, publisher of Conde Nast's Self.

Despite advertisers' focus on price, there is some good news for publishers.

"If you have more money than you had in previous years, you can be a little more experimental," Ms. Muller says.

She predicts that next year advertisers will be more willing to test new magazines and add additional titles onto corporate buys.

That optimism says worlds about the revival of the magazine business.

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