Mag ad-rate debate set to begin

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Magazine publishers and media buyers are set to begin their annual eye-rolling, saber-rattling tussle over ad rates-a ritual made even edgier by anxieties over the state of the economy.

Publishers will ask for 2002 rate increases in the low-to-mid single digits, an Ad Age survey of leading magazine companies found. That's a drop from last year, when rate increases were clustered in the 6% to 8% range. It's more in line with rate increases for 2000.

While sellers cite escalating costs and profit pressures as factors behind the increases, buyers are likely to balk at even small hikes-and will move to strip them away during negotiations. Marketers are looking to trim spending during the downturn. And the media agency behemoths that now dominate the buying landscape are eager to prove to clients they can leverage their size to lower media costs.


"As you might suspect, the largest advertisers are looking for either flat or very modest-I mean very modest-increases," said John Loughlin, president-CEO of the consumer magazine and media group at Primedia, which as a publicly held company is under pressure to show growth to Wall Street. Its consumer magazines will seek rises of between 3% and 7%, he said, down from 6% to 9% last year.

Even privately held publishers are lowering the bar. Conde Nast Publications will ask advertisers in its high-end glossies for an average 4% increase, down from last year's 8% demand. Then again, Conde Nast is known for its refusal to negotiate its published rates.

"Clients' expectations [for increases] are minimally flat to down," said Valerie Muller, senior VP-director of print at Grey Global's MediaCom. "Those clients who have might have incremental budgets are looking for double-digit negatives."

Other buyers agreed publishers should prepare to take a hit in a tough climate. Ad pages are down 11.7% in the first seven months of the year compared with the same period in 2000, according to Publishers Information Bureau.

"It's tough for everyone," said Eric Blankfein, VP-director of planning at Horizon Media, New York. "They gotta share the pain."

Even publishers admit the argument is academic, since printed rate cards are just the starting point for negotiations.

"All of these price increases are theoretical," said Kent Brownridge, general manager of Wenner Media. "All of them are pie-in-the-sky benchmark rate increases. Most advertisers get less than the stated amount, and somehow feel good because the publishers feel rates should go up 7% and they're only getting 4%. ... We are getting further and further away from reality."

Wenner's titles-Rolling Stone, Us Weekly and Men's Journal-will seek a 4% increase, down from 7% last year.

Some publishers said they would enter talks prepared to prove advertisers aren't being asked to shoulder the entire burden of revenue shortfalls and cost increases.

"This year, we sort of explain ourselves by saying we have recognized-before the downturn-that consumers need to shoulder some of the cost burden," Mr. Loughlin said, noting Primedia raised single-copy prices for over 60 of its titles and subscription prices for more than 30. "You get a better reception."

One magazine sales executive said the changing media-buying landscape is making agencies more aggressive. "The way they get business is to go to a client and say, `Look. We can get you a better deal.' That's their incentive."

Rate hikes among other leading publishing groups include:

* Hearst Magazines plans 3% to 6% increases among its stable of titles, down from 7%. But Valerie Salembier, publisher of Hearst's Esquire, said that title would repeat last year's aggressive 9% increase.

* Gruner & Jahr USA Publishing's rates will go up between 3% and 6%.

* Time Inc.'s flagship Time will raise rates 5%. Atop rate-base hikes, Entertainment Weekly's rates will rise 1.5%, while People's will go up 3.1%. Those modest hikes are surprising given aggressive growth targets set by Time Inc. parent AOL Time Warner.

* Playboy will go to advertisers with an 8% rate increase.

* Hachette Filipacchi's rate will go up 4% to 5%. Last fall, Hachette went into meetings with proposed rate increases of 7% to 8%.

Newsweek, Forbes, Fortune and Business Week were among titles that said they have not yet established rate increases.

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