Friday, October 31, 2008
Time Inc. Ad Slump 'Like 1931' Just as Magazine Recalls Great Depression
CEO Ann Moore's downbeat forecast comes out as FDR cover on stands.
By Julia A. Seymour
Business & Media Institute
Time Inc. is facing an advertising ‘depression,’ which might explain its magazine’s recent obsession with the Great Depression and the 1930s.
Time’s Oct. 27 issue – the one with FDR, Abraham Lincoln and the two presidential candidates – was on newsstands the same week CEO Ann Moore told attendees of an Oct. 30 ABC Circulation Conference that, “By this October it was looking like 1931,” Foliomag.com reported. “[Time Inc.] has never had so many advertising clients in trouble at the same time. The declines are stunning.”
Moore’s speech came just two days after she announced “dramatic restructuring” and “significant layoffs” for the company, which owns magazines including Time, Fortune/Money, Sports Illustrated, Entertainment Weekly and People among a host of others.
Like the rest of the mainstream media, Time magazine has drawn many comparisons to the Great Depression this year. A “history” column by David M. Kennedy in the same Oct. 27 issue said, “Today’s crisis isn’t a repeat of the Depression. But we can still borrow lessons from the past.”
“What is now manifestly needed is a round of creative institutional invention like what the New Deal gave us,” Kennedy, a Stanford University history professor and Pulitzer-winning author, wrote. Like others in the news media, Kennedy’s call for a new, New Deal ignored economists who say that FDR’s policies actually prolonged the Depression – extending Americans’ intense suffering for roughly seven years.
Economist Roberts Higgs told the Business & Media Institute a new, New Deal would be disastrous. “I cannot imagine a worse course of action, short of outright socialization of the entire economy. The measures comprised in a new, New Deal will not hasten general economist recovery, but will only bulk up the power of government and transfer income to privileged interest groups at the expense of taxpayers and consumers,” Higgs said.
Yet, the mainstream media have promoted that by comparing the Great Depression to the 2008 economic downturn hundreds of times. On the networks (ABC, NBC and CBS) alone, there were 70 comparisons in the first six months of 2008. Since July 1 that number more than doubled to 157.
Monday, October 20, 2008
Readers feel the Pinch, but Glossies keep their Sheen
By Stephen Brook
As the economic downturn slides towards a recession and magazine publishers peer into the abyss, fervently hoping that the credit crunch does not beget a circulation crunch, they pray that women will value their glossy magazines as much as they value their lipstick.
Advertisers are slashing their budgets more savagely in the third quarter of 2008 than at any time in a decade, with main-media advertising, including that of magazines, the hardest-hit. But it seems that glossy magazines are riding out the storm. Just as sales of lipstick are predicted to.
'There's a theory that in times of recession sales of lipstick go up,' says Alan Brydon, head of press communications at the Media Planning Group, which plans and buys advertising for companies. The theory is that women still want luxury and sales of beauty products are a convenient and satisfying way of getting that. He thinks that the top-end glossies such as Vogue, GQ and Elle will not be severely hit by a circulation slump nor a plunge in advertising revenue. Even though they will be premium products in a recession, their readers and advertisers will still want them.
'Monthlies are in a good place because they are hugely good value,' Brydon says. Women are not going to sever the special emotional connection that they have with glossy magazines, even if they are feeling the pinch, 'for the sake of £3'.
Across the industry there are positive signs. As a weekly glossy, Bauer Consumer Magazines' Grazia should act as a bellwether for the market. Circulation has been solid in October, despite the stock market shocks, and this month it has achieved a record amount of advertising - 80 pages in one issue. 'Money may be tight, but people can afford £1.90,' says managing director David Davies.
Over at the Wall Street Journal, WSJ., the glossy that launched in September, will bring out its second issue in December. There are plans to convert WSJ. from quarterly to monthly next September, recession or no recession.
But in harsh times such magazines are at risk of a backlash, particularly if they indulge in frothy consumer exuberance, such as this week's Grazia: 'Meet the fashiorexics - "I spend £3 a day on food - and £1,000 on dresses".'
Can you still be ostentatious in the middle of an economic downturn? Guardian columnist Polly Toynbee thinks not, and last week witheringly contrasted carnage on the stock exchange with the arrival of the Financial Times' very glossy and very profitable monthly magazine How to Spend It, which can rake in about £1m in advertising revenue per issue. 'The day there was cardiac arrest on the stock exchange, with carnage in every market, was also the day How to Spend It slipped out between the crisp pink sheets of the Financial Times. This was the magazine's well-timed Bonus Issue. Oh joy! Here is the zeitgeist publication of the last reckless decade,' Toynbee wrote.
Gillian de Bono, editor of How to Spend It for eight years, was not afraid to return fire. 'There are still an awful lot of people with an awful lot of money,' she said. 'People spending money is what is going to turn this economy around.' She pointed out that FT readers were high-end and not sub-prime and defended the 'perfect hi-fi' feature (price tag £200,000) that Toynbee took aim at. Anyone buying hi-fi at that price would be handing the government £35,000 in taxes, countered De Bono, which could only be a good thing.
But other magazines are altering their tone as the downturn bites. Elle, the fashion title published by Hachette Filipacchi, introduced a column called The Credit Crunch Shopper, for readers who want to wear the trends but save cash. This month it features a silk-chiffon blouse from K by Karl Lagerfeld at £190 a pop. 'The Elle reader will spend that money,' editor-in-chief Lorraine Candy says confidently. But she admits: '"Must have" or "it bag" we have to avoid now,' she says. Next year the magazine will feature more real-life stories about their readers, as a way of responding to circumstances.
A survey of 4,000 Elle readers found that they were determined to keep shopping. It showed that 33 per cent of respondents' shopping habits remained unaffected by the crunch. 'But they are being a lot more elegant in the way they buy. The huge flurry of instant gratification shopping in the lunch hour - I don't think they are going to be doing that anymore,' Candy says.
The advertising downturn has not hit Elle. Candy says that its volume of fashion advertising rose this year, although beauty advertising struggled. December's issue will be a robust 372 pages.
But the credit squeeze has already claimed its first glossy victim. Women's monthly Eve folded in September, just five months after a relaunch. Publisher Haymarket bought it three years ago from the BBC. The magazine employed 56 staff and most lost their jobs.
At the very top of the market the good times continue, with others set for bumper December issues and steady circulations. But next year is an unknown quantity, even though big luxury conglomerates including Gucci and LVMH plan to boost advertising spend.
At Condé Nast, the December issue of men's magazine GQ - a 20th anniversary special - will be a whopper at 584 pages. 'It will be the fattest GQ in any country ever,' says managing director Nicholas Coleridge. December Vogue will also be bigger than one year ago, at about 450 pages with 243 of advertising. But Glamour, the glossy aimed at the Cosmo generation, has been hit. Its ad volume fell after Condé Nast refused to cut its advertising rates.
'For us it has been a very confident 2008 that hasn't seen any erosion in the last quarter. Having said that, I expect next year to be more challenging,' Coleridge says.
Condé Nast is forging ahead with plans to launch not one but two high-end magazines next year, when Britain could be mired in recession.
The company poached Katie Grand from Bauer, which published her magazine Pop, to launch a twice-yearly fashion and style magazine. It will be called Love, and appear in February with a £5 cover price. The launch of a UK version of glossy US technology magazine Wired will follow months later. Coleridge says Condé Nast is planning for the long-term and the launches will be smart niche publications. 'It is not like launching a super-tanker.'
Coleridge is enough of a veteran to remember the last severe media recession of 1990 to 1992. Then advertising pages fell, but a big difference this time will be the strength of the luxury companies, which have grown into vast international concerns and should be able to weather the downturn better.
Brydon says the luxury houses are being careful, but they are not giving up their cherished positions in the front of book of high-end magazines. To do so could mean that they lose their slots for months, if not years. 'It is almost like a nuclear deterrent. You can't be the first to blink,' says Brydon.
There is still the risk that glossy magazines will leave a bad taste in the mouth of readers who lose their bonuses or, even worse, their jobs.
But Coleridge denies his stable of magazines is ostentatious and says they merely fulfil their journalistic duty to report what is out there. 'Readers always want to see the best of what's available.'
'A lot of it is about dreaming,' says Jeremy Langmead, editor of upmarket men's title Esquire, who predicts magazines will provide more of that next year.
'I am not going to rent Richard Branson's house on Necker Island, but for 10 minutes I am going to imagine I am lying on that beach.'
A survey of 300 men by trend forecasters Future Laboratory for Esquire identified a high spending group the magazine dubbed Intelli-gents. 'These guys were prepared to spend more money at the higher end because they wanted to be connoisseurs,' said editor Jeremy Langmead. 'They want to own a wine library, not just a wine cellar.'
Elle magazine carried out an online survey of 4,000 readers aged between 18 and 55. It found 33 per cent were defying the credit crunch, saying their clothes-shopping habits had been unaffected. Forty-two per cent said they were prepared to sacrifice a night out in favour of shopping.
Grazia has reported on a new type of consumer: the fashiorexic. Tabitha Somerset-Webb, a handbag designer, confessed to spending £3 a day on food to fund her £1,000 dresses.
Lisa Burprich, who works in TV production, eats supermarket own brands and tinned food to afford £200 7 For All Mankind jeans every two months.
Tuesday, October 07, 2008
How's Media Doing?
By James Brady
Wall Street isn't the only hurting industry in town. Madison Avenue's annual "Ad Week" just ended, with media, clients and ad agencies confronting their own woes without a Washington bailout in sight.
Being a media lifer, I focus less on the markets than on the business I've been working in since 1948, getting myself through college by working until midnight as a copyboy at the New York Daily News, by far the biggest circulation paper in the country at the time. And since I've worked on TV and been an editor and publisher--and I'm still a magazine columnist and author and write for this Web site--I've still got a fair amount to worry about.
A couple of things got me thinking about all this. CBS selling Mel Karmazin's old radio stations, the 75th-anniversary celebrations of Esquire magazine, the layoffs of old daily newspaper friends, and an informative lunch at Le Bernardin with a former magazine colleague, during which we talked about his business and about other media, new and old, good times and bad.
First the layoffs, regrettably typical of recent consolidation and cost-cutting at American newspapers. At Mort Zuckerman's, and my old, Daily News, some 25 editorial staffers were said to have accepted buyout offers. They included my pal Faigi (pronounced "Fahey") Rosenthal--tall, attractive, the most competent librarian I worked with at the New York Post before she moved to the News.
In those days before Google, there were only keepers of the morgue, or the "library." You relied on magicians like Faigi to find just the obscure item you needed to nail down a story properly, from hard, upfront news to a tasty item for Page Six.
The other Daily News casualty was the drama critic: lanky, wise Howard Kissel. He covered theater at Women's Wear Daily in my time as publisher and was later hired away by the News, thereby providing an opportunity for a promising young man named Ben Brantley, who took the critic's job at WWD and eventually became the most powerful theater reviewer in town, at The New York Times.
Next, my chat at Le Bernardin with veteran magazine publishing executive Jack Kliger of Hachette Filipacchi. After nine years, Kliger recently handed over the reins of the Magazine Publishers Association (MPA) to John Griffin of National Geographic. I asked him for his thoughts on the magazine business today, a world of sluggish advertising and falling newsstand sales, with a number of magazines failing to meet the rate bases they promise to deliver to the ad agencies.
"This has been one of the worst down periods we've experienced in the magazine business," said Kliger. "I don't want to beat up on newspapers, but if magazines have been bad, newspapers have been worse. I remember 1997 and '98 being pretty bad as well, and we got through that. TV isn't having an easier time either. Cable is doing OK.
"For magazines, I think 'the recession' is short term," he continued. "But structurally things are now even worse than '97 and '98. The auto industry story, for example, is brutal. Magazines are down millions in auto advertising. Television must be down billions."
I asked if there were any bright spots Kliger could point to.
"I don't know if the magazine business will ever again be as robust," he said. "But ads will still be very important, the dominant revenue. Magazine advertising really works. And consumers like magazines. There's value to original and trusted third-party content. Young people may not like newspapers anymore, but they like magazines. And we really do have good print journalists and editors who can learn the new digital platforms.
"I love blogs, much as I love Speakers' Corner in Hyde Park," Kliger said. "But editors are still needed to separate the wheat from the chaff, as they do in magazines but don't on blogs."
Kliger's passionate on ad space pricing. "Magazines should charge more for audience reach, as all other media do," he said. "Circulation being down is not necessarily as difficult a problem in the long term. Circulation is still promising, but the consumer is getting used to the fact you can get things free on television and the Internet. The question is, Who's going to pay for what?"
The ironic thing about Kliger's handing over the MPA reins right now? Despite reports of belt tightening at Hachette, the company's American flagship publication, Elle, is booming. Elle was up nearly 5% in ad pages in August (Vogue, In Style, Allure and Cosmopolitan were all down that month) and even further ahead in ads in the traditionally thick September issue, while category leader Vogue was down.
This buoyant trend seemed to be continuing for October. According to Advertising Age, a tie-in with hit TV show Project Runway has Elle moving from No. 6 in the fashion category to No. 2, behind Vogue.
And Esquire's star-studded anniversary? The issue ran over a healthy 300 pages, while its gala party featured a speech by Bill Clinton, whom you'd think might have been out hustling votes for Barack Obama. That's got to be a sign of something.