Magazines: print ad revenues are dwindling, but alternative revenue streams are not running dry

** Please note: Some names and numbers have been deliberately avoided for confidentiality reasons

 

I still remember the September of 2016. I was in the editorial team of a well-regarded design magazine of a prestigious publishing house, and we had just struck a deal with a high-end Turkish bathroom-fittings brand. They were giving us a lot of money for a lavish affair in a fancy five-star hotel. In exchange they wanted a guest list of 250 of the best architects and interior designers, who could be their potential clients because the brand was very keen on expanding their industry clientele. Our duty was to ensure that the promised 250 showed up and so September was spent glued to the phone, cajoling people I had never met to attend the party. I don’t know of any other industry in which you have to coax people to come for free food and drinks.

Events have become something of a mainstay in magazine publication. As integral today in a magazine’s yearly revenue plan as traditional print ads, which are increasingly on the decline and no longer a source a publication can solely rely on. The loss of print ad revenue is worrisome, but there are non-traditional, alternative ways in which print magazines make money to stay afloat and relevant in a space where their existence is threatened daily by digital media and shorter attention spans.

At the beginning of this month, Condé Nast’s headquarters in New York announced that it was shuttering the print edition of Teen Vogue, the sister publication of Vogue targeting teenage girls that was launched in 2004. In addition to this, the publishing house was reducing the frequency of seven titles: GQ, Glamour, Allure, Architectural Digest, Bon Appétit, W and Condé Nast Traveler (Steigrad, 2017). It’s a sign of the tough times hitting the publishing industry as ad revenues – the primary source of revenue for magazines – are on a downward spiral. As per data aggregator Standard Media Index, “print ad revenue in the US was down 17% between Q2 2016 and Q2 2017… That’s more than double what it was compared to the prior yearly loss of 8%. Magazine revenue was down 16%, compared with 9.6% the year before.” (Fischer, 2017) The news north of the border is not too heartening either. As per the Canadian Media Concentration Research Project (CMCRP), conducted by Carleton University in Ottawa, magazines in Canada are suffering a steep drop in revenue “after peaking in 2008 at $2,394.4 million, before falling to $1,922.2 million in 2012. Fast forward to 2016, however, and revenue was still basi­cally the same at $1,462.7 million—a drop of nearly 40% from the peak, to be sure. This is a clear instance of a medium in free fall.” It is clear that the magazine industry is in dire need of CPR and fortunately, many publications are taking innovative steps to revitalize the medium. These include events, special issues and supplements, paid lists, media tie-ins and focus on digital content, to name a few. These initiatives are changing the way magazines were traditionally run and while these are difficult times for the industry, the interactive nature of these measures means that these are also some of the most exciting times to work in this industry.

The events model is now the most popularly used one by magazines to generate revenue. According to Chad Kaydo, former editor-in-chief of media production company BizBash, events are profitable revenue streams, in that each sponsored event brings in considerable revenue for the company. Events are also content platforms; they “let editors use their sources and storytelling skills in new ways, develop assets that can be used in print and online, and even make news in other outlets.” (Kaydo, 2014) Events bring in new advertisers, as when brands notice the kind of and number of people a magazine’s event attracts and want to target those people. Events can get additional money from existing advertisers, when magazines make “bundled deals” with brands “with costs attached to digital, print, and event elements.” Events can also be powerful marketing tools, especially for lifestyle magazines, when their clients want to sell experiences and “events let them give attendees a taste of that experience.” (Kaydo, 2014)

Taryn Alexandra Hardes, in her project ‘The Events Model: How Industry-Specific Award Events Benefit Magazines’ examines the way events affected the performance of Western Living and Vancouver magazines. These magazines have three kinds of events: sponsored events, external events and internal events. Sponsored events are those in which brands give money to a magazine to organize an event and curate a special guest list. External events are events in which the magazine is not directly involved. It might pump in either money or resources into an event in exchange for brand visibility and recognition. Internal events are usually the most important events in a magazine’s calendar. They are the ones the magazine conceptualizes and organizes. These, typically, include awards that magazines hand out to influencers in their respective area of interest. In Hardes’s study, internal events “not only provide ad sales, sponsorships, and partnership opportunities, they also provide the magazine with proprietary and authoritative editorial content and massive brand exposure.” Each department of the magazine – editorial, marketing and sales – receives significant benefits from the production of such events. In the case of Western Living’s ‘Designer of the Year’ awards and Vancouver’s ‘Restaurant Awards’, “audience development and industry infiltration [helped] Western Living and Vancouver further their brand identity each year.” (Hardes, 2015)

Events are no less important for the publishing house and the design magazine I worked for. The magazine’s most important internal event is an awards list that it curates of the most influential architects and interior designers of that year. The winners are honoured in a snazzy awards show sponsored by a luxury car manufacturer. That brand unveiles their latest car on stage at the event, in front of the winners and other guests that include important members from the design community. The revenue the magazine nets from this event is approximately 310,000 USD. In addition to this, it releases a coffee-table book showcasing the work of the winners. This book is sponsored by another company that pays the magazine around 50,000 USD for the book, which integrates that company’s latest products in its pages. This sponsor also pays the magazine for a web-exclusive event, where designers create unique offerings using their products. In addition to this, the magazine also publishes two main design supplements every year that rake in around the same figure as the main awards event. And then there were various sponsored events, which number, typically, around 6-8 such every year, with their frequency increasing year on year. In 2016, the magazine also introduced a paid listing option for members of the design community, wherein designers pay to be featured. All in all, the revenue the magazine generates from all these initiatives is approximately 930,000 USD, which is as much as 75% of the amount the magazine earns from print ads. Because of the high-earning potential of internal events, sponsored events, specialty books, supplements, lists and web-exclusive events, there is concerted push to increase their frequency, so that as print ad revenue continues to dwindle, the magazine can lean on alternative revenue streams to stay afloat. The other magazines published by the same company have similar revenue-generating strategies. They hold widely popular awards events, which are attended by the glitterati from the entertainment industry. This helps the magazines generate seven-digit revenues, especially because these awards get televised. In addition, these magazines also have TV shows, which get in a fair amount of revenue and publicity for the magazines. Apart from awards shows, lifestyle magazines – particularly in the realm of travel and hospitality – also curate experiences for their readers, for instance, they will fly in some of the best chefs from around the world to create great culinary experiences for a select group. It’s a subtle way for the magazine to not just get revenue, but also build brand value and offer an experience. In her study, Hardes quotes Dale McCarthy, the business development manager of Western Living, who says, “no one wants to buy an ad anymore, they want to buy an experience.” This is now a universal trend, where magazines offer their clients more than just a “place your ad here” option. Rather, they work closely with the brand to integrate its philosophy into an event and curate a select guest list of people who will appreciate what that brand has to offer.

With majority of people migrating their reading habits online, “digital first” or “social first” are now the publishing industry buzzwords. The Canadian Media Concentration Research Project report found out that “the media economy in Canada, as elsewhere, is also becoming ever more internet- and mobile-centric. “Platform media” (i.e. wireline, mobile wireless, ISPs and cable, satellite and IPTV) have grown much faster than the “content media” (i.e. television, radio, newspapers, magazines, music), especially those that depend on advertising. Platform media altogether accounted for nearly three-quarters of all revenue in 2016.” Internet advertising is surpassing traditional advertising. CMCRP estimates that in 2016, “internet advertising revenue reached $5.5 billion.” Google and Facebook, the report finds, enjoy a “duopoly in internet advertising and the scale and scope of their influence is grow­ing and consolidating.” (CMCRP 2017) Kristen Nicole Hilderman, in her project ‘Life after print: Revising the digital editorial strategy in magazine publishing’, maintains that for magazines to survive in the digital era, they have to “align the goals and practices of print and digital editors while developing new online strategies that combine print content, multimedia, SEO, and social media.” To a great extent this is happening already. Most magazines, today, have dedicated digital teams comprising an editor and writers who have daily targets about the number of articles they publish online, the number of tweets they send out, and posts they update on Facebook. DA Mills, in her article ‘The mixed revenue model: how magazine publishers are surviving in a digital world’, studied how Rogers Media is implementing the “digital first” strategy for a number of their magazines. In 2016, the publisher – Canada’s largest – implemented sweeping changes in their magazine business. They discontinued four titles in print: Flare, Sportsnet, MoneySense, and Canadian Business. They kept their popular titles like Maclean’s, Chatelaine, Today’s Parent, and Hello!, but seeing as they saw “a growth of 20% in total digital revenue, with an audience growth even higher than that” (DA Mills, 2017), they focused on the digital strategies of these titles. They did this by monetizing their digital content through the magazine subscription app, Texture. This app, the magazine found out, generated more revenue for Rogers “than all their magazines on newsstands combined.” (DA Mills, 2017) The app also enabled Rogers to draw in new readers, track their reading habits and develop content tailored for their old and new readers. This enabled them to attract advertisers by promising them – with some degree of certainty – that their brand was going to be exposed to the ideal consumer for that product. In the current scenario where print readership is declining, going digital is not just enticing, it’s necessary. Among the many benefits Mills points out are: “it eliminates the costs associated with printing and distributing weekly and monthly magazines; publishers are able to gather important information about their readers and use it to entice advertisers, as well as discover how they might improve or develop their content; and readers benefit from [apps like] Texture in that they can access a multitude of publications, at a much more affordable price.”

Other revenue streams Mills mentions are sponsorships and custom publishing. In sponsorships, publishers offer complete “packages” to advertisers, bundling “web ads, email ads, and logo branding” and selling them for a single attractive price. This assures the advertiser that the magazine will ensure that their message reaches the consumer one way or the other. Custom publishing, where organizations, businesses or individuals hire publishing houses to generate magazines or books for them, has been around for a long time. Earlier, publishing houses that specialized in Business-to-Business (B2B) publications survived purely on the custom publishing model. I worked for a custom publisher that sustained itself by publishing magazines and books for banks, insurance and telecom companies, government bodies and airlines. They had a few on-stand, Business-to-Consumer (B2C) titles, but the steady business from their B2B clients is what they, primarily, relied on. Today, custom publishing has become a very attractive option for all publishers as it “provides guaranteed revenue… [and is] a surefire method of increasing profitability.” (DA Mills, 2017)

Magazine publishing, today, is even more of a “perilous trade” than book publishing. Just last month The Wall Street Journal reported that “the consumer books industry is enjoying steady growth in the US, with total revenue increasing about 5% from 2013 to 2016.” (Turner, 2017) Meanwhile, magazine publishers have realized that to sustain in this industry and to continue publishing magazines, they can no longer rely on print ad revenues. Events, special editions, lists, awards, social media savviness and many other things which were unheard of a decade ago are now the lifeline of magazines. And those that have the ability to constantly innovate and stay sharp-witted and nimble-footed will be the ones to outlast others in this survival of the fittest.

 

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