Ad Sales Growth to Slow in 2001

By Buss, Dale | Folio: the Magazine for Magazine Management, January 2001 | Go to article overview

Ad Sales Growth to Slow in 2001


Buss, Dale, Folio: the Magazine for Magazine Management


But barring an outright recession, growth will remain healthy as manufacturers introduce new products and sophisticated marketers realize that advertising is never expendable.

For many magazine publishers, advertising growth is likely to slow in 2001 compared with last year's booming market, thanks in large part to cutbacks by dot-com, telecommunications, computer and automotive marketers, as well as a general cooling off in the economy.

But as 2001 begins, many executives of both consumer and trade magazines remain sanguine about the overall advertising outlook both for their own publications and for the industry as a whole.

"It's pretty early, but I'm cautiously optimistic," says David Long, president of media sales and marketing for Time Inc. Long projects that the Time group's advertising revenues will rise this year by an unspecified level from 2000's mark. "Business, generally speaking, is still fairly robust. You're always concerned when you hear that certain segments are having problems, but I'm not overly concerned."

The manufacturing and electronics division of Cahners Publishing owns some of the leading titles in technology and manufacturing markets, including Design News and Purchasing, and divisional president Jeff Greisch expects "slower growth in some of the sectors we cover" this year--certainly less than the double-digit growth in ad revenues that they saw in 2001. "But we'll see some growth nonetheless. We aren't talking about negative growth here."

The stars clearly were in alignment for magazine advertising in 2000. The general economy continued its record 13-year bull run. Many titles continued to benefit initially from the surge of dot-com advertising that had begun in 1998, and some got bonuses from advertising tied to the Summer Olympics and the U.S. presidential election. Grain Communications Inc. had a record year, for example, and the company rolled out new and expanded titles such as Automotive Marketer and Automotive News. Fortune, meanwhile, posted a 48 percent year-to-year gain to rack up a "once-in-a-millennium sort of year," as publisher Mike Federle puts it--and that on top of a 19 percent advertising increase from 1998 to 1999.

But publishers began to get skittish about 2001 advertising last spring, with the huge drop-off in ad spending by dot-coms as investors started imposing traditional financial discipline on Internet start-ups, putting some of them out of business and curtailing others' marketing placements in traditional media. Many titles experienced some third- and fourth-quarter pullbacks by some brand marketers. Then a spate of developments in early December worsened their mood: Federal economic indicators pointed to a slight softening in the economy; PC manufacturers announced earnings and sales shortfalls; and General Motors Corp. and Chrysler Corp. slated production cutbacks. Then Robert J. Coen, the forecasting director at Universal McCann, a New York City-based agency, cut his projection of 2001 growth in overall American ad spending to 5.8 percent, from the 6.5 percent prediction he had made in June.

First-quarter bookings nevertheless came in strong for many publishers, and the prevailing view now is that the economy will continue to be robust, if a bit cooler, and that even apparently damaged sectors aren't going to recede dramatically. Automakers' spending in consumer books will slow, for example, concedes Ken Wallace, senior vice president of corporate sales and marketing for G+J USA. And Fortune's Federle says that although automotive was the magazine's third-largest advertising category last year, he expects it to sink to the fifth-largest this year--a significant part of the reason why he foresees the title's advertising sales rising a total of only 5 percent in 2001.

But don't expect carmakers to withdraw into some sort of shell as they might have in past slowdowns, warns Time's Long. "There has always been this thought that advertising is highly expendable, but I don't buy into that anymore," he says. …

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