This Magic Moment…
February 14, 2005

Magazine publishers are confronting a once in a lifetime opportunity.  It results from the confluence of two important trends:

• Deterioration in the advertising value offered by television
• The drive towards increased accountability

Television no longer delivers the audiences that advertisers need to reach.  Ratings continue to decline as channel choices increase.  Increases in commercial clutter, coupled with the ubiquity of remote controls and video recording devices, have made it ever easier for viewers to avoid the commercials – and all indications are that they are fully leveraging this capability.  

Without ad exposure there can be no ad response - and product sales suffer.  It should come as no surprise that there is a growing body of evidence, including an important 2004 study commissioned by Deutsche Bank, which shows that for many brands, television advertising does not generate a positive ROI. 

Numerous studies have found that magazine advertising outperforms that in television.  One especially compelling analysis was conducted by Erwin Ephron and MMA’s Gerry Pollak and drew upon MMA’s extensive database. Although the creative quality of magazine advertising is often inferior, magazine advertising still works. 

In a perverse twist – as television’s value proposition has deteriorated, its share of ad spending has actually increased.  According to estimates developed by Universal McCann’s Bob Coen, television’s share of national consumer media spending¹   increased from 62% in 2000 to 66% in 2004.  At the same time magazines’ share declined from 19% to 17%. 

Most advertisers have been slow to respond to television’s loss of audience – and its resultant lack of effectiveness.  However, they are catching on and catching up, as it becomes increasingly clear that traditional advertising and allocation models no longer generate the results that are needed.  As a result, savvier advertisers and media-buying agencies are aggressively seeking more effective, consumer-centric models.  Sophisticated advertisers like Kraft and P&G have already begun to shift their spending, and - for the first time in years - Bob Coen is predicting that spending in magazines will grow at a more rapid rate than spending in television this year.

As a result of these trends, advertisers have an unprecedented need for what magazines are selling.  They are searching for ways to connect with consumers in more meaningful ways, at the same time they are paying increased attention to advertising effectiveness.  Magazines actively engage audiences no longer tuned-in to television commercials.  Magazine advertising works. 

This near-perfect match between what advertisers need and what magazines offer guarantees publishers the potential to garner a larger share of ad spending.  But it is only the opportunity and not its realization that is guaranteed.   There are a series of major obstacles which must be successfully negotiated before the role of magazines will improve.  We will say more about these challenges in the weeks ahead.

¹Includes television (network, spot, cable, & syndication), magazines, newspapers, & radio.