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Print Marketplace Observations:A Buyer’s Perspective

February 14, 2003

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Agenda Points Magazine Marketplace

Spending Trends and buyer implications Magazines versus other media Magazine Industry Challenge

Magazine Industry Response Concentration on Profitability Developing Better Products

Production issues: Buyer wish list Unique executions Bleed Charges Regional Capabilities

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Marketplace Observations It’s still a BUYERS market In 2002 total ad pages fell to 225,620, the

lowest industry total since 1996. Advertising fueled revenue growth in the

1997-2000 period and accounted for 65% to 75%+ of the average magazine revenue total

Ad revenue peaked in 2000 at $17.7BB and has slipped 6% overall since then

2001-2002 represented a retrenchment period for buyers where pricing for many clients was “rolled back”

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Magazine Ad Page Trends

0

50,000

100,000

150,000

200,000

250,000

300,000

1996 1997 1998 1999 2000 2001 2002

Ad Pages

Source: PIB

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Magazines Versus other Media Despite overall spending fluctuations

magazines’ share of national ad dollars has hovered around 32% since 1990.

32%

6%6%

56%

Magazines

Newspapers

Radio

Television

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Magazine Industry Challenge The industry has been fighting to maintain or

increase the overall dollar share. While print struggled in 2002 and pricing dropped,

television networks sold out inventory and pricing climbed.

For many clients broadcast campaigns are the last to get cut in tougher climates.

Most brand managers feel they get a better ROI from broadcast versus print.

Some clients are adverse to using print or are strictly broadcast focused. Magazine publishers are forced to be creative and persistent. This will be an ongoing industry battle.

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Magazine Industry Challenge As a result of ROI pressures more direct

response oriented ads are likely 1-800 numbers used more readily Increase BRC usage for database collection

(especially true in pharmaceuticals). Some titles already carry 4 to 5 RX BRCs per issue.

Monitored website traffic as it relates to ad spend

Magazines with strong response rates will benefit

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Magazine Industry Challenge Magazines have been hurt by the falloff in

print intensive categories Technology Travel Retail Financial (i.e.: Mutual Funds)

Other categories have helped pick up some of the slack

Pharmaceutical Food Products Packaged Goods

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Magazine Industry Response Magazines are concentrating on circulation

profitability not just raising ratebase so they can charge more

Effective in 2002 all ABC audited titles had to disclose their average price paid so buyers now have a benchmark.

Magazines have begun to raise basic prices and cover prices. They are also weeding out less profitable circulation.

These are all positives from the buyer perspective as the readers are taking on more of the financial burden.

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Magazine Industry Response While consumers may pay slightly more they

are demanding more from the product. With the “Martha/Real Simple effect” magazines

of higher quality stock and bigger trim sizes are the trend.

Layouts have more white space and modern graphics

This is great news for advertisers as reproduction has become less of an issue. Even categories such as Women Service, which had historically low quality stock, has improved greatly (i.e.: the new Woman’s Day and LHJ).

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Print Buyer Wish List Clients are seeking ways of standing out among

ad clutter thru impactful executions i.e.: Barn Doors, French Doors off covers Z-Gates Cover Stickers Popup Inserts Cover Sleeves (Prevention)

Unfortunately many clients become risk averse to the costs associated with these units.

Sales reps should brainstorm more with their production teams to present new executions to clients (everyone wants to say they were the first)

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Print Buyer Wish List Reduce insert spoilage

Many titles, especially newsstand intensive ones, require a substantial overrun

While we can’t always anticipate sell-through is there a way to lesson inserts sent to the shredder and still buy full circ?

Reduce printing costs on pre-supplied inserts or BRCs I.e. buying a “married” BRC in saddle-

stitched books

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Print Buyer Wish List Eliminate bleed charges

Aren’t these antiquated production charges or is there still a production cost involved?

Why do many titles (i.e.:Inc.) not charge for bleed yet others do?

Copy-split stop press charges With advancements in technology can these charges

be minimized? Share with us your selective binding

capability. Purchase by demo or even product category usage?

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Print Buyer Wish List Regional print buying is an issue

Publications define regions and do splits completely different

The CPM premium to do these buys is usually exorbitant (+25-30%)

There are no positioning guarantees, not even just full edit. The same can be said for most demographic editions.

Publish standard material closing dates which are not just the same as space closings.

This would eliminate numerous phone calls to production people

Longer extensions (ie: ship to the printer) would still be confirmed with the pub

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Looking Forward After two difficult years print

advertising should see a rebound in 2003 Monthlies thru Feb. +11% Weeklies thru Feb.3 +3% Coen’s latest prediction for 2003 +5.5%

Better quality products will continue to benefit both readers and advertisers

Our clients welcome any creative ideas that will help move their business