Catalog and Publication Outlook -- Proceed with CautionDecember 2008 By Cheryl Adams
As U.S. printers look straight into the face of one of the worst economic downturns in generations, there is a universal acknowledgement that these are difficult times, indeed. New Year’s celebrations, typically filled with hope and opportunities, are currently clouded with uncertainty.
Forecasts for all printing markets in 2009 are stamped in cold, bold letters: Proceed with caution.
“Clearly, the economic downturn has altered the dynamics and increased the challenges for catalogers and magazine publishers,” says John Coyle, president of Catalog, Direct Marketing and Retail Services at RR Donnelley. “Studies continue to show the consumption and effectiveness of printed catalogs and magazines. Magazines, from the perspective of their significance and efficiency as a medium in the key stages of the purchase funnel. Catalogs, from the perspective of continuing to be a critical component in any multi-channel strategy—from driving direct sales, to driving consumers and prospects to catalogers’ Web pages.”
A Host of Challenges
In general, the economy, raw materials and digital migration have all combined to significantly affect the magazine market, explains Rick Marcoux, president of RR Donnelley’s Magazine and Commercial Services. In 2008, pressures continued from bankruptcies, title closures, declining advertising, and newsstand and subscription revenues. At the same time, consolidation of titles and publishers continued, both from other publishers and private equity, as access to debt and/or equity funding has become more difficult.
“For both consumer and business titles, magazine ad pages and ad revenues have been down year-to-date, in part, due to the health of many advertiser categories,” Marcoux says, noting, however, that new title launches still remain strong.
“At the same time, we have seen publishers discontinuing non-performing titles completely, reducing frequency, reducing run counts or making them Web-based only, and doing so in much shorter windows than in the past,” he explains. “Also, there continues to be downward subscription pressures on weeklies, especially the business weeklies, resulting in publishers reducing circulation and frequency, in addition to organizational restructuring and reductions in work force.”
Marcoux emphasizes that publishers are looking to improve top-line performance through several strategies and tactics. First, is an upward pressure to raise magazine cover prices, which, in the face of the decline in units/pieces of newsstand sales this year, have enabled publishers to improve top-line revenue. In addition, he says, publishers are looking for growth in online advertising revenue models, as well as a focus on local advertising as a new revenue stream.