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There’s hype — and then there’s reality.
As the magazine publishing industry suffers through one of the worst advertising downturns in history — and newspapers simply struggle to survive — separating out what’s cyclical (the recession, it’s hoped) and what’s secular (readers and advertisers purportedly fleeing for the Internet) has become more complicated than ever.
There was, in recent years, the theory that the Internet would destroy traditional media, grabbing all the marketing dollars for Web display ads, social media, iPhone applications or whatever the most recent gadget was. In more flush times, the picture actually varied significantly. While newspapers saw their comparative advantages largely displaced by technology, magazines benefited from appealing to niche audiences, and high-end glossies thrived by offering luxury goods advertisers access to affluent customers.
Still, a downturn in that sector hasn’t necessarily meant the death of all magazines. Advertisers are devoting more of their budgets to the Web because of the tracking abilities it offers, but there are few signs they are deserting print entirely. The vast majority of fashion ad spending has remained devoted to print, and there are no signs a legitimate online business model has been developed that allows publishers to charge for a Web ad even half of what they do for a print one.
It’s been a long time since the measure of success in the media world was say, capturing a page for Harper’s Bazaar versus In Style versus Vogue, and it’s now clear the game isn’t as simple as keeping the share of a marketing budget for a magazine versus a Web site. Fashion and luxury advertisers are shifting spending to events and other consumer promotions, and using other parts of their marketing budgets to create their own content, be it online or in print. Fashion advertisers are still most comfortable in print, but luxury brands are increasingly comfortable with using the Web to market themselves as well.
When the advertising market was flush, the concept of millions flocking to a Web page to read a free article — and thus look at an ad — seemed like a slam dunk for publishers who could draw the page views. But as the economy has cratered, significant questions have been raised over whether a sustainable business can be built on all those eyeballs. An average Web ad is pennies per million views versus tens of thousands for a print one, hardly a viable model to cover the cost of producing content. And now, as even pennies are being counted carefully, it’s no wonder the media conversation has recently shifted to a rethinking of free content. Publishers from The New York Times to Time Inc. have revealed that they are considering charging for some — if not all — of their content.
The recession poses a set of new questions for magazines and digital properties, both freestanding and twinned with print titles. When everyone is cutting their marketing budgets, are digital investments that were slow to offer returns still a good bet for media companies? Will fashion advertisers that were experimenting with the Web now embrace it, or will they go with the tried and true — to the extent that they go with anything at all?
According to TNS Media Intelligence, in 2007 the apparel industry spent $2.2 billion advertising in consumer magazines, representing 75 percent of the overall spending, as opposed to $54.2 million advertising online, a mere 1.8 percent. And in the first three quarters of 2008 (the most recent figures available), those breakdowns barely budged — except to nudge the Internet’s share slightly down to 1.2 percent.
And even if magazines’ Web sites capture a share of the Internet advertising or sponsorship out there, online display advertising by their major clients remains tiny. A ranking of display advertising by the apparel industry compiled by TNS Media Intelligence shows that LVMH spent $186,281 on Internet display advertising in 2008 — only slightly more than the quoted rate for a single ad page in Vogue. That company and its peers presumably spend more on their own Web sites and on nondisplay Internet marketing, but as long as fashion and luxury companies were still laying out some money on marketing (however currently diminished), magazines were enjoying plenty of it.