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Time Inc. also this week revealed a major restructuring that would claim approximately 600 jobs, which was a general response to the grim economic picture and only the latest in a series responding to the pressure of being part of a public company. “I don’t care if this isn’t technically a recession yet — it is for us,” Time Inc. chief executive officer Ann Moore said, adding that she has never seen so many of the company’s ad clients in trouble at the same time. And, while she noted that the magazines are profitable and the company’s digital transformation has exceeded their expectations, she said it was time for Time Inc. to “tie down.”
McGraw-Hill Cos., publishers of BusinessWeek, revealed this week that the company reduced its workforce by 270 jobs during the third quarter. Wenner Media LLC laid off approximately half a dozen staffers this week, and Meredith Corp. saw its endemic advertising decline by more than 25 percent during the first quarter, in categories including food and beverages, prescription and nonprescription drugs and home.
Publishers say they are having trouble getting firm, longer-term commitments from advertisers who are having to make quick and strategic decisions.
And even digital companies aren’t immune. Yahoo has revealed plans to cut jobs, and magazine publishers have come to realize that it will be a long road until Web advertising can generate anywhere near the revenues of print publications while requiring substantial investments.
Wenda Harris Millard, co-chief executive officer of Martha Stewart Living Omnimedia, which this week reported an 18 percent decline in publishing ad revenue for the third quarter, said in an earnings call this week that advertisers are practicing a “just-in-time buying practice,” and many advertisers haven’t finished budgeting through the end of the year.
Signs are that things aren’t going to get better for quite some time as the economic meltdown moves around the globe and into every business sector. Earlier this month, ZenithOptimedia reduced its forecast for growth in global ad spending this year to 4.3 percent from 6.6 percent, and for next year, the company dropped its forecast to 4 percent from 6 percent. “The bank failures will have a fairly small direct effect on ad expenditure — since financial advertising contributes only about 4 percent of global ad expenditure — but fears for the future will cause consumers to cut their spending, while companies carefully inspect their budgets to find cost savings,” the report said. ZenithOptimedia’s new study also noted that, since its last forecast in June, some Western advertisers have cut back campaigns planned for later this year and postponed setting budgets for next year.
On the ad agency side, WPP Group said Wednesday that it predicts a tough year for 2009, and Michael Roth, ceo of Interpublic Group, noted that the economic crisis has begun to weigh on marketers’ planning for the fourth quarter and next year. “This makes the prospects of a slowdown in client spend more of a risk,” he said.