Over the last few weeks I have heard numerous clients talk about an expectation of softening of the media rates into next year as the economy gets squeezed. But is this a reasonable assumption?
I would argue that it’s not and that unlike many previous recessionary periods which have seen media owners slash rates, we may not necessarily see the same trends this time, especially in our two prime media platforms -print and online…why you ask?
We lets start with print media.
In a previous life I used to be a magazine publisher, constantly watching the magazine balance sheet. It was generally tied to one key metric – page yields. High page yields invariably meant higher profit margins but also drove advertisers away when their perception of the magazine’s value was not matched by the rates they were offered. As a publisher you could chose to lower yields to chase higher page volumes, knowing that adding pages was relatively cheap and easy and could ultimately drive higher income and total profits even if margin was lowered. It also was critical when in a competitive market to gain market share as a show of strength.
Well in 2008 I think most publishers have established page yields that they feel they must maintain typically calculated to deliver a certain basic issue size. We all know it’s no longer about having a big issue size and they are happy to publish the minimum pages needed each week or month to service readers and a core of advertisers. Volume pressures have gone.
Also since publishers now see significantly less income generated from print media compared to other services like events, online and lead gen, magazines are much more easily closed without damaging the overall income model they have established. I know of even profitable magazines that have been closed because they no longer fitted a long term strategy, so advertisers should not expect any loyalty from publishers to their magazines if they themselves do not spend dollars on the ads.
So bottom line is I don’t think publishers will feel any inclination to give pages away just to stay afloat. Cutting issue size and closing magazines is more likely in most cases this time around especially where online extensions have been fully established.
Well like many I expect rates to hold up. Demand is rising as dollars shift out of traditional media and a recession will only accelerate the trend to spending more on measurable media. It’s the safest option for marketing manager. Sites can still sell primary inventory at a decent margin knowing the spare inventory will be snapped up by ad networks desperate for a competitive edge especially in the B2B space. Sure consumer, high volume buys may see a squeeze with networks especially pushing to get onto more media buys, but it’s also the case that those media buys are much more ‘spray and prey’ than most in our space could ever be. Frankly for B2B most networks fall sadly flat.
So while there are certain to be a few deals out there it’s unlikely to be the shark frenzy we have seen in years gone by. Expect more consolidation and media closures than a rash of cheap ads. Expect your preferred online sites to be telling you they have sold out of all the good inventory rather than bucket shop deals. And expect your media agency to measure your expectations so that they can still buy the media they feel is effective rather than chase cheap deals.
As always it’s just my humble opinion.
Just Media, Inc.