mediaessentials2e

Money In

Printed Page 115

Magazine publishers make money through two primary means: advertisers and newsstand/subscription sales.

Advertising

Consumer magazines rely heavily on advertising revenue. The more successful the magazine (that is, the higher its circulation), the more it can charge for ad space. A top-rated consumer magazine might charge as much as $320,000 for a full-page color ad and $89,000 for a one-third-page, black-and-white ad. The average magazine contains about 50 percent ad copy and 50 percent editorial content, a ratio that has remained fairly constant for the past twenty-five years.

In some cases, advertisers can strongly influence editorial content. For example, some companies have canceled their ads after a magazine printed articles that were unflattering toward or critical of the firm or its industry.⁴ For editors, the specter of a major advertiser bringing its business elsewhere can present a dilemma: Should the magazine shift its editorial point of view to avoid offending advertisers and thus retain much-needed ad revenues? Or should it continue publishing the same types of articles, hoping that if some advertisers are driven away, others that agree with the magazine’s viewpoint will come in and take their place?

In addition to grappling with this dilemma, magazines have developed innovative strategies for retaining advertisers. For instance, as television stations began generating more national ad revenues in the 1950s, magazines started introducing different editions to guarantee advertisers a specific audience—and thus win them back. There are several types of special editions:

Regional editions are national magazines whose content is tailored to the interests of different geographic areas. For example, Sports Illustrated often prints five different regional versions of its College Football Preview and March Madness Preview editions, picturing a different local star on each of the five covers.
In split-run editions, the editorial content remains the same, but the magazine includes a few pages of ads purchased by local or regional companies. Most editions of Time, Newsweek, and Sports Illustrated, for instance, contain a number of pages reserved for regional ads.
Demographic editions target particular groups of consumers. In this case, market researchers identify subscribers primarily by occupation, class, and zip code. Time magazine, for example, developed special editions of its magazine for top management, high-income zip-code areas, and ultrahigh-income professional/managerial households.

Newsstand and Subscription Sales

Magazines also make money from single-copy sales at newsstands and from subscription sales. (Some online magazines charge a subscription fee in addition to making money from advertisers.) Toward the end of the general-interest magazine era in 1950, newsstand sales accounted for about 43 percent of magazine sales, and subscriptions constituted 57 percent. Today, newsstand sales have fallen to 12 percent, while subscriptions’ contribution to sales has risen to 88 percent.

One tactic used by magazine circulation departments to increase subscription sales is to encourage consumers to renew well in advance of the date by which their subscription is set to expire. Another strategy is the evergreen subscription—which is automatically renewed on a credit card unless subscribers request that the automatic renewal be stopped.

Controlled circulations can boost revenue from ad sales. Here’s how it works: A business or other type of organization (such as an airline or a professional association) sponsors the magazine, and the published issues are given free to readers (such as airline passengers or members of the professional associations). Advertisers are often interested in buying ad space in such magazines, attracted by the captive audiences.