U.S. mag spill is down, but are Canadian titles prepared for a rebound?

With nations to build and Enron execs to harass, Americans haven't had much time for light reading over the last few years and that's been evident in their magazine ad spends.

With nations to build and Enron execs to harass, Americans haven’t had much time for light reading over the last few years and that’s been evident in their magazine ad spends.

With several years of ‘negative growth’ in the U.S., titles in Canada have managed to survive, if not thrive. And while the cat’s away, the mice have plans to whoop it up – to the tune of a projected 5.5% growth in consumer magazine advertising revenue this year, according to the PricewaterhouseCoopers Entertainment and Media Outlook. But the question is, what happens when the American tabby turns back into a tiger?

With a steady flow of magazine launches and fewer closures (see sidebar below), there’s no doubt that Canadian mags are doing well. And, according to Magazines Canada president Gary Garland, U.S. influence has abated.

‘We have been measuring spill for the last 20 years,’ he notes, ‘and what we’ve noticed is that it has been in decline – certainly average circulation per title has dropped in excess of 40% in that 20 years, and that continues as a year-over-year trend. Despite there being more titles coming into Canada from the U.S., there seems to be less circulation coming with it.’

But while Canadian mags are going blow-for-blow with their U.S. counterparts, it might not have been an entirely fair fight lately, given that the U.S. was distracted by matters in its own back yard. While Canada was partially insulated from the worst of the downturn by its sagging dollar, the U.S. caught the recession full in the face, and Yank publishers had more imminent things to worry about than Canadian penetration.

But indicators suggest that might be coming to an end. ‘The [U.S.] projections I have seen for 2004 suggest magazines will be catching up with a vengeance,’ says Garland. ‘They’ll be making up for lost time, and they are expected to lead the market.’

Publishers Information Bureau numbers show that although U.S. mag ad pages are down in the U.S. by 0.3%, January ’04 over January ’03, reported ad revenues are up (for the first time in three years) by 10.4% – including a 33% bump in transportation/hotel/resort titles, a 24% gain in apparel titles and a 22% jump in drug titles. Those gains were slightly offset by losses in technology titles (down 17%) and finance/insurance/real estate titles (down 6%).

Whether the U.S. rebound is a glass-half-full situation or not depends on your point of view. Garland believes that with so many U.S.-based advertisers and agencies burrowed into the Canadian landscape, more dollars hustled into mags in the U.S. will mean a similar trend north of the 49th. But that optimism is not universal. Masthead magazine editor Bill Shields thinks a rebound in the U.S. economy could mean an increase in split runs and increased competition that could negatively affect some Canadian titles – and therefore, by extension, advertisers.

Shields says he has already seen U.S. mags try to raise Canadian circ by using direct mail blasts. On his desk is a folder containing mail pieces from titles such as Condé Nast Traveler, Business 2.0, Business Week, The Economist, Fortune, Prevention, and Outside to name a few. In fact The Economist has sent multiple hits north, and Shields believes it could attempt a split run once it nears the magical number of Canadian subscribers (50,000 or so), where re-plating presses and replacing ads makes sense financially.

Although the ghost of split runs past are an all-too-familiar topic of conversation, the fact that the Canadian Magazine Fund was cut from $32.6 million to $16 million in ’02/’03 means there will be less ammunition to fend off a U.S. invasion this time around. Shields believes Heritage Canada might return its support if it sees a significant growth in split runs.

For his part, Outpost publisher Matt Robinson isn’t worried about a potential influx. He thinks the greatest competition will come in Canada’s strongest categories (such as women and shelter), which won’t affect his 35,000-reader adventure travel mag. Vertical titles already face competition from down south, and a U.S. rebound is unlikely to increase the burden.

‘If [a U.S. mag invasion] is going to take place in Canada,’ notes Robinson, ‘they’re going to go head-to-head with publications like Chatelaine, and Chatelaine has got such a strong presence and is such a strong brand, that it wouldn’t be easy for any American publication.’ For his part, Robinson suggests that efforts to raise Canadian circ are only intended to prop up North American numbers so that U.S. mags can impress U.S. clients.

I Want My PMB…

With only 10% of Canadian mags measured by PMB, and 70 new launches a year, do we need better coverage?

Very little happens in the world of newspapers, radio or TV without a number accompanying it. Whether it’s Nielsen, NADbank or BBM, buyers have a range of data at their fingertips that covers virtually 100% of the field.

Not so with magazines. Out of roughly 1,000 consumer titles in Canada, only about 10% are PMB members. And with the number of launches rebounding, a glance at the totals suggests the measured universe could get smaller every year.

But are buyers concerned about what appears to be an increasing number of titles slipping under the radar?

‘I think PMB is vitally important to the industry,’ notes OMD Toronto media director Anne Myers, ‘and as advertisers are trying to hold the medium more accountable for business results, I think the PMB plays a very important role. But, as with anything, there are going to be niche players that something like PMB is never going to be able to adequately cover because they don’t have enough depth into that particular niche market.’

PMB determines readership by surveying a substantial annual sample of 24,000, but it has its limitations. Regional or very vertical pubs, especially those with small circs, are unlikely to raise enough recognition to generate meaningfully comparable readership results. ‘We’re clearly measuring the vast majority of those publications that are technically measurable,’ notes PMB president Steve Ferley, ‘because if you have a publication of a relatively small circulation, you’d need to have a huge sample to be able to locate the readers and have useable data at the end of it.’

While the number of titles measured by PMB has grown about 20% since the switch to recent reading in 2000, and new books continue to join (there were 105 titles in 2003, but look for at least two more to join the stable in 2005), it’s unlikely buyers will ever see more than a snapshot of a slice of the industry, and mags will have to adapt.

‘PMB is necessary for large magazines in competitive categories,’ observes Masthead’s Shields, ‘but it is not sufficient in and of itself for attracting advertiser interest.

‘I think savvy magazines have to be able to identify not only the editorial that readers are interested in, but also the type of products and services that they want. And then it is up to the sales reps to go to those product and service providers or their agencies and make the pitch. Outpost magazine is a great example of how to take a tightly focused readership and extend it out to the advertising community…. Where does PMB come into that? It’s not necessary. The magazine sells itself. But Chatelaine and Flare need PMB because they’re in a bloody competitive category.’

OMD’s Myers agrees. ‘There are very few large circulation, mainstream magazines that are not part of PMB. It is the foundation…and then, depending on what the target is, what the product is, niche publications that are not measured may be added on top of that.

‘PMB may be the starting point for print campaigns, but most of the time these days, advertisers aren’t just looking for a page in a book. They want some sort of integrated program or – those awful words – added value.’

And most mags – like the aforementioned, eight-year-old Outpost – are willing to provide it.

Although Outpost is not a member of the PMB, it has had its circ verified by the Canadian Circulation Audit Bureau for the last two years. As it’s the only Canadian player in its category, publisher Matt Robinson says PMB isn’t required, but he does know he has to do something to get on advertiser radar.

‘We do a ton of aggressive things outside of the magazine itself,’ he notes, ‘with partnerships – The National Post, the Outdoor Life Network – paid promotions through Chapters, special programs where we have postcards all over the city or all over Canada, posters and so on.’