Tracking the effect of advertising expenditures on paper use.
Advertising expenditures for magazines during 1994-2003 increased from US$ 7.9 billion to US$ 16.7 billion. Advertising revenues are critical for magazines. Advertising categories differ with automobiles and pharmaceuticals topping the list with greater than 20% growth. The travel and financial categories are lagging.
Growth opportunities for consumer magazines are in health advertisements, a resurgence of travel and automobile advertisements, new title launches, and consolidation and leveraging of advertisements across multiple titles. Threats include a weak economy, a weak advertising market, postal rate increases, gasoline surcharges that raise delivery costs, newsstand distribution problems, and growing competition for leisure time. Business publications are vulnerable to economic activity and consolidation of advertisers.
Paper consumption volume change has been flat in magazines. The principal issue concerning paper consumption is not the loss of viability of magazines as an advertising medium but big increases in advertising page rates. These are consuming most advertising revenue. During the first seven months of 2003, revenues increased 9.6%, and the number of advertising pages improved by 1.6%. The total forecast for paper use for 2004 is a 4.8% increase over 2002.
DIRECT MAIL TO GROW
Advertising expenditures for direct mail have increased from US$ 29 billion to US$ 49 billion in 2003. Domestic mail pieces handled in the United States during the first half of 2003 were flat for a second consecutive quarter. Catalogs and direct mail offers gained more than 3% indicating an increase in direct marketing activity during the spring selling season. Many catalogers and direct mail marketers continued mailing despite a tepid economy and the military action in Iraq.
NATIONAL ADVERTISING IN NEWSPAPERS
Newspapers are key outlets for advertisers. Total newspaper advertising decreased from 27% of all advertising spending in 1983 to less than 19% in 2003, but expenditures grew from US$ 34 billion to US$ 46 billion. National advertising comprises the bulk of the growth driven by telecommunication, factory automotive, and coupon marketing. Classified advertising revenues--mostly local--continue to be weak largely due to the emergence of online job posting websites. While newspaper publishers anticipate an advertising growth rebound, future demand should remain slightly negative.
YELLOW PAGES TREAD WATER
Ad expenditures for yellow pages has grown from US$ 9.8 billion in 1994 to US$ 13.9 billion in 2003. Typically, most advertisements are for local services and businesses. The demand for uncoated groundwood used in telephone directories is slightly negative to static.
Newspapers 22% Magazines 5% Yellow pages 7% Direct mail 20% Broadcast TV 20% Cable TV 3% Radio 7% Misc. 16% 2003 $248 billion Newspapers 19% $46 Magazines 5% $12 Yellow pages 6% $14 Direct mail 19% $49 Broadcast TV 17% $43 Cable TV 7% $17 Radio 8% $20 Internet 2% $5 Misc. 17% $42 U.S. advertising expenditure 1994-2003 Note: Table made from pie chart.
Editor's Note: This article is part of a series by Jaakko Poyry Management Consulting, Tarrytown, New York, USA, a provider of marketing and consulting services. For more information, please contact Soile Kilpi by email at email@example.com, or by phone at +1 914 332-4000.
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|Title Annotation:||Inside the Numbers|
|Publication:||Solutions - for People, Processes and Paper|
|Date:||Apr 1, 2004|
|Next Article:||A bright idea for technology.|