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Mags Brace for Challenging ’03

NEW YORK — It was a rocky 2002, and the terrain isn’t exactly getting smoother heading into next year.<br><br>Although the second half of this year was considerably better than the first, publishers continue to find business erratic and...

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WWD Staff

NEW YORK — It was a rocky 2002, and the terrain isn’t exactly getting smoother heading into next year.

This story first appeared in the November 8, 2002 issue of WWD.  Subscribe Today.

Although the second half of this year was considerably better than the first, publishers continue to find business erratic and unpredictable — never a good combination for making those projections.

Many executives hedged by saying it’s too early to make meaningful predictions, but they always have hope. Mainly, they’re banking that the beauty business, which hit some rough patches in 2002, will ease up. They expect the mass category to provide more opportunities than prestige in the first few months of the year. Most admit that the fashion business, especially European, continues to be tough, and they expect the fashion category to be flat or slightly up in the first six months of 2003.

Publishers agreed that a lot of next year is riding on the upcoming Christmas season, where clients need to make their numbers.

As reported, from January through September 2002, apparel and accessories ad pages were down 13.3 percent to 15,750, and toiletries and cosmetics ad pages were off 2.6 percent to 11,596, according to Publishers Information Bureau. The luxury category is obviously not as robust as it had been three years ago, but publishers are seeing pockets of growth, especially in fine jewelry and watches.

Most publishers agree that advertisers are still scrutinizing budgets and booking much closer to magazines’ closing dates.

In July, Robert J. Coen, senior vice president and forecasting director of Universal McCann, projected total worldwide ad spending should increase in 2003 by 5.5 percent to $475 billion, including $249.2 billion in the U.S., breaking the record set in 2000, and overseas spending of $225.8 billion. This week, Coen told WWD that he plans to reexamine that forecast, although he believes it should remain around that percentage.

“There’s concern about the Iraq situation, and if it’s resolved, there shouldn’t be a problem hitting those numbers, but if it hangs around all year long, it could create uncertainty and everybody waits to see before they do anything,” Coen said.

“It’s obviously a challenging market,” said Richard Beckman, executive vice president, chief marketing officer at Condé Nast Publications. “There are a lot of big programs we’re working on, aggressively building our market share. We are trying to create programs that are not short-term, but ones we can anniversary. We’re putting together multimedia ones,” he said.

“Clearly there is a lot of uncertainty and trepidation. The bounce back has not been as rapid as most of us would have hoped for. There’s business to be had out there. I’m trying to root the opportunities and bring the smartest ideas to the table,” Beckman said.

Despite geopolitical factors that could impede next year’s growth, Tom Florio, vice president and publisher of Vogue, said, “We are planning aggressively with marketing programs that have all been approved.” He said after a flat December, he expects to be off 8.4 percent in 2002.

Next year, Vogue will air five TV shows called “Trend Watch” on ABC. The show will air in February on broadcast and cable, and will be repeated several times, as well as shown on private jets. It will be produced by Vogue’s business staff, with direction from Vogue editors. The show will air on Sundays from 5 to 7 p.m.

He said he expects beauty to be “pretty good” next year. “We’re still waiting for contracts with large companies. We’re seeing action in the mass and prestige areas, but more in mass.” He said, however, that the magazine has to be careful it doesn’t “go too far into super mass.”

On the European front, Florio said, “They won’t have their budgets for another four weeks.” Last month, he had 40 meetings in Europe with clients, and said Christmas is going to be a big indicator of things to come.

As for American fashion business, he said, “I’m seeing a lot of flat right now, but seeing potential for significant market share increase.

“We don’t have the big deals in place,” he added. “We’re all over the country presenting platforms for next year. I’m waiting for answers.” He said rates will increase 4 percent in January, and Vogue’s cover price will go up in March to $3.95 from $3.50.

Vogue will tweak its “Vogue Takes” program and will add Aspen in February, as well as other cities.

Reached in Milan where she was visiting clients, Lynnette Harrison, publisher of In Style, said, “People are still being cautious. Advertisers are planning much closer to the vest. People in Europe are still very nervous about the American market. They don’t know what’s happening day to day.”

She concurred that beauty should be strong for the first quarter, in prestige as well as the mass side. She said Estée Lauder has a new launch in March, and Calvin Klein’s Crave will continue to advertise in January.

For 2002, In Style carried 3,005 ad pages (including specials), up about 1 percent from a year ago, she said.

Strong nonendemic categories for In Style are home and electronics, Harrison said. In January, In Style will carry Sony, Sharp and Phillips. In addition, such brands as Lazy Boy will continue to have a strong presence in the magazine. As reported, In Style will launch an In Style Home special section next October. Harrison said she expects to attract more home advertisers to the core book and the special issue.

Automotive business also looks strong for the first quarter, and that car companies “like the Hollywood association,” said Harrison, noting Chrysler and Cadillac, are on board.

She expects the luxury fashion and jewelry business to be flat for the first quarter. She pointed out that high fashion exceeded her expectations in the second half of 2002.

In January, In Style will raise its rate base to 1.6 million from 1.5 million. Rates will rise on average 10 percent in January.

As for Europe, “We’ll have what we had last season. We’re not looking at a huge increase and there is some growth. Fashion plans later than everybody, especially in Europe. What we’re hearing is budgets are flat so it leads us to think we’ll be in that place, too,” she said.

While American fashion business should do well next year, she noted that first-half spending is not as robust as second half for fashion companies and retailers.

Tying in with Hollywood is a major marketing thrust. She said In Style will build on the Golden Globes franchise, and throw a party that will include a viewing dinner and after party for the Globes.

Striking an optimistic chord, Katherine Rizzuto, publisher of Marie Claire, said, “Based on the success of 2002, we will be doing very well next year, we’ll have more programs.” She said she expects to finish this year ahead 15 pages, or 1 percent. “It’s the best year ever, revenue-wise.” Specifically, she said beauty is ahead 5.2 percent, although fashion business was off 15 percent, which she attributes to reduced budgets. She said she didn’t lose any major accounts, but some clients reduced pages.

“We’re closing January right now and we’re up. February last year was a tough issue for us. I imagine it may be again. People are taking a little longer to commit,” she said.

Rizzuto said she took some hits in European business in 2002, but increased business with such accounts as Giorgio Armani and Ferragamo. As for nonendemic categories, she said automotive was up 9 percent for 2002.

Next year, Marie Claire will develop its Haute Card program and offer special product-based guides.

Beginning in February, Marie Claire will raise its rate base to 875,000 from 850,000. The fashion issues, March and September, will have a rate base of 925,000.

Suzanne Grimes, vice president and publisher of Glamour, said, “Overall, I don’t see any huge recovery in the market, and no one’s talking about introducing some big new product with a big budget out there. The magazines that are considered core are doing OK, [but] others are really hurting. Between January and June, I think we will see a bigger divide between the two groups. People will shore up with core books.”

Glamour expects to be off 1.3 percent in ad pages for the year, Grimes said. She added, while the magazine was off 21 percent in the first quarter of 2002, it showed steady improvement as the year progressed. Each subsequent quarter was up, with the fourth quarter showing a 14 percent gain in ad pages.

Glamour will continue its aggressive retail programs next year. A department store’s sales often bump up 20 percent when the magazine does a program, she said.

Grimes believes the mass market, in general, is stronger than prestige right now. She said beauty was the biggest driver in the fourth quarter, with the category up 25 percent in ad pages. Glamour carried four fewer fashion ad pages in the fourth quarter than a year ago.

Looking forward, she said cosmetics, fragrance, hair care and personal products are solid. “We increased our editorial commitment to these categories, and are seeing more advertiser support,” Grimes said.

She said she’s optimistic about the American fashion business. She’s had strong feedback from fashion advertisers, and will carry such brands as Tommy Hilfiger, Anne Klein, Liz Claiborne and Ralph Lauren’s various lines.

Asked if Glamour will be up in the first half of 2003, she said, “I think I’ll be up. It’s kind of tricky. In another month, I’ll know more. They’re not giving out page levels yet. I feel good about the first half of next year.”

Alyce Alston, vice president and publisher of WWD sister publication W, said 2003 is looking “pretty good.”

“We went into the year with conservative expectations, and our top 30 advertisers are exceeding that,” Alston said.

For 2002, W is off 12 percent, with the fashion business also down 12 percent and beauty down 2 to 3 percent.

“Nonendemic is looking incredible for us,” said Alston, noting automotive was up 50 percent for 2002, and she expects the upswing to continue into 2003. Among new nonendemic clients for 2003 are Nokia Mobile Phones, W Hotels, Cointreau, Courvoisier, Ford Race for the Cure Campaign and Jaguar XK.

Nancy Berger, vice president and publisher of Allure, said she expects to be up about 5 percent next year. For 2002, beauty was off 9.6 percent, while fashion increased 18.4 percent and nonendemic categories grew 12.2 percent in ad pages.

Berger sees a lot of fragrance launch activity next year that should boost business. The biggest growth areas for Allure are antiaging skin care products, the youth market and men’s products. “That’s where the spending will be,” she said. Most of the men’s products are in the mass category.

She said Allure’s ad pages were up 3.5 percent for 2002, attributed to fashion and retail growth. Increased business came from such retailers as Bergdorf Goodman, Henri Bendel, Neiman Marcus and Sephora. Allure also plans a big charity alliance in 2003, although Berger couldn’t disclose details yet.

Donna Kalajian Lagani, group publisher of Cosmopolitan, said she’s getting positive indications about 2003. “November is up, December is up, January will be flat to up, and February will be up. To me, that’s good — it shows things are happening,” Lagani said. She said she finished 2002 down 6 percent in ad pages, but said it was “the highest revenues and profits in our history.”

In January, Cosmo will raise its rate base to 2.9 million from 2.8 million. The new rate base will be effective with the January, August and November issues. The rest of the issues will have a 2.8 million rate base, up from 2.7 million.

“We’re seeing action in mass and prestige beauty,” Lagani said. “Prestige is having a tougher time in department stores. We’re breaking some new things.”

Lori Burgess, publisher of Elle, is coming off a tough year where ad pages through November are down 21 percent, according to Media Industry Newsletter.

When Burgess arrived at Elle in May, she said the magazine was down 29 percent in ad pages through the first half. From July to December, it recovered to only being down 6.5 percent, she said. “For the year, we’ll be down 17 percent in total. In light of how bad it was, we’re experiencing a huge recovery.”

She predicts Elle’s business will improve next year and expects a 14 to 15 percent gain in ad pages for 2003. The rate base will go up to 1 million in February, from 950,000. In addition, she said Elle has increased its newsstand pockets and has done a direct mail program, as well as an aggressive advertising and public relations initiative.

She sees increases in mass beauty. “We’re getting renewed support from Procter & Gamble. Allergan, which makes Botox, is strong, and Dove and Thermasilk are coming back. We expect more business from Revlon,” Burgess said. She said there will be some new products from Chanel, Prada Beauty and Lancôme.

She said several European fashion advertisers are doing more, such as Ferragamo, Guy Laroche, Donald Pliner and Bally. “Some have new designers at the helm and they’re infusing their brands,” Burgess said.

She also anticipates increased business from some of the consolidations that have occurred, like Liz Claiborne/Ellen Tracy and Judith Jack/Jones Apparel Group. The bulk of the increase should come in the second half, she added. “So many companies have their fingers crossed with how holiday works out for them. A lot of luxury brands are forecasting comebacks in the third and fourth quarters.”

Another growth area for Elle will be clients who are opening more stores: Ferragamo, Céline, Girbaud, Boucheron, Donald Pliner and Louis Vuitton. “They’re all spending so much money to design these stores, they’ll spend a lot to drive traffic,” she said.

As for new marketing initiatives, she said Elle will have more alliances with major movie studios and will have programs that are heavily focused on outdoor venues, such as billboards and taxi tops.

While details are still under wraps, she said they’re working on some custom-publishing projects, as well as some bricks-and- mortar deals. The custom publishing would be a mini-magazine aimed at consumers who are big spenders in beauty and would give them the latest in beauty news. Ideas include events and programs in salons and spas, branding opportunities and an Elle shop in beauty departments. Next year, Elle plans to raise the price of a four-color ad 9.4 percent to $95,554.

Alexandra Golinkin, vice president and publisher of Lucky, said, “Things look good, although I can’t say the marketplace looks good. Clients are saying either their budgets are flat or down a little bit, but Lucky will remain a core buy. We renewed a lot of business and we expect to be up 10 to 15 percent in the first half.”

For 2002, Lucky’s ad pages were up 37 percent. “A lot of it is retail, and they’re seeing results,” she added. For December, she pointed out that Lucky had growth in 10 categories, including food, beauty, technology and watches. “We’re also seeing nice bumps in pharmaceuticals.”

In January, Lucky will raise its rate base to 800,000 from 750,000. Rates will go up about 6.7 percent reflecting that increase.

Golinkin is seeing gains and new business in mass beauty. In December, Lucky will carry an exclusive Michael Kors scent strip.

She said January will be flat to two to three pages down. “February looks good, and March looks very good,” Golinkin said. “Fashion will really start in March. It’s fine and growing, and we’ll break some accounts in Italy. In December, we broke H&M and Inc., which is owned by Federated.”

Beth Brenner, vice president and publisher of Self, said the magazine was up 11 percent in the fourth quarter of 2002, which makes the book flat for the year. She said next year “looks promising, but not robust.”

However, she said there are several bright spots: health, beauty and fashion. “Everybody’s saying such dismal things with the exception of the fitness category,” she said. Companies like Reebok, Adidas, New Balance and Lady Foot Locker are taking a more aggressive stand and will be spending more next year.

Brenner said the beauty business was “great this year,” and Self made Adweek’s top 10 list of beauty magazines, ranked by beauty advertising revenues. In order, the list consists of Cosmopolitan; People; Glamour; In Style; Vogue; O, the Oprah Magazine; Seventeen; Allure; Self and Redbook.

“Mass beauty has been the largest growth area in that category the last five years. It’s growing more than prestige. But she noted that Clarins and Shiseido are running more pages.

Automotive, which has been important at Self, has its strong and weak spots. “The domestic business is still looking tough. Foreign is looking really strong, particularly the Asian business, such as Toyota, Nissan and Infinity.”

Food, though, was Self’s biggest growth category this year. New fashion clients this year included Gap, Tommy Hilfiger, Adidas, Bebe, Coach and Movado.

“There is so much riding on retail sales this Christmas,” Brenner said. She said one fragrance firm recently told her it needed to do 40 percent of the year’s business in two months to make its numbers. “If there’s a war, all bets are off. But regardless of Christmas, we have to accept the new realities and devise new strategic and creative ways to succeed. We don’t sell advertising anymore, we sell partnerships,” she said.

James Taylor, publisher of Town & Country, said, “I think we’ll be up in the first half. Our big gains this year came in the second half,” Taylor said. “We broke new business this year, such as Chrysler, Nicole Fahri, Absolut and Jaguar, and they’ll continue into next year. This year, we increased market share with our biggest clients.”

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