Budget cuts could hasten decline of print advertising revenue, publishers are warned

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Karin Upton Baker and Danny Bass at yesterday’s Publish conferebnce

Publishers have been warned that constantly cutting budgets could damage the quality of their titles and ultimately see advertising revenues sink even quicker.

The managing director of Hermes Australia, Karin Upton Baker, said the declining quality of magazines, as publications look to scale back costs, is a growing concern for the luxury brand.

Speaking at the Publish conference in Sydney yesterday, Baker acknowledged that while publishers must invest in digital platforms, she warned them to look after their print business or suffer the consequences.

“What is concerning us is budget cuts [at publishing companies],” she told a panel discussion. “We are are looking at people who are producing print magazines and doing it on smaller and smaller amount of money. And while I am not advocating waste, we know that to create an exceptional, creative outstanding environment requires money.

“If we see the quality of these heritage titles slipping that is a particular danger zone and I don’t think it’s something publishers are thinking about.

“The product and creativity is what the publisher is selling to us and that includes the people they are employing on the publication, their level of knowledge and expertise and whether they are getting the facts right or wrong.”

Baker said a further threat to newspapers and magazines was the growing desire of brands to invest in their own own channels, a strategy Hermes was adopting.

“We are a powerful content producer and we also have places to put that content that once upon time none of us would have imagined,” she told delegates. “It is a big threat to the amount of media space we are buying.”

UM chief executive Mat Baxter agreed that clients are redirecting budgets from paid media channels to their own platforms. He said paying for media was space was akin to being a “renter” when the goal for clients is to build brand equity through their own channels.

“Clients are taking money from their marketing budget and redirecting it from paid media to manage their communities on social platforms, investing in new technology, trialling new things, investing in website experience, all the things they control,” Baxter said.

“If you are in the paid media space you have to got to start to diversify. Agencies are doing this and publishers need to become experts at creating new platforms internally. They need to become an architect of building those things with clients. If you do that you’ll find your revenue opportunities will expand.”

He revealed that 45 per cent of UM’s revenue is now derived from non-core media. “That is an enormous percentage when you consider three or four years ago it was 80 to 90 plus per cent. The pendulum is swinging and clients get it,” he said.

Group M chief investment and intelligence officer Danny Bass said print was never going to return to the “glory days” but accused some publishers of still clinging to that hope. He added publishers must become better at selling the benefits of print advertising to young media buyers who only know the digital world.

“This is the first generation [of media buyers] that will probably never buy a  magazine, and who have never bought a newspaper,” he said. He said the role of a passionate editor in articulating the benefits of print cannot be over-emphasised.

Steve Jones


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