In the halcyon days of magazine ad sales of the 1980's, I was selling space for the newly redesigned House & Garden magazine at Conde Nast. The title was "upscaled” to take on the highly successful established leader and invincible titan of celebrity garish home design; Architectural Digest. We fought on many fronts, but circulation became a bigger issue than expected.
Conde Nast quickly became the circulation leader by charging $12.00 for 12 issues despite the costs to produce and mail. AD was charging $36.00 for 12 issues and made the point to advertisers that, yes, their audience was smaller but they were wealthier evidenced by the higher price they paid for their subscriptions. The research war was fun to fight, with dueling claims about quality of readership. Architectural Digest won the over all war with advertisers - so convincingly that Conde bought them - but the battle over what to charge for a subscription was won by Conde Nast (see AD sub price now). The lower priced subscription worked to the advertisers’ benefit because, as we told advertisers back then, magazine buyers buy magazines they like and that suit them based on the content. And, as with everything else, the more you charge the fewer of them you get and the less you charge the more of them you get.
This is a good lesson to remember as we face magazines’ loss of newsstand buyers and subscribers. The web gives it away for free which is a tough price to beat, so, magazines will have to match it.
Free magazines are different from "Controlled" as we all know, but the distinction is becoming less and less relevant to advertisers. This may be a good thing because it is getting harder to get people to agree even to a free subscription knowing they can just read the website. And, since we need print to charge ad rates that can sustain the publication (there is no pricing power on the web), we have to find ways to get magazines into the hands of readers that advertisers will want to reach. This is the arena in which magazines will fight. Securing the best list those advertisers will find attractive.
Magazines are still very attractive to advertisers because they are much more effective in establishing an emotional relationship between advertiser and reader. In fact, it will be advertisers that will benefit the most because magazines are very effective in establishing brands and helping convey the "positioning" and "Value Proposition" of the product. It is still true that a beautifully designed fashion ad in Vogue positions a product much better than a campaign of banners on any website.
Magazines usually take a loss on circulation based on the belief that the money will be made up by increased advertising sales. Well, with all the hullabaloo of the NY Times and other online properties going behind a pay wall, you don't see advertisers rushing in because "Finally we can reach a paid audience". No, it hasn't made any difference to advertisers.
Because it's the content that segments audience, not what the audience pays for it.