The global pandemic poses as a significant threat to publishing groups like Condé Nast and Hearst, which produce and distribute some of the most well known beauty and fashion magazines in the world. So far, salaries and executive pay have been cut at Condé Nast, and the business anticipates redundancies amongst of its 6,000 global workforce. Its biggest rival, Hearst Magazines, has yet to reveal it’s approach to the current challenges within the industry; however encountering trade union disputes, it has actually boosted employee benefits and given all employees a 1 percent pay increase. With retailers shut as well as sales collapsing, many brands and advertisers have cut their budgets, a significant source of income for publishers, putting both many publishers in a difficult position.
A series of surveys by Advertiser Perceptions reveals an increasingly negative outlook among media buyers and marketers, with 44 percent currently saying they have terminated pre-launch campaigns, and 72 percent anticipate a decrease in spend and budget in 2021. According to a survey in March by the World Federation of Advertisers, four out of five marketers from major global brands say they will defer planned campaigns entirely.
Publishers had already been struggling over the past decade as print advertising spend declined rapidly, and consumer attention shifted online. Traditionally print advertising costs were partially driven by circulation numbers. Under pressure from the increasing power of Facebook and Google, digital ads and sponsored editorials have not gone on to make up for the losses. Relatively promising avenues for revenue, like affiliate marketing or diversification into events, have stayed small. At the same time, unlike other international publications and newspapers, no consumer or lifestyle magazines have been able to create a resilient digital subscription business. This leaves beauty and fashion publishers desperately reliant on declining print advertising sales.
In the last year, circulation numbers at major beauty and fashion magazines have declined only a little. Comparing December 2018 to December 2019, the latest month for which data is available according to Alliance for Audited Media, Vogue’s circulation declined from 1,230,101 to 1,221,258; Harper’s Bazaar dipped from 768,121 to 762,088; and Cosmopolitan dropped from 3,037,932 to 2,724,495.
So, where does this leave beauty and fashion magazines? The global pandemic is certain to speed up the decline. Circulation is made up of subscriptions and newsagent sales. Single copy sales make up only a small fraction of total circulation, which will be heavily affected by the current lockdown that has forced many newsagents to close for an indefinite period. The subscription business is also likely to suffer as offices, hotels and other distribution points much of which are currently closed.
Diminishing circulation numbers excluded, there is the added predicament with print advertising: its value is difficult to measure, making it a clear target for marketers forced to cut budgets. Compounding the issue, the insufficient revenues generated by the affiliate marketing programs run by companies like Amazon and Macy’s are being cut dramatically. In the current environment live events are no longer an option.
As a result of the pandemic, the global economy is forecasted to contract sharply by –3 percent in 2020, considerably worse than the 2008–09 financial crisis, according to the International Monetary Fund’s most recent World Economic Outlook report. In a baseline scenario–which assumes that the pandemic fades in the second half of 2020 and containment efforts can be gradually relaxed —the global economy is projected to grow by 5.8 percent in 2021 as economic activity returns to normal, helped by policy support. In this scenario, consumers are feeling confident spending money again and most have largely resumed normal life. People are once again flying and passing through airports, they are commuting to work, and passing in and out of newsagents like before. Public spaces and offices have reopened, coffee tables are once again scattered with newspapers and magazines. Additionally, ad sales never dropped off as severely as many anticipated. Smart businesses are those understand the importance of advertising through an economic downturn.
During this period of pandemic-induced social isolation, many people are consuming vast amounts of media. Global Web Index found that over 80% of consumers in the U.S. and UK say they are consuming more content since the beginning of the pandemic, with broadcast TV, online TV streaming and online videos (YouTube, TikTok) being the primary channels across all generations and genders. According to latest research by Global Web Index, around 30% of respondants say they’re searching for lifestyle and celebrity news, and around 70% are looking for positivity in the news they consume. The report notes a strong appetite to pay for more media subscriptions, with around 40% respondents in the UK and the US considering purchasing new media subscriptions.
With millions of engaged readers, the opportunity to capitalize on advertising sales and increased subscriptions, could breathe new life into an industry and business model that has been in decline, leading publishers to increase their investments in quality journalism and photography, reasserting their cultural relevance.
The risks for even more severe outcomes, however, are substantial. Effective social and economic policies will be essential to prevent the possibility of worse outcomes, and the necessary measures to reduce disease and protect lives will be a key investment in long-term human and economic health. Because the economic fallout could be severe in particular sectors, governments will need to implement considerable fiscal, monetary, and financial market measures to support affected communities and businesses.
For beauty and fashion publishers, in a worst-case scenario, recognized publications, unable to pivot their business models, will be forced to close, unless major media companies are willing to endure years of losses while they look for alternative revenue streams. The smaller and more independent magazines would be first to close, while more profitable, more influential brands, would be the last to go under or be sold off. Commissions from affiliate marketing programs have reduced significantly, while events show no sign of returning. Worse of all, advertising revenue will flatline, particularly in print.
How to Move Forward
The changes in the media landscape over the past ten years has led to a state of affairs where real fundamental change is required. It is no longer just enough to be better at social media or create video content.
This may mean prominent media brands may cease to exist in the coming years, replaced by new entities in the form of new media properties built around rising podcasters and influencers with genuine points of view – think Professor Scott Galloway, or Ben Thompson at Stratechery. Along with levelling and revitalizing their portfolio of brands, media companies must reimagine their business models, moving away from reliance on diminishing print advertising revenue and race for engagement and pageviews. Many legacy media brands still hold nostalgic value that resonates with multiple generations of consumers, which can be leveraged to develop new platforms and more profitable revenue streams.
The correct strategy will be different for every publication. There will be no one-size-fits-all approach. Some will likely charge for their premium gated content, others will enter into the education space, and many will release new services and experiences to meet changing consumer needs and tastes. This may come in the form of curated shopping platforms in partnership with brands or access to private online events or communities. Whatever result is, it will require thorough examination of what each brand represents and what value it will bring the reader, only with this self-reflection will the media companies stay relevant in the post pandemic internet age.
This article originally appeared on www.beautybusinessjournal.com on 06/05/2020