ChasNote

When I saw yesterday that Conde Nast plans to increase the rates it charges readers of its magazines and websites because, according to CEO Charles Townsend,

“We have been so overtly dependent on advertising as the turbine that runs this place, and that is a very, very risky model as we emerge from the recession,”

my first thought was: Oh come on. There have been plenty of recessions and one Great Depression since Conde Nast began a publishing empire built around ad-supported magazines, starting with Vogue and Vanity Fair (which in 1915 ran more ad pages than any other US magazine). I thought here’s another traditional publisher that’s preparing its audience for a post-Internet iPad paradise where readers will pay for their digital content.

My second thought was: Maybe, but so what. Conde Nast should have raised subscription and newsstand rates ages ago. When Henry Luce launched Fortune Magazine in 1930, he charged $1 per issue at a time when the Sunday New York Times cost $0.05. The whole point (according to Alan Brinkley’s telling in his Luce biography The Publisher) was to weed out the riff-raff who couldn’t or wouldn’t pay such an insanely high price for a copy of magazine, and then to make a mint selling advertising against such an upscale audience.

Whether or not the content-is-free culture of the Internet gives way to an I’ll-pay-for-the-premium-stuff future, Conde Nast should raise rates for their magazines. Vogue, Vanity Fair, Glamour and GQ readers aren’t highly price sensitive. And besides, the advertising pitch gets better when your readership is limited only to those with lots of disposable income.

From PaidContent:

“The talks are no where near the formal stage and the idea for a cross-publisher ad net doesn’t seem to be serious at this point. There has been one round of preliminary discussions about the ad net idea and there’s the possibility of another, but nothing has been set yet. So take this with a large grain of salt.

“According to one unidentified Ad Age source, the ad net push is more a wish and expression of frustration than an actual framework. ‘We’re getting killed by ad networks’ Ad Age’s source said. ‘A lot of companies feel like, as consumer companies with a flood of online content, if we could just create some scale on our own and sell across it, we can get a lot better ad rates.’”

I hope it’s not serious, because I like magazines and magazine companies, and I hope they quickly develop ideas to save themselves. This is not one of those ideas. Some of my best friends are ad networks and all, but they won’t save publishing. Ad networks do not drive rates up, and, while ad networks are a nice supplement to other revenue streams, by themselves they cannot support the kind of high-quality, expense-intensive content that differentiates traditional publishers from commodity news.

There’s something magical and irrationally valuable about the content in Time or Vogue or Sports Illustrated. There are other sources of world news, models in fashionable clothes and in-depth sports coverage (respectively), but most of us are convinced these publications do it better. Maybe it’s the quality of the writing and photography, maybe it’s the access they have to their subjects, and maybe it’s just the fact that we’ve grown up associating those names with leadership in those content areas. Whatever the contributing factors, these magazines have built brands with readers around the world. It’s hard to explain the connection readers have to those magazines and the content within them. It’s subtle work. What’s made the business of publishing work is the ability of those magazines — their publishers and sales reps — to explain that magic to marketers, who are then willing to pay premium advertising rates to insert themselves in a premium conversation.

When you bundle up a few hundred magazine brands into a bundled-sell ad network, the “premium conversation” discussion — as well as the premium rates — goes out with the bath water.

Ad revenues at Conde Nast will down by $1 billion from 2008, according to the Publishers Information Bureau. More at SAI.

From SF Gate:

“Conde Nast Publications is closing Gourmet, the nation’s oldest food magazine, and three other money-losing titles as the high-end publisher tries to weather a devastating advertising slump.

“In addition to Gourmet, which had a circulation of 980,000 last year, the publisher is closing Modern Bride, Elegant Bride and Cookie, a parenting magazine. Earlier in the year it killed publication of Portfolio, a business magazine, and Domino, a lifestyle title.”

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(Thanks, Nippy!)

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The crack team at ChasNote had its doubts when Conde Nast launched its expensive, high-gloss business mag Portfolio two years ago. I’ve encouraged them not to gloat, though; they were not alone in expressing disbelief that a media company would launch a $100-million-plus investment in a monthly print magazine in the Internet-enabled year of 2007.

Alas, it’s now over for Portfolio. From TechCrunch

:

“Portfolio saw itself in the same vein as the Fortune magazine of the 1930s, filled with lush photographs and long narratives. But that formula doesn’t work in an age where business is about speed, not leisure or luxury. It also doesn’t work in an age where monthly magazines in general are increasingly challenged by the wealth of instantaneous business news available on the Web. (And you thought the daily newspapers had it tough). Portfolio’s insistence on favoring its print over its Website content also helped to hasten its demise. If you are going to start a magazine these days, the Website has to come first. The magazine companies still don’t realize this simple fact.”

From NY Times:

“LG ELECTRONICS used to run separate advertisements in each country it did business in, and the ads focused on the products it sold: televisions, phones and home electronics. Now, it is introducing its first global campaign featuring a celebrity. And it was not a Madison Avenue agency that designed the ad, but that eminent wrangler of celebrities, Conde Nast….”

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“The Conde Nast Media Group, which created the ads, earned almost $100 million in revenue from custom work like this in 2008. It has created campaigns for the department store chain Dillard’s, the vodka Grey Goose, and the luxury car brand Lexus, which have included in-store events, parties and television programs. All the advertising it creates must run in Conde Nast magazines and Web sites.”

This isn’t unique to Conde Nast, and it isn’t new. So why is that independent blogs (or their partner FM) get so much flack when they help their sponsors devise and execute ad campaigns designed, like those made by Conde Nast, to be more relevant to their own audiences?!

From yesterday’s WSJ in an article about traditional publishers acquiring web services platforms like Conde Nast’s acquisition of FM alum Reddit.

“Usually when publishers acquire technology companies it’s to spruce up their own Web sites. But increasingly publishers such as Conde Nast and Meredith are drawing on the technology to create advertising campaigns for marketers.

“This takes publishers further into the realm of marketing services. Instead of simply selling marketers ad space, they’re rolling up their sleeves and designing the promotions as well. For the next five months, visitors to the Dillard’s Web site will be able to rank products featured in a top-10 list selected by Conde Nast’s Lucky magazine and fashion Web site Style.com. The fashion lists will rotate seasonally, giving visitors the chance to rank new items every two weeks. The top-rated item on the list then will appear in Dillard’s online ads running on nine Conde Nast Web sites, including Teen Vogue, Glamour, Style.com and Vanity Fair.”

Smart. Also not surprising. High-end offline media companies have always had staff and production capabilities to provide marketing services well beyond trafficking and inserting commercials. This is part of what drives premium rates at leading media brands. Advertisers expect their media partners to do more than cash their checks; they demand that their media partners help them succeed among an audience that the media companies know best.

This is why I was confused by news that ESPN has discontinued working with ad networks. I get it that ad networks cause pricing and channel conflict because — despite promising publishers like ESPN to sell their remnant inventory in a blind manner, as part of a “channel” — they sometimes pitch site-specific opportunities. They offer lower rates for the same banners ESPN sells directly. This is a partnership problem, a serious one, but one that should be addressed with tactics short of termination. It’s not religious problem, as ESPN and others have portrayed it. From Mediaweek:

“ESPN’s decision crystallizes a philosophical debate in the online ad sales industry that has intensified since the Interactive Advertising Bureau’s annual meeting last month when during a keynote address, Martha Stewart Living Omnimedia media president Wenda Harris Millard gave her now famous warning against selling Web inventory like ‘pork bellies.’”

My interpretation of Wenda Harris Millard’s pork-bellies battle cry is this. Digital publishers need to remember that they are publishers — companies that engage with high-quality audiences around content in a unique and magical conversation, and service firms that know how to chaperon marketing brands into those conversations. In other words, companies in the mold of Conde Nast, Meredith and ESPN that offer high-touch marketing services.

Whatever ad avails you don’t sell, offer up on the pork-belly exchanges — online we call them ad networks (or Google Adsense), in TV we call them PI or DR rep firms. Hey, people sometimes want pork bellies, and audiences almost certainly don’t want 30-seconds of white static whenever a TV network fails to sell 100% of spots.

But if you don’t or can’t articulate what it is that makes your media brand uniquely valuable to your marketing partners (hint: it’s not your demographics), you’ve ceased to be publisher.

More on the difference between publishers and ad networks from Battelle.