ChasNote

Double-digit growth has returned to global online ad spending. Full coverage at Adweek.

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.

More at Silicon Alley Insider.

From Zack Rodgers’s summary of Razorfish’s annual digital spending report (see ClickZ):

–Display advertising within social media captured only 4% of budgets

–Investment in social-media marketing skewed toward content creation and management (eg, Facebook fan pages, blogger outreach) versus traditional advertising

–The big winners continued to be CPM campaigns or sponsorships negotiated at a site-specific level (30%) and paid search / sponsored listings (25%)

–Mobile advertising dollars remain small, but the future looks bright

–CPC rates at major search engines was between $0.56 and $0.88 per click, expected to rise in 2010

I hear that question a lot. As the mean-spirited bloggers steal audience from traditional publications, and as audiences migrate from reading publications printed on paper to reading them online (where the ad rates are lower), what’s going to happen to the Fourth Estate? Who’s going to pay for investigative reporting??

Seth Godin reminds us that the journalists and photographers aren’t the expensive part of running a newspaper or magazine:

“A magazine with a million subscribers might spend more than a million dollars to deliver a single issue to its subscribers. A million dollars spent on postage, printing, subscription sales, fulfillment, ad sales, sub rights and more. I wouldn’t be surprised if the freelance budget for the writers and photographers (the real reason people read the magazine) is less than 15% of the cost, perhaps a lot less.

“The economics of this business are interesting. Millions spent, millions earned, and almost all of it goes to pay for the paper and the friction it brings.”

So let’s ask different questions. Who’s going to pay for the paper? Who’s going to pay for our collections department? Who’s going to pay our enormous gasoline bill to fill up those delivery trucks? Or even, who’s going to sell the ads?

Two good things happen. One, the discussion is immediately less hostile: Reading news on the internet doesn’t mean you hate democracy. Two, solving the business problem gets easier. Is your ad sales team inefficient? OK, outsource to Google or Federated Media. Is your accounting group costing too much? Maybe software and offshore partners can streamline your approach. Paper, ink and delivery costs decimating your profits? Check out the Internet and the iPad.

Overall US ad revenue for 2009 was $125 billion, down 12%. Newspapers and radio fared the worst (down 20% each) with magazines (down 17%) not far behind. Online display ads were up 7%. Infographic supplied by the Business Insider’s Chart of the Day.

From PaidContent:

“Search engine marketing firm Efficient Frontier has upped its estimates for search ad spending this year. The company now expects spending to increase between 15 and 20 percent, up from its earlier estimates of 10 to 15 percent growth, in part due to the economic recovery. By contrast, Efficient Frontier says search ad spending increased six percent in 2009.”

In Q4 2009 Google added to its enormous market-share lead:

“That was a shift from previous reports, which had indicated that Google was losing ground to Bing. Efficient Frontier says Google’s share of overall search ad spending increased to 74.5 percent from 73.9 percent during the previous quarter. Bing’s share, meanwhile, shrunk to 5.1 percent from 5.3 percent.”

Newspapers have lost 7 million subscribers in the past 25 years, while online newspapers have picked up 30 million readers in the past five. See? The Internet’s not all bad! (Though you might argue that email’s mostly bad, since 90% of emails sent each day are spam.)

(Thanks, @emilyquestions!)

The global outlook is a bit better:

“Global ad spending will decline 10.2% in 2009 when the year is complete but eke out a 0.9% increase in the coming year, according to Publicis Groupe’s ZenithOptimedia.”

Internet advertising is the only ad sector to post gains in 2009. More at Ad Age.

From PaidContent:

“The net was the only medium to attract more money in 2009 in Zenith’s figures, though its growth curve is flatter than the early-2000s heyday growth of 40+ percent a year. It’s now on track for more modest but consistent growth pace of 9.5 percent (2010), 12 percent (2011) and 13 percent (2012), in line with that of TV, which will remain the dominant medium.”

Spending mix, as forecast by Zenith, through 2012:

Among SAI’s list of 22 magazines kicking butt amid the recession, two of the titles are men’s body building mags: Muscle & Fitness and Flex. That surprised me….