PERQ Journal Ad Review: More Red Ink
With a troubling economic climate forcing healthcare marketers to cut media spending, medical publishers are bracing for a challenging year ahead. Publishers will be thankful to break even in 2009 during the country's worst financial crisis in generations.
“We're off for the first couple of months,” says Tino DeCarlo, ad sales director at Elsevier. “A lot of business is migrating online, but many of our journals are subscription based with contracts for three-year periods so that is helping us weather the storm.”
After a 7% decline in ad spending in 2007, PERQ/HCI's 2009 Journal Ad Review reports that medical and surgical journals fell nearly 13% last year. The annual spend rate sank to $434 million, down from $497 million in 2007. Industry analysts expect ad revenue will further decline this year with more titles shutting down, fewer new titles being launched and market consolidation.
In 2008, even the nation's top medical journals witnessed significant declines in both ad pages and dollars. The top five journals in ad revenue—New England Journal of Medicine, Journal of the American Medical Association, American Family Physician, Monthly Prescribing Reference and the Journal of Clinical Oncology—were down 16% in ad pages and 8% in revenue.
“The downturn in ad spending started with the shift to new media a few years ago, but the recession has exacerbated the dwindling support in professional advertising,” explains Bob Girondi, EVP of marketing and research at Communications Media Inc.
Peer-reviewed journals are positioned the strongest to endure weaker advertising support with subscription sales. However, news magazines, particularly those targeting primary care physicians, are likely to face lower margins even if they are well established, analysts predict. “Some journals are well situated and are finding new revenue streams,” says Mary Waltham, a publishing consultant and former publisher of The Lancet and Nature. “This tough economy is going to winnow out the weaker titles unless they somehow reinvent themselves.”
With several blockbuster drugs facing patent expirations and increasing delays at the FDA, pharmaceutical manufacturers are under increasing pressure to maximize their promotional budgets. Despite the cost effectiveness of journal advertising, more money is being diverted to DTC and new media. “There is a new generation of marketers who come from the consumer side of the business who are interested in DTC, web advertising and social media who have not been exposed to the benefits of advertising in print journals,” says Steve Selinger, VP of media at Compas, Inc.
Pharma advertisers lowered their spending in journal advertising by 12.6% in 2008, reports PERQ/HCI. Pfizer, which had been the top advertiser for several years, fell to second and slashed journal advertising by more than half to $23 million, concentrating on three products: Lipitor, Lyrica and Selzentry. Eli Lilly and Co. became the top advertiser in 2008 by increasing its spend 42% to an estimated $24.5 million with Cymbalta ads accounting for nearly half.
Six of the top 10 advertisers' budgets declined last year, but Lilly, Forest, Novartis and Abbott bucked the trend and increased their spending by double digits. This led to increases for journals in specialties like cardiology, up 6.9%, due to steady advertising for Pfizer's Lipitor and Forest's Bystolic. Ad sales jumped 14% at Elsevier's Journal of the American College of Cardiology. Psychiatric publications also saw positive ad page growth, with Clinical Psychiatry News up 19.5% and Psychiatric Times up 7.2%. But for every specialty category that was up in ads, five more were down with urology and allergy losing the most ground (38% each), followed by neurology (33%), pediatrics (25.2%) and pulmonary disease (24.9%).
While ad pages in journals are weakening, readership of journals by physicians is on the rise.
A recent PERQ/HCI syndicated readership survey showed that average issue ad exposure for the top primary care publications was up 13% from 2005, and average issue readers increased 9%.
“Physician media consumption isn't mirroring the change in the consumer market where it has shifted significantly from print to online,” says Dave Emery, sales director at PERQ/HCI. “Our research shows that print medical journals are considered the most important source of information on medical developments by physicians.”
This disconnect makes for sleepless nights if you're a medical publisher. DeCarlo, a 15-year veteran with Elsevier, says, “All the research shows that medical journals are read and used by physicians, but there's a prevailing opinion that journal advertising doesn't work anymore which is not the case.”
To combat this misperception among healthcare marketers, the Association of Medical Media (AMM) created a new advertising campaign to be launched shortly. “The campaign is meant to hit home on the message that journal advertising is critical and dollar for dollar is the least expensive means for getting out a brand's messages,” says Jennifer Day, AMM president. “We hope it will change some misperceptions by promoting the value of medical publishing.”
Medical publishers are considering a number of strategies to maintain margins and cut costs, including shutting down titles. Elsevier has not closed any journals recently, but it is not planning to introduce any new ones either. Not since it closed the print version of Patient Care in 2007 has Advanstar closed any journals. The company is actually adding a new tabloid. In March, Optometry Times was launched with 25,000 readers. Building off Ophthalmology Times, the company was holding events and offering online information for eye care professionals, but didn't have a print brand for optometrists. “We decided to open the print brand and it's starting off profitable from the first issue,” says Steve Morris, EVP at Advanstar.
Other medical publishers have had to shut down well-known, but underperforming titles. Ascend Media closed six publications during the past two years. Neuropsychiatry News, published by Quadrant HealthCom, printed its final issue in February. “We were certainly in the top 10 psychiatric publications, but never broke the top five. A few years ago that was OK, but not anymore,” said group editor Glenn Williams.
Dowden Health Media stopped publishing Contemporary Surgery in December. “It was becoming an economic challenge to support so we decided to focus on our other journals that have a lot of extensions to them,” explains Day, SVP and group publisher at Dowden.
Advanstar has also tapped into a potential new revenue stream—medical centers. Medical Economics features a section on its website dedicated to clinical centers of excellence. The magazine ranks the top centers in various specialties based on feedback from top thought leaders and physician surveys. “Hospitals have budgets that collectively are equivalent to that of the pharmaceutical industry and they are looking for ways to impact office-based physicians which is their number one referral pool,” Morris says.
Recognizing that 2009 will be a difficult year, medical publishers are not only closing down titles, but are also scaling back frequencies, eliminating tabloid-size formats for trimmer models, going online only and pursuing alternative revenue streams. At Advanstar, the company is taking bold steps to strengthen its titles. Last year, the company reorganized its online content under one brand: Modern Medicine, which was a magazine that closed more than a decade ago. The website now has 170,000 registered healthcare professionals and shares content across the company's many titles. In fact, the company has struck an unusual partnership with competing publishers to share information, including CMPMedica. “We may be competitors in print, but we can be friends online by doing revenue sharing on content,” explains Morris.