An increase in advertising spending and focus on niche markets will support a modest recovery
Los Angeles, CA (PRWEB) September 21, 2012
Slowed consumer spending and low print advertising demand is expected to persist through 2012, driving the Magazine and Periodical Publishing industry's revenue down an estimated 1.5% to $37.0 billion. This will only be the mildest decline of the past four years, however, and an improvement over the average yearly contraction of 5.8% since 2007. To the demise of magazine and periodical publishers, their two main sources of revenue tumbled during the economic downturn. According to IBISWorld industry analyst Agata Kaczanowska, "as the economy weakened in 2008 and 2009, companies that traditionally invested in advertising cut spending to maintain positive cash flows." As a result, print advertising took a major hit. Meanwhile, consumer demand for publications contracted as many Americans cut discretionary spending when their disposable incomes declined. This trend led to a reduction in circulation revenue, further hampering demand and revenue from advertising firms.
Industry concentration has remained fairly steady since 2007, as recession-induced uncertainty froze consolidation deals. In addition, Many smaller magazine and periodical publishers pride themselves on their niche product and are not prone to acquiring other publications. However, they are so specialized that when interest in their field wanes, the companies are sometimes forced to merge into a bigger corporation to absorb the risk of prolonged disinterest. While consolidiation was not a major factor over the past five years, the number of enterprises operating in the Magazine and Periodical Publishing industry has fallen, nonetheless. "Many firms cut costs by closing offices, discontinuing unprofitable magazines and laying off employees," says Kaczanowska. As revenue dropped, some business were even forced to fold. Even with these cost cutting measures, industry profit margins are expected to fall from 5.0% of revenue in 2007 to 3.1% in 2012. In an effort to recover profit, consolidation is anticipated to occur over the next five years, as companies merge to take advantage of economies of scale and save on costs.
Due to escalating competition from new media, decreasing subscriber numbers and less business from advertising will continue to cut into industry revenue. As a result, revenue is forecast to continue to decrease steadily over the next five years. To retain an increasingly digitized readership and enable more focused advertising services, the industry is slowly shifting away from print publishing to digital. The improving economy will support slightly improved corporate spending on marketing, driven by an uptick in sales as customers' pocketbooks recover. Companies that can successfully navigate the changing tides in consumer preferences and market trends will come out ahead, as they will be able to complement their print products with new products and expand their audiences. For more information, visit IBISWorld’s Magazine & Periodical Publishing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry produces and distributes magazines and periodicals in print and online. However, publishers that exclusively sell online magazines or periodicals are excluded from this industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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