Papers Are Cautiously Optimistic about 2004

In December, the same month that daily newspapers were predicting an increase in ad revenues for the coming year, AAN ad directors and publishers were cautiously optimistic—or just plain cautious—about the outlook for alternative newsweeklies in 2004.

Signs of economic recovery are beginning to have an impact in some cities, while others are waiting for stronger evidence of a turnaround.

On the positive side, even though revenues for 2003 might have been flat, some AAN papers saw increases in the final months of the year that they hope will continue into 2004. In addition, papers belonging to media groups saw a rise in national sales in 2003.

But it’s too soon to tell whether any end-of-year improvements will be sustained.

National sales were stronger last year at the Alternative Weekly Network (AWN), which coordinates national advertising buys for more than 100 weeklies across the country. Sales during the first 11 months of 2003 were up 6 to 8 percent over last year, AWN Sales Director John Morrison says. The traditionally strong categories of alcohol and tobacco continue to lead. The best growth categories for AWN this year have been financial, media and automotive.

“We’ve had two of our best months of the year the last two months, which is encouraging in terms of setting a strong trend and establishing some momentum going into 2004,” Morrison said in December. November sales were up 45 percent over November 2002, when sales were weak.

Morrison expects a lot of churn going into the new year—some clients will stop advertising and have to be replaced with others—but he says he is “cautiously optimistic” about 2004.

A few years ago, Village Voice Media (VVM), which belongs to AWN, also established its own national advertising department to sell for its publications as a group. The group’s six papers include The Village Voice and L.A. Weekly. “We’re up by quite a healthy margin,” Jim Wolf, VVM’s vice president of national advertising, says. To overcome a strong dependence on cigarette ads, VVM has diversified. Top national ad categories are now alcohol, tobacco, entertainment, finance, telecommunications, pharmaceuticals and automotive. “We’re fishing the whole pond, so to speak,” Wolf says.

Ad sales will experience natural growth as the economy picks up, but Wolf is also trying to boost revenues by making the significant reach and impact of alternative newsweeklies better known to advertisers who have historically concentrated on daily newspapers and consumer magazines, without considering anything in between. “It’s incumbent on us to get the message out there and the more we do that, the more advertisers will put us on the schedule,” Wolf says.

New Times’ Ruxton Group, which sells advertising for 28 newsweeklies, also appeared to see improvement in 2003. Three of the newspapers Ruxton represents said national sales rose last year. The Austin Chronicle reported a 5 percent increase over 2002. National sales were up a little at her two papers, says Jane Levine, publisher of the Chicago Reader and chief operating officer of Chicago Reader Inc. and Washington Free Weekly Inc, which publishes Washington City Paper.

Reports on local ad sales are mixed. At some AAN papers, publishers and ad directors are straining to glimpse any signs that the economy is recovering.

“The only sign I’ve seen that has turned up in our revenue is a little more recruitment advertising,” Levine says. Display and holiday advertising at the Chicago Reader and Washington City Paper were about the same as in 2002, she says.

Levine is convinced that her papers can sell more advertising in 2004, but she believes it will be through the efforts of the sales staff and not because the economy has rebounded.

At New York Press, advertising revenues for 2003 were below the 2002 level, but President Chuck Colletti saw a slight improvement in the last half of the year over the previous six months. Like Levine, he couldn’t credit the economy for the increase. “I think it’s intensified effort and maybe a slightly improved product.”

The trauma of the attack on the World Trade Centers two years ago has had a lingering effect on New York City, Colletti says, and he thinks the city’s economy is getting worse, not better. However, he’s observing a little more optimism on the part of advertisers—even if business hasn’t improved, they seem to want to move on. So he anticipates that 2004 will be better than 2003 and maybe as good as 2002, which was a respectable year for New York Press.

At Mountain Xpress in Asheville, N.C., it’s the last half of the year that was weaker. “The first half of the year we were growing all right,” Publisher Jeff Fobes says. That success wasn’t sustained in the second half for economic and internal reasons. With the public’s optimism about the economy rekindled, Fobes expects the paper to be “back on track” in 2004.

In Memphis, Tenn., advertising was injured not just by the economy but by some unusually bad weather. The Memphis Flyer missed an issue in July when a storm knocked out power. “All things considered, it was a flat year,” Jeffrey Goldberg, the Flyer’s associate publisher for advertising, says. A 13.5 percent gain in classified ad revenues was offset by a 4.5 percent decrease in display advertising. The display ad picture doesn’t look quite as grim when it’s taken into consideration that the Flyer published 51 issues last year instead of 52. On a weekly average basis, display advertising fell 2.4 percent in 2003, Goldberg says. Total revenue was down by less than 1 percent.

“Memphis tends to be middle of the road in national trends,” Goldberg observes, neither as hurt by downturns nor as buoyed by upswings as are some major cities on the coasts. But one economic change—consolidation in the wireless phone industry—has had a significant negative impact. Locally based wireless companies that were once good for 52 insertions a year no longer advertise. “In the last couple of years, that’s been the most devastating hit for us,” Goldberg says. Another hit: Fewer live concerts are playing in Memphis now because it’s harder to find enough people there who can afford the pricey tickets.

Still, Goldberg shares his colleagues’ cautious optimism about the new year. To make up for losses in more traditional categories, his sales staff is trying to convert into advertisers merchants who don’t ordinarily gravitate toward newsweeklies.

In the Midwest, some papers had reason for good cheer; others were glum. At City Pages in Minnesota’s Twin Cities, which is part of Village Voice Media, ad sales improved in the last six months of the year. “Clients are more optimistic in general,” Sales Director Stephanie Hansen wrote in an email, noting that the paper had its largest holiday gift guide ever.

In neighboring Wisconsin, at Wausau City Pages, Advertising Manager April M. Rosemurgy reports revenues in 2003 were up 8 percent over 2002. She credits her sales staff, saying she isn’t so sure that announcements about an improved economy have had any effect.

Farther north, in Duluth, Minn., Ripsaw Publisher/Editor Brad Nelson wrote in an email in December that future sales looked bleak. “Small businesses are not feeling the uptick we hear about in the news,” he wrote. “At least that’s what they tell me.” At the end of the year, the weekly paper announced it would go monthly beginning in February.

The economy didn’t look much brighter in Cincinnati, Ohio. “Ad sales have not benefited from the alleged improvement in the economy,” Jim McIntosh, advertising director of Cincinnati CityBeat, reports in an email. The paper was at 99 percent of its revenue goals through the third quarter “but took a big hit in October and November” and expected to end the year with classified ads slightly below last year’s number, he says.

For the Eugene Weekly in Oregon, ad revenues have been pretty steady in the past three years, with last year’s sales down somewhat, says Bill Shreve, director of advertising and marketing. But he anticipates growth in the next year, particularly in display and national advertising.

At the Austin Chronicle, ad sales were flat for 2003, but there are signs of hope in the Texas city that thrived and then crashed during the high-tech boom-bust. “This fourth quarter we’re roaring back,” says Advertising Director Carol Flagg, who is also display advertising chair on AAN’s board of directors. Flat isn’t so bad when she considers that the paper had a lot of political advertising for local elections in 2002, a windfall that had to be replaced in 2003.

Advertising strength is in key categories like restaurants, bars and clubs, retail and performing arts, an indication that readers have renewed confidence to go out on the town and buy clothes and furniture, she says.

Classified sales at the Chronicle are up substantially because of real estate. But as many AAN papers know, a fat real estate section isn’t necessarily correlated with a booming economy. Landlords have to advertise more to attract tenants when local companies aren’t hiring and people stop migrating to the city for jobs.

Home sales ads have also increased. Flagg attributes this, in part, to low interest rates on mortgages, which turn young readers who might otherwise have remained renters into potential homeowners.

Real estate is consuming space abandoned by adult advertising, which is down 40 percent from last year. The Chronicle accepts but doesn’t actively solicit ads in that category, Flagg says. “Being down in adult is not something we’re going to cry about.”

At the San Diego Reader, Classifieds Manager Gene Rochambeau reports healthy sales, which he credits to the rental market taking off. Rental has represented about half of the paper’s classified revenue over the past decade. The Reader’s second largest category, Help Wanted, has also improved in the past few months, he says.

The Columbia Free Times in South Carolina reported an excellent year. Ad revenues were up 19 percent over 2002, Publisher Amy Singmaster says. She credits aggressively growing circulation for the success and expects continued growth this year. “I think we’re still two years away from peaking,” she says.

Daily newspaper chains have predicted advertising growth in the mid single digits for 2004. No one at an alternative weekly was as specific in predicting what the new year will bring.

“There’s always a lot of uncertainty going into the next year,” AWN’s Morrison says.

For precise fourth-quarter comparisons, cross-referenced by region and paper size, AAN members should consider participating in AAN’s Quarterly Business Trends Survey. The deadline for participating is Jan. 26. For more information, contact Executive Director Richard Karpel.