What changes are magazines planning to make when setting their 2008 budgets? Is cutting costs and hunkering down the answer? How about increasing spending on online and events-related initiatives? Here’s what a collection of industry executives say they will be considering as they hash out the details of next year’s budget.
CEO, Mansueto Ventures
We have a three-year plan to put more than $10 million in incremental investment in our digital operation. For 2008, we will increase spending across the board by an average of about 10 percent, getting the money from increased revenue. We are investing disproportionately in online, however—not just in our online business as a media property but in our online business as a source of data and information and as a social-networking platform.
In regards to the process, all departments come up with wish lists and we will weigh the best options, looking at cost versus opportunity. The senior executive team will meet to review proposed budgets in late September and we will approve the final budget by the end of October.
Our biggest risk is in trying new things, but that’s also the source of our biggest opportunities. We have to over-exert and over-invest in some areas where we think we have strengths. If we’re wrong about our strengths, then we’ll probably pay for it. But we know it’s an even bigger risk to just try to do all the same things as our giant competitors but on a smaller scale.
Publisher, Foodservice Equipment Reports
As a small publisher, we actually wait until the first quarter of the budget year to see how it opens. We’ll be investing in people next year. We’ve run very lean for several years and will add human resources against the magazine and the electronic products, mostly in art and production roles, which should also free up existing staff for our expanding meetings portfolio. This year we’ve added sales support, as we’ve expanded the product base with supplements and meetings. We’ll probably hire part-time folks. We always face the problem of having more ideas than human resources. Balancing people against products and revenues is a constant challenge.
We (there are four partners and two other department heads) sit down with each other and assess needs. If we have competing claims on resources, we make decisions based on what seems most likely to generate profits. The sales people and I also do ad forecasting, going over each active and potential customer and discussing their needs and potential products.
We know our customers, we know our costs, we work carefully with our suppliers and we carefully forecast. And we do it late. I’ve been on the other side when you are budgeting six months ahead of January. Things happen.
Owner/Publisher, 417 Magazine
We’re trying for the first time to do both an expense budget and a revenue-growth budget. With the first, we’ll estimate expenses and then try and set revenue goals to achieve 20 percent margins. With the second, we’ll plan for 5 percent increases over 2007 and then see where expenses need to be to achieve the 20 percent margin. Together, they should create achievable goals on both the top and bottom lines.
Our biggest investment area is in online development. With the build-out of our site and hiring of a Web production specialist, we will have spent about $100,000 in 2007 and plan to spend at least that amount in 2008.
As for making a big change in 2008, we’ll implement a 15 percent advertising rate increase to recognize the increased value of the magazine through growth in readership, and an increased effort to create compelling content on the Web so we can continue to build traffic and value there for our clients. The rate increase helps us earn more per page, while the investment in Web content helps us earn more without printing or mailing more pages.
Obviously a 15 percent rate increase can be a shock to advertisers, so that will be a challenge. The risk is losing clients over the print rate increase, but the opportunity is to leverage our unique content to overcome any price objections while expanding a revenue stream not dependent on paper, printing and postage.
President and CEO, New Track Media
We begin budgeting in the early fall by looking at results for the current year-to-date and revising, if need be, our estimate for year-end. The revised estimate then becomes the base period for the next year’s budget but, more importantly, the process gives us an opportunity to step back and examine quite carefully what’s impacting the current year—trends, success of various initiatives, opportunities for the coming year. This seems to produce a more substantive discussion within the team than simply sending some wonks into a room with the newest version of Excel.