Help advertisers avoid short-sighted cost-cutting measures that save money in the short term but damage their business’s future prospects.

By William Dunkerley

The plight of magazine publishers in the Covid-19 crisis gets little public attention. Foremost in the news are, of course, concerns for personal safety and survival. Remarkably, that topic has actually devolved into a matter of competing political positions. On one side media commentators minimize the risk. Some view rules or recommendations to wear face masks as infringements on their constitutional rights. The other side favors a cautious approach that places public health somewhat above individual liberties.

Aside from the personal sphere, there is the business side of things. Many categories of business were forced to shut down or switch to a completely different modus operandi. As magazine publishers we've escaped that. We don't require the congregation of consumers in a physical place. We don't have the potential for spreading contagion. But our businesses have been hurt nonetheless.

So what's our problem? It's what's happened to the ad market, for one thing. Circulation has been a problem for print B2B magazines, which have been confronted with the prospect of sending copies to empty offices. That's led many to turn to digital solutions.

But What About the Ad Market?

What can you do if your advertisers have cut back or cut you out? Here are a couple of strategies for dealing with the present predicament.

There is a pattern that has been long established regarding recessions and is relevant now in the Covid-19 crisis: Companies tend to cut ad budgets on the leading edge of a recession. Faced with revenue shortfalls, they want to cut expenses in response.

Many find it easier to pull back on advertising than to reduce staff or downsize office space. The thinking is that those reductions will be difficult to revive quickly when business revenues recover. But ad expenditures can be reduced and later brought back up at will.

There is one flaw in that approach, and it involves another long established pattern involving recessions: Companies that maintain their advertising presence throughout a recession have been shown to make a better recovery when it is over. They lose less of their customer base and they haven't given competitors an opportunity to gain ground.

This phenomenon can be used as a sales strategy. When advertisers cut ad budgets, they aren't thinking of future consequences. They are preoccupied with revenue shortfalls in the face of fixed operating expenses. Guide those advertisers to an awareness that ad cuts can be a false economy, one that will suppress future revenue prospects.

An Option Publishers Can Offer to Advertisers

What can advertisers do if they are not bringing in enough revenue to cover expenses?

If an advertiser is in a position to secure a loan from somewhere, this may be a good time to get one. The advertiser might also consider temporary salary adjustments or selling equity to raise cash. It might be challenging, though, in finding equity buyers when the business is in some stage of distress. But overall the idea is not to allow short-term cash flow problems to compromise future business prospects.

Another alternative worth exploring is for you to offer credit to the advertiser, to make advertising with you affordable today. Especially if we're talking about an online publication, this could work out favorably for you. You'll have little or no incremental expense for running a company's ad.

Don't start by offering credit for 100 percent of the ad price. Find a percentage that will put the deal at a price the advertiser will pay. That way you'll get some revenue to meet your operating expenses! Be sure to make eventual payment a legally binding matter so you can collect when conditions improve. Also be sure never to use the word “discount” for this. Discounts are gifts. They don't get paid back. This strategy is about extending credit in a legally binding way.

This strategy will work to the advantage not only of the advertiser, but to your benefit as well. A publication that appears to have been abandoned by advertisers may look less attractive to its readers.

Indeed, with many magazines the ad content is part of the package that readers want. I know of at least one publication for which surveys have shown that subscribers read the ads first. Don't shortchange your subscribers by letting that valuable commercial content slip away.

So that's one strategy: selling the idea that continuing an ad schedule will help the advertiser to recover when the crisis subsides. Here's another strategy that is related.

Like serious recessions, the Covid-19 crisis will take a fatal toll on some businesses. Some will struggle in bankruptcy for a while. Others will just go out of business.

Many of the prospective customers of the businesses that advertise with you will have seen the advertisements over a period of time. Their principal sign that any particular advertiser is still alive is that company's ads in your magazine.

What will readers think when the ads disappear? What advertiser wants to leave room for the impression that the company went under from the crisis? Present that notion to your advertisers and let it sink in. It may keep them from cutting their schedule with you or cause them to reassess cuts already made.

William Dunkerley is principal of William Dunkerley Publishing Consultants, www.publishinghelp.com.

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