Circulation drops, ad rates rise

If that headline seems to make no sense, that means that you're not a newspaper publisher.

Despite tanking circulation numbers, newspapers across the country plan to raise advertising rates anywhere between 3 and 6 percent in early 2007.

Publishers want to maintain those 20% profit margins, and with circulation income down, they plan to make it from advertisers (and from the suppliers who fund the retail advertisers). They may find that advertisers feel differently, however.

"We don't want to pay more for less. We're certainly going to try negotiating rates. We take a lot of factors into the rates we are willing to pay," [a Macy's spokesperson] says.

A big factor will be the many media choices now available. When I started in this business in the 70s, I worked for a department store where we spent about 90% of our budget on newspaper advertising. That has changed, and the change will accelerate if publishers continue to diminish their ad value.

An increasing factor, one serving buyers, says Monroe, is the increasing options now available to advertisers that did not exist 20 years ago.

That makes it easier for advertisers to resist increases, and it also makes it easier to look elsewhere for the same or better results.

"Media is not newspaper-centric any longer," he says. "If newspapers begin to charge rates that don't yield the results the advertiser is looking for, they will move to a medium that does."