Why digital publishers want to be in the magazine business

Yahoo is not alone. Say Media, parent of xojane and ReadWrite; First Look, the new media company created by Pierre Omidyar; and Flipboard all similarly describe their digital products as magazines. And it’s not just an exercise in semantics: They’ve been hiring journalists who have serious print bona fides. Yahoo’s spate of recent hires has included New York Times’ David Pogue, Bon Appétit’s Julie Bainbridge and Joe Zee from Elle.

Yahoo and Say Media have also been rolling out highly visual and elaborate (read: premium-priced) ads. By using the very term “magazines,” Say is trying to remind advertisers that these are high-quality, editor-driven products with real audiences, not just listicles, in the hopes that it will translate into revenue.

“The term magazine describes the value advertisers are getting,” said Joyce Bautista Ferrari, executive editorial director at Say Media (and, worth noting, a former longtime Condé Nast magazine journalist). “They’re getting storytelling, something that has a personality.”

It makes sense. Look at the rates of magazines compared to online ads. A single page in a glossy magazine could be discounted by more than half its open rate and still get an effective CPM of about $70. Online display ad CPMs average under $3, according to Nomura Securities via eMarketer, and even less for programmatic.

“Outside of those very premium spots, everything is highly negotiable,” said Steve Minichini, director of digital media and innovation at Assembly. “Especially with programmatic — all bets are off. It’s very different from the print space, where there’s legacy pricing.”

Print magazines, meanwhile, are everything online publishers want — they stand for something with their audiences, they have established rates based on a long tradition of buying and selling. The publisher can artificially limit supply by cutting pages.

And the magazine-reading experience is different. Magazines may be losing importance as more readers shift online, but they’re still the ultimate engagement vehicle. Research has shown that people are more focused when reading print than when listening to radio or watching TV.

Meanwhile, online publishing is heading for trouble. Desktop ad spending is flattening out and projected to decline as consumers shift to mobiles, but ad spending on mobile hasn’t kept up with the amount of time people spend on the devices. Yahoo’s ad business is struggling, as it revealed in its second-quarter earnings call, which is why it’s rolling out new premium products for its digital magazines.

As such, there’s no shortage of skepticism over whether Yahoo can reverse online publishing trends. There are only so many advertisers who will pay a premium for online magazines, given the reading experience is still different from print’s, said Brian Wieser, senior research analyst, Pivotal Research Group. Also, Yahoo is swimming against the tide, given advertisers are shifting spending out of display and into video and programmatic advertising.

“Unless they print a print magazine, I would suspect they’ll have a hard time,” said Wieser. “The problem’s going to be, advertisers are going to be shifting to programmatic, video. And it’s still more online-like than print-like.”

Martin Utreras, senior analyst at eMarketer, echoed the concern. “Like other forms of traditional media, print magazines still have wide, broad audiences that advertisers value, whereas online audiences are much more fragmented—they’re both more difficult to develop and to define,” he said. “As a result, it will be a challenge for online publishers to convince advertisers that digital magazines can provide the same reach as print.”

Still, it’s not totally unrealistic. Just look at the premium video that online publishers are producing, showing that high-quality content can pay. “If I were selling digital display, I’d also do everything I could to position itself as premium advertising,” Wieser said.