The Swiss Consumer Magazines publishing market comprises spending by advertisers on consumer print magazines, magazine websites and magazine mobile sites, including applications for smart devices. Consumer magazine publishing also reflects spending by readers to purchase magazines via subscriptions or at retail outlets and kiosks, as well as paid online and mobile subscriptions for portable devices. Magazines published under contract, known as customer magazines or custom publishing, are also included in the print advertising component.
Figures do not include licencing or other ancillary revenues. Trade magazines are not included.
The Swiss Consumer Magazine Market
Consumer magazine publishing draws on two major revenue streams: advertising, and circulation; with a 60/40 revenue split between the two. These can each be split into print and digital. Digital spending represents only four per cent of the market, print for the remainder.
Even though digital circulation is carrying on its very positive trend seen in the past 2 years and digital advertising is growing fast as well, they account for a minor part of the market. This limits their impact for the development of the consumer magazine market at large. Given these proportions, development of the print sector is the key to the overall consumer magazine market. And print has for the past four years been in decline.
Analogue to previous years, the broad and extensive supply of digital news causes a further decrease in readership for traditional print magazines. Smartphone saturation, digital news sources, blogs, Internet platforms and many other substitutes are pressing traditional consumer magazines. Like newspapers, they have to rethink their business models and focus on monetisation to survive.
As its positive trends in digital divisions indicate, investment of established players in digitalisation has an impact. However, due to the marginal role these revenues still play, such efforts are not able to compensate the substantial losses in print. Market entrances of new players in this area further complicate compensating losses through digital channels.
It is not likely that print will be completely replaced by digital counterpart or that the losses in print revenues can be compensated with digital income. Correspondingly, publishers are not focused solely on the digital sector; they take care of print as well, because print still generates most magazine revenue.
In circulation, the major challenge publishers face lies in monetisation. Consumers are reluctant to spend on digital magazines. Ad-blocking software and the ready availability of free online alternatives also hinder revenue. Still, print circulation is shrinking only slowly. Growing digital activities are impairing print revenues only slightly. And there is still a considerable share of readers that value physical media, who prefer to read printed magazines.
With advertising revenues, we observe a similar development. Revenue from digital advertising is growing steadily; printed advertising is shrinking rapidly. The result is an overall declining consumer magazine market. The announced joint venture between Swisscom, Ringier and SRG has no market in 2015. It will be interesting to see however, how well this joint marketing company will cope with the challenges faced in an increasingly digitalized consumer magazine market. Ideally, it will be able to monetize the potential lying in digital magazines.
Tamedia has announced new, centralised departments to start business as of January 1, 2017. With the department “Advertising & Commuter Media”, Tamedia will merge its sales teams into a centralised advertising market unit. The aim of the new structure is to simplify planning and booking cross-media and cross-platform campaigns. Considering the changing consumer behaviour and the growing demand for multimedia, cross-platform advertising, we assume to see similar moves of other major players.
Underlying this is a rapidly changing competitive landscape. Magazine publishers now have to compete not only against traditional, well-established publishers but also entirely new players like video bloggers on YouTube, digital-first publishers and even against consumers themselves, who produce content on their own and distribute it using social networks.
Most magazines have digital editions and websites, but these are difficult to monetise for two main reasons: first, the diffusion of free content online and the rise of ad-blocking software. Studies report that worldwide nearly 200 million people use some form of ad blocker which costs publishers 22$ billion in lost ad revenue in 2015. Even though these are international numbers, the problem is relevant to publishers in Switzerland. Due to the rather small willingness to pay for digital magazines, advertising revenue is essential to driving digital revenue. Publishers like Forbes and Axel Springer have begun to block users of ad-blocking software from accessing content on their websites. Whether this means that consumers will turn off their ad blockers, or simply look elsewhere for content, is not yet apparent.
Magazine publishers face a dilemma when thinking about growth: how do they drive digital revenue without pushing consumers away from print, which is still their main source of revenue?
Print advertising and circulation continue down. Rates of descent are slightly flatter, but especially print advertising is expected to shrink steadily. The structural downturn in the consumer magazine advertising remains at the same level.
While digitalisation threatens revenues in classic print sectors of the consumer magazine market, the new technological possibilities create potential for revenue growth. We expect spending in digital advertising to grow considerably, as advertisers will exploit the unused potential in these new fields. At the same time, digital circulation is expected to grow strongly by absorbing demand from print circulation.
Still, digital accounts for a minor share of overall consumer magazine revenues which limits its influence on the consumer magazine market at large. Furthermore, Swiss readers of consumer magazines remain rather print-oriented. Printed magazines are still perceived as valuable, worthwhile.
Overall, this will result in a regressive Swiss consumer magazine market. Consumer magazine publishers have to make digital more attractive without competing against their own print. For instance, they could offer digital news for specific audiences or provide deeper information on specific topics that are already mentioned in the printed magazine. Then, readers could access the digital news with a QR reader and potentially pay for it. In summary, the key to success seems to lie in a co-existence of digital and print rather than the replacement of one with the other. By seamlessly integrating digital and print, publishers should be able to enhance the customer experience in a way that helps to raise revenues of Consumer Magazines at large.
Few publishers dominate Consumer Magazines in Switzerland. The main publishers are Ringier (Schweizer Illustrierte, SI Style, Schweizer LandLiebe, etc.), Tamedia (Schweizer Familie, Annabelle, 20 Minuten Friday, etc.) and Axel Springer Schweiz (Beobachter, Bilanz, etc.). In 2016, this competitive landscape experienced a fundamental change, foundation of the Ringer Axel Springer Schweiz AG: This company is a joint enterprise founded by Ringer and the Axel Springer SE, now the largest magazine publisher in Switzerland. It produces 30 titles with over 500 issues per year and employs roughly 600 employees. The new portfolio includes all magazine titles of Ringier and the entire Swiss portfolio of Axel Springer with title such as Beobachter or Handelszeitung.
There is a universal shift of advertising away from classic forms into digital. This transformation is not only a threat, but also a chance. Publishers will have to face this challenge on many levels, in order to persist.
Ad-blocking and free content mean that publishers are not only struggling to get consumers to pay for magazine content online, they are also seeing advertising revenue problems. Digital growth will be increasingly hard for publishers over the next few years.
Digital advertising is on the rise, because: first, as digital content is attracting an ever-increasing readership, it makes it possible to reach a wider range of potential customers. Second, advertisers have the opportunity to enhance traditional ads with links to social networks or online shops that encourage interactive activities. And third, it is possible to place video ads which have a stronger impact on people than display ads. Put into context however, we see that the effect of this driver will remain confined for the forecast period due to its negligible absolute value in the overall market.
Within Consumer Magazines, the role of social media platforms is becoming increasingly important. More and more people find their way to news and written entertainment via social networks.
Innovation in the consumer magazine publishing market is happening almost exclusively in digital channels. Magazine publishers now have to compete against video bloggers on YouTube, digital-first publishers like BuzzFeed and even consumers themselves.
Digital-first publishers differentiate themselves from traditional publishers mainly through the way they interact with consumers. An example is TheLADbible, which claims its brands have a monthly readership of over 34 million, with over 11 million followers on Facebook, 61,000 subscribers on YouTube and 1.7 million followers on Twitter. It also interacts with people on Instagram, Snapchat, Vine and Apple TV. According to its owners, TheLADbible is followed by half of all 18—24-year-old men in the UK and one-fifth of all women in the same age bracket.
The success of TheLADbible shows that there is still room for titles centred on a particular demographic, and that engaging with consumers on the right platform matters. Print has less relevance with younger consumers, and brands have to be available on multiple platforms to interact with consumers on that particular consumer's preferred platform. We expect this development to be relevant for Switzerland, although the effect might be weaker, due to affection for print, and slightly delayed, due to the less advanced digital shift.
Video bloggers and other entertainment sources are attracting young consumers away from general-interest magazines. They have attracted much of the young audience that would have previously been the domain of hobbyist or general-interest magazines. The number of video bloggers (vloggers) is increasing daily. Internationally, many of the most popular vloggers are members of a multichannel network (MCN) that gives assistance with promotion, monetisation, funding and product development, allowing them to compete more effectively.
Comparison to Western Europe
Consumer Magazines in Western Europe showed a comparably negative tendency to the Swiss market until 2013. Since then the trend is less accentuated; forecasts are less negative for Western Europa than Switzerland
A closer look at the development in the revenue streams within the consumer magazine publishing market reveals that Switzerland and Europe follow the same trends, just on varying absolute levels. Some countries within Western Europe show quite different pictures, depending on how far they are on the digitalisation journey. For example, Switzerland posted one of highest growth rates in digital circulation for 2015, while Norway displayed less growth – presumably because it further developed its digital shift. In digital advertising, Switzerland lies in the middle. Germany indicated less growth, in this area while in Austria, France and Italy digital advertising grew faster.
In print advertising, Switzerland holds up well, similarly to the rest of Western Europe. In print circulation, only Spain and Italy had stronger decreases in 2015.