Publishers may once again be in the catbird seat with advertisers, thanks to Apple. The Wall Street Journal reports that national publishers are having no trouble signing top-tier advertisers for spots on the iPad versions of their magazines.
Time, for instance, has signed up Unilever, Toyota and Fidelity -- and three other major advertisers -- for spots on the iPad version of the magazine. The price: $200,000 for a single spot in the first eight issues.
The Journal -- which will charge $17.95 a month for its iPad version -- has inked deals with Coke, FedEx and four other major advertisers in a four-month, $400,000 ad deal.
What's the big appeal? "Mind-blowing" games, video and interactivity within the ad, Steve Pacheco, FedEx's director of advertising, told the Journal. "You are taking something that used to be flat on a page and making it interactive and have it jump off the page."
Advertisers who want all the bells and whistles in the context of a popular periodical will pay for the privilege. And publishers are using interest in the iPad version to beef up page buys in the paper version.
Conde Nast's Wired is offering advertisers who buy eight pages in a single issue of the paper magazine the opportunity to run video and interactive features through the iPad version, the Journal said. Esquire, on the other hand, is holding off on advertising, planning to offer an ad-free, $2.99 version of the magazine that features music videos from five singer-songwriters hired to create original songs, each containing the phrase "somewhere in Mississippi."
Savior of Publishing?
Advertisers want consumers to interact with their messages. That's been a problem on the web, where most ads are viewed as annoying distractions from reading content. Advertising on the iPad has the potential to be more like television, where its not uncommon for the ads to have all the ingenuity and special effects of a Hollywood movie.
For instance, Sports Illustrated is demonstrating prototype ads that are essentially brand-centered computer games. One for a Ford Mustang features a driving game that exploits the iPad's tilt and turn capabilities. Other prototypes show off the ability to let readers customize their dream Mustang by changing colors and wheel types.
Is the iPad the savior of publishing? It offers several key advantages over web-based publishing that are exciting publishers and advertisers. First and foremost is Apple's ecosystem. With subscriptions and single-issue sales going through Apple's iTunes and App stores, there is a single clearinghouse for all sales. On the web, publishers have to make that purchase pitch directly. Few publishers -- outside of the Journal -- have managed to convince users to pay for web content.
And because over the years people have become quite accustomed to paying for music, videos and apps through Apple's mechanisms, there should be less resistance to buying a digital magazine this way.
Competing with Free
But a sales system is only half the battle. The other piece, of course, is a killer piece of hardware. With its large form factor and its multi-touch, turn-and-tilt and geolocation capabilities, the iPad may be the first machine that turns reading a book, magazine or newspaper into an engaging digital experience.
Of course, no rosy scenario is guaranteed. The iPad hasn't even been released and, despite all the hype, it will take many years for market penetration to get to the point where iPad subscriptions and advertising would make a serious impact on publishers' bottom lines.
Publishers' biggest problem may not be the legacy costs of their print operations . They have the same problem they've always had since the creation of the web -- it's hard to compete with free, Rob Enderle, principal analyst with the Enderle Group, said in an e-mail.
"There is a substantial amount of competition, and much of that competition is free," he said. "It will take a number of years for enough tablets to be in market, iPads or otherwise, to make up for the millions of lost and leaving subscribers."
Expect new companies without crushing legacy costs to profitably publish on the new tablet devices, Enderle said. "Much like TV gave rise to network news, these tablets could promote a new class of publication, one that is closer to a web pub than a traditional paper publication. I sincerely doubt they will save print; they could in fact cause it to decline more quickly. It really depends on how fast the print industry can evolve."