One More Point on an Ad Slowdown

BusinessWeek had an excellent point the other day: ad sales slow down in advance of magazine publication. Sometimes the ads sell well before issues close, particularly with larger (read as more important) advertisers that buy on frequency-based contracts. Getting assignments today only means that there are enough ads to cover the issue coming out in a month or two. Where the real issue is likely to arise is mid-November to December, when publications are now considering February or later. That's when a big slowdown in ad spending is more likely to begin, and that would trigger making magazines smaller and, therefore, reducing the number of editorial pages.

How the dollars flow—or rather don't flow—in any downturn can shape events in ways obscured until much later. As strange as it sounds today, the tech bust that started in 2000 meant that total dollars spent on online display advertising declined 21% between 2001 and 2002. And as strange as it sounds today, many established media organizations used that decline as a rationale for deemphasizing the Web in favor of their traditional businesses—and underinvestment allowed all manner of Web-only startups to outflank them in the one medium that's still growing. While online display ads will still be up in '09, says BMO Capital Markets analyst Leland Westerfield, that growth rate will likely slow. Look for search advertising to hold up, so Google should be hurt the least.

In other words, the reaction to a business slowdown sometimes takes some time to manifest. Don't expect the web to escape, though given the more favorable economics (no paying for paper or print) it could be that publishers will emphasize online even more than they are now. One analyst is predicting a 5.5 percent pullback in ad spending, which is worse than it sounds because markets expect business to increase, so the perceived drop from expectations could run closer to 10 percent, causing executives to worry (stock performance being seen as a reflection of their efforts) and cut expenses even more.

There's nothing you can do about ad slowdowns themselves. Just look for alternative work or sectors that aren't likely to be hit as hard. The main thing is to start pushing now to find alternatives. If you know that things might slow down more significantly in a couple of months, that gives you some time to react.

Five Strategies for the Credit Crisis

Roiling financial markets have sent many leaving the equity markets and seeking solace with their remaining piles of folding money. But for writers the crisis can provide a financial boost, even with advertising down, if you know anything about finance or can help someone who does.

• Consider a book. Book chains and publishers are looking to make money from consumer fears with financial titles. So now might be a good time to go to a publisher with a title that helps people either make sense of what is happening or find ways to lessen the impact.


• Talk to your editors now. They will also be reacting to everything happening and will likely be open to stories about cutting costs, reacting smartly with personal investments, and even getting into stronger position for the eventual recovery.


• Companies are likely to expand custom publishing even as they trim back advertising. They can't completely stop marketing, so they'll want what seems to provide a greater assurance of success.


• Those specializing in financial advice will probably need to repair customer relations and otherwise find a way to dig themselves out of a hole. So offer them some help in doing so.


• Take the load off clients. When everyone wants to cut costs, help them by providing additional services. For example, you might take on large aspects of a project, managing it for the company at an additional cost that is still lower than it would be to bring someone in-house or even hire a temp. That frees them up to shore up the business and increases your income. A warning on this strategy: do not give the services away, or you devalue them and now create the expectation that you should be doing it for free going forward.

Shifting with the Economy

As life looks continuingly uncertain on the macro economic front, it's important to take a close look at your business and make the shifts that can help minimize the impact.

• Sell globally, write locally I've mentioned in the past how a weak dollar can mean improved overseas markets. The dollar has strengthened some, but that doesn't mean it's time to look only at domestic work. Yes, there is turmoil the world over, but it's particualrly intense at the moment in the US. So consider how you might diversify your business portfolio. As a personal example, I'm now working on a custom publishing project for a large Indian company. The project may run through a US firm, but the source of cash is a well financed client overseas, which helps spread risk from various geographic economic weaknesses. It's no guarantee of safety, but does help reduce the issue of having all my eggs in one basket.


• Don't Do Panicked Price Drops I know some writers are getting the "we'll no longer need your services" communications. But I think it's a mistake to react by immediately lowering prices. Now, to be fair, it may be that you might get pressure to drop prices. However, if you're dealing with relativelyh strong clients, they're doing that as a negotiating tactic. Particularly if you're doing corporate work (and a lot of editorial is essential that, as you're writing for big comapnies), the amount you get as a writer is really pretty insignificant in terms of overall budgets. That doesn't mean you can simply demand what you've always gotten. Instead, you have to show the benefit you offer them. Some clients may bottom fish for price, and they tend not to be valuable clients in the long run. Those that appreciate value are more likely to continue paying reasonable amounts to those who can deliver.


• Spend Money to Make Even More When things seem tight, you don't want to spend money. I can appreciate that. Heck, I don't like spending money if I can avoid it anyway. However, as the old saw goes, you can be penny wise and pound foolish. Recently we finally got broadband into the rural area where I live and work. I could have put off the additional amount a month, but it would have made no sense. For the $30 or so I spend a month, I'll be saving hours a week. Save say three hours a week and you have 12 hours at the end of the month, enough to fit in at least a short that would pay hundreds. If you write a 300 word piece even at $1 a word, that's a 900 percent return on your investment (figuring that the additional revenue over the cost is $270). Not a return to sneeze at.


• Drop Duds Now is not when to sink time into clients that sink your business. Go out and find replacements, which will probably increase your revenue and decrease your irritation.


• Market a Lot This should be pretty predictable. You always have to market. But you're at an odd advantage here. When thigns get tight, many businesses, including writing businesses, pull back on marketing activities because they don't want to incur the expenses. That means you've suddenly got less competition. So go to the trade show or attend the seminar where you might meet potential clients, because you're stand out if, for no other reason, by being one of the few writers there.


• Be Ready to Build If things do slow down, you'll find yourself with more time on your hands. So invest the time. Try creating a new specialty that you've been unable to establish before because you were too busy. Pick up some knowledge in an up and coming technology that will affect writers, such as HTML coding or video. Then when companies are ready to invest more, you're in a better position to get the work.

Watching the Writing Markets During a Recession

I've written about some ways to try and anticipate some of the market problems that might come up during a recession, but it's also worth examining what some experts see for the next year or two. MediaDailyNews has an interesting article on what recessionary impact might be on various types of media distribution. Some of the conclusions are obvious, and some are surprising.

Traditional media gets hurt

There's something you could have predicted easily. The credit markets are down as is consumer confidence, and there are "lower sales in the automotive, technology, and packaged goods categories." That means pressure on ads and ad agencies - and the places that the ads run:

TV and consumer magazines should be able to hang tough, say industry observers--but it's not a pretty picture for radio and newspapers.

TV limps along

There might be a little loss of ads on television, but not overwhelming. Not like most freelance writers get directly affected by that.

Magazines are a mixed bag

Samir "Mr. Magazine" Husni, chair of the University of Mississippi journalism department, and one of the leading experts on the magazine market, thinks that successful titles targeting luxury markets will probably be fine. (UPDATE: I added the successful with the intent of noting that some luxury market magazines simply won't make it. And here's a blog post at the Wall Street Journal making the same point.) Mass market magazines will see a drop in ads and might well increase news stand prices - meaning a 6 to 12 month slump in news stand sales, which, I'll note, can affect how much advertisers are willing to pay. So, expect many titles to get thinner or push shorter article lengths. However, in an interesting twist, Hasni expects new titles to launch. Surprised? Apparently Fortune, Esquire, and Entertainment Weekly all launched during recessions. It's easier for new publications - if they have the funding, I'd think - to compete with established titles. Then when the market improves, the new magazines float upward as well. But I would emphasize my well-funded addition. If ad markets are soft, it's much harder to bootstrap to success. Be sure that new titles are from well-heeled companies.

Newspapers in pain

They were having trouble before, and the recession is just going to make it worse. I'm already hearing stories from some writers who are finding that their newspaper clients are reducing freelance budgets and even asking the writers to reduce their fees. This will only get worse with the ascendancy of Internet publishing and ads. If you've been doing work for newspapers, now is really the time to reconsider your business model and see whether there might not be a better way for you to go.

Radio markets sound bad

The market for freelance writing on radio is pretty poor normally, so as radio stations take a downturn along with papers (though maybe not as extreme), it's going to get worse. Funding for NPR is tighter as well. I'd classify this as a "

Online

Analysts figure that the Internet is going to scream along even more strongly during a recession. According to Jupiter Media, so says an Ad Age story, alternative media spending has jumped 22 percent over last year. The analyst firm is forecasting another 20 percent jump by next year. Part of that is because advertisers have less confidence in traditional media - and part of that is because marketers cannot easily show how effective particular outlets or campaigns are. However, what the heck does alternative markets mean? That gets tricky: interactive marketing; banner ads; behavioral targeting (following someone's activities on the web); and even branded entertainment, which includes "event sponsorship and marketing, paid product placement, advergaming and webisodes." As MediaDailyNews notes, it's unclear exactly where any of that money will end up - and so, it's unclear how much will translate into sponsoring content that needs writing. Much of it goes into search advertising, and that only drives content indirectly. But it's important, and even people doing straight editorial online need to understand the basics of search engine optimization as it applies to writing. That means a lot more than "stuff in as much keywords as you can."

Taking Low-Paying Work

In response to my post about tips for writers during fears of a recession, a reader responded with the following:

Your latest email is great. I think there’s a #10 issue to address: whether to take on work that pays less than your normal rate because some money coming in is better than none. This is an issue that we go around and around about online, I know, but it’s a very real one, especially in this economic climate. Yes, taking lower-paying work will take time away from my marketing for better gigs, but I need to pay the mortgage, too. I know I’ve seen you opposed to doing this, in general, but you might want to revisit the issue and examine it from both sides.

Happy to oblige. What I oppose is taking low-paying work when that becomes a reflex action to any business difficulty. The problem is that you set yourself up in a few ways:

• You generally have to work more with low-paying work to make a living, which means that you end up cutting down your marketing time and reducing the chance of getting something that pays reasonably.


• Often writers point to an effective per-hour rate that seems reasonable. That may be true for the off-piece, but those who do significant amounts of such work don't generally seem to do that well overall. That's because you still have to spend time getting the work in and managing the flow. Now your marketing needs increase, because an increased set of assignments means you must bring them in. So you're cutting down on the time available for that lower-paying work and putting a ceiling on what you can earn.


• It should take about the same amount of time to do a competent job on a given length assignment; it's independent of the pay. To decrease the time and increase the hourly rate, you cut corners. Read the writers' boards and you'll see how many people complain about having the do the extra interviews, concept planning, rewrites, etc. That means, to some extent, you must do less than your best, and certainly less than would be required with a higher-paying and more demanding client. You end up turning the writing into factory work. Those who want the commodity writing excuse their lower pay by lowering their expectations. However, if you do this all the time, you end up with a lot of work samples that, to a more discerning client, will speak of such factory work. To put it bluntly, when you skimp, you make yourself appear like a hack to the clients you really want to attract, who then are less likely to use you and you do more of the low-end work. It's like the old concept of company-provided housing and a company-owned store; you never get to make enough to get out from under.

All that said, the reader who emailed me is right. There may be times to take lower-paying work. If you have to send off the mortgage or rent, you need money to do that. But given the above discussion, I think there are a few principles to follow when taking lower rate work:

1. Don't discount. You want to preserve the ability to charge more, because that makes a living easier to get. So don't drop your rate with regular clients in a hope to attract more work. If they are regular clients, then they know what you're capable of doing. If you start taking less, you will continue to take less, because you've said through your action that what you do is actually worth less.


2. Limit the exposure. Treat lower-paying work as something literally to make your nut. Keep marketing fiercely to make it as unnecessary as possible. Continue focusing on getting better-paying work.


3. Balance the value equation. As I teach in my various classes, business is a value equation. You provide value and expect value in return. I don't believe in cutting corners. If you get paid less, still treat the assignment as seriously as you would any. But try to balance the equation to get enough value back in one form or other. Low paying assignments will have to turn around cash quickly enough, be limited in the rights they get, or possibly sit on research you've already done. If you can't make it a naturally more acceptable assignment, then you should pass on it.


4. Incorporate it into your business model. Low-paying work can be a distraction when you just react to it. So don't. Make the lower paying work part of your business model, even if only while economic times seem tough. Have a strategy for it, set boundaries for how you deal with such work, and stick to them. That way you reduce the possibility of losing a grip on your higher-paying "real" work, and increase the chance that the two work streams will harmoniously co-exist.


5. Don't buy someone else's PR. Economic downturns are funny things. They don't affect everyone and everything evenly. Don't go into lower paying work from a panic. Instead, watch how things are going in your usual work. Are you sure that any problem isn't a result of your letting up on your usual marketing? (That can happen too easily to any of us.) Try doubling up on marketing first, unless you're in a cash crisis and the turnaround on such efforts will take longer than you have.


6. Don't buy someone's negotiating tactic. Sad as it is from a view of humanity, there are people who will try to use a recession as an excuse to reduce what they pay, even though they don't have to. But it's not as though you can find a way to work more cheaply as manufacturers often do. Maybe you can to some degree, but be wary of any client who tries to strong arm you into what is unwise for your business. Another way of putting it is that there are poorly-paying clients, and then there are cheap clients. The latter are generally ones to avoid, because they're not providing value in other ways. They just want something for nothing.


7. Don't panic. Douglas Adams had it right in the Hitcherhiker's Guide to the Galaxy. The biggest mistake you can make is to freak out. Take a deep breath and consider all your options in dealing with an economic crisis. Some of those might include borrowing money, negotiating with creditors to spread out payments, or reduce expenditures. The more creative you can be on money, the more space you can make for smarter business decisions.

It may be that a recession will force you to consider lower-paying lines of work, and that can be part of life. But if you have to go there, do it with your eyes open.

Nine Tips for Writers During Recession Fears

What kills business isn't a recession so much as the fear of one. I don't just mean the overall economic effect, but the paralysis that can happen when you own a business and start thinking that you are the plaything of inevitability. You aren't. Here are nine tips you can use to strengthen your approach to doing business during a recession:

1. Market more - a lot more.


2. Don't be picky about topics. You can focus on the "but I *love* to write about XYZ" when you can afford to.


3. Look not just at the clients (and advertisers), but the industries. For example, the legal industry is often considered to be virtually recession proof, because companies need lawyers to do the deals when things are good, and bankruptcies/restructuring debt when things are bad.


4. Read trade press and talk to other writers to see if a given publication shows any of the signs of financial trouble. Ziff Davis just went into bankruptcy, but the signs were there for a while - one reason I didn't try to get work out of them.


5. Look for signs of trouble in your own clients. If checks start taking longer to get to you, start looking for other people to work for.


6. If you have a knowledge/experience niche that gives you a strong in with certain types of stories, strengthen it. If you don't, develop a niche. And keep adding niches as you can.


7. Don't put all your eggs in one client type basket. If you cover a topic for consumer pubs, see if there are things you can do for trade pubs as well, and vice versa.


8. Don't end up using a recession as an excuse: "I can't do any better because of the economy." When most everyone is marching in one direction, go in the other to find opportunities.


9. Look for companies that are more likely to keep producing written materials. An association magazine is one of the better examples, because if they're not sending something out to the members, it's probably because they're out of business. A custom publisher is a lesser example, because when companies feel the pinch, the custom publishing projects may be some of the first things to go, unless not having the publication is unthinkable for their businesses.

If it makes you feel any better, during the last major recession, right after the dot com bubble, there were writers who didn't see big drops in their income. Keep working away and, even if things aren't pretty, you can weather the storm.

Update

A reader emailed, asking me to address the issue of taking lower-paying writing to fill in cash needs. Here's my take on it.

Newspaper Publisher Facing Interesting Economic Times

Media General, claims to own more daily newspapers in the Southeast than any other company, is facing some potential economic shake-up. According to AP, the company is going to meet with a hedge fund that wants to nominate directors to the company's board:

Last week, [hedge fund Harbinger Capital Partners] said it is nominating a slate of candidates for the company's board because Media General "has lost strategic, operational and geographic focus in recent years," according to a filing with the U.S. Securities and Exchange Commission.

When a hedge fund wants to place directors on a board, it's generally because it doesn't see enough short term profits from the company, which could turn into return on its investment. The changes the directors might push for could run from smarter strategic directions to cost cutting and even selling off properties.

Media General owns The Tampa Tribune; the Richmond Times-Dispatch; the Winston-Salem Journal; 22 daily community newspapers in Virginia, North Carolina, Florida, Alabama and South Carolina; and more than 100 weekly newspapers and other publications. If you are writing for a Media General paper, then I think it would be prudent to assume that there will be continued belt tightening, incluidng smaller freelance budgets and all the joys that brings to people like us.

Planning for the Recession

There's talk about a recession, with experts disagreeing as to whether it will happen, it is happening, or already has happened. That's my way of saying that there is always an economic situation. It may be deemed "good," "bad," or "indifferent." No matter what the description, however, that doesn't mean the specifics will be good for you and your business. I've talked to writers who found that their businesses took big hits in the post dot-com recession of 2000 and 2001. I know other writers who saw their businesses take off. At any time, some people will do well and some will do badly.

The difference is that, whether consciously or not, the ones that profit have business strategies matching the conditions. Those that lose have incompatible strategies. Really economically successful writers are aware of changing conditions and adapt their approach as needed. To do that, you have to see that things are changing and then find what will work. That may take some experimentation, but in the end, you can do it.

As an example, let's look at just some of the things happening now. The whole world seems to be slipping into a slump. Banks and other lenders are taking a beating; look at Bank of America, which saw a 95% drop in earnings. The home housing market is slow. Hollywood writers are still on strike. Just these few facts would suggest the following:

• Trying to diversify by going after foreign markets won't necessarily be a help, though Americans might still intelligently make some efforts in this direction because of the current exchange rates.


• Financial services companies may be a poor choice, because many will be cutting corners to restore earnings and regain their stock prices.


• Covering consumer real estate will be tricky, because those in the area will be spending a lot less, which means they will be less interesting for the time being to advertisers, making it difficult for advertisers to justify spending too much on advertising.


• Hollywood has pretty much ground to a halt because of the writers' strike. But signs are that talks may soon restart, and if the two sides come to an agreement, there will be overtime work to get projects moving again. And then, maybe a year down the line (possibly more, depending on how long it takes productions to move from one stage to the next). If you write about entertainment, you might start a particularly heavy marketing phase in a few months. (After the obligatory article on the What The Strike Meant.)

One professional I know said in an online discussion thread that he's concentrating on blue chip clients. That could be wise - assuming that you've got your writing chops to a point that you can satisfy such clients. But remember that even blue chip clients - Bank of America would normally be considered one - can have problems. Read the business news, pay attention to all of the clues, and think about what each implies, and how they all connect.

Read the Business Pages

What do sub-prime mortgages, debt-backed equity derivatives, and growing credit card debt have to do with writing? Nothing, if you don't cover financial matters. But they have everything to do with a writing business. You not only have to crank out words, but you need to properly plan your business, understand where you should be steering it, what external blockades their are to your progress, and what pitfalls lie ahead. Of course that means studying markets and particular publications, but it also means understanding the business climate.

The global economy affects clients of all sorts. Publications depend on ad revenue. Corporations depend, ultimately, on people buying something. People depend on having enough spare money to make their purchases. Trip one area up - like a credit crunch hitting consumers and investors while tripping the housing market, which has been artificially inflated and the source of much of the wealth people thought they had but didn't - and the rest may also take a spill.

When you see an impending economic black hole, it's time to consider your potential strategies. If you focus on the financial markets, then you have to ask yourself if your clients are overly involved in these problematic areas, because when they run into a wall, so might your client. If you're not specifically in the financial area, then you should consider the possibility that within six to eight months, there is a good chance that companies may need to reduce their spending. To keep your business humming, that means you need to diversify, not just among different industries, but also among different companies.

If you have a significant portion - 20 percent or more - tied up with a single client, consider backing off a bit and not being so dependent. Generally diversification is a smart risk-management practice, but in times like these, it can keep you from getting crushed. When you spread the risk, you're not in as great a danger of that one big client cutting back on its work flow.

I'm not suggesting that anyone panic, and, obviously, I have no way of knowing what the economy will do exactly. I'm no financial expert, but I do read the business pages, particularly the articles that talk about broad economic trends. I also try to read between the lines and connect information I get from various sources. This is a case where, if I'm wrong, diversification won't hurt. But if I'm right, it could save my bank account. Maybe a little preemptive risk management could do the same for you.