Does advertising clutter have diminishing and negative returns?

Is advertising clutter an evil or a blessing to the media industry? That question has generated controversy among academics and practitioners alike. On the one hand, advertising brings revenue to the media; on the other hand, advertising clutter is widely believed to reduce the advertising effectiveness

of the media. More and more media planners are now viewing advertising clutter as a factor that reduces a medium's effectiveness (Chan-Olmstead 1994; Mandese 1994). A study conducted by Advertising Age and The Roper Organization shows that consumers and marketers differ greatly in their acceptance of advertising in media, especially in magazines. Whereas 96% of marketing professionals think consumers accept magazine advertising, only 60% of consumers indicate that they accept it (Fawcett 1993).

Such divergent views between marketers and consumers on magazine advertising is noteworthy because magazines are the third largest advertising medium in the United States. In the first half of 1995, magazine advertising spending approximated $5 billion (Endicott 1995), just behind newspaper and television advertising spending. Advertising is an important source of income for most magazines, accounting for 50% of their total revenue (Lawhon 1992). Nevertheless, magazines' share of total advertising expenditures continues to decline (McCann Erickson Inc., cf. Rukeyers, Conney, and Winslow 1991 eds.). One reason for the decline is that advertisers have lost confidence in the effectiveness of magazine advertising. They doubt whether magazine advertisements will be read at all in a highly cluttered environment.

Despite this deep concern about advertising clutter, what constitutes clutter appears uncertain and unsettled. Past studies on TV clutter simply defined clutter as "the sum of non-programming components of broadcast materials" (Brown and Rothschild 1993, p.138). Ha's (1996) study of advertising clutter identified three interlacing dimensions of clutter: quantity, competitiveness, and intrusiveness. Quantity of clutter refers to the amount of advertising space in a medium. Competitiveness refers to the degree of similarity and proximity of the advertisements. Intrusiveness is the degree to which the advertisements interrupt the flow of an editorial unit. Among the three dimensions, the quantity of clutter is most often studied by researchers and the industry (e.g., Brown and Rothschild 1993; Cobb 1985; Mandese 1992; Webb and Ray 1979), because it is easier to measure than other dimensions and has a direct bearing on a medium's advertising income.

Following this tradition, we assessed the impact of the quantity dimension of advertising clutter on the circulation and advertising revenue of magazines. We defined the quantity dimension of advertising clutter as the proportion of advertisements in the total space of a medium. Proportion was used instead of the number of ad pages to avoid biases due to the different booksizes and publishing frequencies of different magazines. A high clutter level is one that exceeds the average proportion of advertisements in a medium. Hence, clutter is a relative, rather than an absolute, phenomenon.

Literature Review

Advertising clutter as a threat to advertising effectiveness has been studied mainly for the television medium, because of the increasing usage of 15-second commercials in the late 1970s and 1980s (Mord and Gilson 1985; Ray and Webb 1986). The former NAB code, which limited the number of commercial breaks and the duration of the breaks, demonstrated a consensus among broadcasters that advertising clutter levels should be controlled to preserve the audience's acceptance of advertising (Surmanek 1989). Ironical]y, such a limitation on the advertising clutter level resulted in an increase in advertising revenues because higher advertising rates compensated for the reduced number of commercials - an inelastic response (Wicks 1991). In print media, newspapers have a so-called "newshole" policy that sets a minimum amount of editorial matter in each issue. The negative effect of advertising clutter on advertisement readership has been examined empirically (Houston and Scott 1984; Rudolph 1947). The studies show that the higher the advertising clutter level in a magazine, the lower the readership of the advertisements. Magazines, in contrast to other major media, have no industry standard on the maximum amount of advertising. Some magazines set a ratio and some do not. Given the void in the literature on magazine advertising clutter, there clearly is a mandate for further investigation of its impact on the lifeblood of consumer magazines - circulation and advertising revenue.

Perhaps the root of the clutter controversy is a difference in views on the utility value of advertising. The "advertising as information" school (e.g., Ekeland and Saurman .1988; Litman and Bain 1987; Telser 1978) supports media advertising because it reduces consumers' information search time, whereas the "advertising as persuasion" school denounces advertising as misleading consumers and wasting social resources (e.g., Kessides 1986; Robinson 1933). Because advertising takes away editorial space or puts commercial pressure on the publication, some scholars view it as a negative externality or a nuisance to audiences (Soley and Craig 1992). They contend that media should be freed from advertising support. Attempts have been made to demonstrate that magazines do not need advertising to subsidize their production costs (Norris 1984; Soley and Krishnan 1987). The studies considered only the cost of production, however, overlooking the positive role and economic benefit of advertising as a profit-making center for magazines (Scott 1991). Certainly, when the proportion of advertising is so high that it adversely affects circulation, publishers need to balance advertising revenues against copy sales. Hence, the key question in our study was whether an increase in the advertising clutter level in a magazine will create a backlash that causes a gradual loss of consumers. If such backlash does occur, where is the threshold point at which it is triggered?

Diminishing and Negative Returns from Advertising Clutter

The proposed negative effect of clutter on circulation is based on the premise that advertising clutter negatively affects consumers' perception of editorial content quality. Circulation is considered the bottom-line indicator of consumers' satisfaction with the editorial quality of a magazine. If readers are dissatisfied with the editorial quality, they will discontinue their subscription in the next year or stop purchasing the title at the newsstands. The decline in circulation will correspondingly lead to a multiplier effect as advertisers withdraw their support of the magazine, triggering further loss of both advertising revenue and copy sales revenue.

The law of diminishing returns is an empirical regularity widely found in the relationship between input and output on the supply side over a period of time. Basically, the law states that the relationship between marginal input and marginal output will be more than proportional at the initial stage, but after a certain point, with all other inputs held constant, the marginal product of each unit of input will drop as the amount of the input increases (Heibroner and Thurow 1981; Picard 1989; Samuelson and Nordhaus 1989). This law can also be applied to the relationship between advertising clutter level and both circulation and advertising revenue. Clutter is desirable initially because it provides strong advertising revenue along with strong circulation growth; yet when the advertising clutter level exceeds a certain threshold where readers' support begins to decline, both advertising revenue and the magazine's circulation may diminish.

Clutter's Effect on Circulation and Advertising Revenue

As a commercial pay medium, magazines must serve the dual demand of advertisers for advertising space and of readers for quality editorial content (Picard 1989). In contrast to researchers who formulated the relationship between advertising and circulation as a positively linear function (Blankenburg 1982; Compaigne 1982), we hypothesized that the relationship is a concave-downward function. Such a functional form applies to both circulation and advertising revenue. Initially, riding on growth in circulation, a popular magazine's advertising clutter would yield high returns by greatly increasing advertising revenue. When advertising clutter exceeds its optimal point, circulation would begin to decline because consumers perceive that the editorial quality has been lowered by the dominance of advertising. As the magazine drops in circulation, advertisers would withdraw from it because their advertising cost per thousand increases. This spiral process would result in the reduction of both advertising revenue and circulation of the magazine. In addition, advertising space would no longer be valuable to advertisers when the clutter level increases because greater clutter means an increase in the supply of advertising pages. As a result, the advertising pages would be sold at a lower price and total advertising revenue diminishes.

How can clutter yield diminishing and even negative circulation returns? Among the few studies addressing the impact of advertising clutter on circulation, Husni's (1988) suggests that newly launched magazines with a high number of advertising pages are more likely to fail than those with fewer advertising pages. The newspaper research literature on "newshole" also shows clutter to be a negative determinant of circulation that negatively affects readers' perception of editorial quality (e.g., Lacy and Fico 1991; Litman and Bridges 1986; Nixon and James 1956; Stone, Stone, and Trotter 1981). Generally, these studies all suggest that the higher the proportion of news content in newspapers, the better the quality (performance) of the newspaper. Advertising is beneficial only at the initial level. When a magazine is cluttered with too many advertisements, it will lose the editorial interest of the readers.

Another school of thought refutes the negative impact of advertising on quality perception. Newspaper studies conducted by Bogart (1989), Hale (1978), and Larkin and Grotta (1976) show advertising to be rated higher in quality than the editorial matter and to be read more by people. Such favorable attitudes were mostly toward shopper coupons or store sale announcements, as well as classified advertising, a form of advertising unique to newspapers. These findings may not be applicable to other media such as magazines in which display advertising is the dominant advertising format. Indeed, a study of magazine advertising readership found that readers were much more interested in and spent more time reading the editorial content of a magazine than its ads (Prijatel, Foskit, and Milam 1994). If clutter really affects circulation, we need to identify the points of diminishing and negative returns.

Because clutter is a relative concept, we hypothesized the point of diminishing and negative returns to be the value above the 10-year historic average for a magazine. From a longitudinal perspective, the historic average can be used as a benchmark in comparing clutter levels over the life of a magazine. Circulation is an indicator of readers' satisfaction with magazine editorial quality cumulated over a period of time, and advertising revenue is the indicator of advertisers' support. We tested the following hypotheses.

H1a: A magazine's circulation decreases when advertising clutter exceeds the historic average level.

H1b: A magazine's advertising revenue diminishes when advertising clutter exceeds the historic average level.

Role of Editorial Orientation in Moderating the Effect of Clutter

We further hypothesized that the point of diminishing returns will differ with the editorial orientation of the magazine. With different expectations about the advertising environment and editorial content, readers of different types of magazines may have different levels of tolerance for advertising clutter. Magazines can be categorized into two editorial orientations. Entertainment-oriented magazines, such as Vogue, contain no hard news and place emphasis on pictures to attract readers. News-oriented magazines, such as Time, devote most of their editorial space to factual information and hard news. News-oriented magazine readers are hypothesized to be less tolerant of advertising clutter than entertainment-oriented magazine readers because they are more likely to read the magazine for information. They may perceive high level of advertising clutter as a barrier to reading the magazine articles effectively. Accordingly, circulation of news-oriented magazines should be more elastic to advertising clutter than that of entertainment-oriented magazines. Because news-oriented magazines rely on the strength of the editorial pages to attract readers' and advertisers' support, the contribution of advertising clutter to the increase in advertising revenue was hypothesized to be lower for news-oriented magazines than for entertainment-oriented magazines. The diminishing returns in advertising revenue from advertising clutter should occur earlier for news-oriented than for entertainment-oriented magazines.

H2a: Circulation begins to decrease at a lower advertising clutter threshold level for news-oriented magazines than for entertainment-oriented magazines.

H2b: Advertising revenue begins to diminish at a lower advertising clutter threshold level for news-oriented magazines than for entertainment-oriented magazines.

Other Predictors of Circulation and Advertising Revenue

The circulation of a magazine is the outcome of a complex set of factors. Advertising clutter is only one of the determinant factors. To predict circulation and advertising revenue, exogenous factors such as general economic conditions and competitive pressure of other titles, as well as endogenous factors such as booksize and cover price, must be included in the research model. Economic conditions can affect the overall spending power of the advertisers, the consumption power of readers, and the inflation rate, and, consequent]y, can causes changes in the advertising clutter level, advertising revenue, circulation, and cover price. The degree of competition, indicated by an increase in promotional expenditures by competitive titles, can also affect a magazine's circulation and advertising pages. On the one hand, when magazines compete with one another for the advertiser's support, some of them will gain at the expense of others if the advertiser's expenditure remains constant. On the other hand, when a magazine's competitors increase promotional effort to lure its readers, its circulation may drop.

Booksize may affect the perception of editorial quality. Soley and Krishnan (1992) found that an increase in the number of pages (booksize) enhanced readers' positive perception of editorial quality. Increasing booksize to compensate readers for an increase in advertising pages is a common practice. Advertising revenue can reduce the price of a magazine by subsidizing its production cost, so a decrease in advertising revenue can increase the price of the magazine. If consumers are price elastic, the increase in the cover price may reduce a magazine's circulation because of lower consumer demand.

Other factors such as the editorial content and promotional effort of the magazine can also affect circulation. Nevertheless, our study was limited to already "successful" magazines that had survived more than 10 years and were the advertising page leaders. Because publishers adjust their editorial content and promotional effort seasonally, we assume that those factors would have been smoothed out over the decade.

Method

A longitudinal analysis was conducted to examine the cumulative effects of advertising clutter on a magazine's circulation and advertising revenue. The sample magazines were chosen from a list of the advertising page leaders published in Advertising Age on October 19, 1992. We used advertising page leaders because they are likely to have a high level of advertising clutter and hence can readily illustrate the expected clutter effect.

It might be argued that circulation is not a good measure of readers' support because some publishers, in keeping with the trend toward demographic targeting, deliberately reduce their circulation to minimize unprofitable distribution (Blankenberg 1982; Thompson 1989). That argument might hold for some specialized magazines that derive most of their revenue from copy sales, but not for genera] interest magazines that rely heavily on advertising to generate profit. An increase in circulation can attract more advertisers by lowering the cost per thousand (Donaton 1993). In addition, the number of "quality readers" of high social position is limited. Not all magazines target them. Advertisers still need a large audience to disseminate their advertising messages at a low per-unit cost. The continuing leadership of general interest magazines such as TV Guide and People in advertising pages sold demonstrates the importance of large readership. It shows that advertisers look at both the quality and the quantity of the consumers a magazine can deliver and may find a middle ground that fits their overall strategic objectives.

Our focus was on general interest magazines, but not limited to those magazines with a broad range of content such as Readers' Digest. In fact, any magazine that does not exclude readers who have limited or no prior knowledge of their content is considered a general interest magazine (Compaigne 1982; Kobak 1993). General interest magazines can have specific content appeal to different types of readers. For example, Sports Illustrated and Vogue are classified as general interest magazines. The target readers are the general public, not football coaches or fashion designers.

We selected 10 leading titles for this study, five news-oriented magazines, Forbes, Time, Newsweek, Fortune, and TV Guide, and five entertainment-oriented magazines, People, Sports Illustrated, New York, New Yorker, and Vogue. This sample represents a wide variety of editorial profiles, reader demographics, and circulation size (Table 1). Because of un-availability of some data, the study's time frame was limited to the 10 years from 1982 through 1991. Circulation was treated as a lag variable because it is the result of the other variables. A consumer determines whether he or she will subscribe to or buy a magazine by evaluating the overall value of the magazine, his/her "consumption power," booksize, cover price, and current economic conditions. As circulation is the end result of a series of such decisions and given that only annual data were available to us, we chose to use the circulation in the subsequent year as the indicator of a magazine's consumer support. Accordingly, circulation figures used in the study were from 1983 through 1992 - a lag of one year.

We measured advertising clutter by calculating the proportion of advertising pages in the total number of pages of each magazine annually. Advertising page and advertising revenue figures were collected from the Leading National Advertisers' Annual Adspend Summary Report. Competitive pressure was measured by the advertising expenditure figures of competitive titles. Competitive titles were defined as magazines that were similar to the ones in our sample in editorial profile and competed for the same readers. Key competitive titles were chosen on the basis of Taft's (1982) classification of magazines (the appendix lists competitive titles for each magazine in the sample). The expenditure figures for competitive titles were drawn from the same Leading National Advertisers' Report. Audited circulation figures were supplied by the Audit Bureau of Circulations. The average booksize was calculated for each title from the total number of editorial pages divided by the number of issues published in each year. The total number of pages of each title was hand counted by a census of every issue throughout the 10 years. Two measures of economic conditions, GNP and income per capita held constant at the 1985 level, were used. Data on those two measures were based on the U.S. government's National Economic Indicators Report. All variables measured in monetary terms, such as advertising revenue, cover price, and competitive expenditure, were adjusted for inflation by using the consumer price index. Readership profiles of each magazine were based on Simmons' Media and Markets Reports. To facilitate comparison among different magazines, time-series indices were constructed to measure changes in circulation, advertising revenue, competitive advertising expenditure, cover price, and average booksize. Specifically, an average index of 1000 was set at the first year for all those variables. Two multiple regression equations were then developed to analyze the relationship of the variables and to examine the explanatory power of the model for the two types of consumer magazines. The masking effect of each variable other than advertising clutter on the total circulation was examined by partial correlation.

Results

Advertising Clutter's Impact on Circulation

The advertising clutter of the magazines in our sample is reported in Table 2. The average advertising clutter level is slightly higher in entertainment magazines than news-oriented magazines. As shown in Figure 1, for magazines in general, the relationship between advertising clutter level and circulation is a concave-downward function as hypothesized. To test the hypothesis of diminishing and negative returns from advertising clutter, a significance test was conducted on the quadratic term. The quadratic term [TABULAR DATA FOR TABLE 1 OMITTED] is significant for all magazines combined, supporting the hypothesis (t = -2.85, p = 0.0027). A high advertising clutter level indeed had a negative effect, not just a diminishing effect, on circulation. Significant differences were found between news-oriented and entertainment-oriented magazines in circulation change (t = -.5.27, df=98, p [less than] 0.001). No significant differences in advertising revenue change were found between the two types of magazines (t = -.57, df = 98, p = .28). After separating entertainment-oriented magazines and news-oriented magazines, we found that negative return occurred only for entertainment magazines! The point at which the return becomes negative is just as expected: Circulation starts to decline at the average historic advertising clutter level (51% of total pages). H1a, that circulation decreases when advertising clutter exceeds a magazine's average clutter level, is therefore partially supported. At point A in Figure 1, advertising begins to diminish its return on circulation. Point Z is the point of negative return.

Readers of entertainment-oriented magazines were unexpectedly less tolerant of clutter than readers of news-oriented magazines. Hence, H2a, that circulation begins to decrease at a lower advertising clutter level for news-oriented magazines than entertainment-oriented magazines, is rejected. Figure 1 shows that at the 50% clutter level, entertainment-oriented magazines had a drop in circulation, while news-oriented magazines still had growth in circulation. Advertising clutter exceeding point [Z.sub.1] in entertainment magazines becomes a "negative externality" to consumers because they do not want any more advertisements.

Advertising Clutter's Impact on Advertising Revenue

The relationship between advertising clutter level and advertising revenues is shown in Figure 2. As hypothesized, the relationship is not positively linear. It looks more like a concave-downward function, especially for entertainment magazines. The data support H1b, that clutter yields diminishing advertising revenue return. Nevertheless H2b, that the advertising revenue return from clutter diminishes earlier for news-oriented magazines than for enter-tainment-oriented magazines, is rejected. Entertainment-oriented magazines have a much earlier point of diminishing return(Point C) than news-oriented magazines (Point D). Advertising revenue is the product of number of advertising pages sold and advertising rates, but the data show that the increase in advertising pages sold (clutter) does not produce a proportionate increase in advertising revenue.

Table 2

Advertising Clutter of the Sample Magazines

Title             Mean (%)     Maximum (%)     Minimum (%)    SD (%)

News-Oriented Magazines

Forbes               59.4         70.4          52.8            6.2
Time                 54.3         58.4          45.8            3.7
TV Guide             29.1         36.1          21.8            4.7
Fortune              64.5         68.4          61.3            2.3
Newsweek             35.4         42.2          29.8            4.3
Group mean           49.0         70.4          21.8           12.3

Entertainment-Oriented Magazines

People                56.1        64.8           49.8            4.0
Sports Illustrated    52.2        58.4           45.4            3.7
Vogue                 63.9        69.3           57.3            3.0
New York              39.8        47.0           35.0            3.0
New Yorker            46.3        53.7           40.1            5.2
Group mean            51.7        69.3           35.0            9.1

[TABULAR DATA FOR TABLE 3 OMITTED]

The results of the partial correlation analysis show that the impact of advertising clutter on circulation and advertising revenue is not spurious. Its effect is slightly suppressed by other variables such as economic condition. When we controlled for the economic condition, the zero-order correlation of .21 between circulation and advertising clutter level increased to a partial r of .28, and the zero-order correlation between advertising clutter and advertising revenue increased from .46 to a partial r of .53.

[TABULAR DATA FOR TABLE 4 OMITTED]

Predicting Circulation and Advertising Revenue

In a more sophisticated statistical procedure, we used two multiple regression equations to examine the predictive variables for magazines of each editorial orientation in their entirety (Tables 3 and 4). Fifty cases for each editorial orientation seems a small number, but it represents over 4000 issues of the 10 magazines in 10 years. As the regression equations are not linear, we tried taking the square roots and logs of the values to improve their predictive power, but gained no improvement. The data, therefore, are presented in their original form. Because the relationships between clutter level and circulation and between clutter level and advertising revenue are not positively linear, the positive coefficient of the clutter level in the equation should be interpreted with caution, especially for entertainment-oriented magazines. The positive return from clutter to entertainment-oriented magazines occurs at a relatively low clutter level.

The regression model fits the circulation return moderately for news-oriented magazines (adjusted [R.sup.2] = .34) and very well for entertainment-oriented magazines (adjusted [R.sup.2] = .55). The fit for the advertising revenue data is better. The adjusted [R.sup.2]s are .42 and .72 for news-oriented and entertainment-oriented magazines, respectively. The operationalization of "clutter" can be handled in many ways. To check the robustness of the results, we defined and operationalized "clutter" as the difference between the current proportion of advertising pages in a magazine and the historic means within the magazine's major category. The results were both quantitatively and qualitatively the same as those reported here.

For both entertainment-oriented and news-oriented magazines, advertising clutter levels and cover prices are significant predictors of both circulation and advertising revenue. In general, the model shows that economic conditions are important to entertainment-oriented magazines only. A strong economy provides entertainment magazines with financial support procyclical with the increase in circulation (beta = .68) and increase in advertising revenues (beta = .45). The impact of the economy on circulation and advertising revenue is not quite significant for news-oriented magazines. Rather, the cover price and advertising clutter level are more important predictors of circulation and advertising revenue for those news-oriented magazines. News-oriented magazine readers are more price elastic than entertainment-oriented magazine readers. Though the relationship between price and circulation is negative for news-oriented magazines (beta = -.58), it is positive for entertainment-oriented magazines (beta = .41). Increases in competitive advertising expenditures negatively affects the advertising revenue of entertainment-oriented magazines (beta = -.19), but not that of news-oriented magazines, indicating the vulnerability of entertainment-oriented magazines to competitive pressure in earning advertising revenue.

Multicollinearity is a common problem in multiple regression analysis. High intercorrelations among the independent variables in a regression model make the regression estimates more sensitive to sampling and measurement errors (Blalock 1972). To test for possible multicollinearity among the independent variables, we first checked the correlation matrix of independent variables. The Pearson product moments between the independent variable pairs are well under .5. Then we checked the tolerance values of the independent variables, using the conventional tolerance value of .1 as the cut off point for high multicollinearity (Fox 1991; Hair et al. 1992; Never, Wasserman and Kutner 1985). All independent variables in the equation have high tolerance values ranging from .71 to .94, indicating that the reported regression coefficients are valid, not artifacts of multicollinearity.

Advertising clutter played a less important role in generating advertising revenue for entertainment-oriented magazines than for news-oriented magazines. We found a very strong positive correlation between advertising clutter and advertising revenue in news-oriented magazines (beta = .76), but only a weak correlation for entertainment-oriented magazines (beta = .31). One can infer that the increase in advertising revenue of entertainment-oriented magazines should actually be attributed to an increase in advertising rates, rather than to an increase in the number of advertising pages sold. The prevalence of deep discounting in the magazine industry (Fried 1994) may be the reason for the lower revenue return of advertising pages.

Discussion

Our study shows that advertising clutter can yield diminishing and negative returns to the magazine industry. Significant differences between news- and entertainment-oriented magazines are found. Negative circulation return and diminishing advertising revenue return from advertising clutter occur for entertainment-oriented magazines, but not news-oriented magazines. Returns turn negative when advertising pages reach an average of about half of the total pages. The diminishing and negative returns from clutter in entertainment-oriented magazines show that the value of advertising to magazine readers is relative rather than absolute. The perceived utility value of advertising declines when its amount becomes excessive and creates irritation. The reason news-oriented magazine readers are more tolerant of advertising clutter may be that news-oriented magazines strengthen editorial content when clutter is high. Moreover, those readers may be more likely to perceive ads as information, a positive benefit, than readers of entertainment-oriented magazines.

The positive relationship of advertising clutter and circulation shown in the multiple regression analysis seems to contradict the quadratic relationship between the two shown in the bivariate analysis. Yet it is highly possible that a quadratic relationship may not fit well into a linear multiple regression equation that includes many other parameters such as economic conditions, booksize, and cover price. Part of the data may be lost in the computation of the regression estimates. For example, the cases with negative relationship may not be captured in the regression estimates. Moreover, in the regression analysis of circulation and advertising revenue, advertising clutter shows a much stronger positive relationship in news-oriented magazines than in entertainment-oriented magazines. This finding is consistent with the bivariate analysis result showing that entertainment-oriented magazines are more likely to be susceptible to the negative impact of advertising clutter.

Another interesting finding of this study is that advertising clutter does not fully account for the increase in advertising revenue. Because we calculated advertising revenue by multiplying advertising pages by the advertising rates of the time, the phenomenon of an increase in advertising pages without a proportional increase in advertising revenue reveals a major advertising pricing problem in the magazine industry. Many advertising pages are sold with deep discounts, so an increase in pages does not generate proportional revenue. To maximize the number of advertising pages, some pages have to be sold at a lower price through price discrimination because the advertising pages becomes less attractive and valuable to advertisers when supply increases. Perhaps an increase in advertising rates is the source of advertising revenue growth for magazines. In making such an inference, we caution that measurement errors in the reported advertising page and advertising revenue figures might account for such results.

Advertising revenue and sales revenue go hand in hand for magazines. Overemphasis of one type of revenue cannot compensate for the loss of the other in the long run. In fact, as demand for advertising and demand for circulation are interrelated, a large readership is necessary to maintain continuous support from advertisers. To sustain support from advertisers and readers, a magazine must develop a well-balanced space allotment between advertisements and editorial content. As Marino (1992, p.116) remarks, "If we [magazine] deliver [editorial] value, rates take care of themselves."

Is a fixed advertising-editorial ratio a solution to the problem? We put the known advertising-editorial ratio policy of the sample magazines as a constraint in Figure 1. The 30% ratio set by TV Guide, a news-oriented magazine, is before the point of diminishing return for consumer magazines in general, and the 50% ratio set by People, an entertainment-oriented magazine, is near the point of negative return for entertainment-oriented magazines. If these magazines adhere to their set ratios, advertising clutter would not adversely affect their circulation.

Conclusion

In examining the relationship between magazine clutter level and circulation, we discovered that the point of negative returns is the average of about half of the total pages in entertainment-oriented magazines. When publishers want to sell more advertising pages, they have to consider the detrimental effect of doing so. In more formal economic terms, they must consider the elasticity of clutter. The loss in revenue from having fewer advertising pages can be offset by an increase in advertising rates or cover price. Our results can serve as a guideline for determining the optimal advertising-editorial ratio for magazines with different editorial orientations. They show that advertising clutter has a detrimental effect on entertainment-oriented magazines' circulation and, to a lesser extent, on their advertising revenue. Magazines that are new or less successful than the ones we studied may be even more adversely affected if they overemphasize advertising. Because of our purposive sampling method, our results are generalizable only to those magazines included in the study.

Magazines provide just one example of the possible negative effect of high advertising clutter on consumers' support for a medium. Using circulation data, we drew indirect inference of consumer support for a magazine. In future studies, researchers could observe how a panel of magazine subscribers respond to advertising clutter and whether the clutter level influences their decision to buy or subscribe to a magazine. For the purpose of our study, circulation and advertising revenue were treated as separate dependent variables. Future research could put them together in a simultaneous series of equations. Despite these limitations, the preliminary findings of our study provide a basis for future research on the economic effect of clutter in other advertising media such as television, radio, newspaper, and outdoor. A comparison of the effects of clutter and the elasticities of clutter across different media may indicate ways to improve media structure by finding a balance between the demands of advertisers and consumers.

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Appendix

List of Competitive Titles for the Titles in the Study

[TABULAR DATA OMITTED]

Louisa Ha (Ph.D., Michigan State University) is an Assistant Professor in the H. H. Herbert School of Journalism and Mass Communication at the University of Oklahoma, Norman.

Barry R. Litman (Ph.D., Michigan State University) is a Professor in the Department of Telecommunication at Michigan State University, East Lansing.