In the King in Yellow Herald variant, there is a rule about increasing the terror level (emphasis mine):
The blasphemous play "The King in Yellow" is being performed in Arkham. Every time the terror level increases, the investigators must do one of the following:
A: Place a yellow sign token in the space just vacated by the terror marker.
B. Place a yellow sign token on the doom track as if it were a doom token.
There are ways to reduce the terror level increase, such as the Director's Diary:
Discard this card when the terror level is increased to reduce the amount by which it is being increased by 1.
What is the order of these two events? Do I place a yellow sign token first before I reduce the terror level? Or do I reduce the terror level and then not place a yellow sign token because it is staying the same?