Prolonged slump puts media in the mood to pander to buyers
By Matthew Rose and Suzanne Vranica
THE
WALL STREET JOURNAL
NEW YORK, May 9 On an early
March episode of her talk show, Rosie ODonnell chatted about her new diet
and the great different salads available at Wendys fast-food restaurants.
A sample sat on the table in front of her. Suddenly, Ms. ODonnell received
an urgent instruction from off stage: eat the salad. Any reason you want
me to taste the salad? Ms. ODonnell asked, on air. Just do it, came the
response. Shrugging, Ms. ODonnell shoveled a fork-full of lettuce into
her mouth, and declared, Mmmm, thats good. This is what it takes to
get advertising these days
WHEN WENDYS International Inc. committed to spend more than $23 million
on ads with AOL Time Warner Inc.s media outlets, the burger chain asked
for and received a host of extra goodies. The media giant, which produces
The Rosie ODonnell Show through its Warner Bros. unit, agreed to have
the host eat a Garden Sensations salad on air. The salad also made an
appearance on TBS Superstations Dinner & a Movie. And this month,
AOL Time Warner magazines such as Sports Illustrated and InStyle inserted
a Wendys promotion personalized with each subscribers name.
Media companies have long sold ads simply by touting the size of their
audiences or the quality of the product. Theyd herd advertisers into neatly
prescribed areas of real estate a 30-second TV spot, a half-page print
ad. Now, on the heels of the worst advertising slump since World War II,
advertisers
are getting a startling array of services that have turned publishers and
TV channels into full-service marketing companies. On behalf of their advertising
clients, media companies stage and pay for parties and corporate events,
develop elaborate promotions and mailings and agree to unusual product
placements.
Advertisers see the shift as long overdue. For years, they have been increasingly
concerned that their messages were getting lost in the clutter of new cable
channels and Internet sites. Theyve worried about dwindling network television
shares and declining magazine and newspaper sales, and fretted about the
looming era when consumers will be able to zap commercials with the help
of electronic recorders. Now, an 18-month-long advertising recession that
saw ad spending slump nearly 10% last year has shifted the balance of power
in favor of the advertisers. Even though there are signs that the recession
is lifting, many of the changes demanded by advertisers are likely to be
permanent.
The tables have turned, says Don Calhoon, Wendys executive vice president
of marketing. If media companies dont play ball, marketers will take
their ad dollars to other places. There are too many ways to reach consumers.
The shifting terrain puts media companies especially magazines and television
networks in a tough spot. They often pay for events and parties out of
their own pocket and write it off as a new cost of getting ads. This means
that the ads that do run these days arent as profitable. And the new product
placements are blurring the line between content and advertising in ways
that may be jarring to consumers.
For instance, in a move that gives new meaning to the term autoeroticism,
Playboy magazine will replace its June centerfold with a fold-out picture
of Bayerische Motoren Werke AGs new Mini car, bumping the real Miss June
to another section. BMW paid the equivalent of six ad pages to the Playboy
Enterprises Inc. publication. On the May 1 episode of soap opera Days
of our Lives, meanwhile, a box of Kleenex tissue got unusually prominent
display in a scene between two weepy characters forced to give up their
baby. Kimberly-Clark Corp. got the plug as part of an elaborate advertising
deal with General Electric Co.s NBC.
Some in the business lament the changes, especially the smaller players.
I am frustrated by how much the world has changed, says John Fox Sullivan,
president of the Atlantic Monthly and National Journal. Consumer magazines
have become such commodities, almost the last thing the advertiser seems
to care about is placing their ads amidst editorial the reader craves.
But many others shrug it off. Our world is changing, says Gary Burke,
vice president of prime-time sales at NBC, which has created several promos
tied to ad deals in recent months.
AD BOMBARDMENT
Traditional ads alone just dont cut it anymore because folks are bombarded
with advertising, agrees Joe Adney, director of marketing at Baskin-Robbins,
a unit of Allied Domecq PLC. There is a real desire to be integrated into
the program. Baskin-Robbinss media-buying firm, Interpublic Group of
Cos. Initiative Media, recently completed a media-buying deal that included
having the ice-cream brand incorporated into TV shows such as Top 20 Countdown,
a music-video program broadcast on Viacom Inc.s VH1. During a recent episode,
the host passed out Baskin-Robbins ice cream from a VH1 truck to passersby.
The clout large advertisers wield has grown with the consolidation of companies,
known as media buyers, that act as liaisons between advertisers and media
operations. About 80% of the ad spending in the U.S. is funneled through
only eight firms. WPP Group PLCs Mindshare, for example, represents more
than $20 billion in annual budgets with clients including Ford Motor Co.,
American Express Co., and International Business Machines Corp.
These firms start throwing their weight around early in the selection process.
Landing in publishers mailboxes recently was a document from Media Planning
Group, a unit of Havas Advertising SA, which represents Fords Volvo unit.
The firm wanted information to help it plan a coming advertising schedule.
Instead of asking standard questions about readership size, age and income
levels, MPG wanted publishers to describe readers typical day, their favorite
movie, author and TV program. I look at this stuff and ask, Is this creative
writing? complains one publisher.
To prepare its 2002 schedule, Volkswagen AGs U.S. media agency, Arnold
MPG, a Havas unit, asked publishers to make a video describing their readers.
Blender, a new music magazine owned by Dennis Publishing, rented a VW Beetle
and sent a production crew on a road trip around Manhattan, mixing nonalcoholic
drinks and confronting random pedestrians. The staffers videotaped interviews
with those who turned out to be Blender readers. When a policeman gave
them a ticket for making an illegal turn onto 42nd Street, they taped him,
too.
Blender eventually got a high single digit number of pages for 2002,
says publisher Malcolm Campbell, but not everyone was so lucky. Of the
120 publications that made a video, only 50 made the cut.
Because Volkswagen is a marquee advertiser, media companies are willing
to go the extra mile. But theyre doing the same for companies without
generous ad budgets. In March, MSNBC, the cable news channel jointly owned
by NBC and Microsoft Corp., signed a deal with financial-services company
Lending Tree Inc. In return for about $5 million, a tiny sum that will
cover all of 2002, MSNBC is creating a twice-weekly financial update which
will be sponsored by Lending Tree.
Last summer, Jeff Hicks, the president of Miami-based agency Crispin Porter
+ Bogusky, gathered more than 50 publishers into an auditorium in Manhattan
and asked for groundbreaking ideas to promote BMWs Mini. Even though
the account was valued at only an estimated $20 million as little as
a third of similar launches Mr. Hicks was inundated with proposals, including
Playboys centerfold idea. The New Yorker, owned by Condé Nast Publications
Inc., threw a party in a Soho gallery displaying Minis that had been decorated
by top artists. Wenner Media Inc.s Rolling Stone magazine ran ads in a
thin strip around the edge of the page showing Minis tearing along a road.
The tagline: Nothing Corners Like A Mini. Readers had to remove the strip
to read the article.
Television networks have gone the furthest in incorporating advertisers
messages into once-sacrosanct territory. When Verizon Wireless, a joint
venture between Verizon Communications Inc. and Britains Vodafone Group
PLC, dangled $50 million in the hope of integrating its Talk Man character
into network programming, eight different channels leaped at the opportunity.
Talk man is the Verizon pitchman who crisscrosses the country saying,
Can you hear me now? into his cellphone.
By January, Talk Man escaped from the confines of the traditional ad.
He popped up in a promo for NBCs Frasier and also appeared on a movie
set designed to mimic Indiana Jones and the Temple of Doom to tout a
rerun of the adventure flick on Walt Disney Co.s ABC. Following the opening
credits of the WBs Dawsons Creek, a teen drama, Talk Man appears
on the shows set and repeats his catchphrase as part of the ad deal.
The networks have been more willing to pursue things like product placement
while two years ago when the market was tighter they were less willing,
said Rich Hamilton, chief executive of Zenith Optimedia, which is jointly
owned by Publicis Groupe SA and Cordiant Communications Group PLC and which
represents Verizon Wireless.
Suzanne Kold, executive vice president of marketing at WB, doesnt see
a problem with this. I dont think most audiences are shocked that there
are advertising relationships with shows or that advertisers fund things,
she says. ABC declined to comment on the Verizon deal.
To accommodate the new demands, media companies have started to change
the way they do business. Hearst Corp.s magazine division, for example,
awards a $1,000 prize each month to the salesperson who comes up with the
best idea to be used by an advertiser. Chief Marketing Officer Michael
Clinton says the company has around 40 proposals floating around at any
one time.
One of those proposals led to Hearsts announcement last year that it had
teamed up with Brookstone Inc., a Nashua, N.H., gift retailer, to promote
DaimlerChrysler AGs Chrysler in Hearst publications and Brookstones catalog
business and 240 gift-store outlets. After six months of planning, the
November issues of 7.8 million Hearst magazines ran a section highlighting
design elements of Chrysler vehicles and Brookstone merchandise. Hearst
says the section enticed 13,600 readers to test-drive a Chrysler.
Julie McGowan, the publisher of Food & Wine, reckons the magazine now
throws anywhere from two to five events a week, compared with two a month
in the late 1990s. These range from parties to store openings to wine tastings,
all arranged to leverage the magazines contacts and give more publicity
to advertisers. Advertisers demand it, she says. Food & Wine is owned
by American Express Publishing Corp., a venture of AOL Time Warners Time
Inc. and American Express.
ELABORATE EVENTS
The events are becoming increasingly elaborate. Fortune magazine, published
by Time, holds roughly one mammoth event a month either tied to an ad-page
deal or to schmooze important advertising clients. In March, Fortune and
its sister publications took over the Road Atlanta Racetrack in Braselton,
Ga., on behalf of Merrill Lynch & Co., a key advertiser. The financial-services
company invited some of its own wealthy customers and corporate clients.
Participants were given a chance to drive a race car at 120 miles per hour.
Publishers fervently hope that a recovery in the advertising market will
bring some respite. Stocks of major newspaper and advertising companies
are up substantially so far this year. Steven Florio, chief executive of
Condé Nast, says 12 of his 15 magazines, which include Vogue and
Vanity Fair, posted gains in their June issues.
But few executives are certain when the turnaround may come. First-quarter
results were generally inconclusive. Ive seen some swallows, but Im
not ready to call it summer, says Richard M. Smith, chairman of Washington
Post Co.s Newsweek magazine.
As far as exhausted media executives are concerned, it might not matter
when the ads return. Arnold, the media-buying agency that put magazines
through their paces for VW, is considering kooky ideas for 2003 pitches.
Publishers are already calling asking, What is our assignment this year?
says Steve Moynihan, senior vice president media director at Arnold MPG.
This time around, Mr. Moynihan says he is looking for bigger and better
ideas from publishers. I anticipate that they will respond to whatever
we request of them, he says.
Arthur Magazine 