MAGS’ FUTURE IN THE SPACE RACE

Byline: Lisa Lockwood

NEW YORK — The magazine industry is not only overcrowded, its syndicated research is sorely lacking. And business is booming in advertorials, but they really aren’t read much. As for the Internet, nobody knows how to make a buck, despite all the high tech hype.
These were a few of the hot-button issues tackled by some media power players Thursday morning at the first annual New York Magazine Day ’96 here.
Sponsored by the Advertising Club of New York and the Magazine Publishers of America, panelists included Steven T. Florio, chief executive officer of Conde Nast Publications; Cathleen P. Black, president of Hearst Magazines, William T. Kerr, president of Meredith Corp., John Heins, chief executive officer, Gruner & Jahr USA Publishing, and Efrem Zimbalist 3rd, chief executive officer of Times Mirror Magazines.
From the advertiser ranks were Philip Guarascio, vice president, general manager of marketing and advertising at General Motors North American Operations; Donald J. Miceli, vice president, media services, Kraft Foods; RuthAnne Miller, vice president of marketing, Donna Karan Beauty Co.; Roger T. Servison, managing director and executive vice president, Fidelity Investments; James L. McDowell, vice president of marketing, BMW, North America Inc.; Kurt Graetzer, executive director MilkPep and Renee V.H. Simons, director, media, Philip Morris USA. Wenda Harris Millard, executive vice president, marketing and programming at DoubleClick Inc., was the lone voice hyping the Internet’s profit potential.
In fact, panelists were in sharpest disagreement over the future of the Internet.
“I think the Internet is a huge opportunity for magazines,” said Fidelity’s Servison. “It can help get over one dilemma of magazines, which is timeliness. It extends the life of the product, and it can be used as a research resource. I don’t know if advertising will be effective on it. I’m willing to pay to get from a magazine site to my site, but I don’t think this medium will be effective for selling [our products] on their site.”
“We’ve made an aggressive push into New Media for a multimedia company,” said Hearst’s Black. “We want all our publishers and editors to understand the new dynamic going on. I don’t know if everyone needs a Web site, but every client asks us about New Media.” But she warned, “If we don’t figure out the revenue stream for New Media, it won’t be a business.
“Advertisers say they won’t pay for it. They want this as merchandising. But Web sites do not come cheap. They need to constantly be refreshed,” added Black.
“It’s hot; it’s growing, but nobody wants to pay for anything on it, not the advertisers nor the consumers,” said G&J’s Heins. “Ultimately there has to be subscription revenue.” DoubleClick’s Millard told the audience that establishing a Web site is about “building one-to-one relationships with millions of customers one at a time…It’s not a threat [to magazines]. It’s the greatest opportunity in a decade to leverage your brand. Editors and publishers are brilliant about their audiences. They need to translate that to another medium. It’s not about technology. You can make tremendous amounts of money. Publishers should understand that the money could be yours. It will be somebody’s, so it might as well be you.
“Advertising is the backbone. Transaction is infantile,” said Millard. “Because we’re the most accountable medium, we know it works. Does advertising really work in magazines? You do not have that kind of proof that advertising works in print and TV,” she said. “The Internet is totally definitive. There’s no cheating. It’s reported in real time. We can tell an advertiser within a three-minute lag time what’s going on at an advertiser’s site.
“Don’t kid yourself. The advertiser is driving this. Agencies hope it will all go away. If you’re over 60, you probably can’t wait to retire so you don’t have to deal with this stuff,” said Millard.
The blurring of advertising and editorial on line was also explored.
Hearst’s Black told the audience about a magazine-related Web site that listed in its table of contents, “The Advertiser.”
“This is a very serious issue. Standards need to be set forward about blurring. I was upset to see it listed as editorial,” said Black. “Advertisers want to worm in. If we don’t keep editorial and content as strong as it is, none of this will be a business.”
“I don’t think advertising can drive the economics of the Internet,” said Fidelity’s Servison. “The next generation is we’ll have a personal agent who will screen out all the noise. I’ll want to screen out the advertising, and I’ll want data and information. I think transaction economics will drive the business, not advertising.”
Measuring print’s effectiveness was another bone of contention.
“We’ve been looking for more accountability for all our marketing expenditures,” said Kraft’s Miceli. “It’s a lot easier to measure the relationship of sales to TV, but it’s a lot more difficult to see how print relates to volume. Since the early Seventies, the focus of magazines has been to sell against each other, opposed to selling magazines as a category.”
Fidelity’s Servison said his company spent $20 million to $30 million in magazines this year, and has more than doubled its magazine budget since 1990. “To us, the objective is to sell products through magazines. We can build awareness quicker through TV, but to sell products, we need magazines. Magazines are first, newspapers are second.”
In discussing challenges facing publishers, Meredith’s Kerr said, “The challenges I worry about most are outside of our control and that’s the role of government. A large part of Congress thinks advertising is a morally bad thing.”
BMW’s McDowell noted, “Advertisers don’t give a damn about buying advertising. They’re in the ‘moving product’ business. We need to become magazines’ partners in selling more products. Publishers need to live and breathe what this client has as an objective to move product and our customers to action.”
McDowell said he needs to find out “what consumers are doing with the magazine when they see the BMW ad — do they remember it? Did it change their thinking? Did they look us up on a Web site?
“Nobody has all that information. Some [publishers] have come to us with one-third of my information or half that information. They need to tell us, ‘I’ve heard what you’re saying, and here are the four books that can do that.’ We need that sense of how we’re getting into people’s minds. We’ve been willing to make special creative for one title.”
Turning to what many see as an oversaturated market, Meredith’s Kerr said, “I tend to believe in the free marketplace. The marketplace is the test whether we have too many magazines. We introduce a new magazine a year.”
Times Mirror’s Zimbalist added, “Where the real bottleneck is occurring is at the newsstand. How many new magazines can you introduce a year? Look at consumer products and shelf space. There are slotting allowances to test it, and failure fees to clear the shelves if it doesn’t sell. There’s a very limited supply of shelf space for newsstands. Other distribution methods will be developed.”
In discussing the future of magazines, GM’s Guarascio said, “We’re moving to a branding situation, and are catching up to the rest of the world. What we’re trying to do is understand the soul of our brands, the essence of the brand and the one thing it stands for.”
Donna Karan Beauty Co.’s Miller observed, “We do business with magazines based upon the emotional connection, if we understand what the brand is about. We co-brand when we advertise. It’s about the psychographics of the readership.”
Conde Nast’s Florio summarized it: “The future of magazines is in pretty good shape. You’ve heard enough about the Internet to last a lifetime; that’s 10 to 15 years ahead. We’re developing some online magazines. But the future of magazines will always be a reflection of the quality of the editorial product. It’s the most egocentric business. If people believe an editor is so interesting, they’ll pay money to read it and pay money to put their message next to it.”
But Guarascio described that approach as “surface chic,” and said he’s not satisfied with the research publishers give him. He noted that GM spends $400 million to $500 million in print, and “research is highly questionable.” He said, “What we’re doing is trying to understand what people mean by match.”
Guarascio charged that advertorials don’t work, especially when they’re in non-endemic publications. “When Vogue magazine runs an advertorial on something non-endemic to Vogue, it doesn’t work,” said Guarascio. “It doesn’t resonate like ad pages or a spread in a magazine.”
As for the problem with syndicated research, Florio said, “Nobody believes it anymore. It’s one of our major failings. We do not have accurate research. There isn’t a piece of research we believe anymore. Fashion companies buy on instinct. But for us to expect companies like Proctor & Gamble and GM to invest $500 million in magazines, we had better get our act together. Unless we solve this, we will have a problem going into the future.”

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