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Meredith Guarantees Top Advertisers Sales Gains

Publisher Promises Free Space if Marketers Don't Meet Pre-arranged ROI Goal

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Meredith , the publisher of large-circulation magazines such as Better Homes and Gardens and Ladies' Home Journal, is beginning to guarantee some of its biggest advertisers that major ad campaigns in Meredith titles will actually increase their sales by a certain amount.

Meredith titles Better Homes and Gardens, Fitness and Ladies' Home Journal
If a guaranteed campaign doesn't make cash registers ring as much as Meredith promises, the company will make the advertiser whole -- most likely by providing ad space for free until it has delivered the return on investment that it pledged.

Many details will be hammered out on a case by case basis, but the program is the latest step toward greater accountability for media sellers and more assurance for marketers scrutinizing every dollar they spend.

"We've been hearing over and over again, and stronger in the past few years, that clients are demanding ROI," said Tom Harty, president of Meredith 's National Media Group, which houses the company's magazines. "They're being challenged by their CEOs and their procurement officers to prove that they're generating sales."

Time Inc. recently began guaranteeing Starcom MediaVest clients making big enough ad buys that a certain number of people will recall their ad campaigns or respond in some way, whether by buying the product, visiting its website, calling an 800 number or telling a friend about it. Some independent magazines promise qualifying advertisers that they will generate more reader recall or response than most of the other titles the advertisers use.

But most magazines, like most media sellers and ad buyers, rely on measures less directly linked with actual ad performance. "The medium of magazines has used proxies for proof of performance like a circulation statement," said Britta Ware, VP-research solutions at Meredith 's National Media Group. "And an ad agency and a procurement officer has used price as a proxy for value."

No magazines seem to have specifically guaranteed sales lift before now. "We are defending print a little bit," Mr. Harty said.

Ad buyers and marketers might appreciate the move. "As an agency, we are really focused on changing our own compensation to be tied to performance," said Jacki Kelley, global CEO at Universal McCann. "So to see a media company do the same is really encouraging."

Tom Harty, president of Meredith 's National Media Group
"Most media owners are not excited to do that , for a lot of reasons," Ms. Kelley added. "They don't control enough of the overall program. But the analytics are getting better. I'm really encouraged by Meredith 's willingness to push on that with us."

Meredith prepared for the guarantee program by looking back at past ad campaigns, comparing consumer purchase data from Nielsen's National Consumer Panel between a group of households that subscribes to Meredith magazines and a comparable group that doesn't. Big campaigns in categories such as beauty, household goods, over-the-counter drugs and food increased their sales an average of 10%, Meredith said.

"The numbers were very compelling and will be great information as we go into 2012 print negotiations," said L'Oreal USA CMO Marc Speichert. "We would love to see the same analysis done by our other publishers."

The guarantees going forward will use a similar research design to evaluate sales lift. Meredith is restricting the program, which it's calling the Meredith Engagement Dividend, to 10 corporate clients that meet certain requirements such as typically spending over $5 million annually with the company's magazines. Meredith 's three biggest magazine advertisers are Procter & Gamble, Johnson & Johnson and Kraft Foods, according to Kantar Media.

"We are creating limited inventory because we're stepping up to risk," said Richard Porter, president-media sales at the national media group. "We're asking for No. 1 share of their print spend and an increase in their overall spend."

Participants must also commit to a minimum level of advertising over 12 months and across several Meredith titles.

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