That the automakers' pain and the Internet's gain would punish magazines has been clear for some time, and publishers are hoping for a 2006 revival-hopes based on a long list of second-half launches and increasing array of their own online offerings-but for now, at least, times in Detroit are as tough as mag reps remember.
"This year has been soft," said MaryAnn Bekkedahl, Rodale's exec VP-group publisher. "How's that for the understatement of the year?"
Publishers are reacting by cutting employees and battening down the hatches. Meredith Corp. and Newsweek trimmed Motor City ad-sales staff in the past few weeks. Time Inc.-which has historically snagged almost a third of domestic auto spending in magazines but saw that revenue shrink 14% last year-made even sharper cuts back in October.
Even companies adding sales reps in Detroit, as Ms. Bekkedahl's Rodale did in December, are struggling. The publisher, which actually increased auto ad pages 6% in 2005 despite flat activity from the Big Three carmakers, saw category ad pages sink 7.5% in January and February compared with those months a year earlier. And that includes imports; for January and February, Detroit chopped its Rodale page buys by 33%.
Poor comparisons to 2005 are a serious indicator of the extent of publishers' pain, given the scope of last year's disaster. TNS Media Intelligence blames the automotive meltdown for $98 million in lost revenue to magazines; the Publishers Information Bureau puts the damage at $80.2 million.
Although carmakers increased spending in four of the first six months of 2005, the back half of the year was a nightmare, with a consecutive string of six down months. That concluded in January this year, when spending fell a whopping 22.7%.
In February there were signs of life again and magazines collected 4.1% more car-ad revenue than in February '05. But there is no return to the days of old, with legions of media-agency executives meeting with legions of ad reps to argue pricing over pages.
"In the last nine to 12 months we've seen a real openness, receptivity and almost an aggressive shift toward new and next, in terms of both advanced media opportunities and larger, more integrated program ideas," said one publishing executive. "There's still a fair amount of effort on decentralized selling-car plate by car plate, sales rep by sales rep-but there's a growing appetite for broader, more strategic programs that cut across media companies' assets to both help these automakers save time and punch through in bigger ways."
migrating to web
While the TNS data suggest print still gets a lot more automotive money than the Internet, there is no doubt the money is flowing from print and into the Web. Ford Motor Co.'s allotment to magazines fell to 21% last year from 23.5%, DaimlerChrysler's fell to 18.6% last year from 19.1% and General Motors' fell to 15.8% from 17.1%. Ford's Web allocation, on the other hand, grew to 3.5% from 3% and GM's rose to 3.5% from 2.4%. DaimlerChrysler bucked the group, cutting its Web budget share to 2% from 2.2%. (TV is not immune, by the way. DaimlerChrysler and GM lowered their allotments to TV, though Ford's TV allocation edged up slightly.)
The Detroit carmakers' total ad budgets are flat at best and generally moving to narrower "affinity" titles, according to four area magazine reps. GM and Ford are struggling to return to profitability in North America and Chrysler Group is readying cost-cutting actions dictated from Germany.
Cost-conscious car companies are also enamored of precision marketing. "As we've been working to increase the differentiation of our brands, we've been reducing the overlap of how they reach out to the consumer," said a GM spokeswoman. "We believe in the power of magazines, and are being smarter about how we use them." Accordingly, mass-reach titles are "sucking wind," but some smaller titles are doing better, one Detroit magazine rep said.
And then there is the new-media landscape. "Like all companies, automotive is evaluating the allocation of dollars and what media they go to," said Nick Matarazzo, exec VP-group publishing director, Hachette Filipacchi Media U.S. "The print guys, the ones who are going to leverage their brands across platforms, those sales people are going to have to be able to talk the talk. The ones who can't are the one who'll be changed. You won't see a drop in headcount; you'll have to reallocate assets."