Auto giants pass the pain to publishers

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Detroit's dire straits are trickling down to magazines, with publishers reporting sharp cuts of up to 40% through the first half in broad-reach titles and General Motors Corp., Ford Motor Co. and Chrysler Group delaying buys until the very last minute.

"We are in such a triage, ER-state right now in Detroit," said a representative at a mass-reach magazine socked by a slump in buys from automakers, magazines' largest advertising category. "We are seeing precipitous drop-offs in spending in our category."

The doom and gloom comes after sagging first-quarter results from Detroit: GM's $1.3 billion loss for its North American auto arm; Ford Motor's pre-tax profit of $664 million for its North American auto unit-about half what it was a year ago; and Chrysler Group's smaller profits.

"There's widespread pain for magazines in Detroit," said Rob Gregory, group publisher of Maxim, although the Dennis Publishing title seems to have been spared. Detroit auto reps are "not just asking what day does this issue close, they're asking what time that day does it close."

Data from PIB show Chrysler Group cut its magazine ad buys to 258 pages in the first quarter vs. 421 a year ago; GM also had drastic cuts in the period vs. a year ago, to 656 ad pages from 827 pages, while Ford Motor buoyed the segment by beefing up to 874 pages compared to 490 a year ago.

The environment for magazines is such that another publisher cited a 5% drop in Detroit-related paging as "not a terrible showing." Magazines' ad paging for the entire automotive category, including Asians and European makers, dropped 2.6% in the first quarter, according to Publishers Information Bureau, but for the month of March, the rate of the decline swelled to 19%.

SOME OPTIMISM

Several publishers remained optimistic. Several niche titles have seen jumps. And the industry expects a big bump in the second half of 2005 from new-model launches. Ford Motor's proposals from magazines were due last week for the fourth-quarter launch of its new Ford Fusion and it has proposals out for the launches of Lincoln's Zephyr and the Mercury Milan.

"It's standard for the auto industry to decrease their spending in the significant reach magazines when they don't have launches," said Matt Turck, associate publisher of Time. "There is still a lot of the year left."

The Chrysler brand was nearly dark in magazines until April. It has four launches this year, but all are in the second half. Overall Chrysler's magazine spending will be down "very minimally," said Julie Roehm, marketing-communications director.

Ford is still advertising in broad titles, but recently cut its print budget and canceled some buys for the second quarter, which a marketing manager at Ford Division declined to discuss.

GM's Betsy Lazar, general director of media operations, confirmed through a spokeswoman that the auto giant has shifted from broader titles to more niche ones, driven by a desire for better targeting and a greater use of contextual creative. She wouldn't discuss spending specifics.

"Detroit ... is experimenting with all different kinds of communications," said a third publisher. As Maxim's Mr. Gregory puts it, "it's all about Madison & Vine." Maxim has a deal with GM's Pontiac involving a unit in the magazine, a Hollywood event, and cable and online components.

Executives from all three advertisers have said they are spending more on nontraditional marketing, including the Internet, events and ride-and-drives. Since Detroit's 2005 marketing budgets are expected to be flat, dollars are being shifted from traditional media, including magazines.

"We've remixed our budget" to better reflect consumers' media habits, said Ms. Roehm. Chrysler is basing its buys on research showing its customers spent 48% of their media time watching TV, 22% online with roughly 20% reading magazines and newspapers. She confirmed Jeep killed a magazine blitz for its diesel Liberty sport utility model early this year after research showed target buyers were very tech savvy. The ad campaign was moved online and generated more than 30,000 people opting in for more data on the model.

Ford Motor's biggest brand, Ford Division, advertises in a mix of broad and niche titles, said Michelle Erwin, car marketing-communications manager, and likes to partner with magazines to develop "unique ideas" to engage readers. She credited magazines for developing cool programs for the brand, citing Hearst Magazines suggesting a co-branded program with OPI to match its nail polish colors to several for the new Mustang.

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