Ford's back, and magazine publishers are gunning for its business.
Ford Motor Co. sent shock waves through the publishing industry last year when it slashed its magazine budget and yanked ads from several leading media companies, including Hearst Magazines and Meredith Corp.
Now the automaker is poised to make a U-turn. Ford has negotiated contracts for advertising rates with all the publishers that had been excluded from the 2000 model-year buy, said Michelle Cervantez, global trustmark marketing manager at Ford. But, she added, "That page rate is based on no actual commitments on our behalf."
In addition to Hearst and Meredith, the list of publishing groups and titles trimmed from Ford's list included Walt Disney Co.; the Washington Post Co.'s Newsweek; News Corp.'s TV Guide; Reader's Digest Association; the Smithsonian Institute's Smithsonian; Gruner & Jahr USA Publishing; and U.S. News & World Report. The dollars pulled from magazines were in part earmarked by Ford to invest in online marketing and advertising.
Ms. Cervantez said Ford's vehicle brand teams will decide which titles to use to promote their new models. Conceivably, the brand teams could again exclude all of the same titles kept off the list last year. "But that's not the going assumption," she said.
DOLLAR SOURCE UNCLEAR
Ford would not specify where the money for additional magazine ads might come from. But Mark Kaline, global media manager, indicated it would not be siphoned from non-traditional media.
The budget allocated for Internet-related advertising last year is "not necessarily shifting back to print," he said.
Mr. Kaline added that Ford's change of heart was influenced by the fact that major magazine players have proposed "holistic, large programs that go beyond advertising."
While it's a relief to the publishing industry that Ford--the fifth-largest leading magazine advertiser, spending $317 million last year--is restoring its roster, some sellers cautioned against an early celebration.
"There's no guarantee of business; they don't have to spend a dime with you," said an executive at one magazine eliminated last year. "It's up to us to peddle our wares." Still, the executive added, "At least it's a level playing field."
Another magazine sales rep whose title wasn't cut said of those that were, "They may not be on the dance floor, but they've been invited to the dance."
Magazine executives said it's not unheard of for an advertiser to lock in rates without making page commitments. But they said the practice is new to the automotive category.
Ford appears to be hedging its magazine bet in other ways, too. In the past, Ford negotiated discounts based on a guaranteed level of spending, sales executives said. But the automaker won't guarantee spending this year.
Some sales executives said Ford could wind up paying more as a result because publishers will be reluctant to offer deeper discounts without knowing how much business they will get in return. Ford could also lose out on prime advertising positions. But others said magazines cut from this year's list are likely to offer aggressive discounts to win back business, putting pressure on all publishers to lower rates.
Ford's decision comes at a good time for the magazine business. Ad pages rose 14% in the first half of 2000 compared to the same period last year. But spending by automakers, the second-largest magazine ad category, has been weak, with pages down 8.2% in the half. Publishers put the blame mostly on Ford.
"The suspension in essence is over," said Jerry Kaplan, VP-group publisher of Better Homes & Gardens and Ladies' Home Journal for Meredith. He said Ford has not yet settled on its "final plans," but Meredith expects to "start seeing some activity" in the fourth quarter of this year.
Copyright July 2000, Crain Communications Inc.