Ford Motor Co. is slicing its magazine spending and chopping major publishing companies such as Hearst Corp. and Meredith Corp. off its list.
The move has set off alarms in the publishing community and raised fears the automaker may be the first major marketer to shift significant portions of its print budget to the Internet.
Early winners that secured corporate contracts with Ford for 2000 include Conde Nast Publications, Emap Petersen, Hachette Filipacchi Magazines, Rodale Press, Time Inc., Times Mirror Magazines and Wenner Media.
In addition to Hearst and Meredith, the list of major publishers shut out at this point includes Gruner & Jahr USA Publishing, Primedia, Reader's Digest Association and Walt Disney Co., according to executives close to the process.
Smaller groups and single-title publishers, such as National Geographic, Newsweek, Smithsonian, TV Guide and U.S. News & World Report also have not inked contracts with the automaker.
Those who did not win any ad business from Ford in this phase now have to go in and fight for every page, while those with corporate contracts are guaranteed a set amount of dollars will be spent. Ford, one of the largest print advertisers, spent $300 million in magazines last year out of its overall media budget of $1.1 billion, according to Competitive Media Reporting. Industry observers said the cuts represent 25% to 30% of that.
"There's no whining to be done," said TV Guide Senior VP-Publisher Dick Porter. "Now what's to be done is to roll up our sleeves and figure out what we have to do to win some business."
ALL MEDIA AFFECTED
Mark Kaline, manager of media services for Ford's Central Media Group, said Ford will increase funding for Internet marketing but said it wasn't entirely at the expense of magazines.
"I wouldn't single out magazines," he said. "Really, all national media are affected."
The automaker also was pushing for greater efficiencies and looking for major promotional tie-ins from publishers. Other publishing executives point to the increased costs incurred during this year's network TV upfront selling season--in which many broadcasters demanded double-digit rate increases over last year--as a reason for magazines to be cut.
"Ford is signaling the industry that they want us to do business with them in a different way," said Magazine Publishers of America VP-Marketing Christine Miller. "They want us to be really marketing focused and not just media focused."
Mr. Kaline wouldn't discuss which media outlets were losing Ford business, indicating that the specifics will vary for different Ford models.
"Things are still in the process of being decided," he noted.
Although Ford buys banners and other forms of Internet advertising, he said the automaker is more interested in partnerships that will draw consumers to its Web site.
"Ford Motor Co. views the Internet as a relationship tool," Mr. Kaline said. "It's not about advertising, really. It's about talking to people one-on-one and in many instances maintaining relationships with our existing customers."
In the future, Ford is likely to invest in developing media such as addressable TV and interactive TV, he said.
Copyright July 1999, Crain Communications Inc.