LIQUOR AD MIGRATION TO TV THREATENS MAGAZINES
Publishers Could Lose Big Piece of $225 Million Pie
NEW YORK (AdAge.com) -- Magazines' longtime marketing partnership with liquor is looking shakier.
Because of the broadcast networks' decades-old voluntary ban on liquor advertising, magazines had largely cornered the market on liquor ad dollars, controlling $224.6 million -- 73% of total ad spending by the industry -- in the first 10 months of 2001, according to Taylor Nelson Sofres' CMR.
But with the confirmation by General Electric Co.'s NBC late last year that it would accept liquor advertising in prime time, some magazine publishers fear their level of liquor ad spending may be threatened.
"We're obviously very concerned," says Jamie Hooper, publisher of Dennis Publishing's Stuff, which counts liquor as a key category, as do such magazines as sibling Dennis title Maxim; Time Inc.'s Entertainment Weekly, People and Sports Illustrated; and Playboy Enterprises' Playboy.
While network TV has historically banned liquor advertising, some cable networks,
"It remains to be seen how much will move [from magazines to TV], but clearly, a large portion will move," says Barton Crockett, JP Morgan publishing analyst. "I think we're really going to find out truly how much liquor companies value magazines."
Brown-Forman Corp., whose brands include Jack Daniel's Tennessee whiskey, has been in discussions with NBC, says Rick Bubenhofer, public relations director. "This allows us to compete with beer and wine on equal footing," he says. Jack Daniel's has already run on cable and broadcast stations spots created by Havas Advertising's Arnold Worldwide, St. Louis.
Taking advantage of the medium
"We plan to take full advantage of the medium," adds Chris Swonger, senior vice president of corporate affairs for Allied Domecq Spirits USA, whose brands include Kahlua.
Marketing via network TV poses several hurdles, however. NBC published a list of 19 restrictions it will place on liquor ads. For instance, the advertiser must "devote a minimum of four months of 100% paid, branded social-responsibility messages prior to commencing product advertising."
Diageo's Guinness-UDV North America began running such ads for Smirnoff vodka on Dec. 15, though not in prime time.
"You have to pay for that, and television could become very expensive," says Jean Pool, president-operations of WPP Group's MindShare, New York.
The other broadcast networks haven't said they will accept liquor ads. "We didn't accept them before NBC's announcement," says Dana McClintock, VP-communications at Viacom's CBS. "We didn't accept them after NBC's announcement. And we don't accept them today."
Like CBS, Walt Disney Co.'s ABC and News Corp.'s Fox also have said they have no plans to take liquor ads.
Some observers say there may be a backlash against NBC for accepting liquor ads. The Center for Science in the Public Interest has decried the network's decision. So have Federal Communications Commissioner Michael Copps and U.S. Rep. Ed Markey, D-Mass., among others. Congressional hearings on the matter "are likely," says Rep. Frank Wolf, R-Va.
"I spoke to Congressman [Billy] Tauzin [R-La., chairman of the House Energy & Commerce Committee], and he promised me there would be hearings on this."
A spokesman for Rep. Tauzin says hearings weren't scheduled but are possible. Rep. Wolf last week spearheaded a letter from 13 congressmen who warned NBC not to take liquor ads.
But, perhaps because Washington is preoccupied with fallout from Sept. 11 and Enron, criticism of liquor ads on TV hasn't yet seemed to capture legislators' and the public's imagination. "I think [the networks] are still waiting to see what kind of backlash there is on this," says MindShare's Ms. Pool.
Brewers -- traditionally a major ad force on network TV -- also would be wary of any backlash that could lead to a ban of all alcoholic-beverage advertising on TV.
For their part, magazine publishers say they haven't heard of print budgets being cut yet. Publishers contend they're confident that liquor advertisers will continue to see the value of magazines, arguing that magazines' brands, value, niche audiences and potential for face-to-face marketing will help keep distiller ad dollars in the fold.
James Dimonekas, vice president and publisher of Playboy, says he believes advertisers want to be associated with powerful media brands. "I think first and foremost advertisers look at Playboy as a brand," he says. "It's not just a magazine -- it's a brand -- and there's a lot underneath the umbrella of that brand."
Mr. Dimonekas points to the Playboy Web site, where Playboy's in-house staff recently created an online "mega ad" that featured Hugh Hefner enjoying Jack Daniel's. Additionally, Mr. Dimonekas points to other ways advertisers can reach Playboy's readers, such as a recent Super Bowl party that featured Brown-Forman's Southern Comfort liqueur as the exclusive liquor sponsor.
Dave Morris, publisher of Entertainment Weekly, which often has featured liquor sponsors at its Sundance Film Festival parties, says: "We've always done added value. We need to take it to the next level and bolster our marketing support [for liquor advertisers]. Events will be a key, and it's one thing that TV won't do or can't do."
People Publisher Peter Bauer homes in on print's ability to reach niche audiences. "People readers are very light TV viewers," he says. "If you put money on TV, you're walking away from our readers."
Mr. Bauer also points out the expense of TV, particularly compared with magazines. "We have a substantial [cost per thousand] advantage," he asserts.
Others in the publishing community seem to acknowledge that losing some liquor ad dollars to TV is a foregone conclusion, and now are looking ahead to how the two media can coexist and prosper as ad outlets for liquor marketers. Citing a recent study by the Magazine Publishers of America, Ellen Oppenheim, MPA executive vice president and chief marketing officer, says: "Magazines as a medium actually improve the efficiency of television."
Brewers go multimedia
Ironically, one group that the liquor companies so want to challenge on TV -- the brewers -- seems to be seeing an increased value in using a multimedia approach.
"We're stealing some business away from television," Stuff's Mr. Hooper says. "Just in the last few months, we've got [Anheuser-Busch's] Budweiser, Heineken and Miller Brewing, which we didn't have before. None of those appeared in Stuff before."