Consumer Magazine Report: Advertising – Eyes Wide Shut

The clutter of last year’s advertising has given way to a more sane approach. Does that mean less profit for print?
Early on, Amazon led the way in building well-known Internet brands through offline advertising. But the retailing pioneer’s experience may also portend the next phase of the industry’s efforts to create, at warp speed, the kind of high profile forged over time by their more established bricks-and-mortar competitors. On Jan. 5, Amazon’s shares dropped 15 percent after the company said fourth-quarter sales would fall below some analysts’ projections, despite tripling of ad budgets.
If Amazon, with its considerable marketing prowess, is failing to turn ad dollars into consumer sales, what about the wave of unseasoned start-ups whose advertising expertise seems to lie largely in access to media dollars raised through IPOs? After an intoxicating year–in which advertising in magazines skyrocketed 348 percent to $707 million–publishers can expect a more considered approach to allocation of ad dollars in 2000. That’s not to say advertising won’t continue to drive the industry: The online category is still expected to fuel what is projected to be another buoyant year for magazines.
But 1999–the first real year of massive spending by Internet companies in traditional media–didn’t transform many free-spending Web start-ups into household brands. The lucky survivors have already begun to reevaluate marketing strategy.
“Last year was all about intense clutter from lots of companies who had never done advertising before. It was pretty clear they didn’t know what they were doing,” observes Richard Dean, associate creative director at Organic Media, San Francisco. “The venture-capital crowd is not familiar with marketing. They thought if you put dollars into advertising, you automatically get eyeballs. Going forward, I don’t think you’ll see less online advertising–because this segment isn’t going to decline–but I do think you’ll see savvier strategy in the way these companies approach it.”
For one thing, publishers may see themselves competing with less expensive alternatives. Many Web merchants are now looking to direct e-mail and co-branding with other sites or e-tailers.
Still, no one argues that the basic momentum of the category is unstoppable. In 1999, advertising in magazines generated 4.6 percent of all revenue, according to PIB–found money in a category already enjoying a good year because of robust spending from automotive, pharmaceutical and computer and software marketers. Thriving Web marketers and startups are expected to offset spending cuts from less successful players. In addition, there are new growth trends among companies that have not previously been as active in traditional media. Last year’s growth was driven, in large part, by startups seeking overnight consumer pedigrees; this year may be more generally categorized by business-to-business online advertisers and established bricks-and-mortar brands seeking to re-create themselves on the Internet.
“Internet advertisers will certainly continue to be a driving force for magazines this year,” predicts Robert Coen, svp/director of forecasting at McCann-Erickson Worldwide. “More and more marketers who are getting involved in online transactions need magazines and other traditional media to get that message across.” He expects overall spending in magazines to jump 7.5 percent, to $11.9 billion, in 2000.
Magazines trailed only network TV in grabbing their share of advertising, according to Coen.
“ advertisers are realizing the importance of print, in getting their repeat message viewed over and over again,” says Suzanne Sobel, publisher of Martha Stewart Living, who says 4 percent of her magazine’s ad pages in 1999 came from the category.
Last year, much of the groundswell in magazine spending from advertisers came in the second half. So while most publishers aren’t sure they can expect to maintain–or exceed–that level of growth in the final months of the year, they are nonetheless bullish about increases in the first six months of 2000.
“We just published our biggest issue, 344 pages, in the weakest quarter of the year,” boasts Steven Thompson, publisher of The Industry Standard, comparing that number with the magazine’s typical 60- to 68-page folio at the time he joined the book in December 1998.
“In the last year, we saw more of the business-to-consumer advertising. But I think this year we’re going to see consolidation in that category. How many drugstores and pet stores online can you have? The business-to-business side is where I think the growth is,” he continues, echoing other business-book publishers. In 1999, he estimates, 35 percent of Industry Standard’s revenue came from advertisers.
E-commerce startups have always used large amounts of capital raised through IPOs to finance their advertising efforts. But that strategy may not work in the future. On Feb. 11,–already a visible Internet brand thanks to aggressive advertising in traditional media–went public at the same time as webMethods Inc., a little-known software manufacturer., which spent $2.5 million on the Super Bowl alone, opened at $11 and closed at $11. WebMethods soared 507 percent, the fourth-largest first-day gain in IPO history. Similarly, by early January, the tech stocks that had led the Nasdaq to record levels had plummeted 35 percent from their December highs.
For all of the Web startups’ ad spending–an estimated $1.7 billion last year–they’ve not really surpassed established brands. In 1999, traditional online bricks-and-mortar entities made up nearly half of Media Metrix’s list of the 50 most popular sites.
Like Thompson, other publishers of business magazines say they’ve seen no slowdown in business from late last year. “The huge momentum started in the fourth quarter is continuing into 2000, and Internet companies are helping to drive that,” says Fortune publisher Mike Federle, who logged 189 pages of ads last year. “Already, through Feb. 1, we’ve booked 78 percent of what we booked full-year in ’99.” Over at Business Week, the magazine’s “e-biz” editorial supplement, launched last March, proved so popular with advertisers, the magazine couldn’t keep up with demand. “At one point we had to leave $5 million in advertising on the table because we were completely sold out,” says publisher Bill Kupper, who adds the magazine is now staffed up to support larger-size supplements. Kupper also expects to double the frequency from five issues.
Nonetheless, online advertisers helped to make Business Week the industry’s top performer last year. The magazine boasted a 22.9 percent increase in ad-page growth, according to the Publishers Information Bureau. Kupper estimates that 30 percent of the book’s $55 million in revenue from new advertisers came from marketers.
Other business books are also scrambling to create new Internet-driven products, which were once the sole terrain of titles like The Industry Standard, Business 2.0, Fast Company and Red Herring. In May, Fortune will debut its first spin-off, eCompany Now. Cahners Business Information announced it is launching eCommerce Business; International Data Group is unveiling Darwin, targeting business decision-makers; and Ziff-Davis Publishing is retooling PC Computing into Smart Business for the New Economy.
Some industry players question the need for so many Internet-specific business publications. “Advertisers used to look at ‘new economy’ books and see their readers as early adopters,” says Bruce Brandfon, Newsweek’s director of advertising, who counted 245 pages from the category last year. “About six months ago it was the new economy. Now, it’s the economy.”
It’s not just the financial magazines that are rushing to produce Internet-focused editorial. In April, Harper’s Bazaar will publish a whole issue devoted to the Internet, while Elle launches eElle, a separate polybagged guide to electronic shopping for East and West coast subscribers. (Elle plans to publish another eElle in December.) This spring, Better Homes & Gardens is publishing its second online shopping guide, evaluating 250 home and family sites. The magazine is also producing a special issue called “Intelligent Kitchen,” which has brought in advertisers such as Intel. While these features help attract advertisers, they also bring in other marketers in the larger technology field. “Computers, chips and software are growing significantly for [BH&G]–something you wouldn’t expect in our category,” says Chris Little, president of Meredith Corp. Publishing Group, who says ads now account for just under 5 percent of revenue.
Other magazines are taking established franchises and adopting them for Internet advertisers. Good Housekeeping, which has published e-commerce guides for readers, established criteria for the magazine’s acceptance of ads from online marketers. Already, the book that created the Good Housekeeping Seal of Approval has turned down ads for sites that don’t meet GH’s taste standards and criteria related to product quality and service, according to publisher Pat Haegele, who saw the most significant increase in business from dot.coms in the fourth quarter, when the title brought in $5 million.
Glamour ran a 40-page advertising section from “ is just another form of retail, and Glamour’s strongest selling proposition has always been driving image and sales at retail,” contends Debbie Fine, Glamour’s publisher. Fine says the magazine ran more than 50 pages from such online entities in 1999.
A repeat of the meteoric growth of 1999 is unlikely, however.
“We’ve enjoyed significant growth and are optimistic about the prospects of a category no one really anticipated as recently as 12 to 18 months ago,” says Newsweek’s Brandfon. “Still, there’s an artificial sense of buoyancy in the category right now. Logically, the pace of growth can’t continue.” n
Scott Aal, co-creative director of Grant, Scott & Hurley, S.F., critiqued three ads for Adweek.
In all honesty, it’s hard to be a fair judge of this ad without seeing the rest of the campaign that it’s part of. I have a feeling it would make more sense in that context. Because as a single piece of communication, it’s a little confusing. Was this “whiz boy” trying to figure out other places to store 4.7 million video, CD and book titles? Was he trying to find a way to store it all himself? I like some of the work that’s been done for Amazon, especially the recent holiday TV campaign, but this seems like a long way to go to remind consumers that nobody has more stuff.
Congratulations to’s agency for convincing its client to do something simple and intelligent. So many Internet companies make the mistake of trying to say everything in every ad. You end up with a train wreck of an ad, which people assume is going to lead them to a similarly complicated site. Who’d want to go there? It also makes a company seem desperate–not an ideal brand positioning. The Ashford print has a quiet confidence that makes me, the consumer, think they actually know (and care about) what they’re doing. I don’t know if they’re the leaders in their category, but they look like they are.
This ad does a perfectly fine job of communicating’s service, and relative to a lot of Internet advertising, that’s admirable. Still, it’s hard not to compare every new ad to the brilliant “When I grow up” Super Bowl spot they did two years ago. Whereas that spot offered a unique perspective and was refreshingly honest, this ad seems a bit trite. You have to wonder if people are getting a little tired of hearing how the Internet is going to radically change their lives (exclamation point!). Maybe for independent contractors, will. But I wish there were a more interesting way to say it.