April 12th, 2004

Mags & Vine; As Branded Entertainment Moves to Magazines, a New Debate Erupts over Sacred Church-State Divide

By Jon Fine
Advertising Age

Brands have seeped into the plots of movies, the very fabric of TV shows and video games and even into the plots of novels. But branded-entertainment advocates are about to take on their biggest challenge yet: persuading magazines to let marketers’ messages into editorial pages.

“The only way we’re going to be more successful is to get even more creative and try to find ways to address this church-and-state” of editorial vs. advertising in magazines, said Matthew Spahn, director-media planning at Sears, Roebuck & Co.

Magazines today must answer to advertisers who demand sales executives come into a meeting with more than a schedule and rate card. Marketers and their media buying agencies want ever-more-creative ideas, and with ad-page sales still lagging for this year’s first quarter, many titles are under competitive pressure from not just their own category, but other media as well. On top of that, custom publishing, where marketers can completely control the editorial content, has steadily grown in the last decade, and an emerging category of magazines, dubbed mag-a-logs, are blurring the ad/edit line even further.

But a product-placement push into magazines, many argue, would violate the church-and-state division between ads and editorial that, at least rhetorically, lie at the heart of magazines’ time-honored pitch to marketers. Magazines sell a relationship with its readers, and an opportunity to reach them in a time of intense focus and receptivity. To disrupt magazines’ signals, say editors and not a few business-side magazine executives, is to severely undercut magazines’ one unique selling point, if not outright reason for being.

“No other media can offer that connectivity to the degree that print does,” said Richard Beckman, Conde Nast Publications’ chief marketing officer. When that church-and-state line gets blurred, he said, “the long-term prognosis for those that do it is not good.”

Others - including some who vigorously defend magazines’ traditional separation of advertising and editorial - privately wonder what the future may bring, and worry what that separation may ultimately cost them. Other media, said one prominent publishing executive, “don’t have any sort of ankle-weights on them” in terms of assembling branded entertainment-type deals. “They are running as fast as they can.”

not ‘part of the fabric’

And marketers notice. Mr. Spahn spoke of “media partners working in much less traditional ways, that go way beyond just buying ad pages or buying spots. It’s more about integration of the product, and becoming a part of the storyline, in ways that readers or viewers will still be interested in consuming that material.” He admitted he was not fully sure what the magazine equivalent of, say, Sears’ deal and appearances in ABC’s “Extreme Makeover: Home Edition” might look like, but expressed dissatisfaction with magazines’ attempts to play in this space. “They still think in terms of advertorials,” which, he said, “doesn’t feel like part of the fabric” of editorial.

“It’s a huge challenge for magazines,” Mr. Spahn conceded, but he added “they’ve got to figure this out. We are getting a little frustrated, frankly, trying to get them there.” Last year Sears spent $47.7 million in magazines, according to Competitive Media Reporting, down 25.7% from $64.2 million in 2002.

Magazine executives testify to increased pressure from advertisers to break down or breach traditional walls.

“More advertisers ask us to blur the lines between advertising and editorial,” said Nina Lawrence, President of Conde Nast Publications’ Bridal Group and Publisher of Bride’s and Modern Bride. “It’s accelerated in the last year.” Ms. Lawrence placed the blame for this squarely on branded entertainment deals: “Advertisers are asking for what they want on TV, and they’re getting it.”

It may not be only advertisers seeking such deals. Peter Gardiner, partner and chief marketing officer of Interpublic Group of Cos.’ Deutsch, said his company was approached by a magazine with an editorial concept worked around one of his clients. “It’s a really tricky area,” he said.

Concerns over this point led one incoming editor of a midsize endemic magazine to write into an employment contract a clause stating that the magazine must strictly observe guidelines governing the separation of advertising and editorial set down by watchdog group the American Society of Magazine Editors, said an executive familiar with the matter.

Any sort of product-placement deals in magazines would rather blatantly violate the industry’s accepted rules. According to ASME guidelines, ad messages and ad pages should be “distinctly different from the publication’s normal layout.” One conceivable exception is for special advertising sections, but these sections must be “clearly and conspicuously identified as a message paid for by advertisers.”

In truth, consumer magazines’ dance with their advertisers is universally conceded not to be a wholly chaste affair wherein both parties scrupulously observe limits and boundaries. Key beauty and fashion advertisers, for instance, are often depicted in product layouts among magazines dependent on them as part of open-secret horse-trading of editorial “credits” for advertising.

“We usually use our fashion sections as the place to throw some of our clients a bone,” said Suroosh Alvi, a co-founder of independent Brooklyn-based lifestyle title Vice.

This admission is privately echoed by top players at magazines owned by major publishers, who sometimes cite more lax ad/edit divisions at European magazines as a catalyst. But a jacket showing up in a fashion layout doesn’t equal, say, a series of paid-for Cadillac references showing up in a short story that doesn’t have the words “special advertising section” topping it, nor a long account of a mountaineering expedition studded with mentions and visuals of the adventurers chowing down on Power Bars.

Integrating brands into editorial is not universally sought by marketers who’ve played in the branded-entertainment space or, unsurprisingly, among key magazine executives.

“We haven’t been looking at magazines at all with the whole Madison and Vine concept in mind,” said Tracy Sandford, director-marketing, JetBlue. She said that JetBlue’s regional tilt precluded making national print buys, but she also believes: “You have to overcome the advertorial concept. ... How can you differentiate between just an advertorial and something a little more integrated?”

“We would never ask an editor to do a product-placement deal,” said Michael Clinton, chief marketing officer of Hearst Magazines. “It’s just not how the medium works.”

not exactly ‘queer eye’

At the same time, it’s clear that magazines’ standard responses to advertiser demands for more marketer-centric content “special advertising sections,” standalone custom-publishing efforts and event tie-ins are simply nowhere near as sexy as a mention on Bravo’s “Queer Eye for the Straight Guy,” and some marketers suggest there may be middle ground in which magazines can operate.

“When it comes to print, the issues are more subtle. But I don’t see a reason why you can’t do what I’ll call ‘appropriate product placement’ in print,” said Philip Guarascio, a marketing consultant for the NFL and a former top marketing executive at General Motors.

The branded-entertainment concept comes at a particularly complex and delicate time for magazines. The medium’s longtime circulation model is widely reckoned to be broken (AA, March 15). Its ad recession is entering its fourth year, with few bubbles and bumps of serious forward ad momentum that, say, TV sensed via strong upfront sales.

A new generation of marketers are excited by the prospect of embedding messages in “American Idol,” “Tomb Raider II” or even novels. More broadly, the commercialization of the American landscape now encompasses the sponsorships of stadiums and arenas, and even public spaces, such as museums and national parks. In another first at Major League Baseball’s opening day in Japan last month, uniforms worn by the New York Yankees and Tampa Bay Devil Rays sported logos and patches advertising Tokyo-based office equipment firm Ricoh, for which the marketers paid over $10 million.

“How do you maintain integrity in a world where the lines are blurring?” wondered one veteran branding executive.

This point is especially plangent for magazines at a time when the category with the most heat is that of pure-play shopping magazines, the frankly retail-oriented products pioneered in America by Conde Nast’s Lucky. Lucky was joined last month by Conde Nast’s male-oriented version Cargo last month. Upcoming later this year is Fairchild Publications take on the genre, Vitals, Hearst Magazines’ Shop Etc., and next year will bring Lucky’s take on a shelter magazine.

Lucky Editor in Chief Kim France strongly objected to notions that her magazine has helped blur the lines between advertising and editorial. “It’s annoying to me that excluding the articles about movies and boyfriends and sex tips somehow makes your hands dirty,” she said. If Lucky’s readers “felt our editors were just shilling, they wouldn’t respond.”

But when asked about Shop Etc. in a recent interview with Advertising Age, Hearst Magazines President Cathleen Black made clear that magazines have entered a new world.

“The more interactive we can make” Shop Etc., Ms. Black said, “the more it’s a useful tool for the shopper. What ASME wants - and what their rules are - is irrelevant to Shop Etc.,” a comment that had editors shifting uncomfortably in their seats. One fumed, “We have people saying” traditional notions of ad and edit separations “don’t apply to certain magazines.”

Slippery-slopers may find fault with Ms. Black’s remarks, but the world of TV offers a useful parallel. One sees product placement in pure entertainment plays such as “The Restaurant”; one doesn’t see them on the CBS’s “Evening News with Dan Rather.” Is it conceivable magazines may enter a similar space, where what’s unthinkable in the likes of The New Yorker and Time is acceptable within the pages of magazines purveying lighter fare?

disgruntled?

The dividing line does vary from magazine to magazine, sometimes shockingly so. Dave Itzkoff, a former editor of Maxim who left that title in the summer of 2002, said that during production editorial pages “were reviewed by someone in the ad department, who would scan for mentions of any brand-name product.” If advertisers’ products were mentioned “in any disparaging way, (the ad staffer) would approach to say, ‘please delete it’” or make the reference more generic. And “if we mentioned a product in a favorable light that was not an advertiser” the ad-side would request “to find a competing product who is an advertiser” and change the reference to that advertiser. Mr. Itzkoff said these requests resulted in several instances to editorial changes.

One Maxim partisan pointed out that since splitting Maxim, Mr. Itzkoff has made hay from being a disgruntled former lad-magazine employee, most prominently thus far in an extensive takedown of the genre written for Manhattan weekly New York Press. But his charges about the coziness of advertising and editorial at Maxim are confirmed by at least one other witness who told Ad Age of such events.

In a statement, Dennis Publishing Editorial Director Andy Clerkson, who oversaw Maxim for nearly three years as its general manager, said “The idea that senior sales staff on any magazine do not try to pitch editors to treat their clients favorably is na ve. However, at Dennis Publishing, the editor in chief has always had and always will retain final say on what is printed. We have never, nor will we ever, alter a product review based on advertiser concerns.” (Mr. Itzkoff disputed that Maxim’s editor in chief had final say.)

“There’s certainly a spirit of cooperation within our magazines, and a willingness to consider new ideas. But there’s also a line drawn between the editorial and the commercial,” said Time Inc. Editorial Director John Huey in a brief statement prepared for Ad Age. “Crossing the line is not good for the reader. It’s not good for the brand. And it’s not good, in the end, for the advertiser. The notion that ‘everybody else is doing it’ is not a compelling argument to us.” (But, again, the line is sometimes elusive. An executive at Southern Living, part of Time Inc.’s Southern Progress unit, admitted in a 2002 Wall Street Journal article that the title brought advertisers into some magazine-planning meetings.)

An editor in chief elsewhere put the commercial argument of church and state in more blunt terms. “Without a visceral relationship with the reader, it’s not going to work,” this editor said. “Don’t be getting in the middle of that” with product placement. “My reader’s gonna say, ‘what’s this (expletive) for?’”

For marketers, said one publisher of a blue-chip magazine, “the most important decision is allocation of media, and who gets what. What happens as the magazine industry, because of ASME, doesn’t do any Madison & Vine type things? I think it ultimately puts the magazine industry in a weaker place.”

‘FIGURE IT OUT’

“Go make the deals and then figure out how they work within ASME guidelines,” shot back Susan Ungaro, editor in chief of Family Circle and president of ASME. “You are selling from weakness rather than strength if the only way you can get an ad to come in your magazine is to promise product placement.”

The bigger question, of course, is if any attempts to get branded entertainment into magazines will be met with consumer acceptance - a la “American Idol” and AT&T Wireless - or consumer backlash. Flashpoints of consumer anger, at press time, are forming over Google’s plans to mine e-mail messages sent on its free “Gmail” service in order to target ads to its users. But executives point out that a new generation of consumers has grown up receiving marketing messages embedded in entertainment products, and, separately, the broad acceptance of shopping magazines such as Lucky indicates consumers tolerate openly commerce-oriented titles.

Still, some sound uncertain. “Ultimately, your ability to create revenue for the advertiser will get hurt if you’re jeopardizing the loyalty of the reader,” said Brad Ball, the principal of the newly launched Madison & Vine firm Ball Entertainment Group, which counts among its clients Time magazine. Still, he suggested in the future “you might find an entire subject written by a well-known magazine brought to you by” a key advertiser.

REWRITING THE RULES

Within a five-year window, he said, “the landscape of reaching audiences and choices audiences have is going to accelerate ... The rulebooks (of marketing) will be rewritten.” As such, some magazine executives speculate about product pages of the future, in which one slot is reserved for an ad placement, and marked as such.

These notions still prompt howls from some key executives. “From a Time Inc. perspective, I don’t see a world where we’re going to have product roundups as pure editorial that are going to have any bias towards any specific advertiser,” said Time Inc. Exec VP Jack Haire.

But one executive pointed to an eventual breakdown in magazines’ resistance to product placement owing to the golden rule (as in: He who has the gold makes the rules). And this is clearly a marketing world in which taboos are broken daily. Last month, a Major League Baseball VP said “never say never” to the possibility of paid-for logos appearing on baseball uniforms.

Magazines’ traditional defenders of the ad/edit divide must make their case in purely economic terms, since even a key player in the one industry organization tracking this situation admits their penalty options are limited. “It’s the next natural evolving demand from advertisers,” said David Granger, editor in chief of Hearst’s Esquire and ASME’s secretary. “There’s really very little an organization like ASME can do to prevent” breaches of the ad-edit divide. “All we can do is warn” offenders “and say they’re not eligible for rewards.”

This is a limited threat.

Ms. France took pains to say Lucky was responsive to ASME concerns, and said, “I have nothing but respect for them.” But when Lucky won Advertising Age’s Magazine of the Year last fall, Ms. France said, “I certainly know not to expect a General Excellence award from ASME.” And, she added, “I don’t care so much. I know I’ve got the readers.”

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