Are Value-Added Programs Vanishing?

Folio: The Magazine for Magazine Management, Sept, 2000 by Jennifer F. Steil

As traditional publishing companies morph into multimedia content providers, each platform must become a separate profit center. But what effect is this having on value-add advertising programs?

Jeff Hamill

Vice president of advertising

Hearst Magazines

We're in an era of advertisers wanting to integrate their media plans, but that does not take the emphasis off added value. Advertisers want media companies to help them market. You can't sell to big advertisers by just going with a straight media sale--you have to help them market their product. That's the emphasis on value added now--what kind of customized marketing you can do for them. This should not be confused with throwing in freebies. (The idea that added value is free is gone.) If you create something juicy for them, they're more than willing to pay for it, but it's not the same as simply selling a page of advertising.

Nick Matarazzo

Senior vice president and director of group publishing and corporate sales

Hachette Filipacchi

Value added will never go away, but it has evolved into something different. The key is to become more integrated on a marketing level with an advertiser and get them more involved with your product. Value add has become smarter, bigger, broader marketing. And these are programs clients are willing to pay for with budgets outside of print budgets. It's about taking your brand and extending it to multi-platforms and leveraging that for clients. If they want to put up a section on the Web, you may have found a new consumer, and the clients are willing to pay for that from a different budget. Some of the dollars will shift. There has been a shift in dollars from print to online, but the overall pie is getting bigger. There may be 5 percent less print, but 20 percent more money. If you position your brand properly, you can still tap into all those budgets.

John Wickersham

President and chief executive officer

VNU Business Media

It's fair to say that the origin of many non-print media efforts began with low-or no-cost offers intended mainly to drive print advertising. But most media companies have evolved their non-print strategies a great deal over the past several years--beyond the value-add concept. Frankly, most media companies are rewarded by analysts and shareholders on a dollar-for-dollar basis, more by demonstrating non-print revenue growth and profitability. So, in this respect alone, it makes little sense to subordinate non-print enterprises for the purpose of boosting print ad revenue. Regarding profits, at VNU Business Media we have low interest in creating subordinate, loss-leader type non-print media channels. We're aiming to develop solid profit contributors, led by our key media brands.

In business-to-business media, many of us are moving toward more integrated business models using the channels of print, expositions/conferences and online. The combination promises to provide a way for us to satisfy the increasingly sophisticated demands of both subscribers and marketers.

Jim Spanfeller

President, Consumer Magazine Group

Ziff Davis Media Inc.

Yes, I do think that value add for the sake of value add is on the wane. Now marketers are simply looking for value, period. Great value-added programs against poor host media do not add up to great value. Great host media with line extensions (be they Web-related or other) can certainly demand distinct and separate payment.

Hugh Roome

Executive vice president Scholastic

We needed to diversify the revenue sources for our publications, and what had been value added for advertising we wanted to build into freestanding business operations. What we've tried to do is build a market services company, so we talk to advertisers about building a relationship with us. Instead of advertising being a critical end game, in terms of our revenue opportunity, we view it as one of several marketing products that we are bringing to the companies we do business with. It's no more important or lucrative than a database license, a custom publishing project, or a Web service agreement.