Cross-company ad deals: a whole lot of hype; few success stories

Folio: The Magazine for Magazine Management, Nov 1, 1992 by Lorne Manly

The 1989 merger of Time Inc. and Warner Bros. did more than just spawn a media colossus. Its creation struck fear into the rest of the publishing industry.

Smaller magazine companies, fearful they would lose advertising dollars and market share to the Time Warner juggernaut, searched for ways to assert themselves in the advertising arena. Swept up in the hype of multimedia and synergy, many publishing executives seized upon cross-company alliances as the answer, and eagerly tried to scramble aboard the bandwagon. Newsweek and Times Mirror Magazines joined forces for the Ad-Vantage program, while Newsweek and Meredith Corporation forged the Family Connection. Bill Communications, Edgell Communications and the Hearst Corporation linked their automotive trade titles in a network buy. And World Publications, owners of Water Ski and Wind Surfing, set up the Active Lifestyle Network with Western Empire Publications' Surfing and Volleyball. "Everybody was thinking we'd get croaked if we didn't dive in," says Tom Evans, publisher of U.S. News & World Report.

But more than two years after Newsweek and Times Mirror, amid much fanfare, set up their alliance, this supposed savior of smaller publishers has established a decidedly mixed record. While the ventures' participants can pinpoint some benefits, the track record is noteworthy more for the programs that have fallen through or been scaled back than for those that have flourished. Publishing companies, like Hachette, that were champing at the bit to cobble together strategic or ad-hoc alliances, quietly abandoned their grand plans. Newsweek's cross-media deal with MTV is on hold, the victim of the recession and poor explanation to potential sponsors of why the two properties should be connected. Hearst couldn't find a sole sponsor for its program with The Family Channel, and also dropped out of the Bill/Edgell alliance.

But executives at publishing companies, advertising agencies and marketers all still believe that cross-company alliances can work. The scope, though, is much reduced. Visions of inking $30 million deals should be cast aside. What's needed is a more customized, targeted approach with a theme tied to the client's own strategic needs. "It's gone from us saying, 'Here are the bells and whistles, the gross number of bodies we can deliver at what CPM,' to advertisers asking, 'How can we get more jars of jelly off our shelves and cars off our lots?'" says Newsweek publisher Peter Eldredge.

Advertisers did not renew

Newsweek and its partners' forays into the cross-media marketplace are emblematic of this learning curve. At first, the moves were predicated on the changing marketplace. "The programs came about in response to an awful lot of press that major corporations and agencies were looking for multimedia relationships," says Jim Kopper, executive vice president/group publisher at Times Mirror.

Newsweek saw the issue in even starker terms--as part of its battle with Time. "My initial objective was to establish at least a presence that could compete--at times--with a multimedia company like Time Warner," Eldredge says. "We wanted to be able to utilize cross-media as an arrow in our quiver."

The two packages have attracted 12 advertisers since their inception, including Kmart, Seiko, Lorillard, Brown & Williamson, Amtrak and Black & Decker. This added up to 511 ad pages in '91 for the three companies. (Newsweek's 78 pages were worth about $8 million in '91; Times Mirror and Meredith did not release total financial figures.) For Meredith, gaining Kmart business for Better Homes and Gardens and Ladies' Home Journal contributed about $4 million to the company in both '91 and '92.

Although executives at the three companies claim the programs have lived up to expectations, the majority of advertisers did not renew the deals. Without a key marketing idea driving a deal, ad budgets become vulnerable to other rate-constructed programs. "With the Times Mirror-Newsweek-Meredith packages, you could save a little money, but not much," says Ira Weinblatt, senior vice president/director of print media at Saatchi & Saatchi. "Reaching wider audiences is not enough," he explains.

The publishing companies appear to have learned their lesson. They are moving in a direction toward more cause-related projects, building on the editorial strengths of the individual magazines. Newsweek is also likely to announce an alliance with a computer-magazine publisher late this fall.

The Active Lifestyle Network has also experienced growing pains since its genesis last year. With straight discounts or special ad sections the only benefits of the network, advertisers weren't exactly scurrying to sign up. Ford was one major advertiser to join, and a three-page ad section on sun protection brought in sunglasses and sunblock advertisers and close to $15,000.

Now, with business picking up and the addition of a third company to the network--Transworld Publishing and its titles, Skateboarding and Snowboarding--the publishers are considering hiring a rep firm to spearhead efforts in non-core categories.