April 12th, 2004

Mags & Vine; As Branded Entertainment Moves to Magazines, a New Debate Erupts

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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