Effective Selling in a Down Market
Seven tips to keep the ad dollars coming.
Debating whether the U.S. economy is technically in recession or not is largely academic for magazine publishers trying to hit their budgets each month. “I’ve been through a few of these and this one is troubling in many ways because there doesn’t seem to be one sector that isn’t feeling the strain in one shape or form,” says Giulio Capua, vice president and publisher of Architectural Digest. “When you’re a magazine like ours and you’re tied to the housing market, believe me, it’s a frightening time.”
Especially when you consider that in some markets, like real estate, major advertisers aren’t just cutting back, they’re disappearing. “Bear Stearns goes out, Countrywide goes out, that’s a lot of money that’s just not coming back,” says Michael Desiato, group publisher of Incisive’s Real Estate Media. “I’m trying to do forecasts now for this year and next year and it’s anybody’s guess. You’re almost afraid to call up people for fear they might cancel an ad.”
Still, both Capua and Desiato and their teams continue to sell (Architectural Digest is up 3.9 percent in pages and 10.1 percent to $88.1 million in ad revenue in the first half of 2008, according to PIB).
Below, the two publishers outline what has worked for them to keep money coming in, including trying to tie advertisers more directly to editorial without crossing the church-state line.
1. Create Scale
In a down market, advertisers need to know programs have reach and that can mean packaging print with other products. “One of the challenges for larger advertisers—automobile, cigarettes, etc.—is when they’re executing programs, especially with magazines, does it have enough scale to warrant creating a display?” says Capua.
Events are a common added-value component for AD. “Events are a hot button in is this ‘experience economy’ and we’ll offer to make an advertiser’s event more special,” says Capua.
AD leveraged the Architectural Digest Design Show—a consumer trade show that draws about 20,000 attendees—to create new sponsorship opportunities for brands such as Lincoln Mercury, which wanted to emphasize the design of a new vehicle series. The campaign featured in-book advertising, exposure at the show and ultimately (unsolicited) editorial coverage in the magazine when Lincoln Mercury brought three young female designers who worked on the cars to the event. “This helped shatter myths about what Lincoln Mercury was about and influenced a community with some predispositions about the design,” says Capua. “Our editor-in-chief thought it was interesting to profile three young women working for a Detroit car company. It was completely unrelated to the sponsorship but ended up taking it full circle.”
2. Develop New Products
Real Estate Media has made up for some of the advertising drop with a series of sponsored roundtables in which a client gets to sponsor and even participate in a discussion of trends in the marketplace, which is then featured in the magazine. “They’re basically buying a seat on the panel and the stories are labeled ‘sponsored panel,’” says Desiato. “Sometimes we’ll package it for high volume advertisers. It’s basically custom publishing. It’s a legitimate topic done as a legitimate story. The advertiser doesn’t get to review the story but they do get a few more bells and whistles such as a logo, a bio for their representative, something to help promote their company.”
Real Estate Media typically does one sponsored roundtable per quarter for each of its four magazines. The publisher tries to recruit four or five sponsors per roundtable, at $10,000 each. In addition to the print component, podcast versions appear on the magazines’ respective Web sites. “Audio works well for this audience,” says Desiato. “We’ve looked into video but we’re not sure it’s right for them. We will do focus groups on video, which is a substantial investment, especially when you’re not sure how to monetize it.”
Desiato also advises publishers to reach out to markets and clients they may not have considered before the downturn. “We’re working with Dubai right now and if it works out, that could be very big,” he says. “ Those are the kinds of things you reach out for—what you typically would not look for. This time last year, I wouldn’t have sent my sales manager to Dubai.”
3. Make Sure Online Ads Drive Response
If ads aren’t working, try something new. Online ads are especially quick to fix. “Typically, ads on our Web sites are static and not based on a CPM model,” says Desiato. “We’ve gone to more text-style link ads that tend to drive more traffic than a cube. People don’t tend to click on Web ads but will click on text.”
4. Hold Rates But Offer Alternative Buys
Architectural Digest is a fairly unique Conde Nast title in that its endemic advertiser base—fabric, lighting, furniture, basically anything going into the home—has little cross-over with its sister magazines. Many advertisers are small businesses with an average schedule size of two to three pages. “We’re usually the biggest line item on their marketing budget and we’re often twice as expensive as other magazines out there,” says Capua.
Holding to set rates is getting increasingly difficult for publishers but AD just abides by an established corporate policy, according to Capua. “It’s the easiest thing in the world at Conde Nast—corporate contracts are negotiated on revenue and it’s out of our hands,” he adds. “We negotiate added-value but we don’t negotiate rates.”
Still, AD has to offer some flexibility for the smaller advertisers that make up much of its customer base. “We’ve had to be creative in creating regional opportunities for advertisers that want to be in the magazine but can’t make the leap nationally first,” says Capua. “We have Top 10 metro buys, New York City-buys, California-only buys. Those are usually the way you find companies entering our brands and as their business grows, they grow into a national buy.”
5. Find the Sweet Spot
Sometimes publishers can tap into other budgets beyond print or online dollars. “It’s interesting to see where advertisers will have money in the budget,” says Desiato. “They may not have money for an ad but they will have it for a cocktail reception. More and more, we’re saying we’ll produce a cocktail reception and you can fly in under our banner.”
Relationships are key but it may be time to cut out the middleman. “There are ways of finding money and the key is finding where the sweet spot is,” Desiato says. “If you’re just talking to marketing directors or agencies, you’re never going to get it. You have to go direct now. Go right into executive level decision-making. If you don’t do that, you’ll just be in more pain. There’s no magic bullet in this. I’ve been through four of these, I know how the story ends.”
6. Take A Long Term Approach
As advertisers pull back (and many push publishers on price and value-adds), publishers need to consider the long term relationship with the client. That means going above and beyond for an advertiser with a proven relationship but also drawing the line for a client that’s proving to be more trouble than they’re worth. “When you hear an advertiser say they have to trim an insertion, do we still execute on the added-value or do we trim it back 20 percent?” says Capua. “We try to take a long term approach with our long term partners. If you’re both on same page and honest and direct, you can work it out even if there are a lot of hard costs tied into the value-added component. Understand the client’s objectives early so you can be out ahead.”
7. Put Some Distance Between You and The Competition
One opportunity in a downturn is that category leaders can actually increase their lead on the competition trailing behind them more easily. “In booming markets, it’s harder to grow market share,” says Capua. “Advertisers are compelled to spread their money around. When the market shrinks, they’re faced with difficult decisions and say, ‘I’m going to stick with what works.’”
Negotiate from a position of strength (even if that’s not the case). “You need to position your products more as something advertisers need than something they want,” says Desiato. “There’s a thin line between advertisers who want to be there and those that need to be there.”