Wednesday, May 30, 2007

Magazine companies start doing the work of advertising agencies

Magazine companies start doing the work of advertising agencies
By Louise Story

NEW YORK: Like executives at advertising agencies, Richard Beckman and his team talk to managers at consumer brand companies about the customers they want to reach. Four to six weeks later, they present a marketing and advertising plan.
But Beckman does not run an advertising agency. He is president of Condé Nast Media Group, a division of the magazine company that publishes titles like Vogue, Wired and The New Yorker. Over the past five years, Beckman has developed an agency-like business within Condé Nast's ad sales unit, generating new revenue by planning events for advertisers and creating advertisements that help sell more magazine pages.

Customarily, magazine companies have made money by selling ad space in their magazines or, more recently, on their Web sites. Now some of them have set up what amount to internal mini-agencies that work with clients to design campaigns for the media company's pages. Sometimes this work spills out into other forums, like radio and television ads.

Like Condé Nast, Meredith, which publishes such titles as Family Circle, More and Ladies' Home Journal, is now handling some creative work for its advertisers, and so is even Surface, a small, independent magazine dedicated to fashion and design. The trend poses a challenge to traditional agencies and has created some unusual partnerships (think of Vogue designing ads for Wal-Mart).

Condé Nast Media Group has been developing sweepstakes, television specials, radio ads, in-store events and, of course, magazine ads for companies like Dillard's, Kohl's, Grey Goose and Lexus. The unit, which relies on a panel of more than 100,000 consumers to evaluate advertising, generated about $200 million of revenue last year.

Beckman's group has drawn the most attention for Fashion Rocks, a concert and television special about music and the fashion industry. The event, now in its fourth year, ties in several large advertisers (like Chevrolet, Citigroup, L'Oréal and Cingular) and was featured last year in a custom magazine sent to Condé Nast subscribers.

This year, Condé Nast is planning another large event to sell to advertisers, Movies Rock. Produced by Beckman and some Hollywood heavyweights, it will feature music that has been influential in movies.

The idea behind both programs is to create major television events that showcase each advertiser. During the Fashion Rocks event last year, for example, Elton John performed a private show the night before that was streamed only onto Cingular Wireless cellphones. (AT&T, which now owns Cingular, has since started eliminating the Cingular brand name.)

Andrew McLean, president and chief client officer of Mediaedge:cia, the ad-buying agency that represented Cingular Wireless when it worked with Fashion Rocks, said that his client's work with Condé Nast had moved from "just buying bits of paper in a magazine to a much more multifaceted relationship." Mediaedge:cia is part of the WPP Group.

Beckman's unit also has access to relationships with celebrities who would not often work directly with advertisers. For example, Condé Nast arranged for Robert F. Kennedy Jr. to appear in an ad for Lexus that also showcased the Waterkeeper Alliance, a water protection group that Kennedy heads.

"They have the cachet and the credibility for top-tier celebrities to want to partner with them," said Robin Steinberg, senior vice president and director of print investment and activation for MediaVest, an agency that buys media in the Publicis Groupe.

Condé Nast's internal agency evolved organically, but Meredith took a different approach. Last summer the company established Meredith 360, an advertising consulting group that operates as a business unit separate from the publishing group. Meredith has purchased three advertising agencies in the past year, allowing it to offer a broad spectrum of services.

"A lot of our different divisions do what a lot of different agencies do," said Nancy Weber, Meredith's chief marketing officer.

Meredith 360 charges for its services, while Condé Nast charges only for costs when it creates custom programs for advertisers, Beckman said. (Condé Nast also makes a profit from such events as Fashion Rocks.) The rate structure means that Condé Nast can often beat ad agencies on prices, Beckman said.

"We don't have to make money from our creative, because we make money from our media," he said.

Some advertisers think that's the way it should be. Condé Nast is currently working with CIT, the financial services company, on a series of interviews with people like the fashion designer Marc Ecko. The interviews are featured online, and Condé Nast will produce live events and magazine sections over the next several months for CIT.

Kelley Gipson, director of brand marketing and communications for CIT, said she did not expect to pay Condé Nast anything more than the cost of the advertising pages her company purchases.

"I look at it as part of the value chain for media," Gipson said. "We don't charge for it when we're working with our customers. We look at the opportunity to provide sort of intellectual capital as the glue in the relationship, so we challenge our media partners to think about it the same way."

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