A pretty eye-opening piece from Ad Age:
Detroit automakers slashed spending with Time Inc. a total of more than $100 million last year. General Motors, formerly Time Inc.’s biggest advertiser, cut its spending by 29%, or $47.8 million, according to estimates by TNS Media Intelligence. GM added no new Time Inc. magazines to its media plan and completely dropped All You, Baby Talk, Motorboating and Salt Water Sportsman.
DaimlerChrysler, while not quite as big an advertiser, was equally aggressive, slashing its spending with Time Inc. from $93.5 million in 2005 to just $39.7 million last year. Ford Motor Co. also reduced spending, albeit much less dramatically, trimming its Time Inc. outlay from $106.7 million to $101 million.
But there were some auto-marketing success stories for Time Inc. Fast-growing Toyota increased its Time Inc. spending to $87.9 million last year from $80.1 million in 2005, and Honda grew its spending to $62.9 million from $58.1 million. However, these increases clearly do not offset the cuts from the domestic players.
Detroit is shifting some money to the web, but even if Time Inc. owned lots of internet properties considered perfect vehicles for the carmakers, ad rates there remain too low to make up for the magazines’ losses, which goes a long way toward explaining why the publisher is still talking about the promise of a digital “future.”
In 1995, for example, Sports Illustrated sold an average of 135,098 copies per issue on the newsstand, according to a Harrington Associates analysis of data from the Audit Bureau of Circulations. By the first half of last year, the most recent data period available, newsstand sales were down 26% to 99,066.
Wow. A lot to digest. Backin 2000-05 when I worked at an online magazine competing with Hearst, Dennis Publishing, Emap, Time, Rodale and company, we’d occasionally have discussions as to how we could cooperate.
Externally, we showed off plenty of bravado because, well, the growth was on our side of the fence online. But who were we kidding, internally, we knew: the absolute dollars of advertising were clearly on their side. Now that advertising online has grown to $15 billion in the US alone, with a range of $25-32 billion in three short years, clearly the stakes have changed. We also knew we’d have to be nice because invariably many of these companies could have ended up acquiring us.
But in light of those sharp drops in ad budgets from print to the Web, I won’t lie: it feels darn good to be on this side of the fence. In fact, I’m not alone. Trends like these might explain why Time just unloaded a myriad of publications including Popular Science for $100 million less than it was hoping to sell them for to Swedish-based publisher Bonnier magazine.
Paid Content pegs the deal at $210-240M, which means a 10.9 multiple.
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January 26th, 2007 at 6:46 am
Ci sono ancora dubbi?…
Perfino i produttori di automobili stanno spostando i loro budget pubblicitari sul WEB, e risparmiano facendo cosi’ perche’ i costi sul WEB sono minori. Peccato per i Time Inc. e gli altri che vedono ridursi i ricavi pubblicitari e la circolazione de…