Time Inc. Bleeds as Detroit Automakers Gut Magazine!

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Time Inc. Bleeds as Detroit Automakers Gut Magazine Ad Spending
GM, Chrysler Lopped $100 Million Off Budgets; Pain Spreading to Publisher
By Nat Ives

Published: January 22, 2007

NEW YORK (AdAge.com) -- Blame it on Detroit. While many are looking to the digital future to explain why Time Inc. fired 289 people last week, they'd do just
Time Inc.'s biggest advertiser -- General Motors -- cut its ad spending by $47.8 million last year. DaimlerChrysler cut its ad spending $93.5 million during the same period with the publisher.
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as well to look at the present -- particularly at the changing marketing habits of the domestic auto industry.

Shifting out of print
While the story of magazines' ongoing battle to adapt to the web world is well-documented, the untold story is of Detroit's beleaguered carmakers, long pillars of print advertising, which are cutting their costs and, when they are spending, often seek more direct and interactive connections with their customers.

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.

Massive Chrysler cuts
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."

Long-term newsstand decline
Of course, there are other reasons for Time Inc.'s woes. The long-term decline in newsstand circulation has afflicted just about everyone in magazine publishing. 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.

SI is actually one of the magazines furthest along in developing digital revenue. Its total print circulation has also grown since 1995 on the strength of the subscriptions that make up most of its circulation anyway. But advertisers view newsstand sales as a sign of vitality.

So even with the layoffs, the country's biggest magazine publisher will need more than a killer web strategy to produce the growth demanded by its parent, Time Warner, and its ultimate boss, Wall Street.

'Time of transition
"As you all know, the past year has been a time of transition at Time Inc.," Time Inc. Chairman-CEO Ann S. Moore said in her staff memo last Thursday. "While we continue to invest in our core magazines, we are also focused on transforming our workforce and broadening our digital capabilities in order to become a truly multiplatform publisher."

It's clear, all the same, why Time Inc. has focused so heavily on cutting costs -- and why so many employees wonder how much of the undisclosed savings will even go toward digital investments.

While the remaining 10,500 Time Inc. employees wait for the future to put some new lift under Time Inc., last week's cuts are taking their emotional toll. The company has eliminated nearly 800 jobs through layoffs and voluntary buyouts, sold Progressive Farmer magazine, closed Teen People's print edition, and started an auction for 18 magazines with some 560 employees.

"I'm fine, having had the rare foresight to move to the digital side," said one of the Time Inc. staffers still employed after Thursday. "But everyone is pretty bummed out, as you can imagine."

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It's big domino effect, which will continue!

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What was interesting is that many print media was stuck on continually writing about how the "domestics" were behind the times...

So lo and behold the domestics looked at how best to market their products and it was determined that Print media (such as Time Inc) was being left behind in communicating to consumers...so 100 million dollars was loped off Time Magazine advertising revenues and portions redirected to MORE MODERN MEATHODS OF COMMUNICATING TO CONSUMERS!

Serves them right!