MAGAZINES GASP AS PHILIP MORRIS SNUFFS OUT ADS
Tobacco giant Philip Morris USA unwittingly may have delivered a one-two punch to the magazine industry when it pulled the plug on ads in 40 publications with substantial numbers of young readers. By doing so, PM wanted to reaffirm its policy of cigarette
Blow No. 1 means that as much as $90 million to $100 million in advertising is being yanked out of magazines, some of which carry a significant portion of PM's cigarette advertising, including for the flagship Marlboro brand.
PM last year spent $215 million on ads for its tobacco products in magazines.
Blow No. 2 is to the financial future of more than a few of these magazines, which are either on the edge or "living off advertising from Philip Morris," one industry observer says.
Some of the publications could soon fold or be merged into other periodicals.
PM and Starcom in Chicago, which has largely held media-planning and buying responsibility for PM's brands, have paid top dollar to advertise in magazines. Starcom is a sister unit of Leo Burnett USA, PM's longtime principal ad agency.
In many instances, they have paid premium rates for position, particularly for inside and back covers. It's not likely the publications jolted by this PM move will be able to recoup the lost revenues.
PM's pullback comes after state attorneys general began dealing with the issue of youth smoking, investigating whether cigarette-makers were targeting young people with their advertising. Doing so would be a violation of a legal settlement two years ago between states and the biggest tobacco companies.
Sources say that Time Warner Inc.'s Time Inc. publishing unit held the biggest share, an estimated 27 percent, of PM's magazine ad budget. Publications affected by PM's cutback include Sports Illustrated, Entertainment Weekly and People. Time Inc. may be losing up to $30 million, sources say.
Where will that $90 million to $100 million go? Perhaps into other magazines or media or promotional marketing. Then again, it might all go to the bottom line.
- Northwestern Memorial Hospital is in the initial stages of selecting a new ad agency, following what was described as an amicable parting with Leo Burnett USA, which won the account in May 1997. Not known is whether Northwestern has hired an outside consultant to assist in the search. The split preceded the recent appointment of Holli Birrer-Salls as vice president-PR, marketing and physician services. She had been with the Cleveland Clinic Health System. Burnett has done some award-winning advertising for the hospital, including a Silver Effie awarded Wednesday for ad effectiveness in a national Effies competition of the American Marketing Association New York chapter. But a number of doctors at Northwestern privately have expressed displeasure with the "Amazing Things Happen" line in Burnett's advertising. Northwestern spent $2.5 million in media in 1999, according to Competitive Media Reporting. When Burnett won the business, the other finalists for the account were Cramer-Krasselt and McConnaughy Stein Schmidt Brown.
- Memphis-based Hampton Inns is leaning to TN Media for the media portion, and perhaps sister agency FCB Worldwide for the creative, of its $20 millionad account, with Los Angeles offices likely to work on the client, sources say. DDB Dallas is Hampton's agency.
- PR agency Golin/Harris International is putting its name and motorsports practice capabilities on its own race car, sponsoring account executive Molly Morter in the new off-road racing season beginning Saturday with the Kiwanis Off-Road Championship in Antigo, Wis. Morter, 24, the world's 1998 women's off-road racing champion, will race in 12 events during the coming season. Golin/Harris has clients in motorsports marketing, and "we are joining the parade," says Chicago-based president Dave Gilbert.