As an Image Tarnishes, Advertisers Start to Reconsider
By STUART ELLIOTT
The New York Times
6/28/02
The mounting difficulties confronting Martha Stewart, centered on questions about her sale of stock in ImClone Systems, are starting to unnerve the marketers and ad agencies that buy commercial time and advertising space on and in the media properties that bear her name.
Marketers say they are proceeding with plans to advertise in the Martha Stewart Living Omnimedia outlets like Martha Stewart Living magazine, the "Martha Stewart Living" syndicated television show and the Martha Stewart Web site (www.marthastewart.com), but they are hedging their statements with phrases like "at this point in time" or "for now." A week or two ago, they did not bother with such qualifications.
Advertisers, skittish types to begin with, are also saying they are closely monitoring consumer reaction to Ms. Stewart's problems. They are looking to gauge whether the intensifying publicity is damaging her brand or the ability of the media she owns to deliver the customers marketers seek.
"We're still pretty bullish on her media properties, but there may come a point where we have to re-evaluate our position if an investigation yields things that might affect the way people consume her media," said Peter Gardiner, partner and chief media officer at Deutsch, part of the Partnership division of the Interpublic Group of Companies. Deutsch represents Revlon, which advertises in assorted Martha Stewart Living Omnimedia properties.
Jon Mandel, co-chief executive for United States operations at MediaCom, the giant media services agency owned by the Grey Global Group, said: "Advertisers are mercenary. If the ratings stay the same, they'll stay in. If the ratings go down, they'll go away. And if they go up, perhaps more will come in."
It is too early to assess ratings trends for Ms. Stewart's weekday and weekend syndicated shows. And newsstand sales for the latest issue of Ms. Stewart's magazine, which has a July cover date, will not be available for several months.
Advertising in that issue, from blue-chip names like American Express, Home Depot, Johnson & Johnson, Kraft Foods, Sears and Toyota Motor, increased significantly from July 2001, to 136 pages from 108 pages, a gain of 25.9 percent, according to Media Industry Newsletter, a publication of PBI Media. But those pages were bought months ago, as is typical in the magazine business.
Allyn Magrino, a spokeswoman for Martha Stewart Living Omnimedia, said that information was not available on ad page sales for coming issues. For the year to date, the magazine has carried 999 ad pages, according to Media Industry Newsletter, up 1.6 percent from 983 for the first seven months of last year, at a time when many magazines are suffering double-digit percentage declines.
"I'm sure some advertisers have to be rethinking whether the association with Martha Stewart at this point in time should be put on hold until the situation clears up," said Michael Drexler, chief executive at Optimedia International USA, part of Optimedia International, another large media services agency.
"The real key is whether the audience responds to the property, the product, because that's what the advertiser buys," he added. "But in this situation, she is the product, so it's unfortunate that her image has become a little tarnished." Optimedia is part of the Zenith Optimedia Group, which is jointly owned by the Cordiant Communications Group and the Publicis Groupe.
George Fertitta, president of Margeotes/Fertitta & Partners, an agency known for creating campaigns for premium-priced products like Godiva chocolates, said: "Martha Stewart is a brand, and many brands are resilient. As resourceful as she is, she may find a way to turn this around."
Mr. Fertitta added, however, that because there "was already a question mark" over Ms. Stewart, generated by "the tendency to bring down people who are wildly successful in everything they do," she might not be able to draw down from "the reservoir of positive, good feelings" that many other media personalities use to help offset negative publicity.
"There may be people who feel they would rather see her lose than win," he said. Margeotes/Fertitta is part of the Maxxcom division of the MDC Corporation.
Mr. Mandel of MediaCom likened Ms. Stewart to a celebrity endorser because of the circumstances in which her media properties are perceived as an extension of her persona.
"There are probably some advertisers who look at this and say, `If she were doing a commercial for me, this would be in violation of the morals clause in the contract, and I wouldn't go near her anymore,' " Mr. Mandel said. The reference was to language that is standard in many contracts between a marketer and a pitchman or pitchwoman, providing escape clauses if events cause the celebrity to fall into disfavor with consumers.
Debate is lively as to what effect the coverage of Ms. Stewart's personal finances will have on the readers of her magazine, the viewers of her TV shows, the customers for her catalog merchandise and the visitors to her Web site.
"I still believe she's got a dedicated following," said Charlie Rutman, president of Carat USA, a big media services agency that is part of the Carat division of the Aegis Group.
"They are concerned about what's going on," he added, "but are they going to stop buying her magazine, her home furnishings, tomorrow? I don't think so. In the near term, there's no effect."
But there could be consequences, he said, "if the editorial content begins to suffer, if the programming begins to suffer, because her people become distracted and take their eye off the ball."
Some advertisers said yesterday that they did not think that was happening yet.
"We have no plans to cancel or change our presence in the magazines at this time," said Peg Holmes, a spokeswoman for General Motors, the largest national advertiser, which sells the GMC Envoy in Martha Stewart Living and other publications.
"As with all our advertising properties, we advertise to reach different consumers," she added, "and if a property isn't reaching consumers, we would re-evaluate it."
James Kenyon, a spokesman for another automaker, the Chrysler Group, a division of DaimlerChrysler, echoed Ms. Holmes's comment.
"We don't think this has affected our marketing arrangement to this point, and we are still pleased with it," Mr. Kenyon said. "We'll have to see what the future holds, but right now we're happy."
Less than two months ago, the Chrysler Group signed a multimillion-dollar marketing agreement with Martha Stewart Living Omnimedia, calling for the company's products to be advertised in media including the magazine, television and radio shows and the Web site. For example, Chrysler is the only automotive advertiser in a new monthly Road Trips section of Martha Stewart Living magazine; the section began appearing in the May issue and also appears in the July issue.
Another advertiser that recently signed an elaborate marketing deal with Martha Stewart Living Omnimedia is MasterCard International. The agreement, which centered on designating MasterCard as the "preferred card," includes commercials on the TV show, ads and advertorials in the magazine, banners on the Web site and logos in the catalog.
"As of right now, it's status quo," said Caryl Hahn, vice president for global media at MasterCard, because "there hasn't been any measurable change" in areas like visitors to the Web site or orders for magazine subscriptions or merchandise.
"If that changes, if we see something different with sales, subscriptions, we would re-evaluate as with any property," she added. |
