According to AdAge, Federated Department Stores is poised to drastically change their Marketing Media Mix in the coming years. In a move that reminded me of major beer brand Foster’s recent media eviction – Federated will move as much as $425 million away from local print media. At first glance, I read the newsclips to say that they were pulling out of local newspaper completely. Much like what I think about Fosters’ move – my opinion is that putting all of your eggs in one marketing basket is a mistake; however, according to the article:
The most dire prediction calls for as much as $425 million of the retailer’s ROP newspaper advertising to disappear by 2008. More conservative estimates, such as the Deutsche Bank research report “Federated Impact May Be Greater Than Papers Expect,” by Paul Ginocchio, forecast a still-stinging $200 million blow for the already ailing medium. Federated’s annual newspaper spending currently totals $830 million.
The headlines I saw everywhere today sensationalized the potential loss in revenue for local newspapers. Many stories alluding to the end of the Newspaper industry are like the headlines we read in the supermarket check out line. But really, Federated is just having a go at promoting a national brand, with national media tools. That changes the equation for local newspapers and will certainly equate to lost revenues. On the up side – local online newspaper sites continue to grow at a strong pace and although articles tout TV advertising and national magazines as the NEW vehicles for Federated, few are talking about the role of online. According to the article:
“Federated’s bevy of historic and beloved department-store brands will be officially reborn as Macy’s, backed by the company’s first national branding campaign.”
“Our media selection will be driven by where our customers’ eyeballs are going,” said Jim Sluzewski, Federated Spokesman.
“Newspapers will continue to be a very important medium,” he said. “The fall launch is one point in time, and what happens longer term is something we are still going to be working on,” added Federated Spokesman Jim Sluzewski.
In my opinion, Federated is completing a loop that began when they started acquiring regional brands like Burdines and Foley’s. Having started my career with the online advertising teams for two prominent newspaper groups, I had the chance to pitch one of the major Federated brands back in 2000. At the time, Burdines was one of the original department store brands in Florida. Just 6 years ago, Burdines still actually needed a transactional web site to (as they put it) “help drive additional foot-traffic in to their stores”. In addition, they were just starting to look for media outlets for online recruitment advertising.
Today In just 6 short years times have changed, Burdines is gone, consolidated under Macy’s. Federated has brought much to the table as far as online recruitment goes and is often touted as having one of the best online careers sites on the web @ Retailology.com.
In Federated’s opinion, consolidating under the Macy’s brand was really the logical next step in consumer minds. It follows that Macy’s as a national brand will now be promoted nationally. For now, the hype, and reality is that local advertising will suffer in the short term but Federated isn’t shy about adjusting a marketing strategy that isn’t working out. Abby Clark VP of Sales for The Columbus Dispatch made the following point in AdAge:
…despite Macy’s national brand ambitions, newspapers remain relevant. “It’s going to be risky. People go to newspapers and look for sales and shopping, and if they don’t, they may not think to go to Macy’s as often.” Ms. Clark said Macy’s experimented two years ago by pulling back on coupon offers in ROP ads. “They backed off quickly from that because it hurt them,” she said.
And who said national brands don’t benefit from local newspaper advertising? Just ask Best Buy, Target, Home Depot, Office Depot … the list goes on. As a local consumer, where you are is where it’s at, so local consumption of products and services goes hand-in-hand with consumption of like-focused media and tools. Federated, THE single largest print advertiser, has been advertising in local newspapers forever. I think that Federated’s move will do more to prove some of the value of local print advertising than crush it. No doubt the print revenue that was enjoyed by local print publications will never be the same but the power of local comsumers will crop up in future Federated media buys… as they said, they will put their money – “where our customers’ eyeballs are going.”
I believe that Federated’s new Chief Marketing Officer, Anne MacDonald is just dealing with the reality of managing her marketing budget. You don’t often get carte blanche to take a $1 billion dollar ad budget and just double it (OK, that actually NEVER happens) – in the real world, you rob from Peter to pay Paul. MacDonald, a former Citibank marketer is no doubt a national brand expert (and believer) so the national focus is no shock. And don’t forget that Citibank and Anne MacDonald’s peers have won most of their accolades in the last 5-10 years for their progressive work in online advertising, an area where local media outlets could surely make back some of their losses.