Sears, Roebuck & Co.'s plans to streamline its advertising budget is raising concerns among newspapers that count the nation's biggest retailer as a major source of revenue, industry leaders said Wednesday.
Publishers are expressing uncertainty about the financial impact of the proposed changes by Sears, the nation's largest newspaper advertiser.
But some newspaper executives who are negotiating with Sears say they believe the talks will produce agreements beneficial to both sides.
"Sears, Roebuck & Co. came to the dance with newspapers. The fact that they want to continue to dance with newspapers is a very heartening thing to me," said Jerry Tilis, vice president of marketing with Knight-Ridder Inc., which publishes 32 newspapers in 27 markets.
Part of Restructuring
Sears has indicated that, in conjunction with a major corporate restructuring announced Oct. 31, it plans to centralize its ad buying and is asking newspaper groups to help by dealing with Sears at the corporate rather than local level.
"From newspaper chains, we are requesting corporate contracts that will ultimately lead to one order, one invoice, with a single rate that would cover each newspaper application," S. Scott Harding, Sears' national retail ad manager, said in a speech last month to a meeting of the International Newspaper Advertising and Marketing Executives in San Francisco.
Sears' proposals are rooted in its proposed corporate restructuring. A major part of the restructuring involves repositioning Sears' retail outlets as "stores of super stores" offering more brand-name goods at discount prices.
In conjunction, Sears wants to "dramatically increase the quality, consistency and impact of our (print) advertising cost-effectively," Harding said in the speech to the Reston, Va.-based trade association.
Harding backed up the plea for cooperation with a statement that some newspaper publishers have perceived as a threat, saying Sears needs to either reduce its print advertising costs "or utilize alternatives that provide a more cost-effective means of reaching consumers."
Reggie Hall, executive director of the International Newspaper Advertising and Marketing Executives, said Harding's statement was not so much an ultimatum as a financial fact.
"In this business there are always alternatives; that's why it's so competitive," Hall said. "The yellow pages, billboards, the back of a bus--those are all ways of distributing your message."
Move to Standardize Rates
Tilis, who said he had been negotiating with Sears for about six months, agreed.
"I'm sort of happy they're talking to us as opposed to the local direct-mailer or the local cable advertiser," he said.
Some newspaper-chain executives said Sears' proposals were accelerating an existing movement toward industry-wide standardization of national advertising rates.
Gary Sherlock, executive vice president of newspaper advertising with Gannett Co., owner of the nation's largest chain, said his company had not determined that complying with Sears' proposals would result in a loss of ad revenue.
Tilis said newspaper chains might even find an increase in advertising dollars from Sears.
"We have a vehicle--the newspaper--that can address most of what Sears wants to accomplish with their new direction," he said.
"If we can position ourselves with Sears to be the solution, then I think the answer is yes. If we're unable to come up with a fit, then I think the chances of more revenue are not as good.
"But what I draw tremendous comfort and confidence from is that they need to communicate with a massive audience frequently," Tilis said. "These aren't people saying, 'Give me more for less.' These are people who want to forge new partnerships with newspapers."