Government Financing

There is a dark side to marketing, and we all know it. Like other temptations, some marketing scams lure people with great promises that later become unrealized dreams and then disaster. To use a local example, let’s look at the Business Development Bank of Canada (BDC).

In 2008, I financed a purchase of shares with a loan from BDC. The prospectus supporting the application lined out the parent company as a reader-driven publishing company that would abide by known professional standards, not as a matter of ethics, but as a matter of business. “If I have the loyalty of the readers,” the prospectus reads, “the advertisers will come.” Specifically, the prospectus mentioned not concealing ad messages in editorial content. Based on that business plan, I got the financing.

Before long, I learned that BDC had identified our sector as a marketing target, and our sales staff contacted BDC for advertising. BDC’s response was that they require supporting editorial content as part of any ad package. Here is what their agency said, “As for BDC, are you certain there is no possibility to get editorial content? Because the client had been very clear on this campaign. They will consider only publication able to give them editorial content.”

We outlined our policy and the existing published and known standards for magazines, but BDC elected to decline our proposal and go with our competitor. On June 14, 2010, here is BDC’s agent’s final determination: “The campaign has been booked. The client has decided to go with Woodworking magazine, as they provide us with the requested added value besides the feedback we got from the Public Relation department of BDC with their latest collaboration.”

For perspective, the Canadian Magazine Industry Code of Reader and Advertising Engagement says, “No advertiser may purchase product placement or mention in editorial pages, photographs or illustrations.” Also, it says, “The separation of editorial content and advertising messages must be transparent to the reader, and editorial integrity must be free of compromise or external influence.” I have provided links to this and other standards on this web site, as well as at, www.woodindustry.ca.

These standards are fairly unambiguous statements that are in direct contradiction to the position demanded by BDC, whose latest position denies the above-quoted e-mails even exist: “BDC maintains the position it conveyed to you through the email of Mr. Rivest dated August 8, 2011. Please note that Mr. Rivest has retired from BDC in December 2011. BDC considers this matter to be closed and will not respond to your allegations or future communications related to this matter.” This from BDC’s legal flack. The August 8 letter from Rivest said, “I am not lobbying for help with BDC. I am simply providing an example showing there is a right way to do magazines and a wrong way, and the wrong way gets adopted because of ignorance of processes, lack of perspective and false promises of value. The idea extends back to Eve and the Garden or the last guy you hired to “turn around your company.” Your choice.

Let’s take another example. Pick up a magazine – any magazine. Is there an ad on the cover? The answer is almost universally no. This one has been studied to death (as has advertiser control over editorial). Readers appreciate it like you appreciate a drunken insurance salesman at a yard party asking if your loved ones are protected. Wrong time; wrong place.

The Canadian Magazine Industry Code of Reader and Advertising Engagement says, “No advertisement may be promoted on the cover of the magazine….” Similarly, the Magazine Publishers Association (MPA) says, “The cover and spine should not be used to advertise products other than the magazine itself.” In fact, nowhere is the practice of placing advertising on the cover endorsed. Yet, it happens.

Why does this happen? That’s easy: money. One of the beauties of our system is that the press is free to do what it will, pretty much. It is almost impossible to pass a law restricting the press. Therefore, if you want to lie, cheat, misrepresent, insult or manipulate, the readers are fair game, assuming you don’t get caught breaking another, more general law. As this bit of wisdom seeps into the sales forces of the world, the lowest common denominator seizes on a vision of easy money and opts to destroy a fun magazine for short-term profit. This has happened in golf, outdoors, sports, how-to and other publications, and has filtered to the tops of media companies, the legislative process or governmental bodies, as is evident in the case of BDC (above) Adscam under Chrétien and Martin, and other cases.

The list of bogus marketing plans is endless. Plagiarism is the act of presenting the work of others as if you did it, yourself, and is universally rejected by publishers and academics. However, plagiarism ended up being at the core of the problem with BDC. Under that agreement, the company that won the ad contract was provided pre-written “editorial” copy by BDC to be presented as if it was original material. BDC’s Rivest replied to our query on August 8, 2011: “BDC’s media relations team offers free of charge editorial resources and interview opportunities with local BDC financing and consulting experts to print and online publications across the country which range from community newspapers and dailies to business magazines and trade publications.  This exercise supports public relations work and is not related to our advertising activities.  The decision whether to print our articles makes the object of a purely editorial choice.”

Clearly, the “choice” is to provide free (or else) editorial to bamboozle the taxpayers and readers, or lose a contract.

Another interesting standard is the Canadian Advertising Code of Standards, which says, “Advertising is defined as any message (the content of which is controlled directly or indirectly by the advertiser) expressed in any language and communicated in any medium (except those listed under Exclusions) to Canadians with the intent to influence their choice, opinion or behaviour.” This means any column, any feature, any profile, any new product and any “news” that is directly or indirectly controlled by the advertiser is an ad. Therefore, any attempt to disguise the ad as editorial is an intent to deceive. As you can imagine I will say, this has been studied to death, and every professional should know it. The readers don’t like it, and they say so, just as they let it be known when a medium works in their interests.

This list could go on. The practice of running “free” ads is rampant, but it says to the reader that Advertiser X likes this magazine better than that magazine, when the advertiser’s agent simply gets to tell his boss he got free coverage, possibly with free new product releases and free pictures of company staff and events. The “ethical” problem with this behaviour is that Advertisers X’s competitor does not get the same “free” rate, and is duped into paying for an ad to get the “free” editorial stuff it looks like the competitor is getting. The problem is, they are both getting the same thing. Screwed.

There is often a more sinister reason behind working against standards, and it includes working as a group. Communication really, really is power, and the perception is out there that if you can control the media, control the trade shows or control the associations, you can rule the world. I have always thought those people should drink less and try gardening as a hobby, but they have the sound track turned up too loud. Propaganda only works when people let it, and when they get tired there is hell to pay. The program to which I refer is out of the Edward Bernays school of public relations, and I can explain why it doesn’t work, but it would add another 2,000 words. Maybe next month….

On the business side (not ethics), the readers know when they are being “worked,” and they don’t like it. Again, this has been studied to death. When the readers don’t’ like it, they quit reading both ads and editorial. When they quit reading, their response rate goes down. When the response rate goes down, the return on the investment, even if free, goes down. When the value is gone, the advertisers seek new ideas and options, and the publication dies. This happens over and over. You saw it in 2009 in the U.S. and Canada in virtually every market. On the marketing side, they even have a response for it. “If this magazine dies, another one will come along to replace it, and they will have to match the ‘deal’ we got with this one.”

However, once the value goes out of communication, either in society or in industry, when people cannot believe what others say, then the energy follows and the interaction on all parts reverts to an “as needed” basis. In this case, the smart-aleck marketers have succeeded only in paying an unprofessional to ruin their reputations and income.

This is the crisis point. Let’s say you are competing against off-shore particle board that doesn’t meet standards and weighs half what you use. Yet, because of a loophole in the law, your competitor gets to slam a Made In Canada sticker on the back of every piece. He may or may not put you out of business – likely not, since you are known by your reputation and customer base. However, he may actually be successful in devaluing the entire Canadian industry by giving folks the expectation that stuff made in Canada crumbles during installation.

Each of you that decide to enter into a marketing campaign will face the challenges above, or similar. There are likely as many good ways to protect yourself against unprofessional marketers as there are scams that demand a defence. Most are common-sense. You may have heard if something looks too good to be true, it is. Well, it is.

You can apply some math. It costs about a dollar to mail a magazine or direct-mail piece. Multiply that by the claimed circulation, and you have a number. Costs more to buy that much paper and put ink on it. It costs more for staff to fix and place ads, write or steal copy and figure out how to put everything together. That gives you another number. When you pencil things out, remember that the offer to cheat on your competitor and pass the saving on to you only works while you’re courting. Once a commitment is in place, you can predict your future when the next pretty face comes around.

Fortunately, there are still plenty of media options that know and follow professional standards. Since each of you expanding into new markets will have different needs, you can have a candid talk with your media options. I assume most of you will be dealing with local and regional media, not national, but the rules still apply, and knowing the rules lets you manage the game.

As we have been talking about advertisers, let me say that in trade magazines, they pay the freight. More than that, they deserve respect for doing it. They want you to get a publication, and they prove it. Please take an opportunity to thank all our current and potential advertisers. Some great industry supporters are not in our magazine, but can’t be because of budgeting or market issues. Other advertisers have a policy of covering all the media in a market to assure saturation. You can’t tell a book by its cover.

On the other hand, if you need financing, I’d consider PayDay Loan before our government’s idea of “entrepreneurs first.” You have to walk the talk.

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