• by Tom Siebert , October 2, 2006

A retail exodus from newspaper insert advertising may be in store next year--if a remark from the often-prescient Carat CEO David Verklin is true.

During a panel discussion at Media magazine's Forecast 2007 conference last week, Verklin, who heads up Carat's Americas and Asia units, dropped the bombshell that a major retailer has told agencies that future media plans would eliminate freestanding inserts--the colorful supplements announcing sales and other commercial events--from its advertising plan by 2007.

Chased down after the panel, Verklin declined to elaborate. But it's worth noting that the Aegis-owned company is currently pitching retail giant Wal-Mart, in tandem with DraftFCB, the new-breed marketing agency. Carat is also the media agency for Radio Shack. A source familiar with the shop's strategy said it has been advising the electronics retailer to cut back on FSIs for several years.

With classified ads under siege from Craigslist, and help-wanted advertising losing its power to Web sites like Monster and HotJobs, freestanding inserts are among the last bastions of easy, old-fashioned profit for the newspaper industry.

One industry expert speculated that a big-box company like Best Buy would be ripe for a move away from inserts.

At an Advertising Research Foundation conference last Thursday, Patrick Keane, director of field marketing and sales strategy for Google, said that 40 percent of Best Buy's budget goes toward its Sunday advertising circular. He pointed out that it only represents 276 stock-keeping units. Online, however, a retailer can provide access to the entire 250,000 units typically carried in a suburban big-box store.

A spokesperson for Best Buy was unavailable for comment. But in a sign that something is happening within the company, Chief Marketing Officer Mike Linton resigned last month.

"It doesn't really matter who it is," one marketing industry observer noted. "Once one of the big retailers does it, even in small doses, you could see a stampede away from the inserts."