Last week, the publishing agency closed Blockbuster Preview magazine just five months after winning the work for the DVD and games rental firm, amid rumours that it failed to woo advertisers. It is now conducting a wide-ranging review of its business, with a view to becoming a mainly fee-based publisher. Titles up for renegotiation include Debenhams Desire, Homebase Ideas and a handful of premium hotel publications.
In addition, Publicis Blueprint's chief executive, Jason Frost, is considering his future, while finance director Paul Jeal has already departed.
Craig Smith, the agency's marketing director, claims Publicis Blueprint is leading a change in the way customer publishing is funded. 'Every publisher is over-dependent on this revenue model. Frankly, it is time we all moved beyond it,' he says. 'This moment has been a long time coming. I am not denying that this is a painful time for us, but we are trying to create a new industry paradigm.'
Andrew Hirsch, chief executive of rival John Brown, which produces Waitrose Food Illustrated, fears Publicis Blueprint may have tarnished the reputation of the entire discipline. 'I am very angry about it. We have worked hard as an industry to prove how successful customer magazines are, and I hope no damage has been done,' he says.
'We put a stake in the ground 10 years ago that we would only do fee-based work. When Homebase approached us, we said there was no way that could be an advertiser-funded model. We proved that we have taken the right path.'
Another publisher that refuses purely advertising-funded business is Haymarket Network, publisher of the Army's Camouflage magazine, among others.
'We have been waiting for something like this to happen because we couldn't believe that any of the ad-funded models were being successful,' says Haymarket Network managing director Juliet Slot. 'We have no advertiser-funded projects in our portfolio. It was felt that the risk of such publications would be far too high for our business.'
With its client Sky, for example, Haymarket Network receives a fee for producing Sky Sports magazine and shares advertising revenue based on an agreed commission structure.
On the face of it, customer magazines are in rude health. In the latest ABCs, for July to December 2007, eight of the top 10 magazines in terms of circulation were customer titles, and according to the Association of Publishing Agencies (APA), a customer magazine is launched every working day.
Julia Hutchison, chief operating officer at the APA, says customer magazines should be purchased like any other marketing medium, through the payment of a fee. 'I hope clients realise that these magazines must be funded in a viable way,' she adds. 'In some instances they can take advertising and it works well for some models. We are not saying "never do it", we are saying "be realistic".'
Hirsch believes the main pitfall with ad-funded magazines is that the client does not appreciate the full value of the work being done for them. 'Anyone can go out and sell something for nothing,' he says. 'The most profitable publishers are fee-based.'
There are success stories, however. Superdrug's customer title Dare, which is produced by River Publishing, is purely ad-funded and distributed free in stores and via handouts.
'Superdrug has a great range of suppliers who advertise in magazines. It is about building a picture that works for both advertiser and client,' says Ed Axon, managing director of River Publishing. 'An ad-funded magazine can work - it depends on whom they are for and how well they have been researched. But we would never guarantee revenue if we hadn't fully researched the market.'
With marketing budgets squeezed, the advertiser-funded route can appear attractive, and there is a temptation for publishers to overestimate potential revenue to secure new business. But Publicis Blueprint's Smith believes these days are numbered. 'The agency needs to have an element of responsibility. A lot are tempted to over-promise, but it sends out the wrong message to the wrong kind of client,' he says.
Publicis Blueprint is now renegotiating with some of its clients in an attempt to reduce its exposure to display revenue. 'That doesn't mean that overnight we will convert to a wholly fee-based model, but we will be asking clients to share some of the risk,' adds Smith.
With reputations and jobs at stake, publishers are likely to closely examine the risk they are taking on before committing to new business in the future.