Answers For the Newspaper Industry

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If you are reading this you have an interest in the future of the newspaper industry. This was written to document my experience and thoughts about a drastically changing industry and to hopefully stimulate serious discussion in finding solutions for our most trusted source of news. My entire career has been in the print media industry: from my first agency job working in yellow pages to my latest role as Associate Media Director managing the budget for a major newspaper advertiser. I have never worked for a newspaper, nor have I worked for a newspaper advertiser, however for over eight years I purchased over one billion dollars in newspaper media, from the largest major dailies to small market weeklies. I was caught between the excuses of declining circulation from publishers and frustration from the advertisers over a once stable media currently portrayed to be in chaos.

I witnessed newspapers caught off guard with the viral growth of online news consumption and their inability to take advantage of the phenomenon. I have been in some brutal multi-million dollar contract negotiations that rarely ended well for the newspaper.

While it was my job to secure the lowest possible rates while advertisers were slashing their print budgets, I knew the cuts and harsh negotiations were killing the industry that provided me with work. I was instructed to negotiate agreements that I felt truly benefited neither advertiser nor publisher. I have heard every publisher new idea from changing print design layouts to renting e-reader devices to sell content and I have yet to hear a game-changer.

While I am probably considered young to the newspaper industry, I do have traditional reading habits. I am a huge fan of fiction and read as much as time allows. The Kindle and other e-readers are brilliant devices offering brilliant distribution models, but I still do not own one. I love the feel of a book in my hands and truly enjoy shelving another completed edition to the collection. Will I eventually buy a Kindle? Probably. But I will hold out as long as I can. And magazines offer an experience that cannot be duplicated on a website. I only read a handful of magazines that fulfill my top interests; sports, science and current affairs.

A website cannot offer a sense of completion from flipping from cover to cover and I actually enjoy looking at print ads in magazines (however, I am an ad geek). When it comes to hard daily news I trust only one source…newspapers. But I don’t read them in print. I prefer consuming my news from discussion boards and reading headlines from newspaper websites across the nation. If I want to discuss the gubernatorial race in Illinois, I want to read about it from the local newspaper, not from a cable news show and not from an online blogger. But the only way to conveniently read this valuable source of content is from their website…for free. I am a prime target for newspapers and they are struggling to take advantage of charging me for their content and lose out on capturing my readership for their advertisers.

Is there a business model that holds the answer? Yes. Do I know what that is? I may. And this manuscript will explain how my experience, ideas of innovation and passion for trustworthy, reliable news has driven my vision for finding a solution.

What Went Wrong? A quick recap of the last decade

Caught Off Guard

The basic cause of the current struggles of the industry is pretty much agreed upon by the experts, so I will keep my experience to a quick snapshot. I recently heard a fantastic analogy for the newspaper industry from one of my closest friends who has worked in newspapers for almost 30 years. He compared newspaper publishing companies to the Ents from J.R.R Tolkien’s tree-like characters from his Lord of the Rings stories. They are old, powerful and made of wood (paper) and it takes them a long time to make a decision, but when they do, they do it with full force. And with that philosophy often results in a high-risk, high-reward scenario.

When I first started buying newspaper media, website advertising wasn’t even an option. Most newspapers were not enthusiastic about building a website, but they all eventually caved out of necessity.

Every reputable business had a website to showcase their product. Unfortunately, that product for newspapers was the content they put on their websites. And those that didn’t charge consumers to read (which was all of them except the Wall Street Journal), were in fact giving their product away for free.

They didn’t believe (or want to believe) that people would prefer to read their news on the internet over the printed version. They were correct…to a point. Most people do prefer to read newspaper and magazine print editions, however when given the choice of a free and convenient resource for the exact same content, the choice was simple for the consumer. There are basically two types of news readers; those who want it fed to them via links and news alerts (I’ll call them feeders) and those who browse. Most people prefer to browse.

And when the world of social networking rocket launched into the mainstream, the viral distribution of their free product actually hurt more than helped their business model. It also spurred the concept of free distribution such as Craig’s List, which is greatly to blame for the loss of classifieds revenue for the newspapers.

People seek out and consume news content more than ever before and newspaper website traffic is still increasing, but it still doesn’t matter.

The website cannot “save” the newspaper model. Reporting quality, reliable news content and publishing a daily newspaper is not cheap and the ad revenue from a website is not nearly enough to sustain the business model.

When newspapers first started selling their online product they would visit me with both a print and an online sales rep. Usually, the print rep was a newspaper veteran with very little knowledge of online and the online reps were young web guys with little to no newspaper or sales experience. Very few offered bundled ad packages with print and online, which would seem most logical and they often took turns talking, rarely discussing the other medium.

One major hurdle for newspaper sales teams was that the readership auditing for the print product was measured very differently from its younger online brother. Media buyers were not able to provide their clients with a trustworthy measurement if one attempted to combine the readership data. The only option was to separate the two medium as completely different ad vehicles. Not to mention ad costs were drastically lower for the website if compared to print media. An aggressive average CPM for a daily newspaper is around $50, while online website CPMs were closer to $5-10. But the disconnect did not only occur at the newspapers. Media agencies had problems categorizing the budget for newspaper website advertising. Should it come from the print budget or the online budget? This caused more problems for the newspapers than one might think.

In 2007, I convinced my client to allocate a small portion of the print budget for newspaper websites. After plenty debate we were finally given the green light to negotiate media for over 80 newspaper websites throughout the country. It was challenging, but it was awesome. My print buyers, including myself, had never negotiated or purchased online media before, so it was quite the learning experience. However, what we found out was that the newspapers seemed to have even less experience than we did.

Nothing was standardized; from ad sizes and trafficking to readership measurements and sales strategies every newspaper website was different. But after months of negotiations and millions of dollars allocated to newspaper websites the campaign was a success…or so I thought. The advertising reach had expanded within each market to capture both print on online readers, the CPMs were much lower than print and most exciting to a print buyer was that the effectiveness of the media was finally measurable. We would shift dollars between print and online if we felt the website was not as popular in a specific market and we were actually able to track purchases from the advertiser website and report CPOs (cost per order). And the budget we allocated to online barely impacted the newspaper media. So after a full year I felt we found a great strategy for capturing as much of the local audience via the newspaper as we could with a more diverse campaign. But I was wrong.

And it wasn’t because of the newspaper website ineffectiveness; online readership was continuing to increase. The problem was the online media buying department at the agency. While the CPMs and other measurable stats were impressive to print buyers, the online folks disagreed.

The $5-10 newspaper website CPMs were high in the eyes of the online professionals when compared to the $2 CPMs they could buy with a geo-targeted campaign on larger website bundles.

And the lack of standardized execution practices for newspapers frustrated the online departments. Newspaper website campaigns were much more labor intensive than typical online campaigns. So, the next year the online newspaper budget was managed by the online division and the budget slashed by 75%. And after the first quarter, the campaign was killed all together due to the poor results…when compared to other online campaign results, of course. It ended up coming down to where the budget would be allocated: print or online. If print had control, campaigns had a better chance of “success”, but if the dollars came from the online budget, it had little chance. The results all depended on the eye of the beholder.

But I didn’t give up. The following year I gathered website data from the top newspapers in the country and attempted to convert that data logically so it could be compared side by side to newspaper circulation data. I simply asked each newspaper for their average daily and Sunday unique visitors within the DMA for a three year period.

The point was that if I could capture the change in unique daily visitors on their website for three years and compare that to the trend of print circulation for the same three years, could I logically see those that canceled their print simply went online. Then the story wouldn’t look so bad.

Instead of a 15% decrease in circulation in three years, I would also see a 60% increase to online readership. So, the readership wasn’t lost; it just moved. And this data could paint a better picture to the advertiser and increase confidence in newspaper reach. Sounds simple enough, right? Wrong again. It was like pulling teeth. Many newspapers didn’t even understand what I was asking for (no one had ever asked for such a thing) and others provided numbers that were clearly way off. They didn’t realize I was trying to paint a positive picture for them and it only led to frustration. Some said they couldn’t capture the data as I requested while others sent numbers that made no sense. A market of one million cannot have three million unique daily visitors within the DMA. It’s just not possible, but I was getting that kind of data and my confidence was decreasing. After a month of pulling as much of the data as I could, I still ended up offering a snapshot of top newspapers that painted a positive picture for a movement of readership that was now measurable instead of simple a loss. But it still wasn’t enough.

The damage had been done and the advertiser was simply not confident enough in the medium or felt it was not the best way to invest media dollars. But newspapers can still excite advertisers once again.

I always felt that the smartest way to sell newspaper website media would be to offer bundled packages for the larger print advertisers. Provide homepage or front page “take-overs” for a whole day and treat it like a premium position in a newspaper. Build the packages so that the online cost looked like ROI for the large advertiser to compensate for lost print circulation. In other words, the newspapers would be saying, “we know some of our readers are moving from print to online so if you spend X amount in print we will supplement with our websites.”

Newspapers are still struggling to generate enough revenue from their websites to support their current business model.

Protecting Content

It never seemed to cross the minds of publishers that once that website was up and offered to readers for free, that they would in fact be giving away their product. However, in their defense, it was hard to imagine (except for the Wall Street Journal) anyone would pay to read content on a website. It was a Catch 22 scenario. If they charged people to read their websites, too few people would subscribe and the website would not generate enough traffic for decent ad revenue and by opening it up for anyone they ran the risk of giant search engines and news aggregators to use their free content to drive their own traffic.

It is essential that publishers find a way to protect their content-not only for the publisher’s bottom line, but for us as Americans. I enjoy discussing sports, politics and current events anonymously on a sports team message board. It’s a great place to debate topics with strangers when it can often be too confrontational to discuss with friends or family. My only complaint about online discussions is when someone disrupts a quality discussion with ridiculous statements, citing ridiculous sources. And by ridiculous, I mean opinions based off of clearly biased sources, such as some cable “news” entertainment networks or other opinions found and circulated from online bloggers. Newspaper journalism is the most reliable and trustworthy news sources we have.

They have editors that take responsibility for what is published and fact-checkers for all news stories. And distinguishing fact from opinion pieces in a newspaper is obvious compared to cable news or bloggers and they have a far greater reach and viral growth potential than newspapers currently have. That is very scary to me. I received countless emails during election time (from both sides of the political isles) that were absolutely false, yet they spread like wild fire. Newspapers should stress the fact that they are the most reliable and serve an essential civic duty to our communities and they need to scream it from the rooftops. Readers need to be reinforced that the reliability of what we read is incredibly valuable and the local content unique and desirable. Americans can be lazy, we want information fed to us and rarely seam to question that what we consume is indeed fact.

The New York Times said that they will start a “pay wall” for their website in 2011. So, consumers will have to pay a monthly fee to read their website. The Wall Street Journal charges to read their website, but they implemented their pay wall from the beginning. I don’t know how the New York Times will measure the success of their pay wall strategy, but the initial impact will most likely not be positive. Clearly the number of readers will decrease and the additional revenue from subscriptions may be countered with a loss of ad revenue from the site, since the impression inventory will decrease.

However, in the long run it will help lead the way for other newspapers to do the same and consumers will begin to expect to pay. While it is a necessity that newspapers begin to charge readers for their content, a pay wall does not address all of the industry issues, because it does not address the entire business model.

Website advertising is a small source of revenue for the newspapers compared to their print ad revenue. And many publishers began to see a point of diminishing returns from their print product due to the high production and distribution costs. Some newspapers actually said they didn’t want their print circulation to grow; they simply wanted it at a manageable and profitable level. They wanted a stable print model of their most loyal subscribers and hope to stop the bleeding. And then there is the big issue of being a terribly eco-Unfriendly industry. Many people ditched the print edition for the website just because it was a more environmentally conscious decision.

And while it was somewhat understandable that the newspapers would be caught off guard from the internet explosion, the inefficient and eco-unfriendly business model of the print product should not have been a surprise. And if this was foreseen fifteen years ago and steps were taken to get ready for new distribution models, they probably would not have launched free websites. The printed edition will not disappear overnight, some say twenty years, but a healthy balance of paid print, digital and online distribution is essential for their survival.

The key is a balanced distribution of all available products which allows a seamless, natural evolution to digital content.

The Answer: Integrity

Regardless how one defines it…

1. adherence to moral and ethical principles; soundness of moral character; honesty

2. the state of being whole, entire, or undiminished

3. a sound, unimpaired, or perfect condition

Since this just sounds like a philosophical tagline, I’ll break it down. Again, America’s most reliable and trusted source of news is newspaper journalism. Most TV “news” networks (I like to call them entertainment networks that focus on news) and online bloggers have an agenda, often lack facts and portray opinions pieces as news stories. And with the enormous reach of television and the internet, it is easy to spread less than truthful information. And we have witnessed it with a fury in the last five years; most prevalent in our frustratingly tit-for-tat political climate. So newspapers are our best shot towards an adherence to moral and ethical principles; soundness of moral character and honesty; or…integrity. It is important for the newspaper industry as a whole to band together to spread the word that they are the most trusted and valuable source for news.

Currently, newspapers offer multiple products to consume their news. That’s good; readers want options. However, let’s look at the different options:

1. Print edition – newsstand or subscriptions

2. Website/Mobile Web – free

3. Digital editions – subscriptions (often separate from print)

These products provide unique options to consume local news; however their subscription, advertiser and revenue models are all different; that’s not good.

There must be a balance of product distribution that is focused on that which drives the greatest revenue, while taking advantage of the viral growth potential of the online products. With the right strategy a paid media bundle of these products provide options for both types of readers; the browsers and the feeders. Once established, content is protected and publishers will benefit from a model that is whole and undiminished in its entirety; or filled with integrity.

Every “good business” book I have read stresses the fact that regardless of the industry a successful strategy must include innovation; always looking to the future. With a protected distribution model aligned with a media bundle, a natural seamless evolution to the favored product will occur regardless of how the consumer eventually decides to consume news in the future. The iPad looks like a cool device, but it only focuses on the wealthy early adaptors and doesn’t address the mass market.

If the industry works together for this sound, unimpaired, or perfect condition they will once again be proud and confident of the integrity of their business model allowing them to focus on what they do best and what Americans need them to focus on, which is reporting reliable and trustworthy news.

I have developed a plan which I believe address every industry challenge and provides a model of integrity for the print industry. I’d like to hear ideas and opinions from industry professionals. Send me an email if you’re interested in discussing the future of the industry.


Source by Brian Brennan

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