March 26, 2011
However, our agency is clearly not on its own. The newspaper advertising industry has been in steady decline for some time. By my estimate, they have “lost” more than $17 billion in advertising to other media in the last 10 years. Ouch.
Going to newspaper industry summits can’t have been much fun this past decade. Each year a familiar story continues. A loss of ad dollars, circulation erosion, reduced head counts in editorial — the result of an internet-inflicted slow death.
But what would I do if the newspaper industry were a client? Rather than just add to an echo chamber already filled with word of its demise, what sort of advice or solutions would I offer up?
The first point I would make to newspaper execs is that the rapid shifts in digital and technology aren’t just an issue for newspapers. Every medium is getting hammered, turned around or rethought. Broadcast TV is wrestling with the economics of investing in expensive programming amid slipping ratings, while cable and satellite providers struggle with the challenge from interlopers like Netflix. Yahoo and AOL are investing in original content but worry that they look “traditional” com
pared to brighter and shinier new web offerings. Even the all-powerful Google will admit it missed the social-media boat, while Facebook wishes it had thought of Groupon. My point is that no medium or media company is able to stand still. Every medium keeps finding itself at the starting gun in a race for survival or re-invention. Why shouldn’t newspapers be at the forefront of innovation?
Arguably, their incentive to shift is higher, the risk lower.
So here are five strategies that could help bring the newspaper industry back from the brink.
Buy or bring innovation from outside, rather than trying to build it yourself. When an industry has been in cutback mode, like the newspaper business has been for several years, the first thing that will have been squeezed out is a taste for innovation. Take a leaf from the bluest of blue chips: Procter & Gamble. Under former CEO A.G. Lafley, who engineered the most significant turnaround of the company’s history, P&G sought to fast-track innovation by tapping into R&D outside of the company.
Lafley recognized that small, entrepreneurial companies were more nimble and inventive than his own. In going outside, P&G was able to double its innovation success, which Lafley credited as a major factor in doubling shareholder value over five years. For the media world, many of the entrepreneurs inventing your future are in Silicon Valley or on some school campus. Track them down, buy them and build from there.
Learn from what the New York Times pay scheme gets right and what it gets wrong. A future where advertising is the lifeblood for newspapers, I’m afraid, just isn’t sustainable. The number of advertising options available to marketers will continue to increase, and newspapers’ share of ad spending will continue to decline. You simply need to find a way for consumers to pay for your content online.
You do have loyal readers, and I’d bet that they will pay. Sure, News Corp.’s Times of London reportedly lost 90% of its web traffic when it first put up a pay wall. But you don’t need all that traffic anyway. The supply of ad impressions outstrips demand by a huge factor. That’s why online advertising rates remain minuscule.
And that’s why charging non-print subscribers $15 for four weeks of access to the New York Times Online and its smartphone app, under the plan The Times will implement widely on Monday, sounds pretty good. Dissenters variously argue that the Times is charging too much or won’t make enough new revenue, and the paper may well adjust its strategy as time goes on, but the industry needs the Times to pull this off. And if enough other papers follow suit, maybe consumers will increasingly accept the charges.
Build better, not more, content (and audiences). Getting consumers to pay for their news online means not only giving them the content they want but also content they will value. Breaking news is overrated. In today’s digital age, it’s perishable, with a shelf life of a couple minutes at best. And that’s if Twitter didn’t beat you to it.
But exclusive, penetrating, well researched stories have value. Once the revenue model shifts from lots of eyeballs to paying eyeballs, the content changes. I envision fewer Paris Hilton stories and more print equivalents to “60 Minutes” and HBO-style content. Music to most journalists’ ears.
Give away 100 million iPads. I’m serious. Make tablets ubiquitous in schools, fast-food restaurants, bus stops, trains, planes, libraries — anywhere that people have downtime to spare. Get Americans reading again. Consider it a public service. Get a new, younger, more connected consumer who stopped picking up a newspaper years ago to read, watch, hear and touch your content.
And since tablets are a more advertiser-friendly platform than the web, I don’t mind if you give this content away.
Be a video medium. I believe in the power of the printed word, but as CEO of a media agency I value online video more, and so should the newspaper industry. TV advertising costs are increasing faster than our clients’ ability to raise their own prices, so there’s an appetite for shifting some of that video budget to digital. Online video is expected to grow 40% each year for the next three years.
Premium video on newspaper sites is highly attractive to brand advertisers. Wouldn’t that be a turn, newspapers stealing ad dollars from television!
I’m sure there are more and better ideas than the one’s I’ve suggested. Feel free to add them in the comments below. Newspapers have a proud history in this country. It’s time for them to have a great future.