Entries for month: December 2009
Sorry to disappoint the pundits, but newspapers survived the storm
30 December 2009 · By Earl J. WilkinsonReading through the inevitable year-end looks back at 2009, it's amusing to see how the pundits have just now “discovered” that the worst economic pounding in eight decades didn't actually kill newspapers after all.
That hardly makes newspapers a growth industry. That hardly means there aren't more cutbacks to come. That hardly means we shouldn't double and triple efforts to regain key advertising categories. That hardly means we shouldn't shift budgets toward business-building activities such as sales, marketing, research, and digital. That hardly means it hasn't been one hell of a ride.
Yet it does mean that what INMA has repeatedly said this year has proven true:
- There is no pending death of the newspaper industry.
- Second-tier newspapers in the best of times would die in the worst of times.
- Debt-laden corporate parents stole the headlines, while the newspapers they owned quietly scaled operations and maintained profitability.
- Newspapers with generic missions positioned in the middle of their markets will be at-risk for the foreseeable future.
- Newspapers were dramatically over-staffed with journalists, a bubble inflated by advertiser demand and not reader demand.
I witnessed more of a marketing focus at newspapers in 2009 than in the past two decades, combined. A simple formula emerged with value created through an intense focus on “audience + content + platform.” Rupert Murdoch nudged us all along this path with his efforts to monetise content – which he did by defying the pundits through a smart segmentation of content rather than a monstrous paywall.
My biggest concern for newspapers remains cultural incrementalism. We spend inordinate hours on finding perfect processes to integrate with the existing cultural structure. Instead, we need to create cultural workarounds that unleash entrepreneurialism and provide publishers with strategic alternatives to serve audiences and advertisers.
As we enter 2010 on surer footing, have we learned enough lessons to create growth agendas? Or do we re-emerge from the storm shelters and continue business as usual?
Role of audiences in corporate strategy will determine publisher success in decade ahead
22 December 2009 · By Earl J. WilkinsonIn the past month, INMA has released two reports I authored:
- “Recreating Value for News Content In an Age of Abundance.”
- “Newsmedia Outlook 2010: Last Minutes of Danger, Last Minutes of Opportunity.”
Audiences are atomising. Instead of one big homogenous audience for general-interest content delivered in print form, technology is opening up new options for content sources and style while simultaneously creating new ways to access that content.
The result is a mad dash to understand the new audience segments and maximise the new value formula of “audience + content + platform.”
This would be happening regardless of today’s recession. Yet the recession – and subsequent acceleration of key advertising categories to the internet – has intensified the need to monetise content outside the traditional publisher model. And the only way to do this is to understand the value formula, dissect audience and content, and redistribute in a way where money can be made outside the print bundle.
What opened my eyes in the course of researching the reports was the two clearly opposite directions publishers and digital theorists are going on this road to value creation.
The publisher route above is rooted in the original sin of giving away all content online – a sin that can’t be taken back. For years, they accepted that the bigger the digital audience, the higher likelihood that a business model would congregate around it. Yes, digital extended the print audience. But the combination of low-value, brand-fickle eyeballs and the economics of abundance that never allowed an advertising model to emerge pushed publishers to thinking anew about their business models.
The digital theorist route remains consistent: grow the biggest audience you can by giving away your content and encourage audiences to read your content that would otherwise not know your brand – a strategy that will grow your influence and which should one day attract a business model. Surf the nature of the internet to its logical conclusion. Don’t fight it.
The argument hinges on your view of the audience.
What publishers are beginning to understand from the advertising community is that while there is a role for mass media, the emerging value proposition is about other attributes of an audience: level of engagement, passion, buying power. The more chiseled the audience, no matter the size, the higher CPM that can be charged. A hodgepodge audience has value, but less so as advertisers can aim their messages at finely tuned eyeballs and better measure return on investment.
Publishers acknowledge the Age of Abundance and are attempting to carve a sphere of scarcity from it. Maybe it’s real scarcity, maybe it’s the perception of scarcity. Yet they need that scarcity to either charge advertisers or charge consumers. Scarcity comes from segmentation, which comes from an intense understanding of the audiences the publisher wants to serve.
What’s missing so far is an organisational structure to manage and monetise these audiences, an over-arching vision that brings these audiences together under a news brand, and a marketing message to define the brand across audiences and platforms.
At INMA, we believe we can take a leadership role in answering these questions in the year ahead. Our plans include the launch of an audience development blog, summits on audience development in Europe and North America, and a report updating the industry on these discussions.
How we view audiences will be critical to the newsmedia industry’s success this decade.
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E&P's demise a sober lesson for newspapers
15 December 2009 · By Earl J. Wilkinson
The Nielsen Company announced last week that it would close Editor & Publisher (E&P) magazine by year's end after 125 years of reporting on the U.S. newspaper industry.
No official reason was given, though one can guess the lack of growth prospects and tepid profitability were the culprits.
As of this writing, there remains a distant hope that a “white knight” will save E&P. There's been an amazing outpouring of support and sentiment in the past few days. Whether that can be translated into the preservation of this institution is unknown.
In any event, the events of the past week provide lessons to be learned for publishers.
Let me start by saying the Nielsen announcement profoundly affected me. It was the equivalent of a relative dying. It literally stopped me down for several hours. From what I can see online, others had a similarly emotional reaction.
My ties to E&P today are relegated to interacting with two of their best editors, Jennifer Saba and Mark Fitzgerald. Yet in years past, INMA held a marketing awards competition with E&P that brought me in contact with publishers Ferd Teubner and Colin Phillips, among others over the years. It was E&P in the 1930s that first recognised the emerging profession of promotion by supporting this competition.
E&P elicited love and hate. It was like the beloved uncle, with all its quirky imperfections yet always wearing its heart on its sleeve.
When I was a young reporter and editor in East Texas in the 1980s, I used to scour E&P's classifieds, ruminating on where I would go next in my career. In the newsroom, we would pass around a single copy that would be read by 30+ people on the distribution list. Long before the internet, we would devour every precious word.
Yet in 1999, I was so displeased with E&P's coverage of the business side of newspapers that I created The Newspaper Industry web site and e-newsletter for INMA to aggregate such coverage in one location. I noted that E&P had begun re-writing other people's stuff, so why not just link directly to the source? It was a success for INMA, but a small blip on E&P's radar.
Every week in print for many years, E&P was the source of news and information on the U.S. newspaper industry. You couldn't do without it. I've heard “Bible” attached to E&P's name many times in the past week.
I suppose that, beyond losing a “relative,” E&P's demise eerily mirrors what doomsayers say about newspapers. What would happen if our local newspaper went out of business? Who would cover the local news? Who would be the connective tissue of the community? Would life continue as normal? Would people find “good enough” alternatives?
My pat answer is that, hypothetically, bloggers and non-profit web sites would rise up and take over the role of the local newspaper. Eventually, amateurs would become professionals, a web site would emerge as the leader, a business model would revolve around their audience, and the ecosystem would return to equilibrium.
There was nothing hypothetical about E&P's demise last week. It was real. And it hit too damn close to home.
I'm still trying to make sense of it all:
- Who covers the newspaper industry? Who is going to assume E&P's role? Are media-related magazines going to beef up coverage of a stuttering industry? In the
investment world, Deutsche Bank and others dumped coverage in the past year. Aggregators will run out of links to content if content providers cease to exist.
- Wrong price: There was an online report that suggested that Nielsen could have offloaded E&P to a variety of buyers who would have taken the asset off
their hands for nothing but the assumption of obligations. Nielsen refused, believing the brand was worth millions. I suppose that's a business decision, but how
sad that a for-profit company killed a brand altogether when there were takers – albeit at the wrong price. Sound familiar, publishers?
- Cause of death: How did E&P really die? Nielsen may have held the knife, but an autopsy might show more natural causes. For all the influence that E&P had, dissecting its audiences and value propositions reveals incongruencies that developed over the years. Like newspapers, its classifieds shifted to free online sources. Like newspapers, there was over-reliance on a certain advertising category (technical/production aspects of newspapers). Like newspapers, it gave away far too much for free on its web site. Like newspapers, its coverage became too broad for its resources. Like newspapers, differentiating value eroded over time.
The E&P story should serve as a sober warning to newspapers on several levels.
First, influence is great, but it rarely pays the bills.
Second, to create value for content there must be the perception of scarcity. Don't give it away.
Third, don't try to build audience by being all things to all people.
Fourth, align your target audience with your target advertising.
And, fifth, this can happen to you.
Applying a popular remedy to the audience cauldron of big regional dailies
09 December 2009 · By Earl J. WilkinsonTwo broad demographic trends are bearing down on newsmedia companies:
- Working-class consumers and general-interest regional newspapers are separated and nearing divorce. News – on paper or digitally – is
less relevant for this stagnant part of society, publishers are no longer focused on their needs, and fewer advertisers want to reach this demographic.
- Upper-class consumers are consuming more news than ever before, yet are multiplying their platforms beyond print to smarter and faster versions of the World Wide Web via computer internet and mobile.
The newspaper industry is often portrayed as a one-size-fits-all industry. It's not. There are several kinds of daily newspapers in the world, notably:
- “Quality” national dailies.
- “Popular” national dailies.
- Regional dailies.
- Financial dailies.
- Sports dailies.
Why? Because their audience is a hodgepodge.
Through the decades, regional dailies evolved into hybrid products to appeal to demographics across a broad spectrum, united by sprawling geography and class aspiration. Regional dailies serving large cities in geographically dispersed countries with weak national newspapers and economically mature consumer markets fueled the growth in the printed press. These metropolitan dailies set themselves up as mini-national dailies, with a mix of national and international news along with the collection of local news, puzzles, comics, horoscopes, and classifieds.
Spread thinly in content and audience, the regional dailies have been devastated by the disaggregating effects of the internet:
- Fringe audiences of under-educated working-class people more comfortable than ever with their lot in life no longer are forced into seven-day subscriptions as they have online alternatives that meet their infrequent-consuming lifestyles.
- Historic print content – such as puzzles, comics, horoscopes, and classifieds – has migrated to more efficient online and mobile platforms as part of the re-write of the information landscape.
- Non-local news has become a commodity because of the over-supply by wire services and the endless supply opened up via the internet and web surfing.
By contrast:
- “Quality” national dailies have tight upper-class audiences paying premiums and advertisers willing to pursue them.
- “Popular” national dailies have tight working-class audiences willing to pay a surprisingly high cover price to see content that fits their lifestyles.
- Financial dailies target business executives with money.
- Sports dailies target sports enthusiasts that cut across demographics, though skew toward the “popular” end of the market.
The regional dailies can't determine where they want to be. That's because they're locked into geography as their defining audience characteristic. They're not willing or able to apply a “quality” or “popular” filter because they remain in a circulation numbers game for their one-size-fits-all product – at any cost. The overwhelming majority of regional dailies are owned or managed by people who aspire to be “quality” yet flirt with “popular” because they know that's where the numbers are. This gets spun as “dumbing down news.”
Across this broad continuum of publishing genres, the trend is clear: newspaper companies are losing working-class readers. The biggest circulation losses in mature markets are coming with popular dailies. The biggest losses among regional dailies are their working-class readers.
That doesn't mean upper-class readers aren't in play for newspapers. They simply are more likely to stick with print newspapers, they are willing to pay more for content, and they are willing to engage with your brand across platforms.
The strategic question becomes whether publishers should invest more time in deepening connections to its most loyal readership segment or try to make up for lost ground with working-class readers.
I argue that pursuing working-class readers with upper-class content is a disconnect. Instead, metropolitan publishers should consider launching second or third newspapers at working-class audiences or alternatives via the internet. Isn't that what the advertising community is asking in the broadest sense: quit giving us ill-fitting pieces!
Wouldn't it be liberating to aim a quality product at a quality audience using a quality medium? Wouldn't it be liberating to let loose with a popular product aimed at a popular audience using a popular medium?
Publishers of regional newspapers – notably, metropolitan dailies serving large urban markets – need to clean up their audience cauldron if they are to make sound business decisions about content and platforms.
One size does not fit all.
Life after newspapers
02 December 2009 · By Earl J. WilkinsonHave you ever seen the History Channel series “Life After People”? The idea behind this series is that if people suddenly disappeared, what would happen to the Earth? In sometimes graphic detail, the series looks at what happens to animals, plants, cities, and the ecosystem.
Similarly, an entire cottage industry has emerged to ponder “life after newspapers.”
On the one hand, you have those who believe people will walk around uninformed, presumably running into walls with stupidity. On the other hand, you have those who believe in a better world in which all information is free and people share so much that we're all better informed.
What the History Channel series teaches us is that natural law trumps all. Without people interfering, nature runs its course. Buildings crumble, animals evolve, deserts eventually become river beds, and so on.
If newspapers disappeared tomorrow, the functions they serve in society would largely be taken over by two groups:
- Bloggers, amateurs, online communities, and such. These are individuals with strong viewpoints.
- Governments, companies, and sports franchises reporting on themselves.
Unlike the History Channel series, those pesky people are still everywhere.
The amateurs are a bit like 18th century newspaper publishers – in it for the passion and the thrill, not the money. Of course, that changed over time. What's different is the powerful ability of governments, companies, and sports franchises to report on themselves. This is something happening today, and they're getting better and better at it.
I'm not going to lament the loss of dispassionate journalists and doing God's work. I'm not going to lament the loss of the media conglomerates and their passion for profit.
Like the History Channel series, I'm simply going to explain how nature takes its course. If newspapers suddenly disappeared:
- There would be a small, lucrative market for some kind of credible reporting that would be filled by amateurs.
- There would be massive demand from advertisers for someone to fill the space left by newspapers, though lower demand than before newspapers disappeared.
- There would be growing demand from consumers to make sense of the cyber-chatter.
- The entrepreneurial amateurs would realise, over time, consumers and advertisers will pay.
- The amateurs would figure out there are synergies among themselves that they can take advantage of. Perhaps syndication?
- They would figure out print is a good way to push content at people and fill the serendipitous holes in digital consumption patterns. Plus, advertisers would pay a premium to be in a push product.
- Someone rich and powerful would begin buying these small communities and knitting them together in networks.
- As money chases market demand, the market value of these online communities would balloon. Bigger and bigger companies of tiny online communities would emerge.
- As for-profit companies own the online communities, efficiencies would be found and growth becomes a game of maximising financial value from each micro-niche and finding new niches.
- Ownership consolidates, and there would be calls for government intervention to prevent profit-hungry conglomerates from further ruining the original mission of the online communities.
This is part exercise in science fiction, part wake-up call for newspaper publishers.
If we had the opportunity to re-start the information landscape, the natural order suggests we end up with big companies owning and managing tiny micro-communities.
We're there now!
The challenge today is restructuring big companies managing one big product for one big audience to big companies managing many products for many communities.
If you don't find a way to transition, there's another path. What a pity that that path would naturally end up back to where we started.
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