Innovative Advertising Solutions Blog

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Mapping out the crossover point for digital vs. print

24 January 2012 · By Adam Burnham

As print revenues continue to decline, news organisations must start mapping out their crossover point by asking tough questions about their digital revenue growth: Will it be enough to replace print losses and when?

Happy New Year to all, and I hope you have as high aspirations for 2012 as I do — both personally and professionally.  

I want to start by letting everyone know my wife and I are expecting baby No. 4. Lillian Sue Burnham should be here on or before February 14, but if you ask my wife, any day now is good with her. We are very excited to welcome the last addition to our family. That is my advertising innovation at the home front.

Now for an entertainment update: Two movies I watched for the second time over the holidays, which I thoroughly enjoyed and have important messages that correlate to our changing industry: “Moneyball” and “The Social Network.”  Both are great examples of challenging contemporary philosophy to create new dynamics and new business models; buck legacy thoughts and expense; invest in your future; create products the audience wants in ways never seen; and rethink your plans regularly. All key takeaways. If you have not seen them both, you should.

OK, on to business and the topic I want everyone to plan for: The Crossover Point.

My friend and colleague, Kirk MacDonald, blogged last month about the need for all our peer companies to set their digital growth goals at 50% for 2012, and honestly, this has to be the minimum expectation.

I took this a step further recently while in California meeting with our sales teams at our Los Angeles properties. During those meetings, I posed this question to them:  

What do you need to do to double digital revenue in 2012?  

Eyes lit up; I had their full attention. But this was a challenge to that team and, quite frankly, a challenge I would make to all my peers. I followed that up with a brief discussion on the scope of what that level of growth would mean to their organisation, how it would fundamentally change their business model moving forward and, most importantly, how much money they would make. (Sales people love monetary motivation.)

There is reality in a digital growth rate of 100%. If print continues to decline at a rate of, say, 10%, digital growth needs to be in the triple digits to cover that loss. At Journal Register Company, we have seen digital revenue grow fivefold from 2009 to 2011.  So I know it can be done. However, many questions persist:

  • With the magnifying issues we face in declining revenue streams, and fewer and fewer cost buckets to cut from to maintain adequate levels of profitability, what are the steps necessary to create stability?  

  • Knowing the current downward trends in print, what does your digital revenue growth rate need to be to once again become a growing business?  

  • When can digital gains replace print losses? 

  • When is your crossover point? 

The basic principle of mapping out this crossover point is key to all our organisations. Thinking one, two, and maybe even three years down the road creates a reality that we all need to confront. To understand the road to recovery, you first must understand the true issues you are facing. More importantly, without this key metric mapped out and plans created to achieve it, the mountain will become too tough to climb for most.

Knowing this crossover point is step one. Almost akin to admitting you have a problem. Now you can begin to build towards achieving. Start today. Understand what your future direction needs to be.  

This exercise has to be more than just putting numbers on a spreadsheet. There has to be a believable and achievable path to success, with a large focus on digital growth. Here are some key components I recommend you assess as you build:

  1. Sell-through rates on banner inventory on your local sites.

  2. Traffic growth necessary to support your plan.

  3. Rate leverage on digital classified products.

  4. Current products and the need for new products in the future.

  5. Your possible partners.

Obviously, understanding print declines is important to this exercise in order to fully understand the task at hand. I would encourage you to be conservative in your print assessment. If print shows recovery, you have some cushion in your plan.

All of our properties at Digital First Media will have identified this point by the time this blog has been posted. Plans are already under way to meet the crossover point.  

Time to play to win and stop playing not to lose! (Quote admittedly stolen from another friend and colleague, Arturo Duran.)

Until next time ...

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About this blog

The Innovative Advertising Solutions Blog looks at not only integrated advertising sales for newsmedia companies but the full spectrum of agency-level marketing solutions for advertisers: print, digital, package, and event sales; social media marketing services on behalf of advertisers; and behavioural targeting across a range of digital products.


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Greg Bobolo
CEO
SendtoNews
New York, New York, USA
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Adam Burnham
Vice President
Affinity Express
Elgin, Illinois, USA
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Barbara Cohen
President
Kannon Consulting
Chicago, USA
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Tami Coughlan
Associate Director,
Integrated Solutions & Business Development
Associate Publisher,
The Kit
The Toronto Star
Toronto, Ontario, Canada
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Darrell Kunken
Director of Research/Market Analysis
The Sacramento Bee
Sacramento, California, USA
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Tyler Mack
Digital Media Director
The Register-Guard
Eugene, Oregon, USA
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Kirk MacDonald
Executive Vice President/Advertising, Marketing and Digital Sales
Denver Post
Denver, USA
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Suzanne Raitt
Vice President, Marketing and Innovation
Newspapers Canada
Toronto, Ontario, Canada
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