What’s next in the publisher response to COVID-19?

By Shelley Seale

INMA

Austin, Texas, USA

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Publishers are checking a list of their most important considerations right now, which include safety, remote work, the advertising decline, cash flow, and potential cutbacks. Everyone is also wondering when we will get to the “new normal.”

With the International News Media Association (INMA) taking a lead role in distilling the news industry’s global response to COVID-19, CEO Earl Wilkinson held a Webinar on Thursday to update members on the shape of cutbacks, the tradeoff of subscription wins and advertising losses, and the unique role news brands are taking to preserve small, local, independent businesses in this crisis.

Wilkinson opened the Webinar by catching INMA members up to speed on the conversation around the COVID-19 crisis. News publishers worldwide are seeing a surge in digital traffic and subscriptions, assessing winners and losers in different advertising categories, and beginning to develop a clear road map for operations.

INMA CEO Earl Wilkinson presented a Webinar about the future of news publishing in the wake of COVID-19.
INMA CEO Earl Wilkinson presented a Webinar about the future of news publishing in the wake of COVID-19.

What publishers don’t want to do is flatten the economic curve, Wilkinson said. They can look to China as a model for a tall, short economic curve.

Wilkinson mentioned several models worth paying attention to when trying to make some predictions. One of these is that in learning from East Asia, there seems to be an eight-week span between “takeoff” and “landing” of the coronavirus, with readjustment starting to happen after eight weeks.

“One of the things we learned is that after the eight-week period, you’re still very ginger after that,” he cautioned. One doctor referred to this period of the pandemic as an “induced coma” that we will likely wake up from in the third quarter. It’s not too early to ask what changes in the market and behaviours are likely to be permanent, even after July.

Publishers are checking down lists of their most pressing concerns with COVID-19.
Publishers are checking down lists of their most pressing concerns with COVID-19.

“I’m also seeing a balancing act between public service and the need to fund our companies,” Wilkinson said. Publishers need reader revenue, especially in the large decline in advertising.

Traffic, subscriptions, and paywalls

Interest in news is skyrocketing right now, Wilkinson said.

“We’ve seen mostly a surge in news subscription starts, not surprising from the surge in traffic,” which has been 50% worldwide. “A lot of this is coming from people who possibly weren’t subscribers before but are passionate about your brand.” 

With a 50% uptick in news Web site traffic worldwide, here are how traffic numbers are looking in specific regions:

  • United States has seen a 33% jump in news site visits.
  • Brazil has seen a 34% increase since March 1, and 40% since the virus spiked.
  • Sweden had an 84% increase in page views in week 11 of the year, year-on-year.
  • Europe has seen a 267% increase in subscriptions starts the week of March 16.
  • North America has seen a 63% increase in subscriptions starts the week of March 16.

“I think there’s a real global debate happening right now, and I think it’s happening in different ways,” Wilkinson said.

There is a global debate about the issue of public service journalism versus revenue.
There is a global debate about the issue of public service journalism versus revenue.

Wilkinson mentioned an article written by Andreas Schürer, deputy editor-in-chief of Neue Zürcher Zeitung (NZZ), “Like bread at the bakery, quality journalism has a price in this pandemic moment,” featured last week on INMA.org.

“He is basically saying we have a moral obligation to charge in this downturn,” Wilkinson said. 

In Europe, the trend has been to create lower introductory offers rather than lowering the paywall, while North America is starting to raise paywalls around COVID-19 coverage again.

“Just be aware of the debate. Be mentally prepared to make cases for both sides of the equation,” Wilkinson said. “I just think it’s incredible that we needed a global pandemic for people to realise how much they needed news coverage.”

Newsprint and COVID-19

Some people have questioned whether the virus could be transmitted via print newspapers. However, there are zero documented incidents of COVID-19 transmitted through newsprint. In South Asia in particular, where print is still everything, those rumours have been detrimental to newspaper operations.

“We’ve distilled some of this scientific research. Newspapers are particularly sterile because of the ink and the print process,” Wilkinson explained.

Porous surfaces like cardboard are the least likely transmitter, according to NIH. “I think it’s very safe to say the science says newsprint is pretty bulletproof on that,” Wilkinson said.

Still, many newspaper publishers have said they are creating a process around printing their paper editions — masks, gloves, and other safety measures in the printing process, and safety measures for distributors and sellers, for example. This can result in their being no direct human touch from the printing press to delivery. Publishers are reacting in this way to quell the public concern.

“We want to create talking points as customers come to us with worry, but we probably don’t want to proactively plant that seed” of doubt, Wilkinson added. “I think newspapers are doing a great job of protecting the consumers.”

Impacts to advertising

“At the arc of this downturn, I’m hearing chatter of 30-50% declines in the first and second quarter, then easing in the third quarter and getting back to normal in the fourth quarter,” Wilkinson said. “But the data shows that might not happen until 2021.”

Advertising revenue has declined by 40%-50%, and may not return until late 2020 or even 2021.
Advertising revenue has declined by 40%-50%, and may not return until late 2020 or even 2021.

At the same time, the downturn does provide some distinct advertising opportunities:

  • Government public service announcements.
  • Appeals to Fourth Estate (journalism) amid cutbacks.
  • Goodwill advertising among top companies.
  • Becoming a hub for small businesses during the downturn.
  • New cleaning products.
  • Tech solutions for working remotely.
  • Quick service restaurants open for delivery or pickup.
  • Alternate payment programmes.
  • Remote entertainment.
  • Peripheral content to COVID-19 (programmatic).
  • Common tactics include discounts, bundling, time extensions, and special packages.

“We are saying to the advertisers: We know you need to cut back, times are tough, but consider the Fourth Estate, consider supporting journalism,” Wilkinson said. “This is really resonating internationally, especially when it comes from the CEO or editor-in-chief. The big play is about advertising in the long term. The small play is this free advertising [for restaurants, etc.] in the short term.”

Advertisers are very reticent to have anything to do with COVID-19 content, though Wilkinson said he’s starting to see those walls coming down. “I’m seeing publishers that are creating soft content that is resonating.” For instance, advertising that goes with content about how to work from home.

Publishers and their sales teams

It’s important right now for sales reps to “unemotionally” move on from under-performing portfolios. “Who is moving on to new accounts non-emotionally?” Wilkinson asked. “Do you furlough your reps, or do you shift to new categories? We’re seeing interesting new data about quota relief. How do you keep them motivated in this new environment?”

Media is twice as likely as other industries to provide such quota relief to sales reps. There is some serious scrutiny going on about where sales reps fit into the picture during the lockdown, versus post-lockdown.

News publishers are reporting several priorities in ad sales:

  • Prioritise and protect vital accounts.
  • Focus on critical activities and transfer those to the best sales reps.
  • Reposition resources for medium-term growth.
  • Deploy a “customer success” mindset for advertisers.
  • Adjust sales compensation and quotas to optimise performance.

Shape of cutbacks to come

“We’re beginning to see the shift to cutbacks, especially on the labour front,” Wilkinson said.

He presented scenarios for how different business models might fare during the downturn, based on their reliance on advertising. These scenarios assume a 50% reduction in advertising and based on US$100 million in budgeted revenue.

  • Free news company with no reader revenue and 100% reliant on advertising would see a US$50 million revenue decline.
  • Traditional news company that hasn’t really transitioned to digital (80% advertising) would see a US$40 million decline.
  • Typical news company (50% advertising) could expect a US$25 million decline.
  • Diversified news company (20% advertising) would see a US$10 million decline in revenue.

“A US$10 million dollar hit is tough, but it’s very manageable,” Wilkinson said.

When it comes to forecasting possible cutbacks to come, he said the first principle amidst uncertainty is to minimise permanent job losses for staff. Other potential cutbacks are:

  • Across-the-board employee salary cuts.
  • Across-the-board employee work week reductions.
  • Senior management take 20%-plus pay cuts, without work week reduction.
  • Employee furloughs.
  • Layoffs in the 10% range, notably part-time over full-time.

“The tough part is that every market is a little different,” Wilkins said. “You have highly liquid labour markets in North America and the South Pacific. Certain European countries, you’re talking paying years of severance, not months. So drawing down on those markets is much more difficult and long-term.”

For media companies that think this crisis is a long-term, deep issue, they are doing layoffs as big as 40%, he said: “Most publishers are reaching for furloughs first, salary cut second, and layoffs more in the 10% range.”

Publisher’s paradox

“At the end of the day in digital advertising, advertisers can say ‘I don’t want to be associated with this topic or that topic,’ and we can do that programmatically,” Wilkinson said.

Advertisers want to block COVID-19 coverage, but unfortunately that represents 100% of the current traffic surge. So publishers can monetise that surge from the reader side of things, but not the advertiser side.

When it comes to keyword blacklists, Wilkinson said the numbers are staggering. One brand reported that their ad had been blocked 130 million times in the last 30 days.

Newsworks UK said three more months of pandemic could cost news brands £50 in lost advertising. Read more here

Publisher lessons from the front lines

There are lots of lessons to be learned from those publishers in countries that were hit early and/or hard.

For example, in South Korea, the response of JoongAng Ilbo was incredible. An entire print production team isolated itself at the office to get the work out, while at the same time protecting themselves and the news. “These were amazing stories, but wouldn’t necessarily work in other markets,” Wilkinson said.

Print production staff at JoongAng Ilbo in South Korea quarantined themselves in the office to safely get the newspaper out.
Print production staff at JoongAng Ilbo in South Korea quarantined themselves in the office to safely get the newspaper out.

“One of the interesting things about this I would draw to your attention is that everyone has a story to tell. That tells the story of how they’ve responded to this. The issue for me is not their story, it’s that they told their story. You have a story to be told as well, and I hope you have some headspace in this environment to tell your story.”

La Repubblica operates in what is now the hardest hit country in the world so far — Italy. At the very beginning of the crisis, people wanted information and went to the Web and social media, where there was a lot of misinformation, INMA reported this week. “But something turned in recent weeks, and they found that people were really looking for stories of hope,” Wilkinson said. “I think the job to be done at some point in this crisis is to elevate these stories of hope. I challenge you to elevate that in your coverage.”

La Repubblica is seeing a surge in subscriptions, up 50% to 110,000 digital subscriptions in a country of print street sales. The company did lower its pricing to an invitation pricing for new subscriptions. They are also locking some articles, publishing government and public information freely, but locking other premium coverage.

Stories of inspiration from news publishers around the world can give other publishers a boost.
Stories of inspiration from news publishers around the world can give other publishers a boost.

“There are stories all over about amazing stories of inspiration of what publishers are doing.”

When we get to the new normal and that next phase, telling these stories is going to be a big deal, Wilkinson said.

Takeaways

There were six big things he hoped people would take away from this Webinar, Wilkinson said:

  • You have a moral obligation to your company and market to raise paywalls.
  • Take it to the bank: newsprint is not a carrier of COVID-19.
  • Think about advertising opportunities, necessities, and sales reps.
  • The shape of cutbacks is to minimise job losses, and reliance on advertising is key.
  • There are rising concerns about advertisers disassociating from COVID-19 coverage.
  • Focus on emerging stories of inspiration.

“Charge for your content,” Wilkinson said. “I wouldn’t say what to charge, but you have to charge something. We can’t make the mistake of the last 10-20 years and say it’s free and open. You have a moral obligation,” to keep your brand in business.

He added that there is even a tiny sliver of companies that have actually raised their prices: “Public service announcements are vital. We need to focus on sales reps. What do we need to do to get them hunting and not farming?”

Emerging issues on the horizon

There are many other things publishers need to be looking at. If print’s existence in a local market is reliant on advertising and that advertising goes away, then the business model has to change.

“But these models don’t really work in print-centric places like South Asia, so what will that look like?” Wilkinson asked.

Working from home is totally new territory for many companies, and there is a need to have sharp, smart conversations about the long-term value of remote work.

For low paywall markets, they might think about how to slowly ease into premium mode over the next three months. “Let’s take a look at both sides of the Atlantic as far as what paywalls do.”

The shape of government support is another issue, but Wilkinson said, “I don’t think we have a huge role in that except to distill and report.”

Tthis is a big trust moment for news publishers, Wilkinson said. “When they write your brand’s story after this is all said and done, what’s it going to say?”

About Shelley Seale

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