The real advertising forecast: Ready or not, here it comes


As the merriment of 2012 family celebrations subside and the reality of less than 1% growth in retail holiday sales sink in, let’s look ahead to predictions for the advertising market in 2013.

Forecast No. 1: the year pre-prints go away

We have heard from advertisers for years that pre-prints are too broad, too costly to field, and so yesterday. They remain in the mix for some advertisers because of historical organisational structures where media buyers and merchandisers perpetuate their use.

But these retailers are now being run by outsiders or financial executives who do not hold pre-prints so dear. 

Experiments for alternatives have been in the field for the last few years, some with success. The alternative is not one vehicle but a mix of digital advertising, social media, and targeted print. 

The historical pre-print retailers are also being replaced by others, so even if they continue to use pre-prints, their own future may be in doubt from fundamental competitive forces. 

Of course, there are competitive threats from new U.S. postal pricing plans and the internal challenge of a shrinking print subscriber base.

Will 2013 be the year that newspapers finally lose pre-prints? Or will margins just sink to record lows?

Forecast No. 2: the year store-based shopping disappears

It will finally be clear that terrestrial store-based shopping in certain categories will disappear. Electronics, books, small appliances, casual clothes, prescriptions, mid-market jewelry, among others, have and will be dominated by digital or direct-to-consumer channels (e.g. QVC). Along with it, will go the print and local advertising supporting such sales.

On the service side, financial services and any local directory-type business left will leave local print players, as well. There will be a small uptick in the United States in the health-care category, as consumers sort through providers and insurers for Medicare and other individual insurance coverage impacted by the new health care regulations.

The local U.S. advertising industry will benefit some from health care provider competition as players re-position themselves. However, note the early signs suggest local and regional brands are partnering with multi-market players creating national networks and brands.

The Mayo Clinic’s recent actions are a case in point. This will make national buys or national buying more prevalent.

Will 2013 be the year newspapers follow their local retail advertisers down the advertising spiral?

Forecast No. 3: the year immigration, birth rates, and aging have meaningful impact

Many members of local media advertising and general management teams have not fully come to grips with the changing population. Immigrants have some different interests than others with longer histories in the United States. 

For example, local media outlets often report local political events, assuming the readers understand how government works and why this particular issue is even important to them. 

The higher birth rates of many immigrant groups and current minorities typically exceed those of the longer-term residents. In the United States, 2012 saw the number of non-white babies exceed those of white newborns.

Advertisers discuss the importance of the family in their advertising mix, but do local media company products and services speak to these communities? Do sales teams reach out to the stores and service providers of these communities with salespeople who understand and know the culture?

These businesses may remain local and strong longer than others but may not respond to the telemarketing call or self-service Web site.

Aging of the population is double-edged. The baby boomers were traditionally strong local news consumers and newspaper readers. There are still many of them around, some with money and time on their hands.

Local media companies now offer news and information to this segment across devices and channels. However, there is little growth in the audience here, just continuing to focus on the core.

Getting more revenue from a core customer is not a bad strategy, just not a longer-term growth strategy. Younger audiences are going elsewhere for news and information and have for a long time.

Forecast reality: So what?

Henri Poincaré, a French mathematician, is quoted as saying, “It is far better to foresee even without certainty than not to foresee at all.”

I do not really know if these forecasts will, in fact, take place in 2013. The more important issue is what newspapers and local media companies are doing to address them. The green shoots of each of the above have been with us for a while, but many local media firms are behaving as if they are not going to happen.

Where are the new revenue streams? Where are the new ways to organise? To exit fixed costs and give the business a more variable cost structure? 

We have been strongly urging clients and friends in the local media business to work through the scenarios — local, national and global — on what the business might look like in the next three years. The INMA Web site and conferences are rich with ideas, best practices, and inspirations.

These forecasts and others like them may not happen in 2013, but they will happen and local media companies need to be prepared.

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