The times, they are a-changin’.
Famous words from the great bard himself, Bob Dylan. And never a truer sentiment for these troubled times than his words, “You’d better start swimming or you’ll sink like a stone.”
Sad to say many around us have failed to understand the significance and importance of these words to our industry and have already sunk without trace in the digital whirlpool.
Before attempting to answer the question, “Is there a future for newspapers,” I think we must try to understand just how “the times they are a-changin.”
I have been involved in the media industry since the late ‘60s, and at no time since then has there been such a challenging set of dynamics affecting the very structure of our business. Media fragmentation, the demise of the traditional media, the digital revolution, and the death throes of the media planner/buyer and media owner relationship are just a few that deserve attention.
Fragmentation first shook the foundations of the media business with the explosion of commercial TV and radio stations across Europe in the ‘70s and ‘80s, sadly an explosion that was not matched either by the quality of programming or the development of research tools to help the media planner understand who was watching what and when.
More recently, fragmentation has hit the digital world with a massive growth in the availability of opportunities, one which I am glad to say is being better served by research tools that provide — or at least attempt to provide — a degree of accountability for the advertiser.
To demonstrate this growth, in 1995 global IT publisher IDG estimated there was, at that time, some 23,500 Web sites worldwide with some 39.6 million users, yielding an average of 1,985 users per site. By 2010, this had increased to 255 million Web sites with 1.96 billion users, averaging just 7.7 users per site.
Dramatic? Yes. True? Yes!
Unsurprisingly, this growth in digital media opportunity has resulted in a tremendous shift in advertising expenditure across Europe.
In numerous countries, digital spend (including search) now exceeds 20% of total ad spend, matching and even out-performing that of TV. Newspapers have suffered most severely with many failing to address the new digital age. Last year, in the UK we saw many dramatic headlines in the press: “Death bell sounds for local daily newspapers” in The Times and “Losses are mounting as newspapers struggle to find the right balance between print and digital” in The Sunday Times.
Most sadly on the global platform, we saw just before Christmas the publication of the very last print edition of Newsweek magazine, although it survives in digital form.
Digital is here to stay and it continues to permeate all aspects of life, most notably how we communicate and consume our media.
During the 2012 summer Olympics, we saw a huge surge in the use of digital media in all its forms — outdoor, mobile, social. I am sure that one of the lasting legacies of the Olympics will be continued growth in the use and development of these new media to create ever more powerful and personalised interaction between advertiser and consumer.
The media planner/buyer/owner relationship
What has taken many by surprise has been the erosion — even the silent death — of the traditional media owner, media planner/buyer relationship. Accepted that change may have been long overdue, decisions made on the basis of “friendships” nurtured over pub lunches and finely tuned at Ascot, Henley, Wimbledon, and the 6 Nations Rugby Festival certainly belong in the past.
That said, there was a sort of openness, honesty, and transparency about this structure — one where the media seller really had to understand a client’s products, services, and markets. And whilst it was maybe too comfortable a relationship, it had an honesty and sense of partnership about it I feel the current structure lacks.
There is still, of course, a place for the hard-working media sales team, one that strives to understand the advertiser’s business, their objectives and challenges, and how their media can best deliver a measurable return on investment.
With the growth of digital spend, we have seen a fragmentation of the selling process with inventory for many publishers being readily available via ad networks, Google, and increasingly, through the major agency trading platforms. The result of this has been a dramatic reduction in the influence of the media owner sales team over an increasing percentage of their ad revenues.
Key factors such as editorial quality, environment, and brand loyalty are no longer deemed as important by the planner, who now resembles the city trader and knows little about the media he invests in. Price dominates, and frequently, faceless computer programmes make the decisions.
We have also seen a resurgence of many of the practices of bygone days with media owners coming under considerable pressure from the mega buying agencies to provide “incentive” programmes to ensure loyalty and group business. Across Europe, these will take many a varied form — from free pages to hard cash kickbacks based on revenues across total client activity.
How the writers of the Loi Sapin in France must be turning in their graves!
In terms of the online business, networks and the trading desks are rumoured to retain at least 50% of a client’s budgets with end of year “bonuses” being paid back to trading partners. Who this benefits is, of course, debateable, but I doubt it is the media owner who will be forced into selling inventory at rock bottom prices with little transparency as to what this is costing the advertiser.
Of course, the agencies need to recoup the considerable costs of developing their ever-improving technologies. But be sure these costs are openly charged to clients, as would be the practise in most other professions.
It is not a good situation in which the media business finds itself. I believe that change is long overdue. If we want to be taken seriously as a professional business, then we need to learn to behave like one.
In the States, the debate has started and the ANA (Association of National Advertisers) has published a study that acknowledges the traditional media audit can no longer address rebates: “Sadly, much of the media procurement process and the metrics of traditional media auditing are no longer adequate to pick up these subtle losses of value for medium-sized clients.”
Where so much is at stake, few are bold or brave enough to speak out about the situation, especially where most have a vested interest in the status quo and are happy to hide behind a “firewall” of silence that surely stretches contracts and SOX (Sarbanes Oxley) rules to their extremities.
There is no escaping the digital revolution. A failure to recognise this would be fatal for most newspapers.
The way forward: partnerships, research, and audience
To survive, one needs to adapt to the new world and deliver content across all platforms. Your readers hunger for your editorial and even your relevant and well-placed advertising.
I am a great believer that brands benefit from being promoted in sympathetic environments and that there is an intrinsic value in where you advertise — not just in being delivered to the right targets.
But beware your income, in particular your online income, which will come under increasing threat from the networks and trading desks. Be clear about how you want to work with them and how they must work with your sales teams: treasure your premium inventory, and don’t devalue your brands.
You could choose to take on the networks at their own game. For example, you could seek out newspapers with similar profiles, combine your inventories, and effectively set up and sell your own network. As an example, one could build a network of European quality newspapers and combine the inventory to provide an offering that could compete for the pan-European budgets of the quality goods and travel advertisers.
This creates an incremental income stream and would put you in competition with such publishers as Time, National Geographic, and Newsweek.
Partnerships may also offer a valuable source of new income. As publishers of newspapers, you own communities in numbers that will be the envy of many a specialist publisher. Yet those specialist publishers may have editorial skills in areas that you lack and your readers seek.
For example, the top PC publisher in Holland may only deliver a circulation of 35,000, a number clearly of little value to the security software advertiser who needs to target virtually every household in the country.
Meanwhile, De Telegraaf, Holland’s largest circulating newspaper, circulates more than 600,000 copies daily. Why not join forces? It could be a win-win situation. Not only can specialists provide the editorial expertise to attract the budgets, but also they will know well all the potential advertisers.
Research can also be used to increase income from new and existing advertisers.
The Swedish research organisation RAM works with newspapers to help them build online panels of readers that can then be offered to advertisers to help them better understand how their advertising is being received and how it can be improved to deliver greater return on investment.
The panel could be used to help an advertiser evaluate proposed creative visuals and content pre-campaign, thereby improving the advertising message and increasing sales — great in the retail sector, whether it be a car tire specialist or burger chain.
Regardless the doom and gloom, be positive. There is clearly a future for newspapers. Most significantly, your readers love you and, in the main, remain loyal and faithful.
You will, however, need to adapt and deliver your content efficiently across the whole scope of platforms from print to mobile, from Web to iPad. There is still a great hunger for your content, and your own amazing communities remain the envy of most media owners.
To quote The Sunday Times on April 4, 2012: “Readers are still in love with papers despite the decline in circulations.”