Drilling deeper for data uncovers the true value of audience


In the late 1800s, farmers and ranchers in the state of Texas faced an ongoing problem with “black goo” that was seeping from the ground and fouling the water needed for crop cultivation and livestock.

Luckily, along came companies that offered to help farmers and ranchers clean up the “black goo,” pumping it from the ground and hauling it away in 50-gallon drums at no cost. Many farmers and ranchers were happy to sign away the oil and gas rights for their land just to “take care of the problem.”

Much has been written about the newspaper industry’s inability to charge advertisers a high enough rate for digital advertising to make up for declines in ROP, insert and classified advertising revenue. According to some industry leaders, there isn’t enough digital “inventory” — at current price points — to make up for print advertising shortfalls.

While farmers and ranchers in Texas in the late 1800s failed to recognise the value of “black goo” (oil), newspapers do understand the value of the audience they deliver via print. The challenge is that newspaper’s historical perspective and experience with mass audience delivery — more is better — has been applied to digital channels.

As a result, newspapers have failed to recognise and exploit the higher value provided by delivering niche and one-to-one audiences for advertisers. Advertisers, especially retailers in the United States, have not only cut their print advertising budgets, but are allocating their remaining resources to digital audience delivery channels that newspapers could — but do not — provide.

Doing what they know best, newspapers offered banner ads on their Web sites. Classified ads that ran in print were uploaded to Web sites, banner ads were sold and newspapers rushed to connect to national online ad networks. After a short period of time, it became apparent that it would be difficult to live on revenue derived from clickthrough.

At the same time, e-editions — a complete replica of today’s newspaper — began appearing online. Too often, these e-editions were made available at no charge to non-subscribers. Newspapers did not require Web site registration or charge for access to their online content because they were afraid such moves would reduce total online audience; even though at the time they were doing very little to monetise online audience.

Things have changed a lot, but the pace of change in the newspaper industry continues to be slowed by the perception (historical) that the more audience you deliver the better.

Ask an advertising director — or chief revenue officer, if you will — whether it is more valuable to deliver 100,000 readers or 1,000 consumers with a stated interest in the advertiser’s product and service. Eight out of 10 will pick 100,000 readers. Ask an advertiser the same question and 10 out of 10 will likely tell you they would pay as much — or more — to reach 1,000 consumers interested in their product or service, than they would to reach an audience of 100,000.

Digital communications channels (Web, e-mail, text, social media, and so on) are all about interaction. There is an anonymous audience (don’t ask them to register or pay) and there is a known audience (know where they live, their relationship to your brand and use that information to provide value for which they pay).

Today, newspapers are signing up readers and others in their local market to receive Daily Deals from local advertisers. Advertisers can reach a “large” (won’t say “mass”) audience with their deal of the day. If you are a grocery store or retailer providing a product or service with “mass” (there it is again) appeal, a newspaper’s Daily Deal programme provides good value for your money.

What newspapers are failing to recognise is that if they asked consumers signing up for Daily Deals to share their interests and preferences for the types of deals they receive, and then actually targeted Daily Deal offers based on the consumer’s preferences, the value of Daily Deals to consumers and advertisers — and the newspaper — would increase exponentially.

The recent explosion of social media sites should dispel the belief that consumers won’t sign up if you ask them for their name, where they live, their e-mail address, phone number or their preferences. Besides, don’t newspapers already have most of that information for current and past subscribers and private party advertisers?

The truth is a significant share of consumers — especially when dealing with a credible and respected newspaper brand — would be more than willing to provide their contact information and preferences if it meant they could receive Daily Deal offers that meet their preferences, needs or wants.

Today an advertiser in the United States can rent an opt-in e-mail list for US$0.15 per contact. All they know is that the person the e-mail is attached to lives in a particular ZIP code. No name, no gender, no physical address, nothing else.

If a single opt-in e-mail with ZIP code information is worth US$0.15 to an advertiser, how much do you think a Daily Deal opt-in e-mail with a name and address, an established relationship with your newspaper brand, and a stated interested in your advertiser’s product or service category would be worth?

Sometimes less is more. But the more you know, the farther you go.

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