With 35 cents of every ad dollar projected to be spent on interactive marketing by 2016, (Forrester Research, U.S. Interactive Marketing Forecast 2011 to 2016), newspapers must quickly change their culture, capabilities, and practices if they are to maintain and grow local ad share.
Can the newspaper business — focused for decades on one-way, mass audience delivery — successfully transition to two-way, niche, and one-to-one, permission-based audience delivery? What kind of culture and capabilities are required to capture a share of future interactive marketing budgets, and what barriers to change and success do newspapers face?
Sandy MacLeod, vice president for consumer marketing and strategy with the Toronto Star, pointed out in his recent Ideas Magazine article (First step to culture change is setting strategic direction), that “(o)rganisational culture is an interesting beast and one that is not easy to tame.” Newspaper organisations around the world are dealing with their respective “beasts” (organisational cultures) as they attempt to successfully transition — and transform — their businesses so they not only survive, but thrive in the future.
Faced with the realisation that there are “no more costs to cut” in the print organisation, several newspaper organisations are pursuing “digital first” business strategies, creating new organisations that focus on acquiring digital revenue at a pace that will offset print revenue declines and generate overall business revenue growth. Adam Burnham, Senior Vice President for Local Digital Sales with Digital First Media, shared in his recent post on the INMA Innovative Advertising Solutions blog, (Mapping out the crossover point for digital vs. print), that “(if) print continues to decline at a rate of say 10%, digital growth needs to be in the triple digits to cover that loss.”
Whether retrofitting an existing “beast” or creating a whole new genus and species, newspaper organisations face significant challenges when they embrace and implement the practices that will serve as the foundation for interactive marketing success.
Remember, more is not (always) better. U.S. newspapers have a long tradition of reaching — or trying to reach — every household in their market. Whether through the distribution of a Total Market Coverage (TMC) product, mass subscription mailings, or the use of random digit-dialing, prior to the passage of Do Not Call laws, newspapers became very good at communicating a message to a large audience. More has always been better in the world of newspaper marketing. And if you had a postal box, front door knob, or telephone, your local newspaper did not hesitate to use it to communicate. “Send it to everybody — the more the better” was the newspaper mantra.
This “more is better” approach continued as newspapers launched their Web sites and digital products. The focus continued on increasing the numbers but shifted to increasing unique Web site visitors, page views, and click-through rates. The challenge, as Harold Gronke, Managing Director for Verlag Dierichs GmbH & Co., in Kassel, Germany, points out in his recent post on the INMA Innovative Advertising Solutions blog (Forget (almost) about Google) is that delivering a large online audience holds little value when most of that audience is from outside the market in which your newspaper operates.
In an effort to “build the numbers” online, newspapers abandoned online registration and paywalls for fear those tactics would impact the numbers. As a result, the numbers did grow, but the end result was an anonymous audience the newspaper knew very little about. And when newspapers did request information from those signing up for breaking news e-mails, the only information collected was an e-mail address, perhaps a zip code, and maybe gender.
The “cost” of entry to access free news and ads was very low — so as not to impact the numbers. As a result, those signing up had very little invested (time or information), and, as a result, the digital relationship had less value for the consumer — as well as the newspaper and its advertisers.
While interactive marketing is also focused on delivering the “numbers,” advertiser expectations — and the way in which advertisers measure success — is quite different from mass marketing. With interactive marketing, advertisers are more focused on quality (orders) vs. quantity (reach). The differences between mass marketing and interactive marketing present an unfamiliar landscape to many newspaper marketers.
|One to many||One to one|
|Reach & frequency||Cost per order|
|Difficult to measure||Everything measured|
|Disruptive marketing||Permission marketing|
Permission-marketing benefits come with increased responsibility. It's been 13 years since Seth Godin's book, “Permission Marketing: Turning Strangers into Friends and Friends into Customers,” was published. The permission-marketing principles introduced then are even more relevant today, given the significant growth in interactive marketing channels and ad spending.
As Godin points out, “Permission marketing is the privilege (not the right) of delivering anticipated, personal and relevant messages to people who actually want to get them. It recognises the new power of the best consumers to ignore marketing. It realizes that treating people with respect is the best way to earn their attention.”
Permission marketing doesn't play to the strengths of newspapers or anyone involved in delivering a mass audience for advertisers. In the past, a newspaper's approach has been to seek forgiveness rather than permission.
Most of the principles of permission marketing are in direct conflict with the practices employed in the past by newspaper companies. As a result, “mass marketing think” only serves as an institutional barrier to capturing interactive marketing budgets. Newspaper advertising managers want to know how they can “make money with e-mails,” incorrectly thinking it could be as simple as sending a .jpg image of an ad to everyone with an e-mail address. “It is our list, isn't it?” they ask. “Then send it to everyone.”
The rules for permission marketing, the foundation of interactive marketing, are quite different than the rules for mass marketing. Newspapers must quickly adopt permission marketing practices if they are to successfully compete for a share of interactive marketing budgets. The first challenge for newspapers is recognising the value of audience. Newspapers must understand that the standby, “more is better” mantra does not apply to interactive marketing. Only after overcoming this first challenge can newspaper companies position themselves to pursue interactive marketing ad share.
Permission marketing requires newspapers to know (collect information) and interact (use information) with their audience like never before. Permission-based relationships require institutional memory (an integrated consumer database) and the capabilities and skills to maintain and update information (opt-in status, preferences) over time.
Newspapers, with their established brands, credibility, and long-term local presence in the market, have an advantage when it comes to establishing permission-based relationships. According to a November 2011 study from the American Consumer Institute, nearly two thirds of consumers do not trust online companies such as Facebook or Google with their personal information.
Extent to which U.S. consumers trust online companies* with their personal information:
|Do not trust||62%|
* Google, Facebook, et al.
It's About Long-Term Relationships, Not Short-Term Revenue.
Relationships are built on trust, familiarity, and consistency. While newspapers start with a credibility advantage, they are vulnerable to the same relationship pitfalls that competitors face. Just as a brand is the sum of all contacts over time, so is the relationship with consumers. Consumers bear a “cost” when they opt-in to permission-based programmes, in terms of the time invested to sign up, privacy exposure, and the cost to process communications. The consumer bears this “cost” because they believe it will result in better service in the future, i.e. more relevant information/offers. The higher the “cost” to consumers — permission intensity — the greater their buy-in and expectations, and the greater the value of the relationship to the consumer, and ultimately the newspaper and their advertisers.
Just as in real life, the quickest way to destroy a relationship is to violate trust or behave inconsistently. This includes assuming that anyone providing their e-mail address is interested in receiving information or advertising offers, i.e. permission creep. It also includes ignoring the information consumers have provided for the purpose of generating short-term revenue, i.e. “send it to everybody.”
The “price” of failing to accept responsibility for relationships is greater than just losing the opportunity to communicate with consumers (opt-out). A lack of process, capabilities, and the skills to manage permission-based relationships can come at a heavy cost to interactive marketers. Failing to meet consumers' expectations has long-term ramifications (lost revenue, lost relationships) for newspapers or any organisation pursuing interactive marketing ad share.
How to read this chart:
- The greater the consumer interest, the greater the participation.
- The greater the cost to enter, participate, privacy exposure, the lower the participation and interest.
- The better the category/message fit, the greater participation, interest, monetary benefit, and message relevance, and the lower the perceived cost to enter and participate.
- The more attractive the advertiser (known brand), the greater the participation, interest, monetary benefit, and message relevance.
- The longer the time for redemption (buy anytime vs. buy this Friday), the lower the participation, interest, and perceived monetary benefit.