How can newspapers re-capture advertising share?

Changes in consumer news consumption already have led to significant changes in how and where advertisers invest their marketing budgets.

Traditional media’s share of ad spending continues to decline as advertisers shift their budgets to more efficient media channels. By 2016, interactive marketing (social media, e-mail marketing, display ads, mobile marketing, and search marketing) is projected to account for 35% of total ad spending in the United States, or roughly the amount advertisers will spend on TV advertising this year (Forrester Research, U.S. Interactive Marketing Forecast, 2011 to 2016). 

How can newspapers re-capture advertising share and compete for interactive marketing budgets? What are the keys to future success?

When I moved to Cedar Rapids, Iowa, in 1981, I called the local newspaper to sign up for a subscription. Since my job involved a lot of travel during the week, I asked the customer service representative to sign me up for a weekend subscription. I was surprised when I was told the newspaper didn’t offer a weekend or Sunday-only subscription and that my only option was to sign up for daily delivery. Needless to say, I didn’t subscribe and elected to pick up the newspaper at my neighbourhood convenience store on the weekend. 

Much has changed since that day.

Today, consumers are spending less time with traditional media (watching TV, reading newspapers, listening to radio, reading magazines) and more time online. Consequently, advertisers have shifted their advertising budgets to lower cost interactive media channels, which provide improved targeting and measurable results, and newspapers’ share of U.S. ad spending has declined from 22% to an estimated 12% over the past decade.

Newsmedia companies have cut operating costs to preserve profitability and more are instituting paywalls for their online content. They are attempting to transform into “digital-first,” multi-media companies that offer a portfolio of print and digital products, providing advertisers with mass, niche, and one-to-one audience delivery. Can newsmedia companies recapture their share of ad spending? What are the keys to a successful transition and what must they do to compete for a share of interactive marketing budgets?

1. Focus on local audience and advertising.

In a recent INMA Innovative Advertising blog post (“Local Is Our Future: Treat It Well and Let It Lead the Way”), Adam Burnham writes: “National digital (advertising) is a playground we (newspapers) all want to play in, but we just don’t scale.” He points out national digital advertising is placed by interactive agencies or purchased on open exchanges, which drives down ad revenue — as low as US$1.25 CPM, in some cases. Newspapers’ strength — their competitive advantage — is local audience delivery, their local advertising sales force, long-term relationships with local advertisers, and established brands.

2. Develop and use consumer and business databases.

Newspapers, with their multiple contact points and ongoing interactions with consumers and businesses in their communities, are in the best position to develop and maintain local consumer and business databases. Lists may be fine when delivering a mass audience, but an integrated database of consumers and businesses is required to target advertising and cost-effectively sell interactive marketing products and services to advertisers. Creating an integrated database that recognizes consumer or advertiser relationships, departments, products, services and channels provides newspapers with a competitive advantage, and makes it possible to provide advertisers with quantifiable niche and one-to-one audience delivery.

3. Re-organise sales staff and create new sales channels that match resources (selling costs) to ROI (advertising revenue potential).

While a local advertising sales staff can provide a competitive advantage for news-media companies, the costs associated with personal selling can be justified only for larger advertisers. Ad salespeople should be capable of selling all advertising products and services, rather than having separate sales forces by channel (print versus digital).

Anne Wong’s article in the October edition of Ideas Magazine(“New Advertising Services Bring in Millions in New Revenue”), and Tyler Mack’s recent INMA Innovative Advertising Solutions blog (“Creativity Transforms Advertising Executives into True Media Marketing Consultants”), provide timely case studies of how newsmedia organisations can achieve success by transforming their advertising sales staff and sales process.

New sales channels and processes must be established to match selling costs with advertising revenue potential. This includes establishing an internal sales staff that uses telephone, e-mail, and live chat to support the needs of advertisers.

Finally, newsmedia companies must demonstrate competency by “walking the talk.” They must use their own multi-channel products and services to market their products and services. Offering to handle a local advertiser’s Facebook page, as suggested by a recent Editor & Publisher blog (“Making Facebook Work for Publishers”), works only when you can demonstrate you know what you are doing, e.g. have your own successful Facebook page.

4. Embrace permission-based marketing standards and use database-driven e-mail communications.

In its recent U.S. Interactive Marketing Forecast 2011 To 2016, Forrester Research points out, “E-mail tethers together customer experiences across channels” and “developing mobile or social programmes will result in sending more e-mails.”

E-mail marketing’s low cost per contact and database-driven one-to-one targeting capabilities are required to market print and digital products, as well as deliver targeted audiences for advertisers. Using e-mail to “batch and blast” one-way messages to consumers or advertisers only demonstrates a lack of e-mail marketing competency. Permission-based, database-driven, e-mail communications is critical to demonstrating your organisation’s interactive marketing skills, as well as matching sales expense to potential ad revenue.

5. Acquire e-commerce capabilities to sell your products and services.

Providing consumers and businesses with 24/7, self-service order capabilities is essential for long-term success. PCI-compliant, online order capabilities are essential to lower per-transaction costs, whether you’re selling new print or digital subscriptions to consumers or multi-channel advertising products and services to businesses. E-mails or Web pages that direct respondents to call — versus providing self-service order capabilities — only serve to demonstrate your organisation’s lack of interactive marketing expertise.

6. Create a culture that puts customers first.

Satisfying customers’ needs may seem like an obvious requirement for the success of any business. But newspapers have a long history — and an internal culture — of putting their needs ahead of those of their customers.

Twenty years ago, I could sign up only for daily delivery of my local newspaper because, I assume, it ensured the newspaper maximised circulation revenue for each subscriber and simplified daily distribution. Today, consumers and advertisers have lots of options for accessing news, as well as marketing their products and services. These options, combined with interactive channels that allow them to instantly share their positive or negative experiences with others, should serve to motivate newsmedia companies — any businesses, for that matter — to focus on serving the best interests of customers.

A customer-first culture changes the way you do business. For example, 10 years ago my local newspaper had its own customer service staff that handled all incoming calls. The staff was small and consisted of four customer service representatives: three retired teachers and a retired nun. They knew everyone at the newspaper and, as a result, were able to direct callers — subscribers and advertisers — to the department or person that could address their needs. Today, callers are greeted by a recorded message and directed to enter a number to be transferred to various departments. Many callers are transferred directly to a staff member’s voicemail.

As a small business owner, I know when I take care of customers, everything else will take care of itself.

7. Create a culture that embraces change.

John Newby’s recent INMA Satisfying Audiences blog (“Culture of Change Leads to Innovation”), identifies the benefits derived from creating a culture that embraces change. Having worked for a newspaper, as well as a number of start-up businesses, I’ve witnessed firsthand how an organisation’s — or an employee’s — capacity to accept change impacts the organisation’s or individual’s ultimate success.

Creating a culture that embraces change and a staff that is constantly searching for ways to do things better plays a key role in helping newsmedia companies recapture audience and advertising share.

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