Thursday, November 1, 2012

Advertising dilemma: are tablet editions for expanding the reach of the print edition? or to attract new digital ads?

"What exactly is the purpose of your new tablet edition?" I often ask magazine and newspaper publishers when I have a chance to talk to them. You'd be surprised how many times I get a rather vague answer. The real question I usually want answered, however, is what is your advertising strategy?

Tablet editions present both newspaper and magazine publishers with a dilemma: is the purpose of the new digital edition to extend the reach of the existing print product, or is it to create new advertising real estate?
The answer, of course, depends on the kind of digital edition created. I have argued in the past, and would today, that The New York Times does not yet have a tablet edition. Instead, what the NYT launched way back in 2010 was an extension of their website – a newly reformatted website to be read on tablets. Because of this, the ads that appear inside NYT for iPad have no tie to the print edition, it is essentially web advertising.

Likewise, replica editions do not create new advertising real estate (in general). The ads one sees in the digital edition are usually unchanged from the print edition.

It is those natively designed tablet editions that present new opportunities for advertisers – either to buy into a new digital publications, or to swap out their static print ads for interactive digital ones.

One issue facing publishers is that their circulation strategies are in conflict with the ad strategies.

In the newspaper world, publishers are trumpeting their gains in digital subscriptions. The problem for many, however, is that losses in print are not translating into gains in digital advertising – of it they are, the gains do not offset the losses.

The New York Times, for instance, is reporting huge gains in digital subscribers. But the paper is very much dependent on national advertising. So what we are getting is a confused message. The ABC, for instance, just this week issued new circulation numbers that showed that the NYT now has 896,352 paid digital subscribers, and though print readership declined to 717,513 , the end result was a gain in total paid circulation.

A few days earlier The New York Times Co. released its Q3 earnings and the report showed ad revenue down to $182.6 million, a decline of 8.9 percent. So while the paid content advocates are cheering on the paper's digital efforts, the shareholders are no doubt screaming.

The key to digital ad revenue gains in tablet editions is either getting existing advertisers to pay more for their tablet ads, or to get new advertisers into tablet editions. Both are proving difficult; nay, almost impossible.

For some publishers, though, the tablet edition is working as an extension of print. By recording increases in tablet circulation, melding that with print, some publishers are attempting to created a single branded ad platform. If Hearst, for instance, which is forcing its readers to choose print or digital, can successfully move their readers towards their digital editions, they can save production costs while maintaining their rate bases.

Others who are giving away their digital editions to print readers, are hoping for the same results.

The ABC, which has had to be somewhat flexible in its rules for tablet editions, still is wedded to the concept of the replica edition – the digital edition where all the content and all the ads are the same. This is an outdated approach to a very complex issue. The rules, for instance, demand that the general flow of a digital magazine replicate those of the print edition. This rule alone would be enough for many digitally savvy publishers to consider that it is time to dump the ABC and its restrictions.

Most B2B publishers who have taken the leap to tablet editions are pursuing, at least for now, replica strategies. But here the publisher is facing a new problem: qualifying readership. While advertisers are pretty sure who is reading the print edition, assuming the publisher has abandoned their BPAs, knowing who is reading digital editions in impossible if the publisher launches a free tablet edition.
No advertiser will pay more to see their
2-page spreads shrunk down to tab size.
For now at least, Apple has not set down rules for qualification schemes inside tablet editions – and the ABM, which appears to be abandoning the interests of publishers for those of brands, has not aggressively pursued this issue with Apple (at least as far as I understand – I've asked and gotten no solid information back).

A few publishers have attempted creative solutions by including questionnaires in their tablet editions. These questionnaires are sly attempts to qualify readers. They do not prevent unqualified readers from download their apps and accessing the issues, but they do provide the publisher with some useful reader information.

The goal, of course, is to be able to claim that a certain number of readers of the tablet edition are of value to industry advertisers. Caterpillar Paving, for instance, wants to reach someone who can buy a very expensive piece of asphalt paving equipment, not some kid who happens to like looking at construction equipment.

Since B2B publishers are generally pursing replica strategies, the goal is to be able to keep justifying those ad rates, even when the BPA may be showing a decline in circulation (or the BPA has been eliminated entirely).

The ultimate goal for many publishers is to start seeing new digital ads for their tablet editions. Unfortunately, we still appear a long ways away from this goal.

Apple's efforts with iAds has been rather embarrassing so far. Here is a giant tech company that invested in a mobile ad network, Quattro Wireless, only a week ahead of the launch of the first edition of the iPad. From this came its iAds.

It then launched the tablet publishing platform. One would have thought that providing digital advertising for these new digital publications, especially the tablet-only publications, would have been a natural outcome of the investment. It hasn't worked out that way.

Time Inc.'s CEO Laura Lang revealed that the company's reps would be selling into the iAds network. This would definitely be a move in the right direction, and would provide an incentive for publishers to begin accepting network ads into digital editions the way they do into their websites. It would be new revenue.

The downside, many publishers would argue, is that these network ads would be generate a far lower rate than what they themselves are charging their print advertisers. It is a fair position to hold unless one looks at the level of digital revenue these publishers are generating.

For start-up digital publications, though, the advantages of network tablet ads is obvious. If Apple (or Google) could generate several pages of ads per issue, this could make many tablet-only publications break even. For Apple the benefit is not only the cut of the ad revenue it would receive, but the continuing fees it would collect from paid digital subscriptions.