Monday, March 4, 2013

The newspaper ad revenue problem will not be solved with simple solutions, or by simply giving up

Sometimes newspaper publishers get accused of being solely focused on cost cutting. It is a common complaint heard whenever staff cutbacks are announced, or print schedules reduced. But, believe it or not, it is not always true. There are times when despite the obvious subjects for cost reductions a newspaper executive will be slow to react.

I think a good example of this is the stock market tables, a feature that all but the financial newspapers have eliminated. Any reader today can, of course, simply through a few keystrokes find a stock quote. There is simply no need for those pages upon pages of stock tables to appear inside a newspaper – and they don't, publishers dumped them years ago. But the decision was controversial: the argument against eliminating the tables was that financial advertising would suffer. But many publishers didn't see the issue of ads appearing in the Business section as directly tied to the advertising seen there, after all, the section wasn't being eliminated, only the tables. So the tables went.

But when there is a direct tie in to revenue it is harder to get publishers to act. Take classified advertising. How many papers have eliminated their classified sections?

As a former classified advertising manager I can tell you that no one alive is as big an advocate for classified as I. When I was a CAM my department was the engine that drove profits, always out performing retail advertising and generally allowing me to get my way whenever there was an argument about resources, staffing or most anything else. Thanks to always blowing away my budget revenue goals I could sometimes act like a real son of a bitch, as many of my colleagues would tell you. It also led directly to my first publisher position.

But today, the classified sections of most newspapers are a waste of paper, and a waste of potential. The few dollars brought in by the handful of recruitment ads, for instance, hardly justify the paper and ink spent to reproduce them. But far worse, the continuation of the print classifieds continues to hold back any real innovation by classified managers.

Few, very few newspapers have migrated their classified ads into their mobile apps, where geolocation services could be utilized. Most newspaper chains have invested in classified websites with only the thinnest connections to their print products. So, in exchange for a few dollars coming in from these popular classified sites, they have basically frozen in place their dying classified products. As a result, long gone are the days when we classified managers could fly off to Banff to attend a classified managers meeting safe in the knowledge that out bosses dare not question the expenditure.

The problem of newspaper advertising is an incredibly complex one, one often simplified by media observers as "ads have gone online." It's not true. In many cases the ads have not migrated, they have evolved, mutated or disappeared completely.

Take bank advertising, for instance. This is still a major category for most metro newspapers. But banks today communicate directly with their customers through their websites, email and apps. The only real purpose for those quarter pages ads appearing in print are new customer acquisition. The same goes for other categories such as cellular and cable.

This Sunday I opened the Chicago Tribune and counted the print ads. Once I left the main news section it was a real effort to find any ads, at all. The second section with national and world news would have been completely ad free were it not for the full page ad on the back from a electronics retailer contracted for that position. The sports section, despite the success of the Blackhawks and Bulls contained exactly one ad.

But I have talked to publishers, mostly in rural or suburban areas, that say they are not yet seeing their advertising collapsing in this way. Sure, ads are down a bit, but they attribute that to the soft economy, local businesses shutting down. One publisher told me that their biggest fear about launching a tablet edition for their newspaper would be that customers would like it too much – why drive readers to digital when they, and the advertisers, were still loyal to print?

I responded by asking them about their sales staffs, and to a man they said that they felt they had good managers in place, with staffs very dedicated to sales and good customer relations.

For me I often wonder how an ad manager could return to the office on a Monday after a paper was produced for Sunday with so little advertising?

If a sign of insanity is doing the same thing over and over and expecting different results, what is to be made of many newspaper executives. For every company like Advance that has torn apart its model, there are others can not make a change until it is in bankruptcy court. But even radical change, like altering print schedules or print formats, won't solve the problem of newspaper advertising. So for some, the idea is to become less dependent on advertising by embracing paid circulation strategies that deemphasis advertising. Never do these strategies originate in the ad departments, of course, and never do they promise to actually increase revenue levels, but merely to offset some of the losses.

So what to do? My own answer is to radicalize your thinking before introducing radical changes to your print schedules, formats or staffing.

The first thing I would propose is to stop boxing yourself in with the status quo – this includes rates, sections, formats, platforms.

Most newspaper publishers do not seem to remember the days when newspaper marketed themselves 24/7, filled the airwaves with both circulation and classified promotions. I entered the business professionally at a time when the Hearst newspaper in L.A. was promoting classified ads for $5. It got the phones to ring and drove business, even if it didn't drive profits. When that promotion ended another began.

Today, most rate cards are either so complex they are beyond the ability of advertisers to understand or care, or they are rigid and inflexible. If your sections are without ads, sell ads. Get aggressive. Better to cut the rate for print then wait until digital is all you can sell, because if you won't compromise in print you will find digital ad selling a shock.

The second thing I would propose is experiment with products, platforms and advertising solutions. Many newspapers, and clearly the Tribune is among them, are long past the time where they should worry about switch business – the migration of ads from one section into another. What the Tribune needs, like most metro newspapers, is to make local businesses dependent again on them for their marketing needs. The daily paper, and its website, is not serving this need, so a publisher has no choice but to experiment, create and launch new products.

Many media observers today, and many newspaper publishers themselves, have increasing doubts about the future of newspapering. That does not mean, however, that the future of their businesses need to be in as much doubt. As many small publishers have long discovered, it is the relationships with their readers and advertisers that is important.