Conference speech, International Newspaper Marketing Association, 2008 | by Danny Meadows-Klue
Newspapers have run out of time. It’s crunch time because the online newspaper model for most is little more than an enhanced copy and paste of the print title, with archives and minor discussion – a model pretty much the same as the mid nineties. Most newspaper group have failed to shift their web editions into high traffic community hubs that can act as a transition for advertising revenue as it migrates further out of print.
Cultural change lags behind revenue shifts
Those who don’t force through rapid innovation during the next 24 months will not be able to survive the falling profitability of their print titles. As circulations continue to erode and audiences continue to switch to other channels, the printed newspaper is increasingly less attractive to advertisers. The problem is just as true at local level as national level and echoed in all markets where online media has transferred into the mainstream.
Inside the newspaper companies, the balance has finally shifted to where the websites – in particular classified verticals – deliver the revenues that balance out losses in the high cost print titles. Collectively many of the businesses can survive the transition, but only if the monetisation of their web editions is completed.
Monetisation strategies
Most digital newspapers still have only a simple publishing strategy, and one that fails to deliver the volume of engagement their advertisers need. This is compounded by weak monetisation strategies with only simple yield models, limited advertising formats and too conservative approach to product innovation. Ironically this makes their web businesses look like they are failing to deliver, yet they may actually be all but a few steps away from unlocking the right formula for the brand.
Revenue growth still correlates more closely to page impressions than unique users, time spent, or community activity, providing a certain audience threshold is crossed. Over the next three years the importance of reach (unique visitors) and time spent will continue to grow. Revenue models for online media will continue evolving with the entrenchment of contextual advertising and video pre-rolls as core elements in the advertising product mix.
The competitive set for online newspapers remains massively broader than those of the traditional print titles, and many senior executives still fail to appreciate this, citing Google’s local search revenue growth as the problem and failing to understand the dynamics of classified advertising migration to myriad niche vertical sites that mushroomed in the market gaps left by the newspaper sector’s slowness to innovate.
Social media
The ‘web 2.0’ models of social media have in general been poorly adopted by newspapers. While internet pureplay businesses readily harnessed consumer generated content and engagement to fill the gaps in their pages, newspaper teams wrestled over the editorial integrity of inviting others to take part beyond simple comments around their own writers’ articles. Community and social media functions will remain the key to audience growth.
The challenge shifts to video
At the same time, the convergence with television content that took place on the web was only slowly adopted by newspapers. Every newspaper should carry significant video content as a core element of their programming. Video content should include data from video news agencies, simple soft studios within the newspaper’s buildings and readers. The need for video capability will shake out those only dabbling in web publishing.
This was echoed in last year’s Pew report (July 2007) that confirmed “57% of US internet users have watched videos online and most of them share what they find with others”. They also found that among the 18-29 age group, 76% watch the online video, underscoring the way behaviour is starting to change. This will accelerate dramatically over the next three years as convergence with television concludes.
The Pew research found that news was the most popular genre of online video with every age group, except for those aged 18-29 where comedy was watched more. Not surprisingly, YouTube was the most popular single destination site, with 27% of all online video consumers saying they watch or download video from that site.
However the YouTube phenomena is simply the reality of first mover advantage. As Yahoo and MSN develop rival platforms, and as blogging tools build the bandwidth to stream their customers’ video content, the scope of sites that will house video will broaden dramatically. Alongside this the arrival of mainstream broadcasters will further stress the newspaper model by providing fully streamed television over the web (IPTV).
The future for newspapers
The speed at which these changes will happen will be faster than newspapers and their management teams can react. Rick Edmonds, Media Business Analyst, Poynter Institute believes a bright future for newspapers depends on two things:
“Editors and newsroom staff must continue as the primary news providers in their communities, adapting and delivering reports on multiple platforms, innovating in form, voice, variety and audience-focused content” and secondly that “as businesses, newspapers must generate new sources of income as traditional ones fade. That includes online display advertising, rich and competitive local classified, local search, other online income and multiple niche publications. They must also get the best results -- discovering new lines of business and holding on to the old -- in the paper edition.”
Many analysts have been more direct. Paul Ginocchio, media analyst at the Deutsche Bank reckons it’s about online sales. "The best thing newspapers could do next would be to hire new sales staffs.”
Crunch time
The newspaper industry is on the edge of crisis. Many will not survive the next three years. The web can be the way through. But the businesses newspapers are building, on the whole are neither fast enough, broad enough or effective enough. The right strategies are simply not in place.
