Digital newspapers: The perfect storm - Trends, challenges, implications, solutions

The perfect storm

The kids who don’t read papers are now adults, the role of newspapers in people’s lives has shifted, advertisers are thinking differently and people connect differently. The challenges facing the newspaper industry – both print and online – come from all sides. The only solution is that the product at the heart of the newspaper has to leap: radical change to become relevant to the information needs of consumers in the digital networked society, and accessible through the channels and techniques that match their new digital behaviour. Only the newspapers who understand this will survive.

Contents

The ingredients of the perfect storm
A few examples of changes that demand response
• Time: Frequency of the publishing model needs to change
• Geography: The changing role of local identity in culture
• Hyper local content and ads: The iGoogle effect
• The package: Lacking relevancy
• Local disintermediation: Local audiences outranked by other dotcoms
• Tackle the traffic problem: Prioritise a leap in sustainable traffic
• Embrace social media
• Integration: Weaving content, community and commerce together
• Reflections
• How our team support

Why this time, the change is different

The changes in consumer behaviour and advertising thinking that emerged in the mainstream during the last five years are neither cyclical nor generational. These are fundamental shifts in the way our economies and societies work. The digital networked society created new ways of interaction, and yet the models of most newspapers – both online and offline – remains heavily grounded in a world where:
• Information was scarce
• Information needed to be packaged and delivered
• Mass markets shared commonality in the content they wanted from this editing
• The supply of media was restricted
• Advertisers needed these classic media channels to reach their audience
• Advertisers did not have the opportunity to go direct to customers
• The economics of publishing created high barriers to entry for new entrants into the media industry

These changes are neither cyclical or generational. The only difference between markets is the scale of their impacts so far. Today’s media brands service the transition generation as well as digital natives. They are simultaneously spanning the mass of audience that has a completely different behaviour, the increasingly tiny minority of those whose behaviours are unchanged, and the evolving transition generation whose behaviour shifts further with every extra hour on Google and Facebook.

The ingredients of the perfect storm
Having worked with online publishers for 15 years, we have been tracking the factors changing this landscape. These can be grouped into four areas.
• Audiences
• Advertisers
• Competitors
• Business models
The newspaper content and business model was built on a set of rules which no longer apply. In each of the four areas, fundamental shifts have taken place, permanently changing the roles of newspapers, magazines, television, radio and outdoor media.

The global recession that triggered a collapse in advertising spend in many countries simply accelerated the inevitable, bringing forwards the effects of those changes and forcing some media groups to confront the need for change earlier. The breadth, depth and length of the recession means few newspapers have ability to ride out the storm, lacking the financial reserves needed to carry on trading.

The challenges newspapers face stem from fundamental change in
• The nature of information
• Marketing theory
• Consumer technology
• Media experience
• Social networks
• Cultural identity
• Consumer expectations

That’s why the traditional content models and business models – of those from the Web 1.0 era of online media – lack relevance and will eventually fail.

Examples

Time: Frequency of the publishing model needs to change

This is one of the first challenges online media faced and many took steps to address it. As early as 1997, the team I worked with at Telegraph.co.uk began squaring up to rolling news and realtime publishing.

In the digital networked society
• ‘Daily’ replaced by immediacy: Consumers expect fresh content now rather than access now to stale content
• ‘Pushed and packaged’ replaced by on-demand
• Society fractures into more diverse daily cycles, breaking the habit of morning newspaper readership

Strategic decisions
Collectively this demands that news and content publishers face a series of strategic decisions. If they embrace these, then the relevancy of their content and business continues in the eyes of the reader. This creates the potential for mass audiences which in turn drives the advertising model.

• Switch the publishing model to rolling content publication
• Move to ‘platform neutral’ publishing, embracing online toolkits from Kindle to Twitter
• Re-engage audiences with the media brand at new times and new places

Geography: The changing role of local identity in culture

The local press is particularly at risk. For local community publishers the advertising collapse is amplified and their teams lack the leadership to develop new content models.

The importance of ‘local’ has faded. Lives are geographically more flexible, labour is more mobile, and thanks to the web, social connections defy geography. The role of identity through tribes rather than locales has swollen, and digital tools – from email to Facebook – have unlocked ways people can maintain a presence in multiple tribes. New market entrants in the online media space have gained leverage over local content, and in key verticals - such as motoring, recruitment, real estate and the auctions market – those new entrants have local windows into national databases, providing an economy of scale the newspaper industry failed to build.

Strategic decisions
Collectively this demands that news and content publishers decide which verticals they will focus on and make a series of strategic decisions. As media groups rather than single titles they can still embrace these, although increasingly this will mean working with competitors rather than in isolation. The tough emotional decision will be to step back from market sectors the print title once owned and accept they can nolonger play in that space.
• Lever local content across large regions
• Focus on verticals and relationship marketing
• Extend local brand equity across new platforms

Hyper local content and ads: The iGoogle effect
Media brands need to accept the new information ecology and work within that framework. This means understanding the roles of Google in driving search traffic, nurturing the role of aggregators as a way to build connections with audiences and actively rebuilding the content products to live and prosper within this ecosystem. Most newspapers and magazines still need to extensively refocus their editorial and advertising strategies.

Strategic decisions
• Build a strategy around Google, not against it
• Invest in content and the architecture of discussion for the communities the publisher serves
• Create platforms, not words: nurture engagement and give the community a voice for their own content rather than creating the majority centrally

The package: Lacking relevancy

Newspapers and magazines draw together content from a diverse catchment, judging what’s relevant and interesting and packaging it together in a way their audiences can digest and enjoy. The editing process was essential in a time when people didn’t have direct access to that information, but now that the barriers to information access have melted away, the need for this packaging and the nature of what is needed have both changed.

The package of the newspaper lacks relevancy for many people. The web and broadcast media have taken ownership of breaking news, interests in passions and hobbies can be satisfied more readily by niche content websites and consumer magazines, and the activity of daily packaging has been eroded by the approaches of iGoogle and aggregator platforms who provide self selection tools with the benefit of a global economy of scale.

The role of aggregation shifts to the web, and increasingly consumers have become the editors of their own ‘Daily Me’ by using the tools to select their own RSS feed and data blocks in a way made effortless by portals like Yahoo, MSN and social networks like Facebook. These new players aggregate more efficiently than newspapers and the limitless choice of granular feeds of data gives consumers the chance to weave together their own personal portals for the start of each day. Ten years ago traditional media started to move towards this space with their personalised editions, but few innovated far enough to provide a viable alternative to the portal’s software platforms.

Strategic decisions
In this landscape, the choice for newspapers and magazines is how to maintain their distribution and position the carefully edited package as something consumers can trust, respect and enjoy.

• Rebuild the relevancy, focussing on topics defensible in the medium term
• Embrace multi-digital platform publishing with the website as one of many different digital access points to the content …from Twitter to Kindle actively broaden the touchpoints
• Syndicate content aggressively across all digital platforms that match target audiences, advertising the brand and helping maintain awareness in people’s media map
• Approach the web by thinking webspace rather than website; taking content to consumers rather than driving traffic to newspaper sites

Local disintermediation: Local audiences outranked by other dotcoms

For the local press, having a monopoly of local audiences had been guaranteed. This was a foundation stone for the business and one that has now been broken.

A web browser is a newsstand of a thousand titles and ‘local’ audiences can be as easily reached and targeted through national or global sites as they ever could through local media. IP/geo targeting is finally unlocking granular local communities for marketers using display advertising online, just as local search is providing a new type of geographical relevancy in listings. Add to this the location tools that transform mobile handsets into geographically smart computers, and it’s clear that newspapers have to fight for their relevancy.

Many of these models deliver local audiences to brands while circumventing local media. Alarmingly for the local media sector this should be seen as still the starting point of this trend. Further imminent changes will come with the mainstreaming of new generation mobile phone devices and the unlocking of greater intelligence about the web browser through behavioural targeting ‘super-networks’ that use ISP data to build a perfect picture of each and every view and click.

Strategic decisions
Local media need to simultaneously reshape their content strategy and boost their audiences.

• Review the content strategy and build a content model which is sustainable for meeting audience interests in the medium term
• Create content relevant to the advertising markets and look for new types of connections into the sales processes of key advertisers
• Focus on traffic growth strategies to build audience numbers to make them viable

Tackle the traffic problem: Prioritise a leap in sustainable traffic

For the local press, having a monopoly of local audiences had been guaranteed. This was a foundation stone for the business and one that has now been broken.

This is, in part, a numbers game. There are many more variables in the online publishing business model, but traffic is a consistent weak spot for most online news media sites. The audiences their sites have to find to compete with in the new landscape may need to be ten or more times greater than the current traffic levels and doing a little more of the same won’t in any way get the brands where they need to be.

Strategic decisions
Online newspapers need to achieve a quantum leap in audience levels and have paid a heavy price for under-investing in their marketing over the past decade. The solutions need to be top-down from here on.

• Prioritise traffic growth as a strategic corporate goal, setting key performance indicators (KPIs) for granular aspects of the business’s growth
• Build a senior leadership team of stakeholders from editorial, marketing advertising and technology to drive the strategy: focus on business agility and team structures that champion rapid prototyping and testing of ideas
• Audience acquisition: Get the basics of advanced search engine optimisation right and rebuild business processes and publishing workflow around SEO
• Take audience acquisition further, building out rich and integrated acquisition strategies that go far beyond optimising content for search
• In parallel develop reader retention strategies that combine publishing with relationship management, content tagging and audience profiling

Embrace social media

Media sites need to embrace audience participation and social media as a way to boost content and traffic. Get the models right and the audience growth rate shifts, permanently. Fail to innovate the model and growth continues only slowly. The difference over a year can be dramatic, and between media properties who do and don’t use social media tools, this difference readily translates into a clear decision for advertisers.

While Facebook, Wikipedia and Myspace may be synonymous with social media, they only reflect a few ways consumer participation can be harnessed. Social media includes:
• Ratings and voting
• Consumer generated content: text
• Consumer generated content: images
• Consumer generated content: video
• Consumer generated content: audio
• Consumer generated content: knowledge (the wiki model)
• People who like this, also like this… (the individual behaviour profiling model)
• ‘Most popular content’: top for traffic, blogging, posting (the collective behaviour tracking model)
• Advanced user generated content (social media applications)
• Mash-ups that combine content together

Strategic decisions
For media brands, the steps forward are sequential:
• Architect participation by creating frameworks communities can actively participate in
• Market the social media, focusing on distribution and discoverability
• Nurture contributors: Build relationship marketing strategies around star posters, using the Digital Strategy model of content development in social media
• Reduce audience churn by building loyalty and repeat use behaviour with the web publication

Integration: Weaving content, community and commerce together

In this paper we touch upon just a few of the ways we’ve helped media groups develop stronger online businesses to support business migration. Transition from one set of economic and publishing models to the next is traumatic for any firm, and today’s recessionary advertising market compounds the problems.

That’s why the process demands top down leadership and an integration of people and visions from across the business: content, community and commerce need to be woven together to create the right strategy for the business.

Strategic decisions
• Unify project leadership teams around vertical content sectors and publishing goals in key areas such as news, property, motors etc
• Build intensive strategies for boosting traffic and audiences for each vertical sector
• Create content as a heart for community discussions to builds audiences, and create stronger monetisation strategies for capitalising on this advertiser appeal
• Build platforms for communities to link together, facilitating engagement and driving discussion
• Develop processes that use integrated teams around key projects and encourage rapid prototyping of content, tools and applications to satisfy known consumer needs
• Task cross functional teams with building strong traffic acquisition and retention strategies

Reflections

A successful and diverse media industry is a key component for a healthy society. The importance of journalistic integrity is just as true online as in print, and the role of news providers as guardians of democracy is true irrespective of the platforms they use to publish. The digital networked society needs a plurality of informed voices to help structure the exceptionally noisy debate as every member of society gained the tools to publish. In an increasingly globalised culture, local online media can become a centre of gravity for local communities, driving social cohesion the way their printed patents did two generations before. As media strategists, our beliefs are that businesses can still make that transformation, no matter how difficult and frustrating it may feel for managers locked inside less flexible media groups. The perfect storm in the newspaper industry does not have one single conclusion for newspaper publishers, instead it offers a choice and for those that are ready to adapt and accelerate this is far from the end of the road for media brands.

How our team support

For over ten years we’ve specialised in accelerating publishers through the transition to produce powerful online media businesses that build relevance in the eyes of their audiences and new revenue streams from their advertisers. There are a range of strategy solutions as well as training programmes for their teams. Among the most popular strategy solutions are:

• Strategy healthchecks and risk analysis
• Traffic-building strategies
• Content and community strategies
• Product development strategies
• Ad revenue strategies
• Leadership coaching days