We are only now learning how to sell audience based on what we know or surmise about our audience. But we moved beyond even that on Saturday, focusing on the messages businesses want to communicate to prospective customers, most of which should be...A sustainable revenue model
Take a look at the traditional newspaper business model from the outside in:
Consumer engagement is a raw material newspapers collect and bundle for resale to their primary paying customers — advertisers — who nowadays fall into two primary camps:
– Big-box chain retailers, who use newspapers to distribute their glossy, free-standing inserts, and
– Small/medium non-chain retailers and service businesses, who face their own huge disruptions from the big boxes but cannot afford rich, diversified marketing programs.
In the glory days, consumers were willing to subsidize a newspaper’s cost to deliver its convenient bundle of news, information and advertising. This allowed newspapers to set a high price for advertising — too high for many SMBs.
But times have changed. Through consolidation in the retail sector, there are fewer big box stores to advertise. Those that remain can communicate directly with consumers via their feature-rich websites, which makes them less dependent upon local newspapers.
This makes it a time of need, and opportunity, for both newspapers and SMBs.
If newspapers want sustainable local revenue models, they should help SMBs make it through big-box disruption, and this current pseudo-depression, as a local business partner with viable marketing solutions. Print can be part. Web can be part. E-mail can be part. So can mobile, SMS, outdoor, broadcast and cable.
CraigsList and Google Adwords do little for brands, or sales/special offers, or new store locations, or loyalty programs. We all can appreciate how hard it is to succeed with a local storefront or service business nowadays. Newspapers could help these SMBs, and themselves, by offering the media solutions SMBs need.
17. March 2009 at 5:52 pm :
Jay, the analysis here of the retail ad market is good, but a bit too basic. In the middle, between the huge chains and the local retailers, are the regional chains. I worked in communications for Southern States Cooperative for 25 years We had to struggle to stand out without the power of the local community link or the clout of the national branding.
That said, newspapers need to get good at serving marketers who have a dispersed, hard to reach market and not worry too much about regional, local and national ad buyers.
All of those businesses have someone within them who wants to reach the local widget market and ONLY the widget market. (At the farm co-op, in ad buys we didn’t buy eyeballs, we bought acres of cotton or heads of cattle.) Newspapers have the local brand to make that happen.
Let’s discover the value of the niche, walking it backwards from where the money is. That is to say, what local niche is spending a lot of money buying stuff in a competitive market? Gannett had a good idea with MomsLikeMe. What else? Teachers? That’s a niche needs and wants real news, BTW.
Here’s another one: Every newspaper should publish an aggressive, no-holds-barred tab or magazine (with a web site) about local advertising and marketing that covers every ad biz in the area. Send the publication to people who buy ads. And sell ads. And sell printing and web sites and billboards and TV ads. It should make a lot of money. (That’s another niche needs and wants real news, BTW.)
What about creating and marketing a free web-based texting service for parents of pre-teen and teenager children? Throw in some cute features, like an alarm clock. Pitch it as helping teach the kids responsibility, commitment and integrity. Brand it with the newspaper and a local bank. Call it WuduPlz.com. “WuduPlz do your homework.” “WuduPlz know u r loved.” Put ads not only on the site, but on the newspaper site and in print to promote the service to parents, promoting the newspaper and the regional bank, both. After they send the message, show them local news headlines.
Yeah, I’m WuduPlz.com. I’m pitching it to newspapers as a easy way of starting an effort of using their powerful local news brand to start creating a portfolio of new and different products.
Another idea: Newsletter (with web site) for area government purchasing agents. Sure, it’s only about 400 people, or less. Spending, what? Millions of dollars each year, buying cars, computers, etc.
17. March 2009 at 6:04 pm :
OK, I’ll bite. You’re right that the regionals and super-regionals have the Jan Brady tween-child syndrome: not big enough for Mad Avenue, not small enough to focus purely on one niche in one market. The use case you describe, it seems to me, falls to local zone managers — how to reach that one niche in that one market when it isn’t the only city you serve. Same would be true of big boxes trying to geotarget a message.
That’s been true for years, though, long before the Internet. So my question is, how does the Internet change that game, and does it help or hurt the tween-size businesses?
18. March 2009 at 9:27 am :
Thanks Jay. I’ll take a shot at answering.
As others here have said clearly, one of the goals is to turn local newspapers into more powerful branding channels. I saw this painfully within the regional retailing organization I worked with, but it is true of small retailers as well. And, let it be said that creating and maintaining a brand is no cakewalk for national firms either.
Let’s focus on this: In the local community, the newspaper is one of the most POWERFUL BRANDS there is. Our question is, how can newspaper use their powerful local brand to make money?
What is a brand? In this discussion, let’s say a brand signals to the buyer the product or service can be trusted. That is to say, the brand signals competence, integrity, and caring–it can be all of those or just one, depending on the audience and the service.
(Note: Branding is tricky, weird business. I’m keeping it simple here, but I’ll mention that in Virginia, Virginia Tech recently started handing out (for a fee) their brand everywhere they could. Tech toilet seats, Tech blankets, Tech everything. I swear I even saw Tech eggs at the grocery store. I don’t pretend to understand it all. The brand signals a “belonging.” There is something here for newspapers–maybe–but I’m not talking about that.)
The brand of the local newspaper is, however, targeted to the community. (The NYT is a national brand.) That’s a strength and a weakness when it comes to the web. Let’s go with the strength.
We have a strong, targeted brand–The Daily Bugle. How can we extend that brand effectively, without harming the brand? In that context, look at my first post regarding niche products.
It’s too easy to launch web site or even a newspaper today for a niche. Almost anyone can do it. But, the newspaper brings its brand to these new products. Or should. Too often we see newspaper launch a niche product that is not identified with the newspaper brand. Or linked to their news. Yet, other times you’ll see a something like charity event that is promoted with the newspaper’s brand–powerful!! That immediately says: This is worthy of your consideration.
That’s the approach we are asking newspapers to use with our WuduPlz text package. It’s why we add news headlines on the last page of WuduPlz.com. The TeenTribune package also exploits the newspaper brand, and there are others. If the regional bank or retailer is working with my newspaper, it signals competence, integrity, and caring. And it helps the advertiser stand out from his competition. That has real value in today’s noisy and fragmented marketplace.
Besides making money, what’s nifty about creating a branded portfolio of marketing channels is that it can snowball. While making money, pushing out The Daily Bugle brand with additional quality products linked to area businesses makes the newspaper brand even stronger, MORE powerful in the community, which makes it more valuable to local and regional retailers who want to enhance their own brand in the community.
Again, as I said in my first post, walk it backwards. Newspapers need to be looking for a fragmented customer base and a fragmented retail/supplier base. Good example is residential real estate–lots of buyers all over the place, lots of sellers all over the place. Second, we need to be looking for a market where there are enough margins to pay for marketing. How many houses do we have to sell to pay for ads? Answer: Not many. Perfect. Autos are the same way, of course.
Now, what else? As we drill down, the markets can and will be smaller, as will the margins. So, we have to adjust what the ads will cost and what we can afford to do. Some fragmented markets will not be worthwhile. And some markets are not fragmented enough. I offered examples in my first post here.
Finally, it needs to be local. That’s what newspapers do–local.
It seems to me that there is still plenty of opportunity in the health care areas despite all that has been done already.
For example, dentists are everywhere, as are people with teeth. Highly fragmented. Margins on each patient are outstanding. And it’s local. And the newspaper can offer it’s brand to ID the teeth channel as trustworthy, which is very important in health care. Real local news (say, who is in trouble with the state board or who is offering high tech techniques or what local dentists say about the latest new research findings, etc.) could give it power and higher value, too. (It’s called journalism. Newspaper know how to do that.)
Also highly fragmented on both sides with reasonable margins. and local, is computer maintenance. But, like dentists, it is not real estate or autos. And here the newspaper brand might not be as powerful, but the brand does have some value.
Again, the new channel doesn’t have to be targeted to an industry. WuduPlz–targeting parents of pre-teens and teenagers–is a good example of a way to offer a retail help branding using the newspaper that might appeal to several industries–banking, health care, even regional grocery stores. In any case, WuduPlz should be much more profitable than selling toilet seats with the local newspaper’s logo.
19. March 2009 at 7:27 am :
Speaking as an ad agency guy, my beef with daily newspapers is that they never really built programs for the small business. Dentists, for example, only want to reach people who live/work within a few miles of their office. Everything else is waste. But newspapers wanted me to purchase a zone ad covering half a county, because they could keep the price up. Remember the old saying: “I know half my ad budget is being wasted, the problem is I don’t know which half”? Media got fat on that waste. Targeted internet advertising has the potential to reduce waste. But the media sales organizations need to be willing to sell smaller deals, with their smaller commissions, to make advertising an investment that pays off for advertisers. It’s the “long tail” concept. Keep it in mind.
19. March 2009 at 7:46 am :
cars.com and apartments.com and careerbuilder.com are owned and operated by newspaper groups. These are new brand names, with value, created out of thin air. Newspaper groups could do the same thing with a news aggregation site. Put Drudge right out of business. PRNewswire sells access to newspaper newsrooms, that’s all. Newspapers could band together and create a “pay-to-play” PR submission site that would have PR firms typing in MasterCard numbers every day… And of course you use “remnant” space in your own properties to promote these new services.
20. March 2009 at 9:12 pm :
Mike Poller hit on the two things newspapers need to start working to exploit, especially on the web:
1) Local, targeted reach. (And that is not just zip codes, but age, gender, family status, etc.) Anything the newspapers can do to target a worthwhile audience, do it.
2) Use the brand of the newspaper on all new products. (Once upon a time, we wanted to create new brands independent of the newspaper. And that was fine when we had the time and money. No more. Time to use that powerful brand of the local newspaper that communicates competence, integrity and caring. Do it right, and you’ll make the brand even stronger.)
Any new revenue ideas that are about using the newspaper’s brand and targeting are not likely not ideas that newspapers can exploit well.
20. March 2009 at 9:13 pm :
Oops, last line in that last post should say, “Any new revenue ideas that are NOT about using the newspaper’s brand and targeting are not likely not ideas that newspapers can exploit well.” Sorry.
21. March 2009 at 11:33 am :
Jay Small is said to have said: “Right now, we don’t do much beyond the sale” of space. That’s right. Newspaper have sold audience and that’s good. Can newspapers offer ways to enhance the marketers’ relationship with the audience?
23. March 2009 at 3:01 pm :
What I said was: we sell space on a Web site as a two-dimensional hole, much the way we sell it in print. Online interfaces are multidimensional, layered and, I joked, intertwined a lot like a web … a world-wide … web.
We are only now learning how to sell audience based on what we know or surmise about our audience.
But we moved beyond even that on Saturday, focusing on the messages businesses want to communicate to prospective customers, most of which should be calls to action beyond a simple click. That’s what I loved about what the team cooked up.
23. March 2009 at 5:00 pm :
Jay, I’ve published magazines and sold advertising and know well the feeling that we need to “do more” for our advertising clients. And, anything newspapers can do, they should do. But, I learned early on that we can’t manage our clients biz.
So, what more can newspapers do to create, as you put it, “calls to action beyond a simple click?”
It gets into what was called “reputation management” at rev2oh, but I prefer to call “branding.” With the web, newspapers can move into branding, an area that TV has done so well with in the past. Newspapers have a powerful local brand which they can use as a starting point to help a business communicate its competence, integrity and caring to the local community.
5. April 2009 at 5:26 pm :
You might be interested in reading my MA thesis December 2008, which starts here: The fundamental problem of newspapers on the internet - The Krugman Paradox
http://www.metaprinter.com/2008/12/the-fundamental-problem-of-newspapers-on-the-internet-the-krugman-paradox/
You touch on a lot of the content in there and my conclusion that is that absent online advertising innovations, newspapers must seek alternative revenue streams to achieve economic sustainability.
It seems like a simple statement but NAA just keep ramming readership numbers down our throats while revenues decline.