Advance makes its move on Cleveland

You're right. Papers should ditch print and go all-digital. That always works. There's tons of companies out there making money only from distributing news online, more than enough to pay for a full newsroom of reporters and editors to put it out.

The solution isn't to eliminate print. Fuck, we just went through the worst recession since the Great Depression. I know some advertisers will never come back to print. But as the economy improves, ad budgets will go up. Hopefully, that will mean more ads in print, esp. if newspapers are smart and target the local businesses that could make this model sustainable. There are ways to work print and web together to sell ads and make money. Newspapers just need to capitalize on them. That might mean adjusting ad rates down some from where they once were so that you can attract more local companies, but even at lower rates, you won't attract those companies if you can't sell them on the fact that there won't be eyes on your product.

Yes, newspapers are behind the curve on making money off the web. But, honestly, how many news companies make money primarily from the Internet? News is a fucked up business; we aren't Amazon, we aren't eBay. We sell information, and until recently, people have been reticent to pay for information online. And ad rates for the Internet are abysmal. That's why papers suffer. Google makes money off ads because it doesn't limit them to one site; it licenses the ads out to multiple sites. That's a model newspapers can't match (well, some chains can, but not most). And Google can broaden its base by offering ads to smaller sites. They pay the site a portion of what they get, and both sides make money.

Money can be made by newspapers still, both digitally and in print. Not the hands-over-fists amounts they once made. But enough to still provide a viable product to readers as long as people don't overreact to an economic crisis that hit more than newspapers hard. Digital advertising revenue has increased a ton in recent years and will continue to grow. It hasn't matched the declines, but it's not like the declines happened independent of a financial crisis that shook nearly every industry in America. Companies are starting to spend more on advertising since they are making more money. Some of that is going to come back to print. Acting like the drop in print revenue was just because of the explosion of Internet ads is bullshit. It happened because the economy was in the crapper. Revenue will return; again, not at the level it was once at for print, but it will return.

I will concede newspapers let themselves get screwed on classifieds. I've contended for years that newspapers were behind the curve adapting to the craigslist model. They needed to find a way to make themselves valuable to certain audiences, esp. realtors and auto dealers. The guy selling his baseball cards on craigslist isn't killing newspaper classified revenue and any suggestion that it is is disingenuous or ignorant. The dealerships throwing their cars up on craigslist and other sites at a lower rate than newspapers offered and setting up their own sites to market their cars is what is killing ad revenue. Same with realtors and houses.

But at the heart of all of this will be keeping and growing readership, online and in print. You don't do that by alienating them to make a quick profit.

 

I pretty much much agree with your conclusions. The answer probably will be some kind of stew, a mix of print, digital, subscribers who pay more for what they get, new business lines such as event management, and all that. I'm not lusting after the death of print, nor have I said here that it should be eliminated. Print should remain part of the mix, but daily delivered print should be a luxury product, commanding the highest prices from subscribers. Or it must be rationed.

I'm afraid digital advertising revenue at newspaper companies has not "increased a ton" in recent years. It was $1.5 billion in 2003. Ten years later, it was $3.4 billion. It has increased by large percentage amounts (more than doubled), but that's because the starting point was so small. It has been a flat line compared to the rocket trajectory of ad spending with pure-digital players such as Google.

Of course the crash of '08 threw a blanket over just about all economic activity. But the double-digit declines in print advertising revenue began two years earlier, before advertisers had the excuse. Meanwhile, spending on digital advertising during the same recession continued to increase at rates even steeper than the rate of decline of spending on print advertising. Even during the worst years of the recession, total advertising spending continued to increase. Somebody was getting that money.

You're right, some of that will come back to print -- a fraction of it, probably an amount that won't even make up for the mild inflation of recent years.

You don't have to believe me. Instead, listen what (soon-to-retire) Steve Burd, CEO of Safeway -- the company that has pumped your Wednesday editions full of grocery coupons and advertising inserts -- said to analysts during a February call:

"[A]s people become more digital, there’s an opportunity – which we’re working hard at – to actually get out of the paper ads."

Safeway already has cut back its newspaper spending by about a third since 2010. It's working on a digital loyalty program that sends coupons and deals direct to members' phones as they stroll the aisles, based on their shopping habits. You think Safeway is alone?

I was house-hunting a year ago and asked the real-estate agent about all this. Being a news person I asked about her agency's advertising, and whether it would resume spending in the local paper when the market rebounded. She snorted. Not a chance, she said. It's a Zillow world.

It's not that readership doesn't matter. It's that mass doesn't matter. Digital finds precisely the customer the advertiser wants, and charges him only for the ads that get a response. Growing your readership is always good, but only because it gives you a greater inventory of potential customers for your advertisers to target; your advertiser no longer is interested in reaching all of them. In fact, huge pageviews and big audiences actually work against news-website banner ads. It increases page inventory, which depresses ad rates.

The guy selling baseball cards on Craiglist was an example, a small example that you rightly extrapolated to car dealers and other major advertising categories. Surely as a news person you understand the purpose of an anecdote -- it illustrates the larger issue. The same principle applies to car dealers, real-estate agents, and companies placing help-wanted ads.

Print, yes. But not the way it was done before.

 

OK, one thing you have wrong. During the worst years of the recession, the first two, total ad spending declined 21 percent, 12 percent in 2009. It started rising the next year as the economy was on the rise, but it still hasn't reached 2007 levels, and probably won't for a few more years.

As for the declines before the recession, publishers were slow to react because at that time increases in online revenue were keeping pace pretty much with decreases in print. Now, that doesn't include classifieds, a huge revenue loss we won't get back. And, bottom line, they shouldn't have been content to see those losses. They should've seen the fact that they were about to hemorrhage money from realtors going online. Same with car dealers.

And one of the biggest losses has to be the Wednesday grocery store ads. I started to mention that in my last post. The paper that I'm at doesn't even carry them any more because stores turned to direct marketing and send them in the mail (now, I have no clue if we have our hands in that; I know a lot of papers got into that business). And as for what Safeway is looking at, we're a long way from people waiting to get coupons until they're at the store. A lot of people plan their grocery shopping before they step foot inside the store. They want to know what's on sale to plan what their family will eat. There are ways with loyalty cards to take advantage of that digitally (track habits and send emails with specials on products they buy and such), but sending a coupon in the store wouldn't be as effective. Of course, grocery stores will probably use a combination of the two in the long-term, and newspapers could make themselves relevant there, esp. for smaller, regional chains or locally owned stores.

The model from the 1990s is gone. Newspapers are still looking for the best way to make money in the new marketplace. And, in time, I think you're right. The print product will become a luxury. But I think in most markets, we're far from reaching that point from a revenue standpoint.

And it's unfair to compare newspapers to Google. Google makes money hand over fist in part because it uses a model that screwed over newspapers for years. They can offer cheap ads to tons of users and have them disseminated through several other sites, who then get a small share of the profits. Newspapers are limited to the sites they manage.

Could newspapers have done something similar? Maybe, esp. on a local level, but not on the level Google has. It's like comparing how Wal-Mart operates to how a mom-and-pop store operates. It's two different, though tangentially related, beasts.

And that's what newspapers have to show that to advertisers to make themselves relevant again. They need to show that people still want news, and we can deliver it better than any medium. Newspapers have been attacked on a dozen fronts, but we still offer a greater amount of news and analysis than anywhere else. In some markets, esp. bigger markets, the playing field has been leveled a lot. But in medium and smaller markets in much of the country, newspapers still have an advantage. They need to capitalize on that.

Newspapers need to show local businesses that we're still the best way to get news out about your specials. We're the place to turn to to show people the things they didn't realize they wanted. Or show them that you're the place that offers a great price, product or service at a time when they aren't really even looking for something. I think sometimes newspapers don't take full advantage of this online, basically just re-running a static print ad when they could have an ad that rotates with what a shop has on sale or what a restaurant's special is for a small premium that would be worth it for the advertiser.

We'll never be like we were. No business will unless there's an economic boom like we saw in the 1990s. But things can improve, esp. with smart management. Some chains don't have that. Some do. I'll say this, though, you're statement about limiting print to a luxury item is probably more true in larger markets where more people turn to the Internet for information. Not that the web hasn't hurt medium- and small-size papers as well. But I think it's easier for those latter markets to remain relevant to their readers and advertisers than the larger markets because the people in those markets still identify the newspaper as part of the fabric of the city. In some larger cities, I think it's easier, esp. among younger readers, to make that separation.

 

How has no one called out this horseshit yet? Way to take every word an asshat publisher (who probably doesn't even believe what he is saying as he was forced into this situation as much as everyone else) gives you. Even the headline is a joke. Most major newspapers in the country are digital first and have been for five to 10 years. Then again, without buzz words, there is no Poynter.

 

Yeah, that was a bullshit, PR-type piece. You can't let someone drop those words into their interview and not point out that newsrooms began the switch to that mode years ago. Some, like ours, still hold certain stories until print first, but every day that number is going down.

 

Thanks for catching my mistake on ad spending. Your'e right about total spending -- it did decline in the recession. I was looking at digital ad spending during the recession -- which did continue to increase through the recession on an annual basis -- and mistakenly said it represented total ad spending.

As for Google, you can say it's not fair to compare. And your mom-and-pop hardware store can complain all they want about Wal-Mart, too, until the day they close because they can no longer compete. Fairness has nothing to do with it. All your advertiser cares about is whether he or she is getting a return (a measurable, quantifiable return) for each advertising dollar he or she spends. Is Google a different beast than a newspaper? Absolutely. Does an advertiser care? No.

 

My point is that newspapers need to show advertisers how we can be a better return BECAUSE we're a different beast. Just like a local store can be more responsive to customer needs than Wal-Mart can. Some advertisers will still go the cheap route, but I think if we can capitalize on what we have to offer, we can get back a sizable chunk of the money that's been lost in recent years. Local businesses have managed to compete with McDonald's and Wal-Mart because they stress what makes them different. Newspapers need to do the same with advertisers.

 

So, what makes a print newspaper a *better* deal for advertisers?

 

1) Ability to cross platforms and effectively reach a wider range of readers. Papers probably need to expand this even by getting deeper into the direct marketing business so they can blend that with traditional print ads and web ads.

2) Service -- we conceivably can be more responsive to local needs than Google. Are we always? Not necessarily. But we can be. And by this, I mean working with restaurants to have an ad that alternates each day to show specials or weekly to include a printable coupon or such.

3) Niche products/events -- this is the stuff like college guides and bridal issues and such. But instead of just printing stuff off, newspapers need to be in the business of running more of these types of things. Run an advertising supplement before the event featuring the companies that will be there, then charge them for booths at the event as well. They get some more bang for their buck there. Heck, give people a discount for signing a contract that would carry their advertisements beyond the date of the event if it's appropriate (say, for a catering service or such).

4) Big events -- If something big is happening in a city, the local paper needs to hit it hard and become the one-stop shop for people coming to it. Here, we've made a good amount of money off the NCAA Tournament and the Bassmaster Classic recently. Made a mint on the PGA Championship years ago. But the events don't have to be that large. They can be local arts festivals or anything else that you can use to get advertisers in for a week or two for a few extra. Add enough of those through the year, and you get a good amount of money in. Paul McCartney coming to town? Hit up some restaurants around the arena that don't advertise as much or do so sporadically to get them into the paper the week he's going to be there. This is done to a degree at a lot of places and forgotten completely at others.

That's off the top of my head. Again, we won't get all the money back, but we could get some.

 

I have no idea why the average daily newspaper does not cost at least $1.00. What is so wrong with expecting people to pay $6.00 per week for the convenience of having the daily paper and, maybe, $3 for Sunday...with all their local news and information...delivered to their doorstep? My paper costs 50 cents M-Sat...this is too little. That's one of the things I think the publishers are missing out on because, honestly, $9 a week is not too much to ask, especially when it could be the difference between getting a daily paper or getting nothing.

 

Because they can get it online/on Facebook/on the local TV news station/on the radio/wherever for free.
Unfortunately, a lot of people don't make the value judgment of quality content. All content is equal.

 

<a href="http://paidcontent.org/2013/04/11/two-charts-that-tell-you-everything-you-need-to-know-about-the-future-of-newspapers/?goback=%2Egde_99188_member_232148238">In this April 11 post</a>, Matthew Ingram backs up much of what I've said here.

I think you're correct to suggest newspaper companies need to expand into events -- not just the usual auto shows, but seminars, marketing workshops, and the like. Capitalizing on local relationships is vital.

They'll need to. <a href="http://www.bostonglobe.com/business/2013/04/06/amazon-google-ebay-eye-next-disruptive-technology-same-day-delivery/MUdurofiYnJ9WgUV1MHTyK/story.html">Amazon already is rolling out a local service</a> that will deliver your Amazon purchase the same day, and Google, EBay, et al, are doing the same. That's not so much a threat to newspapers specifically, but to the local advertisers that spend money on ads.

The same loyal readers who might be upset at getting a printed paper only three days a week are going to be equally upset that their favorite local hardware store has shut down because of Amazon or some other digital service that enough people have grown to like and use. It won't be the hardware store's fault; the shopkeeper will have to make the same decision that publishers now are making: Cut costs (lay off staff; close on Tuesdays; slash inventory), find new sources of revenue, raise prices, or some combination of same. Or close.

The customer is always right. But consumers also must accept the consequences of their decisions. If enough consumers vote with their wallet and use Amazon same-day delivery, they forfeit the right to complain when the local Ace Hardware man closes shop. When enough consumers migrate to free/low-cost digital news, they forfeit the right to complain about 3-day delivery and/or higher subscription rates for a printed paper.