Newspaper industry faces re-invention or death
|Cyril Pereira||Jan 11, 2012|
Circulation increase became a key metric to leverage advertising rates. It generated disproportionate advertising revenue leverage against the cost of the copy sales growth. This was a bonanza that allowed newspapers net profit margins of 20-25% for decades.
It was too good to last. The Internet disrupted the paid news model and severed generational renewal. Losing audience and revenue, print is in terminal decline.
Internet disruption & demographic switch kill the biz model
The demographic engine for metropolitan newspapers died sometime after the mid-90s. Gen Y & Z are “Digital Natives” who rely totally on laptops, smart-phones and tablet screens to receive news alerts FREE.
There is no renewal of youth readership in print. The ageing profiles of existing newspaper readers are unattractive to brands looking for next generation shoppers.
Advertisers and their agencies are squeezing newspapers for heavy discounts while they divert budgets to digital channels and social media to reach youth.
Today’s youth have to be met through their preferred media, which is not print. Mobile, Online and Social Media platforms are the challenge for 21C marketing.
Press responds with desperate measures (all fail)
Desperate newspaper publishers shifted focus from serious issue-driven journalism to crime, sex and celebrity gossip. Voyeuristic gratification became the publishing mission.
Capsule reporting and racy tabloid formats were designed to cater to distracted youth and time-impoverished middle-class professionals. That gained ‘flip-through, throw-away’ interest which did not impress brands. They were shy of sharing that content environment.
FREE tabloids were distributed on trains, buses and at shopping malls in the hope that copies sprayed liberally would attract advertising revenues sufficient for survival.
The youth spend their time on digital and mobile platforms. The professionals have little time to sit with newspapers but ample digital access to news of all categories.
Eager advertisers are chasing both groups through Cyberspace in continuing experimentation of methods, formats and channels. Generic press does not figure in their calculations of future marketing.
Quality press brands enjoy residual commercial support as they still wield influence over national politics and corporate business. Margins are thin and getting thinner. Staff lay-offs have reached their limit. There is little room left for internal cost reduction. There is no revenue growth. Ageing readers are going blind and dying literally.
FREE tabloids are struggling to keep their noses above water. Advertising rates are low and in many cases uneconomic. Publishers can live on hope and hype for only so long.
The days of 25% net profit margins are gone. The dominant concern is survival.
What options for newspapers beyond print?
Newspapers are a medium of broad reach for which advertisers are charged 100% even when a specific marketing target comprises only 15% of that reach - potential buyers for BMW cars or holidaymakers to New Zealand for example. That is unsustainable.
Online, mobile and social media platforms allow for targeting, connecting and interacting with individuals who fit specific target definitions. Advertisers are looking for ‘engagement’. Brands want to dialogue and sustain a lifetime relationship.
Strong newspapers enjoy incredibly powerful brand equity compared to other businesses. That strength can be multiplied through online, mobile and social networks to serve appropriate content, connect communities and facilitate access to searchable archives.
Content created with deep domain expertise has inherent value to communities. They will pay for useful information, convenience and access ‘on-the-go’. That re-defines the value of content beyond news and advertising dependency.
It requires database-driven,content / format / technology / channel / organization structure alignments to converge and connect consumers seamlessly across a range of personal devices.
Digital channels are opportunities to project the powerful print brand into all networks and platforms in Cyberspace. It enables entirely new revenue opportunities for different kinds of service. Content is the glue which holds communities of interest. Services that enhance community experience can be built and grown around that central idea.
The organization previously called ‘newspaper’, needs to nurture and facilitate multiple community touch-points. It is anchored in content but creates value well beyond it.
Is it prudent to re-shape the existing business structure and model? Or replace it altogether? Can the transition be managed without fatal dislocation? Can the managers and staff cope with such radical change? How can successful transitioning be mapped?