Shoptalk/Commentary: Think Integration, Not Separation
Posted: 9/24/2012  |  By: Gary Randazzo
Having come from the world of media management, I have a great interest in how media companies are coping with new technologies and developing a business model that creates value and profits.

As I look at the media responses to new Internet-based alternatives, I find that media respond to new technologies in a silo fashion. That is, they tend to create products that stand by themselves but can be bundled.

It seems that a more studied, strategic approach to new product development is in order.

Consider the classified section of the newspaper. The Internet’s ability to allow consumers to search quickly to find products that match their needs has made the newspaper-classified section seemingly obsolete. Specialized search engines quickly decimated the merchandise, employment, auto, and real estate listings.

Over the past few years there have been new versions of Internet classified search engines. In fact, so many have been introduced it is difficult for advertisers to decide which to use.

So why didn’t newspapers create the Internet alternative? The simple answer is they tried. They developed websites that offered the same attributes as the competition, but the innovators on the Internet had already made headway in attracting an audience, a large number of whom were not newspaper readers.

The newspapers tried to preserve their successful model and simultaneously attract a new audience — a response that usually involved the creation of a website that operated separately from the printed edition’s organizational structure. The results have not been encouraging. Newspapers continue to be under financial pressure as their audiences and ad revenues shrink.

I have long been an advocate of melding Internet operations with the newspaper organization model as opposed to creating a separate organization to operate the newspapers’ websites. If the newspapers’ classified department managed the websites’ classified revenue goals, the marketing solutions would have been different.

I would think that under this scenario, products would have been developed that would have integrated the strengths of both products and built the audiences of both simultaneously. For example, newspaper websites could offer their classified customers, for a small fee, an opportunity to place a two- or three-line ad in the printed and digital editions of the newspaper, directing the reader to the website. This would provide a means of preserving the classified section in the newspaper plus a means of driving traffic to the newspaper website. This scenario provides a symbiotic relationship between the newspapers’ websites and their printed and digital editions.

Similarly, if the newspaper advertising department were responsible for creating ad revenues for the newspapers’ digital edition and website, then the marketing solutions would be different than if the website competes against the newspaper for ad revenues.

Preprints, for example, are a strong source of revenue for newspapers, but advertisers are concerned about falling circulation penetration. Combining a strategy that allows an index of preprints to be added to the digital edition and website provides some opportunities to expand revenues and satisfy advertisers’ needs to improve their preprint ROI. Internet versions of preprints could have video capabilities allowing advertisers the ability to expand their sales pitch.

Preprint advertisers often sell space in their preprints to suppliers that stock their stores. Adding an Internet component with video capabilities would provide a means for advertisers to increase the ROI on their preprint and for their suppliers to increase sales.

Under this scenario the printed newspaper continues to reach its market and drive traffic to the digital edition and website.

It just seems to me the solutions for newspaper survival already exist; it merely requires an organizational structure that allows the strengths of the Internet and the printed product to be combined in a way that benefits readers and advertisers. This is where the newspapers have the advantage — Internet-only operators cannot easily duplicate a newspaper or its franchise. Newspapers, on the other hand, can add digital editions and website capabilities that match any Internet competitor.


Gary Randazzo is founder of GWR Research, a marketing and management-consulting firm. He served as senior vice president at the Houston Chronicle, and as executive vice president and general manager of the San Francisco Chronicle. He can be reached at gary@gwrresearch.com.