Need to Make Profits Online? It CAN Be Done After my December column, some asked: How exactly do we make enough money to sustain, let alone grow, our newsgathering organizations? How do we continue to serve our communities' information needs adequately -- while making a profit?
By
Steve Outing
(January 07, 2009) -- Last month in this column I offered 11 pieces of key advice for newspaper CEOs, hoping to spark some more innovative and aggressive action as the industry spirals downward at an alarming rate (Tribune Co. bankruptcy, major urban papers up for sale, chain-owned small papers shutting down, etc. = full-blown industry crisis).
The core concepts presented (I certainly do not claim them to be all my own) seemed to be well received; I got quite a bit more complimentary feedback on that column than normal, and heard about the column being passed around to newspaper management teams.
But a couple of readers expressed their disappointment that I didn't adequately address the Elephant in the Room: "If we follow that advice, how exactly do we make enough money to sustain, let alone grow, our newsgathering organizations? How do we continue to serve our communities' information needs adequately while making a profit?"
Fair enough. So for this month's column, I'll dig in a bit deeper on the money issue. But don't expect me to come up with a silver bullet for you. Like many of my fellow columnists, consultants, bloggers and pundits who specialize in digital media and who try to predict the future of the news industry, my background is heavier on the journalism/content side of media than the business side. (Of course, I've not noticed any miraculous solutions for the newspaper industry come out of Harvard or Stanford's business schools, either.)
Let's shoot for a panoply of revenue solutions to keep newspaper companies afloat in print, online and in the mobile world. PBS MediaShift host Mark Glaser has that in mind, too; in his recent blog post, "Your Guide to Alternative Business Models for Newspapers," he wrote: "A successful online newspaper will need a mix of many different revenue streams to survive in the digital age."
Pardon a short aside. Way back in 1995 I authored a lengthy research document for Jupiter Communications, "The Online Newspaper Report," and what I wrote then was almost identical to Glaser's advice in late 2008: To succeed in the online world, news companies will need to rely on multiple revenue streams. I think such advice goes back further than any of us can remember, actually -- to whoever coined the phrase, "Don't put all your eggs in one basket!"
Anyway, back to the task at hand. I'll address each of the key points from last month's column from the money angle. Here goes ...
1. Issue an edict: Digital is first!
This is a big step for some newspaper companies that still see the majority of their revenues come from the print edition(s), but necessary for survival. Once the digital-first decision is made, a transformation must be done in the advertising and classifieds departments.
* No more print-only specialists on the sales staff.
* Everyone sells across platforms, and no one platform is dominant. Sales reps should be examining each client or potential client's needs with an objective eye to what will perform best, and crafting an advertising plan that utilizes the most effective formats. This may mean selling a retailer who targets a younger customer base on Web, search, blog and/or mobile ads and not trying to talk them into more expensive print placements as well, or bundling print in with the package.
That will sound like heresy to some traditional-thinking media salespeople, but you're not doing yourself any favors by selling advertisers on a medium that no longer works for them. They have too many other options for spending their ad dollars locally.
* Constantly develop new digital content and services that can attract new advertising dollars. With the average age of a newspaper print-edition reader now well over 50, focusing on creating new digital initiatives that will attract younger readers and users makes much more sense than designing yet another print special section in order to attract ads.
* Among the new digital services you create and experiment with, focus on niches. A dog-focused blog and online social community, for example, expands your ad program to the long tail (sorry, couldn't resist that pun). Advertisers like veterinarians, pet shops and kennels will spend money because you can target consumers in a way you could never do before, and they can afford to advertise on that blog; it may be the first time that they've been able to afford doing business with your newspaper.
2. Consolidate print and online editing functions.
There's not much to say on this point, other than it can represent cost savings over staffing a separate online operation. And to heed tip No. 1, digital and print operations must be integrated in any event.
3. Print edition: Don't bother chasing young people. 4. Print edition: Focus on the core demographic.
Whenever I suggest such ideas as this, I hear from editors who say that a good number of young people do still like the printed newspaper. Sure they do. Some young people also watch Charlie Gibson and ABC World News every night. But notice the advertising on that show; it's dominated by products and services aimed at an over-50 demographic, especially pharmaceuticals, over-the-counter drugs, health insurance, and other things targeted at older consumers. (I've also seen ads on that program for dial-up Internet service; now there's an industry with an aged customer base!) Many newspaper print editions are in much the same position now.
There's plenty of life left in the print edition(s) of most newspapers, but you may as well face the facts of life and focus print sales efforts on the demographic that you're now reaching.
The key concept was stated in tip No. 1 above: A newspaper company's ad reps should be able to call on any local business and have something that will work for them. If it's a chain of high-end furniture stores or a Cadillac dealer, print may be the primary vehicle. For a mass-market furniture chain that draws in both young people looking to cheaply outfit a new apartment and older people on a tight budget, then a combined print-online buy will make sense. If it's a local bicycle shop with just a few stores and a modest ad budget, a strictly digital ad program may be called for: e.g., targeted ads on a cycling blog and online community, behaviorally targeted Web site ads that will reach likely bike enthusiasts, even sponsorship of a mobile phone app designed for local cyclists.
5. Guide older print loyalists to a life online
If a newspaper ad-sales team embraces the idea that print readers are now older and advertisers who choose to be in print target that demographic, that doesn't mean that older consumers can be left out of the digital picture. Plenty of research shows that older people are embracing the digital lifestyle, though not quite as overwhelmingly as young people. Sales reps dealing with that high-end furniture store chain can and should be devising digital supplements to the print ads they sell, educating the store owner about new opportunities to reach his target clientele beyond the print edition. For instance, the store's print-edition ads could include a coupon that can be found online, or received via cell phone by texting a special code. If the store is still behind the curve with its online presence, a newspaper ad staff can build it a mini-site, or design a social-media program to help it take advantage of opportunities to engage in conversations with customers.
I'm a firm believer in getting remaining print readers to utilize all that the newspaper brand may offer, including online and mobile. Older consumers are still a huge market, but even they won't stick with print forever (especially if the print edition keeps declining due to staff cutbacks). So help advertisers who seek out older consumers reach them in print and as they increasingly use online and mobile services.
6. Reduce the number of print editions.
I mentioned this last month as a coming trend, and one preferable to cutting news staff when budget slashing is required. Yet another example from last week: The Cincinnati Enquirer is cutting classifieds sections on two days of the week. A growing number of newspapers are cutting print editions entirely on one or more days per week. Detroit's two dailies made a controversial decision to stop home-delivery several days a week. Steve Yelvington's The Shutdown List tracks both this trend as well as actual newspaper closures.
There's not much to say about how to make money from that trend. But the money saved by such moves can be channeled into developing new online and mobile content and services that represent new advertising revenue and subscription fees.
One of the newspaper industry's big impediments to digital innovation over the last decade has been the distraction of putting out the daily newspaper. As those demands lessen, more innovation and executive focus on monetizing digital content and services is possible.
7. Online: Broaden your definition of 'news' to include micro-personal
With this tip I emphasized that "news" to today's digital consumer runs the gamut from what trail your friend hiked today (and posted news of it on Facebook to her personal online social network) to how many people died in the latest Israeli air raids on the Gaza Strip. What I was getting at is that newspaper Web sites (and mobile services) have an opportunity to serve the full range of news requirements of an individual -- and that what is "news" today is different than what it was even a decade ago.
To this I would add the need for newspaper Web sites to also include links to news from other online news sources. That is, be more like Google News, so your Web site users can sample and get news from multiple sources, while still using your site as their home base. NYTimes.com sets the example with its new Extra Web site service.
The money side of this strategy, of course, is simply to generate more traffic to and from your Web site, and thus generate more online ad dollars. We all know that online ads don't bring in as much as print-edition ads have historically, but limiting your newspaper Web site to content that's solely your own is leaving money on the table. The old definition of newspaper "news" is much less valuable than the broader range of news that I've suggested you embrace.
8. Hire a social VP.
With this tip I suggested that just as the traditional newspaper company has long had a vice president of circulation, the modern, digital-centric newspaper company needs a VP of social media. Part of this executive's job is to reach out to the social networks and integrate what they do with your newspaper's digital initiatives, which builds traffic and usage for online and mobile services you many offer. And to develop social, two-way interaction initiatives and communities that bring the newspaper company into the interactive communications world that is the Internet.
But social media is also a revenue opportunity for the newspaper industry. Social media and social marketing consultants are a dime a dozen these days; this new wave of experts want to teach and assist businesses and marketers in the ways of using online and mobile strategies to talk and engage with their customers. The idea behind "social marketing" is still so new that many companies -- and especially local businesses -- don't understand it, can't define it, and don't have a clue about how to initiate it.
A newspaper company that's hired a social media VP can educate businesses in their market about the benefits of digital social marketing, and provide social marketing services alongside all the other advertising options offered. I mean that a social-media-savvy newspaper company can be consultant and social-media marketing agency for businesses that want to utilize the digital world to interact and converse with their customers and potential customers, and stop just talking to them. The Internet is slowly killing off the old model of marketing; the savvy newspaper can guide its client businesses into Marketing 2.0 (a.k.a., social marketing).
Newspapers already enjoy established relationships with most businesses in their markets. That's a huge advantage over social media/marketing consultancies. Newspaper companies just need to bring in the expertise and add social media/marketing services to what they can do for their local businesses.
9. Experiment, fail, and experiment more.
I wrote this tip in last month's column mostly with content and services for the consumer in mind. Build new digital services, and the ones that work will bring in more ad revenue and possibly user fees.
What I failed to mention was that each experiment can benefit from involvement during the design and development process of parties from various departments. Newspaper companies need to break down old walls during the innovation process. So if a team is developing a set of "long-tail" niche mobile content services, for example, the advertising department should be in from the start. Resist the old newspaper cultural imperative to develop new editorial content and services and when it's ready tell the ad department, "Go forth and sell this."
Every new experiment -- and there should be lots of them -- needs to have the content, technology, advertising and marketing people on the design team from the beginning.
10. Leverage your remaining staffers, and augment them.
One of the ideas I mentioned last month is to use the topic specialists (beat reporters) you already have to create new niche digital products, where your journalists are reaching out to topic experts in the community to add to the professional content, and to build interactive, conversational communities around the topic.
With a digital-centric business model, each of those reporters can be expected to write and maintain a blog, which becomes a niche product for your ad department to sell. Because the idea is to build a constituency of topic experts and enthusiasts who interact with the journalist-blogger, each of these blog-social communities becomes a "long-tail" ad opportunity. The journalist should also leverage social networks like Facebook and Twitter, alerting "friends" and "followers" on those networks about new content and developments on the niche blog.
We've seen a bit of this in the past, with newspapers, for example, publishing political-insider blogs covering state or local governments. Those early experiments usually involved just one or two bloggers (who also wrote traditional stories for the newspaper's print edition), and they lacked the current vision to build interactive, participative social networks around the niche topic. What I'm proposing now is a bit of a do-more-with-less strategy, by amplifying the work of one professional journalist and topic expert with the voices of local experts, independent bloggers and enthusiasts of the topic.
Now build a network of these niche blog-social communities and get the ad department to sell into them. In effect, I'm talking about a newspaper using its existing resources (remaining staff journalists who have specialties) to build a blog network locally. Niche content, arguably, is more valuable online (higher CPMs) than that from a general-interest news organization like a newspaper.
This approach is possible when the news organization has a digital core. The content produced for the blog network is also used -- and enhanced and tweaked -- for the print edition. (Consider this the other way around: If the print edition comes first, the niche blogs get shortchanged in terms of effort; the lesser quality and excitement of them makes it harder to sell to advertisers.)
11. Consider retirement.
This unpleasant and perhaps rude bit of advice was aimed at newspaper CEOs who may not have enough spark left for radical reinvention of their enterprises. The same should go for newspaper ad and classifieds managers who remain afraid of letting go of the old models that are still bringing in significant money, even if it is declining each quarter. Hand the reins over to a true innovator, if that's what it takes to save the organization.
12. Bonus tip: Newspaper as ad agency.
I didn't get into this in last month's column, but since this month I'm focusing on the money angle, it's an important one. Newspapers with existing ad sales staffs -- and long-standing relationships with many local businesses -- can refocus to help their clients buy the best advertising possible to meet their goals. That may not be spending all their money -- or even any of it -- on the newspaper's print edition(s), Web site or other digital services. It might mean guiding them to other ad vehicles outside of the newspaper's offerings.
So develop a plan to not only sell local businesses on what your company has to offer, but also facilitate getting them into other venues that will achieve the client's goal. Set up systems that support that with the client business going through you -- and you get a referral (or agency) fee.
As a brief example, many businesses have become publishers of their own. The Web site of the local NFL team is as much a media destination for football fans as is the sports section or your newspaper or Web site. So if an advertiser comes to you wanting to reach pro football fans, sell them a program that gets the message into your print and online sports pages as well as onto the Web site operated by the NFL team.
The local newspaper is no longer a monopoly in town. It's no longer feasible to behave as though that's still the case. By becoming a community-wide information and advertising service, you can get back on the path of increasing revenues.
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Need to Make Profits Online? It CAN Be Done
