SAGE Advice: Selling Newspaper Ad Space in a Worrisome New Year

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By: Leo J. Shapiro, Erik Shapiro and Steve Yahn

Consumers followed through on their announced intention to spend big on holiday gifts this past Christmas. Our Leo J. Shapiro & Associates January national survey shows almost three in ten consumers (28%) reporting that they spent more for Christmas this year than last?an increase of five points from the 23% reported last January.

Gift-buying enthusiasm also resulted in dollars spent on gift certificates growing by 16% or so from last year.

Despite heavy holiday spending, consumers came through the Christmas season in a strong financial position, optimistic about their financial future and with heightened plans to buy some specific major goods. Specifically, there is a nine point jump in the% who expect the balance between their income plus saving [versus spending plus debt] to improve in the coming year, to 64% in January from 55% in December.

But even though consumers are well positioned to spend, prospects for strong retail sales in 2007 are inhibited by fear. Two months after the Congressional elections, gloom about the prospects for the nation persists. Just 25% feel things are going better for the nation and 57% feel things are getting worse. The% fearing possible layoffs in the coming months jumps five points month to month to 40% in January.

Even though the Shapiro Index measuring plans to buy major goods is up month to month from 94 to 104, the Shapiro Index measuring active shopping — checking prices, visiting dealers — by consumers for cars, housing and other major goods continues down from 125 in October to stand at only 91 in January, the lowest level in more than two years.

Given this mix of consumer optimism and fear, advertisers have a chance to achieve good sales but must manage marketing in 2007 as if they are walking on ice that may or may not bear their weight.


BOTTOM LINE

Newspapers’ current challenge is to find ways to help their advertiser clients close sales with a consumer who has money but is reluctant to spend. There are at least two alternative advertising approaches:

1) The first alternative, which is already widely used, employs conventional and well-tried techniques to make an offer so overwhelming that it cannot be refused — “Going out of business”, “clearance”, “last chance”, “No money down, do not pay until next year,” and the like.

2) A second alternative involves the newspaper becoming a doorway to the Internet for consumers who have an interest in the advertised product but are reluctant to spend.

Consumers with an interest in buying a specific product but a general reluctance to spend can be seduced. Their desire for the product can be enhanced to where it overcomes reluctance to buy.

Newspapers, in linking their print to their Internet edition can provide consumers with a desire to buy to the advertiser with a desire to sell. This creates an opportunity for the advertisers to interact sensitively and responsively with potential customers so as to enhance desire and overwhelm reluctance to spend.

As consumers increasingly get their news both online and in print, it is increasingly incumbent on newspapers to provide their advertisers and editorial writers with an interconnected and integrated online/in print platform for editorial and advertising content.

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