By: Mark Fitzgerald
For a business that jealously guards its right to keep sources secret, that delights in stomping on its direct competition and that often won’t let some of its own employees work together, newspapers form a remarkably sharing industry. Outsiders attending their first newspaper association meeting invariably marvel at how freely editors, financial executives and operations managers swap tips and experiences on generating revenue, getting the big story or improving product quality.
Yet even when the industry is mired in an economic slump such as this one, a puzzling number of newspapers drag their feet in adopting this or that innovation with the potential to improve their business. Journal Register Co. CEO John Paton — who has shown a willingness to try anything at his newspapers but the old ways — thinks he knows what it is. “I am still stupefied at the amount of fear in the newspaper industry,” he says. “I believe that fear has got to the point that it cripples critical thinking and action. Newspapers need to become fearless again about making their mistakes in public. We used to be good at that. We lost that along the way.”
Here are four marketing tools that newspapers can use right now. Some are proven revenue generators. Some just show tremendous potential. None should be feared.
1. Deal With It: Flash Marketing
Get this: The rap on “deal of the day” or “flash marketing” is that it’s too … successful. So many people jump on the deals offered by social shopping sites, so this criticism goes, that it can overwhelm the advertisers who risk alienating regular customers or failure to cultivate new ones as they struggle with the sudden crowds of deal-seekers.
“It’s an interesting criticism, being ‘too successful,’ when you think about it,” says Julie Anne Mossler of Chicago-based Groupon, the first and probably best-known provider of social shopping services. Groupon combines coupon offers or other consumer deals with aspects of social media. Whether or not it’s a deserved criticism, being “too successful” certainly is not something from which newspapers have suffered for too long.
There are variations on the theme by different purveyors of social shopping solutions, but basically it works like this: Consumers are alerted to a deal — perhaps a coupon or a gift card sold at a discount — being offered by a retailer, restaurant, service or other business. The deal doesn’t become effective until a certain number of other consumers also accept the deal. That gives consumers an incentive to tell friends, adding the social media aspect. There can be other incentives as well. Living Social, which has begun a partnership with The Washington Post, gives a consumer a free deal if at least three people also buy in on the deal using the consumer’s link.
Despite recent caviling about the downside of social shopping, advertisers have flocked to it as enthusiastically as consumers.
Whatever name “flash marketing” or “deal of the day” goes by, it’s gone viral — and newspapers cannot stand by while others take the business it generates from local advertisers, says Robert Scher, president and CEO of Shoutback Concepts LLC in Solon, Ohio.
“The problem has been how to get these local business advertising, and flash marketing or deal of the day has been able to capture that — and capture it in a phenomenal way,” says Scher. “Newspapers should have a piece of this.”
There’s one more advantage for newspapers that are desperate to attract women — social shopping’s audience is 70% female, he says.
Shoutback offers a private label platform that’s designed strictly for media partners, which, Scher says, has great advantages from the start: “Newspapers have got great brand capital right there. They have the print and online readership. They’ve got social media exposure with Facebook and Twitter.”
Scher says his social shopping solution even can encourage print subscriptions, with subscribers getting an exclusive deal page and the ability to earn its “Deal Bucks” rewards faster.
The Philadelphia Inquirer’s philly.com chose to go it alone with its social shopping Website, PhillyDealyo.com, which offers heavily discounted coupons to local restaurants, retailers and cultural events that kick in when the group of would-be buyers reaches its “tipping point,” typically 50 people.
“Philly.com knows Philly, and we know the deals that Philadelphians want,” says philly.com President Ryan Davis. PhillyDealyo bills itself as Philadelphia’s only local group shopping site — a none-too-subtle dig at Groupon.
That feeling that Groupon is a threat to newspapers is common — and wrong, says company spokeswoman Julie Anne Mossler. In fact, it’s eager to partner with newspapers and, judging by the inquiries it has received of late, newspapers are also interested in hooking up.
Papers were likely swayed by the announcement earlier this summer that Groupon was partnering with newspapers in The McClatchy Co.’s 28 markets, which include The Miami Herald and The Sacramento Bee. McClatchy papers will get exclusive deals not offered by Groupon’s local sites, and Groupon will get the newspapers’ powerful local promotion capabilities.
Groupon, which has grown to 80 markets now, was already in every single one of McClatchy’s markets — but saw advantages of their own to the partnership.
“It’s definitely a kind of win-win relationship for Groupon and the publisher,” says Mossler. Newspapers are respected as experts in their markets, she says, and Groupon benefits from that halo effect. Newspapers also get yet another opportunity to connect with online audiences.
Why partner with a national outfit when any newspaper can easily copy the group-shopping concept? Shoutback’s answer is its deep best practices knowledge. Living Social, its reward system. Groupon, its heft.
“We’ve got a 50-person customer service staff, and an editorial staff of 70,” Mossler says. And that, she notes, is a ton of folks for an individual paper or even a chain to hire on.
Groupon also is addressing the “too successful” problem with the launch of Personalized Deals in Chicago, New York and three other big markets. Using past purchasing information, Groupon will target deals to likely consumers rather than simply offering every subscribers the same deal. “It will take care of that fire-hose approach,” Mossler says.
2. Video: Ready For Its Close-Up
When Lee Enterprises Inc. recently reported its second-quarter results, Chairman and CEO Mary Junck opened the management discussion by talking about the very newest revenue initiative at the Davenport, Iowa-based chain of mostly smaller community newspapers.
“In May we began rolling out interactive video advertising, and already our enterprises have reported advertiser commitments totaling more than $1 million,” Junck said.
There’s money in video — and it can be made quickly.
When Journal Register Co. handed out Flip HD cameras to every one of its hundreds of reporters back in February, the advertising revenue those video postings brought in paid for the cameras within two-and-a-half months, says Daniel Sarko, JRC’s senior vice president/integrated sales. Since then, JRC has ordered more and put them in the hands of citizen journalists trained through its Community Journalism Labs. “They take them and shoot on topics and events our reporters couldn’t get to — and we monetize that,” Sarko adds.
If there is such a thing as a no-brainer revenue generator for newspapers, it’s video.
Because of the Internet, newspapers for the first time have an opportunity to steal share from television at its own game. Newspapers can approach small businesses and give them a shot at effective commercials that are far more engaging than banner ads. At JRC newspapers, the videos are hardly top production quality, but it doesn’t matter.
“Our guys do rough form video, format it to 15 seconds — and an advertiser who could never afford to be on television has an ad,” Sarko says. “We can offer to satisfy all their needs in print, television and the Internet.”
Both JRC and Lee rolled out their video with lightning speed. Within four months, all 42 enterprises at Lee were offering interactive video. Did Lee run up against some big training difficulties because of the rapid pace?
“It was a snap,” says Rona Rahlf, publisher of The Daily Herald in Provo, Utah, and one of the key leaders in the rollout. “The vendor support was terrific, they were very well organized, and the tool is very easy to use. Anybody can do it.”
Lee chose Jivox’s Online Video Advertising Platform for its initiative. The attraction, Lee executive say, was that ad sales and operations people can access and manage advertiser accounts, enter insertion orders, set campaign pricing, and track performance in real-time and traffic video ads all from a single console.
“We were looking for a provider that could help in this area, and wanted to move very quickly,” says Nathan Bekke, the Casper, Wyo., publisher who was another leader of the Lee initiative. He says Lee is finding advertisers of all sizes for its video, and its salespeople are finding Internet video comes practically pre-sold to potential advertisers.
“We don’t encounter resistance in any form or fashion,” he adds. “Most of our customers, speaking from a local perspective, are eager to move into the Internet because it allows them to interact with their [customers] — and it produces results for them.”
Occasionally Journal Register salespeople encounter customers skeptical or just unfamiliar with the concept, says Sarko: “The real hurdle is, when you’re a newspaper sales rep you never have to put a newspaper on the table and say, ‘Have you ever seen one of these before? In some cases you do have to do that with Internet video.”
His answer: “I see you have a computer here. Well, the same trusted brand that is delivered to your home every day is now delivered to the Internet by that same trusted source.”
3. Local Local Local; Mobile, Mobile, Mobile
Don’t take our word for it — this is what Google CEO Eric Schmidt tells newspaper editors: “When I say Internet-first, I mean mobile-first. That’s where the action is. That’s where the growth is. It’s a completely unwashed landscape.”
Mobile devices from cell phones to smartphones, from Kindles to iPads are ubiquitous, more numerous than computers and carried in pockets and purses everywhere. Yet many newspapers are not yet dabbling in mobile.
Big mistake, says Clark Gilbert, president and CEO of Deseret Media, which runs the digital operations of The Deseret News in Salt Lake City and its sister TV station.
Mobile is the next disruption, he says in an interview in conjunction with Borrell Associates’ upcoming Local Mobile Advertising Conference in Dallas Sept. 27. “Companies who don’t get that and don’t play in this space are going to miss huge growth opportunities,” says Gilbert. “Companies who realize this is a disruptive trend and embrace it now are going to miss some of those errors we made when we were moving from print to digital, or traditional media to online.”
Mistakes such as thinking that the Internet was just another way to present the print edition. Similarly, mobile must be regarded as a unique medium with content and business plans designed to take advantage of such qualities as its geolocation capabilities, texting and alerts, audio and interactivity.
Mobile looks to be a big space to play in as well. In its forecast earlier this year, Borrell said 2010 would be a breakout year for mobile marketing that’s expected to jump from $2.7 billion in 2009 to $9 billion this year. Local mobile spending will double to $586 million this year, and soar to $14.7 billion by 2014.
For newspapers, mobile remains mostly about potential — but it’s easy to see whole new vistas of revenue generation that could spring from it.
Imagine a reader gets a flat tire. He checks the directory the newspaper has created, and his mobile, using its geolocation capabilities, not only gives him one or more nearby choices for tires, but also offers a coupon. In the back office, the newspaper gets a little piece of the transaction between the reader and tire store.
But as The Gazette in Cedar Rapids, Iowa, discovered as it implemented its mobile-first culture, the digital infrastructure is not quite there yet. Experiment and fail and experiment again is a wonderful motto for the digital age — but advice to be avoided when money transactions with their readers and users are at stake.
Still, mobile already allows newspapers to go direct to consumers with deals, with text advertising, with point-of-purchase offers.
And the audience is already there. Lee Enterprises chairman Junck noted in the company’s latest quarterly earnings announcement that its newspapers’ 48 mobile Websites attracted 5.5 million page views in June alone.
Now the cost of being ahead of the curve on mobile is coming down. Demand for developers of apps for iPhones and other smartphones, for instance, pushed developments costs into the six figures for some smartphone applications.
SachManya, for instance, has developed a do-it-yourself app maker allowing publishers with no digital training to build a native iPhone, iPad, Android or Blackberry app at prices starting at $299.
Yapper (Your App Maker) includes features such as geo-tagging that would be very expensive for newspapers to develop on their own, says SachManya CEO Chintu Parikh, who worked on the launch of Yahoo Mobile in the U.S. and Asia. Yapper’s early customers include Robinson Newspapers, a chain of weekly newspapers serving the Seattle metropolitan area that publishes the West Seattle Herald, and the Palo Alto, Calif.-based Embarcadero chain of weeklies and online news sites.
“Both media companies have taken another step going beyond a news app to have better engagement with readers through always-on devices with location awareness,” Parikh says.
4. Auctions Bid for Comeback
Auctions are hardly a new revenue tactic for newspapers. Even before the Internet, newspapers were launching auctions to deepen trade relations with advertisers, stir some excitement among readers — and pocket some of that transaction cash.
Online newspaper auctions are about as old as the Web itself. Vancouver, B.C.-based CityXpress, for one, has been hosting them for media companies since 1997, and by now some auctions like the Minneapolis Star Tribune’s annual nine-day Golden Gavel event are practically a tradition.
But recessions have a way of reviving interest in auctions as retail and service businesses become reluctant to lay out cash for advertising. Auctions give them the option of trading for ad credits, and exposure during the auction through the newspaper online and in print.
It’s also a technique for attracting new advertisers. CityXpress, for instance, claims it has introduced more than 60,000 new advertisers to the 400 media partners it has in the U.S. and abroad.
One new player in the newspaper and media auction space is Ranger Data Technologies, which created Boocoo, an auction system in which individual ZIP codes are “licensed” to participating newspapers or other media. If the buyer and seller are in the same ZIP, the transaction fee goes to the media partner. If the buyer and seller are from different ZIPs, the media organizations split the fee.
Boocoo, launched in June, is not yet charging any fees as it builds traffic and awareness. “This project was never intended, nor could it succeed, as a temporary or quick fix in terms of revenue,” says Ranger Data President and COO Tony Marsella. “This brand-new business, brand-new transactional revenue stream, and wide-open opportunity for local media partners is a long-term play.”
Auctions offer newspapers an opportunity to put themselves up for bid, so to speak.
One example is Mediabids, the Winsted, Conn.-based company launched in 1999 as an online marketplace for print publications to offer advertising opportunities and for advertisers to ask for “bids” of ad space from the publications.