By: John Fredericks
More bad news coming over the wire every day concerning what seems to be the inevitable and fateful doom of the daily newspaper as a viable growth business. More cuts, more excuses, pending strikes, more blame, more of the same. What gives?
It’s like the ‘Tale of Two Cities’: “It was the best of times” (Current US booming economy!); “It was the worst of times” (The major daily newspaper near you!).
Industry leaders delivered several presentations last week specific to how their publicly held publishing companies were responding to the seemingly endless crisis. Some were interesting; some were compelling and some were downright silly. The leaders of Scripps want to double their local sales force (great, but who is going to train all these new people?ok, my personal bias notwithstanding, the concept is sound and pro growth if implemented properly). A parody of one of the sillier ideas might go something like this:
Everything we can possibly measure that prints on paper is down every which way. No worries — we have a plan! Let’s hire a soda pop consultant, buy some new computer software, cut a bunch more jobs … and hoorah! Let the good times roll! Vote for me!
Here are the real issues no one will publicly acknowledge or address: the dual value proposition decline — one on the consumer side and the other on the advertising side.
Consumer Value Proposition in decline
Consumer value is defined as the time/value/ROI the reader achieves from engaging with the content.
This is achieved by providing highly relevant and compelling content to its defined audience segment that connects with the consumer and provides a return on their time invested in reading it. We want to sell readership, yet we refuse to value it and hide this anomaly in antiquated claims of “church and state.” Look, we all want to protect journalistic freedom. That is not the point. It’s about providing content that is coveted — and not anathema — to the audience it seeks to engage. When you are the major daily newspaper in any given metro market and you have a less than 30% circulation at best in the most affluent growth suburbs with that feeble penetration percentage eroding by the hour — and your intended audience votes 70% red (Conservative) — yet your editorial positions and advocacy journalism continue do to the frantic Howard Dean left wing scream every day- what do you expect? This isn’t church and state; this is stupid.
Disagree? See the New York Post, circulation zooming up, the leader of the “vast right wing conspiracy” (I don’t know what the “vast right wing conspiracy” is but I want in!).
Readers are fleeing because the content most major newspapers provide is not giving them an ROI on their time invested. It’s that simple. Once again the basic principals of microeconomics trump the experts! The industry’s response is attuning to the Queen of France 200 years ago when posed with a similar dilemma, she boldly responded, “Let them eat cake”. If memory serves me correct she was beheaded.
Advertiser Value Proposition in decline
Advertiser value is defined as the financial ROI the advertiser achieves from investing for ad space in the format that carries the content
Advertising success and consequent investment sustainability is based strictly on ROI which is directly related to price (of ads) and performance (results) based on an econometric linear regression model that traces back to content. When advertising rates and subsequent deliverable performance expectations are based on a readership level matrix of 100% and actual readership is something less than that – the ROI model explicitly implodes for the advertiser.
1. Advertising success has a direct and linear 1:1 relationship to readership percentage level
2. Readership has a direct and linear 1:1 relationship to content that connects with its intended audience
3. If the content is valued by its intended audience and translates into a consistent readership level of 100% and your pricing is based on that, advertisers will meet or exceed performance expectations and advertiser ROI will be at promise or above
4. If readership consistently falls below the target price equation, leadership must either fix the content/time/value consumer proposition or decrease rates to bring advertiser ROI back into alignment
The latest response to this: raise rates only 6% vs. 8%! What econometric ROI model is that based on? Voodoo economics if I ever saw it!
The Digital Equation
Why is online readership and advertising to that audience exploding, then?
Five primary factors are driving online readership:
1. The universally inexorable expansion of broadband wireless network platforms available
2. Ease of access to those platforms with lower and lower price points to participate in the wireless environment eliminates normal barriers to entry and increases user-ability
3. Changing habits of a new generation of users that prefer an on-line digital environment to other communication devices and tools
4. Rapid global technology development fueled by an un-regulated internet environment inspires and unleashes entrepreneurial creativity guaranteeing continued technological advancement at a rapid pace
5. Free content and the choice of that content opens the markets to global participation with no socio economic parameters of participation and no restrictions on subjects thus maximizing the time/value consumer proposition on all fronts. In a sense this is the perfect economic storm: access, limited barriers to entry, universal availability and enormous choice. This is supply side economics in its purest form. This is John Galt.
In newspapers, we eliminate choice of content and — worse yet — provide unwanted material that the editors and journalists want with no analysis of the demand side of the equation for the audience it is intended to relate with. Turn out the lights, this party’s over.
Perhaps the real future of major daily newspapers is simply no future at all, and they are merely the precursor to an all encompassing digital strategy where print no longer exists except to announce special events. In the interim, the print platforms can be used to robustly promote the online component and encourage established readers to gradually choose a preference of receiving their content of choice in digital vs. print format where they can access what they want. This will give them the content choice they are clamoring for demonstrated by their lack of time invested in the print product.
If you want to save the behemoths there is an on-line symmetrical circle that amounts to a mathematical formula equating the monetization of any digital initiative. Print can follow this axiom to revitalize its consumer and advertiser value propositions:
“The Online Symmetrical Circle” is defined as the circle being the broadband and wireless networks available in an un-regulated capitalistic environment; Inside the circle are the following components”
1. Content (or a new technology like You Tube that creates its own content) that is unique and cannot be accessed anywhere else.
2. Marketing the content to the appropriate audience that will use, value, embrace and covet the content to a point where it then seeks it out on its own.
3. Technology (software) to serve up the content to the audience (user) that investigates or seeks the content in a user-friendly environment.
4. Device / Tools (hardware) that houses the technology (laptops, blackberry, IPOD, Cell Phone, etc.)
5. Advertising that is targeted to the specific audience that covets the content served up to that audience through the same hardware and software that delivers the content while providing unprecedented measurement matrixes to track and measure effectiveness and ROI for the investor (advertiser).
This is a simple formula that is the engine of online advertising growth. Each piece can be extrapolated to the print venue.
We’ve met the enemy: it is us!