Newspapers Compete for Ads With Other Media

By: Lucia Moses John Goetz got his first lesson in how not to sell newspaper advertising from Bud Selig, now the commissioner of Major League Baseball. It was 1968, Goetz was an outside classified-ad-sales representative for the Milwaukee Journal Sentinel, and Selig a major auto dealer in his territory. During their first meeting, Selig and his general manager gave Goetz their blunt assessment of newspaper ad reps: "All you guys ever care about is selling more newspaper advertising. No one has tried to take into account what we need."

Goetz, today a sales trainer for The San Diego Union-Tribune, never forgot that comment. Since then, he's been pitching "consultative selling" as a way to win a bigger share of a customer's ad dollars.

He represents more the exception than the rule, though. Consultative selling is the norm at other media, but still considered innovative for newspapers. As the dominant local players for so long, they haven't had to get too reactive -- or too creative.

Or so they thought. Newspapers have lost a big share of local-ad dollars to competing media that are slicker or just plain hungrier. Papers that aren't selling consistently with an eye on local competitors do so at their own peril. Advertisers aren't spending like they used to, so papers that expect to boost revenue will have to do it at someone else's expense.

In customer-satisfaction surveys, advertisers give newspapers points for things such as accuracy in their ads and service -- the basics. That's no longer enough for the local furniture-store owner who needs fresh ideas to make his cash register ring. Unfortunately, too many newspaper reps' idea of consultative selling is "go bigger, more days, add color," says Alice Kemper, founder and president of Sales Training Consultants Inc. in Fort Lauderdale, Fla. While radio and TV are pitching creative marketing ideas, she reports, "our salespeople are still standing over the counter with a rate card."

Goetz's reps don't walk into an advertiser's office and start talking about the Union-Tribune. Instead, they find out the advertiser's sales goal and, from that, estimate his ad budget. Then they formulate a media plan that will use the paper to meet that goal, based on the reach of the newspaper ad schedule. The reps show how shifting spending to the paper will let the advertiser reach more potential customers.

Goetz says that, while his training is paying off at the Union-Tribune, it took years to get people used to a different way of selling. "We can't afford to do business as usual," he declares. "We've got to offer things no other media can offer."

At the local level, competing media have become more numerous and better at selling themselves. Cable TV and radio are stronger than ever. Billboards and Web sites battling for auto, employment, and real-estate ads are nibbling at market share. One of them, RegionalHelpWanted.com, enlists radio stations to promote its network of local help-wanted sites. President Eric P. Straus predicts its oldest site, Poughkeepsie, N.Y.-based HudsonValleyHelpWanted.com, will do $2 million to $3 million in annual revenue in five years. "It's another ankle-biter hurting the newspaper industry," says sales trainer Mike Blinder.

The local competition is changing, sometimes to the detriment of newspapers. Here's how, medium by medium:

Broadcast TV

As cable TV's presence has multiplied in household penetration and channels, network TV prime-time audience share declined to 56% in 2001 from 62% in 1996. Media merchant bank Veronis Suhler Stevenson predicts that from 2001 to 2006 local cable spending will outpace local broadcast spending, with the former growing 12.9%, the latter 3.9%, compounded annually.

But watch out: The kick in the pants from cable has forced broadcast salespeople to get more aggressive. And in today's economy, broadcast actually looks better to big players such as car advertisers, as active shoppers become passive ones, says sales consultant Blinder. Newspapers should respond with advertising ideas that will get the passive shopper's attention, he says, such as selling an auto ad on the financial page or recruitment-ad positions on the home page of the paper's Web site.

Long term, advances in TV-viewing measurement could have an upside for newspapers. Nielsen Media Research, a VNU sibling of E&P, is replacing its paper-based diaries with a "People Meter" service that will give advertisers overnight-viewing data at the local level. And Arbitron is testing a portable meter that automatically records what its wearer watches.

Michael Lambert, media research specialist for The Virginian-Pilot in Norfolk, believes people meters will put papers in a positive light by underscoring the passive nature of TV watching: "This is earth-shattering stuff, and it's going to be very advantageous for newspapers."

Cable TV

Though its share is still relatively small, cable is the fast-growing pubescent kid of all media. Its revenue shot up 17.8% between 1996 and 2001, compounded annually, and is expected to continue growing at a double-digit percentage pace. Cable offers advertisers the total package: reach, frequency, and audience targeting at rock-bottom prices. While most of its revenue comes from subscriber fees, cable snatched up $3.4 billion in local-ad revenue in 2001.

Once derided as order-takers (sound familiar?), cable reps have dramatically improved their sales presentations with training and marketing support. Like radio, cable offers its salespeople high commissions -- and provides a fun environment that's light on structure, says Ed Baron, a newspaper-industry sales trainer.

And cable is becoming as targeted as newspapers, in some markets selling by neighborhood, with the goal of sending ads to individual sets. Long term, TV people meters should be a boon for cable, whose audiences are too small to be accurately measured by printed diaries. Calling cable "radio on steroids," Blinder predicts it one day will be newspapers' "big problem."

Radio

This fast-growing sector now looks like the bully down the street, fit and ready to take ad share. Sales staffs are young, aggressive, and well-trained. "They are literally scrapping over $800 bits of business," says Michael Lambert of The Virginian-Pilot.

Well-versed in the consultative sell, radio started using research in the 1980s to show advertisers the potential impact of their ads based on
listener demographics. Ownership consolidation has simplified the sales process for advertisers, allowing reps to sell multiple formats and stations with one bill.

Suspicions that consolidation has hurt radio haven't been borne out. Since the Telecommunications Act of 1996 relaxed station-ownership limits, the number of owners declined 34% and rates grew 90% -- while radio's share of local ad spending grew. According to a Federal Communications Commission white paper, consolidation hasn't been shown to have a significant effect on audience sizes or formats.

The industry should benefit from the "Portable People Meter" being developed by the Arbitron ratings service, says Larry D. Lakoduk, a former radio operator who now consults for radio and other media. "Radio has always been under-represented as a medium," he says, "because, in the recall process, it's difficult [for people] to remember which stations they listened to."

Radio is in tune with its enemy, newspapers. Its reps claim newspapers have declining circulation, plus high rates. Lakoduk, CEO of Mediacom International Inc. in Rancho La Costa, Calif., says radio also goes after newspapers for having low ad recall. "That reduces their GRPs [gross rating points] by two-thirds."

Yellow Pages

While the regional Bell companies have long dominated the directories business, the telephone book that lands with a thud on your doorstep may not come from the phone company anymore. Private-equity firms, attracted to the industry's stability, are buying up phone books from the telecoms and starting new ones. Estimates call for the industry to grow by 1.5% to 3% this year, with nearly 90% of the growth coming from local advertisers.

This ownership transformation means more fighting for ad dollars among the directories themselves and with other media, including newspapers, says John F. Kelsey III, CEO and president of the Kelsey Group in Princeton, N.J., a research and consulting firm used by the directories business.

Competition is stimulating hiring -market leader SBC Communications Inc. will add significantly to its sales-and-support staff this year -- and creativity, as reps get smarter about charging more for value-added features, such as headers and display ads. The Yellow Pages are "very quietly garnering 20% of local ad dollars," says Lambert in Norfolk. "They're a sleeping giant."

In markets with multiple books, Kelsey predicts merchants will feel pressure to buy ads in all of them at the expense of -- guess who? -- the local paper: "It is war out there, and the damage, at least at the margins, is going to be newspapers who are trying to fight for those same ad dollars."

When it comes to competing with the directories, the timing is crucial. Newspapers must get to advertisers long before phone-book salespeople blanket the market. With multiple players changing their canvass time year to year, that's getting harder to predict.

Direct Mail

Newspapers' days of trashing direct mail as junk mail are long over. Mail has maintained its U.S. ad share at about 19%, and was one of few media to gain share in 2001. With advertisers hungry for evidence their marketing dollars are well-spent, direct mail's ability to slice and dice mailing lists is tantalizing.

On the Web, direct marketing's effectiveness gets even easier to measure, while response rates are higher and the cost lower. Forrester Research forecasts that spending on e-mail marketing will grow to $6.8 billion in 2006 from $2 billion last year, but pointed out limitations: It's good for retaining existing customers but not so great at attracting new ones -- and the more it's used, the more it risks customer backlash and losing its effectiveness.

Its fast-growth days may be over, but direct marketing is still expanding as advertisers add it to their multimedia mix. Newspapers and direct mail have traditionally scrapped over grocers and local businesses, but all major categories are increasingly up for grabs as they demand more-targeted solutions, says Bill Wilson, special-projects director and former head of telemarketing for Knight Ridder.

While newspaper sales reps have a multitude of products to sell, direct mail's strength is in its single-product focus, Wilson says. The biggest player on the block, Advo Inc., conducts extensive training for its salespeople, while many newspapers take a sink-or-swim approach, says Alice Kemper of Sales Training Consultants Inc. Selling points for newspapers include their total-market-coverage products' ability to target an area and strong readership of their Sunday preprinted inserts.

Local Weeklies

Shoppers, community weeklies, alternative papers, and their ilk may be insignificant on their own, but add 'em up, and they may represent the daily's biggest rival for local ad dollars. Some 60 such titles, for example, elbow The Virginian-Pilot for orders in the Norfolk area, a threat as big as cable.

The rise of suburbia has nurtured community papers' strong growth, while demographic-oriented publications such as alternative weeklies have thrived due to their ability to deliver niche audiences. Community papers offer more targetability at lower rates than a daily, and many now belong to large groups that have banded together to form regional sales networks. Veronis Suhler Stevenson estimates that advertisers spend some $7 billion annually on paid and free community weeklies, not to mention shoppers.

"They are very aggressive, very sophisticated with their marketing efforts," says Nancy Lane, executive director of Suburban Newspapers of America (SNA). "When they go in and make a presentation, they have all the bells and whistles that the daily would have, and they've done a good job organizing themselves in clusters."

Weekly salespeople may be no more sophisticated than their daily counterparts, but they're hungrier, Kemper says: "They know from Day One they're hired, they're also going to be prospecting. They have more time to go knocking on doors."

And it's not just local dollars that are at risk. SNA, buoyed by research that found its members' readers are active vacationers, is going after the $1.35 billion in travel-related dollars spent in the local daily. The organization helped net a four-week, $21,000 test last month by Carlson Wagonlit Travel benefiting its members in suburban Detroit, and says it's going after other major travel companies such as Apple Vacations and Holland America.