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    • Sat Sep 6th 15:47 PM
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      Newspaper Ad Revenues Gaining Downhill Momentum; Online Struggling Too
      As a 20 plus year veteran of the Newspaper industry...as an Advertising Management professional (Daily and Weekly, Shoppers, Family Owned, and Corporate Owned) I have an insiders opinion.

      Newspaper revenues have been self inflicted wounds. Family owned newspapers in smaller markets are in much better shape than newspapers in markets owned by corporations or large groups. Many of the problems can be repaired, or at least the declines arrested.

      The main issues can be laid at the feet of top executives and publishers. Therefore, the problems can be corrected by examining them, and probably removing most of them.

      The problem....lack of long term vision, and the wrong skill set to correct them. Corporate newspapers have valued only the immediate months' Operating Profit, and designed compensation programs accordingly. Corporate directors receive bonus payments based on either annual or divisional factors. This system has focused on the very short term performance financially.

      Virtually no focus is placed on the fundamentals of the business. Adding to this, high level managers at the local and corporate level have changed in professional fields of expertise. Over the past 10 years, most local publishers and higher corporate types are now financial managers- accountants- not Editors, Advertising, or Circulation types. Think of that for a moment, and you can begin to see a large part of the long term problem.

      Newspapers have traditionally attracted people interested in reading news that is important to them. Advertising was strong, because local advertisers could rely on both strong readership of their ads, and affordable ad rates that reflected return on investment. Both have been seriously eroded, and may be too late to correct.

      Readership has been eroded, because senior management directed focus on short term bonus' for themselves. Examples...the refusal to invest resources and time for local Circulation managers to build home delivery services of newspapers. Instead, a practice of artificially "puffing" circulation is the focus. Almost all newspapers now have NIE departments (Newspaper In Education). Sounds good on the surface, however, the main reason the departments exist, and the main responsibility, is getting large bulk sales to schools paid for by businesses. That is then called "paid circulation" and reported as such to the ABC (Audit Bureau of Circulation). Another practice is to "wrap" a newspaper with a "jacket" of newsprint with ads on it. That "jacket" is paid for by advertisers, then dropped at hotels etc, perhaps at major league sporting events or concerts. Then, that entire pressrun is counted as "paid" as well. Using a newspaper to help reading programs is not really the circulation Advertisers are counting on. Nor is a free newspaper at the hotel desk. Home delivery is the most important, with paid single copy sales next.

      The problem? Real newspaper circulation is far less than stated. The consequence is that ads don't reach real readers, and ads don't work as well as in the past. This "puffed" circulation is the basis that ad rates are sold to advertisers.

      Why does this matter? Many publishers receive bonus based on circulation increases, not the type of circulation. Ad rates have also faced similar issues. Circulation goes down, ad rates go up, and results for those advertisers go down as well. In the online area, Publishers refuse to re think the model. Classified ad rates were raised artificially and forced online, with no infra structure to give that online ad a chance to work. It was done simply to add revenue. Results for the customer were not considered. That inflated price gave rise to Craigslist, Monster, and many others that have eroded Classified ads.

      Display advertising is no different. Less real circulation, yet higher rate. What other industry does that? Give you less, but charge you more. Very poor execution of the online revenue model. Many publishers try to count online pageviews as extra circuation. Marginally true, but the print advertiser gets NO benefit of it, and the online only advertiser gets no benefit from the print. So, not completely accurate to "spin" online pageviews as circulation to advertisers

      In the newsroom, the head counts have been drastically slashed. The only reason anyone even buys a newspaper is to read the news. The problem is not so much the cuts, as WHO has been cut, or quit. The more tenured and experienced the newsperson, the more likely they are to be be gone from today's newsroom.

      At some point, there will be an executive in one of the companies that will state the obvious, and make some bold decisions. If the CEO does not fire them immediately, the changes needed will be done, and the newspaper industry will recover in some form. Until then, the death spiral will continue. The market will crush many of them, and only a few will survive. Local family owned newspapers have a better chance of survival, because they tend to make better long term decisions.

      Think of it this way...an NFL team cuts it's best quarterback, running backs, line, and defense, but KEEPS the rookies and third stringers! Then expects the team to win the Superbowl, and expects you to pay the full ticket price to watch em! Then, the executive is surprised by an empty stadium!!
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    • Mon Jul 21st 22:19 PM
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      A Silver Lining in the Newspaper Crisis
      As a 26 year newspaper advertising manager....both family owned and publicly traded corporations...

      The problems usually lie in two areas. Publicly traded companies are primarily motivated by profit margins. Historically, the margins have been 40%. In the more recent past those margins were near 30%. Now, newspapers are hoping for something near 20%. How many businesses out there would call a 20% profit margin BAD? Publicly traded companies put pressure on local publishers to deliver that margin...no matter what they have to do to achieve it. A great many publishers fear their own jobs first, and have NO long term plan or vision at the local level. This means simply "cut", without regard to what those cuts mean in the future....a future that can be as close as the next quarter.
      Family owned newspapers tend to take the content and the long term outlook very seriously. Profit margins are just as rich as the others. They tend to cut in a very different way, and usually are hesitant to cut at all.

      The second area is advertising. The main reason newspapers are in the state they are now in is due to shortsighted corporate demands of the last 8 years or so. As the internet began to rise, corporations refused to execute more customer friendly pricing, and realize the need for integration of the web. When the opportunity came to capture the revenues from local customers, they priced themselves out of reach for medium to smaller sized local customers. They refused to invest in the web in a meaningful way to bring the power of the web to those same customers.

      Consequently, those local customers began to drift to other mediums. Now, when the newspaper needs those locals, they are not available to them. Many newspapers have resorted to selling space at firesale prices to prop up weak days or months. What was a rare "deal" is now so common as to make published rates only a reference point. This is also the fault of local publishers, and corporate directives. Instead of moving toward the local advertiser, the shortsighted greed of the early part of this decade carried forward until the bottom began to fall out in 2006. Most advertising executives were pointing this out as early as 2004. No one took the warnings seriously, and the collapse began in earnest early in 2007. In the last 5 years or so, many publishers come from the accounting or financial disciplines, where they used to be either Newsroom or Advertising professionals. Accountants tend to cut expense to reach the profit target. They do not have the vision, or temperament to take risk. Therefore, they cut to profitability. And they did, and continue to do. Unfortunately, at some point that approach reaches an end. When that end has been reached, that visionless publisher has cut most of the talent that could have kept the long term issues from becoming as severe- possibly avoid it altogether. Now, when they need the very best and brightest talent, that talent has been driven out of the business.

      Now, they still refuse to believe that the web will eventually replace them. Unfortunately, they still have no long term vision...and think the recession is the problem. Now that current short sighted view drives even more away from them. If you own stock in publicly traded newspapers...don't expect any significant return to greatness in the near future!
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