July 2008

Newspaper industry growth “will be online” ...

MatchWork was present at the 78th INMA World Congress in Los Angeles, USA. Amidst the current atmosphere of “gloom and doom” surrounding the industry, more than 350 delegates came away with a different message from the Congress. Instead of focusing on negatives, speakers delivered messages of innovation and inspiration in every session:

  • Author Christopher Zook said newspapers can thrive by making an intensive effort to redefine their “core,” and by identifying hidden assets within their businesses.
  • Analyst and author Charlene Li challenged attendees to shift the focus from content to building a genuine relationship with the audience through fresh methods like content aggregation and social networking.
  • Citing the media explosion in India, executive Rajiv Verma said he expects a “rebirth” of the newspaper industry.
  • Newspaper executive Brian Tierney forcefully urged attendees to ignore the negativity and put the industry’s challenges in context compared with similar issues in TV and radio.

Virtually every presenter offered imaginative solutions that will answer the challenges, and add value for newspaper companies around the world. There was one clear message across all countries and continents: The consumers will catch information at their leisure. Newspapers must offer audiences what they want, when they want it, through whatever vehicle they prefer to view it.

Redefining the Newspaper by identifying “The Core”

Christopher Zook, head of global practice strategy at Bain and Company and author of Unstoppable: Finding Hidden Assets to Renew the Core and Fuel Profitable Growth, used examples from other companies and industries to stress the need for newspaper companies to define their core — and redefine themselves. He said that research indicates that, within the next 10 years, 80 percent of newspapers will face one of four scenarios:

  • “Death by a thousand cuts," with continual outsourcing, consolidation and downsizing, as well as regrets for not acting more boldly.
  • A redefined model of "shrink to grow," stressing smaller and maybe a less frequent print format. Money will be taken from some areas of the existing core and reinvested in new areas of a redefined core. There will be an online "utility" core, with many revenue streams.
  • Acquisition by an integrated internet/media company.
  • Liquidation and disbursement, or a move to a much smaller or even non-profit status.

Singapore Press Holdings (SHP) Chief Executive Officer Allan Chan said the company has gone beyond print and made a full-scale commitment to online through SPH Digital Media Offerings. This includes newspaper-based content sites, interactive sites, regular content sites, magazine sites, internet classifieds, search and directory.

The channels might be different but it’s very clear that future growth will come from online businesses

Partnering with an Internet Powerhouse?

The internet giant Yahoo has formed alliances with dozens of U.S. newspapers but Lem Lloyd, vice president of the newspaper consortium at Yahoo, said that isn't indicative of who is in control of the relationships.

The largest growth in online ad spending will be local, Lloyd said, and it is expected to double to US$12 billion in 2010. "As this trend progresses,'' he told conference attendees, "you all are in the driver’s seat because you have the sales force, whether it’s local or regional."

With its HotJobs brand, Yahoo has rolled out more than 400 newspaper job sites that are in competition with Monster and CareerBuilder. Nethertheless some delegates raised doubts behind the scene and asked the question how long Google and Yahoo will need the newspapers for their business. Other publishers concentrate on their own brand for all online businesses.

Reference: Friend or Foe?

Newspapers must market Audience, Brand and Content

In his annual executive briefing of information gained from dozens of visits to newspapers around the world, INMA executive director Earl J. Wilkinson said the driving question for newspapers is the value equation. Creating value is important to everyone, yet while some companies are creating value others are destroying it. Companies like Schibsted in Norway and Singapore Press Holdings are expanding their regional footprint with their embrace of digital revenues, expansion beyond geographic boundaries and pursuit of stable profit margins. They are among the great value creators. Yet, in the U.S., newspapers are ultimately losing value as they focus on high profit margins, continued earnings growth and multi-media products. “The market isn’t buying what newspapers are selling in this country,” Wilkinson said.

There are two primary disruptors of the newspaper value equation: technology and abundance. Technology changes the ways that consumers access information and their expectations of the provider. Abundance creates a disconnect in the understanding of what is success. Wilkinson pointed out that, in the U.S., the average household contains more televisions than people. In an environment containing that level of technological abundance, what is the value of one more section or article in a print newspaper? Newspapers need to reassess what they are producing and how they are producing it.

What is it that newspapers have that the market should value? “The answer,” Wilkinson said, “is as simple as A, B, C: audience, brand, and content.” Going forward, newspapers’ value proposition won’t ultimately be about content, but exploiting their audience. Currently, too much of the newspaper value measurement is centred around content. To become a growth industry again, the focus has to shift to audience.

Successful newspapers are those that have stopped worrying about specific products and are concentrating on filling the market space by any means necessary. This is because the value of the audience member is the primary metric, be it the print audience, the online audience or the cross-platform, multi-media audience member. Yesterday’s audience value proposition was all about size. Now there are all sorts of demographic factors to be considered. The business going forward is all about managing the print side’s decline and the online side’s rise.