Some industries just can’t get out of their own way.
I’ve been close to the newspaper industry for a long time. I got my start in this industry selling online newspapers ads, back in the early ’90s. I’ve developed and sold ad servers. I currently count many newspapers among my company’s customers.
Over the years, I’ve stayed in the loop on some internal developments within a few of the larger U.S. newspaper companies. I’m respectful of my access, but some of what I hear lately has me very worried.
They’re about to shoot themselves in the foot… again.
Several large U.S. newspaper companies are giving the circulation marketing departments control of their Web sites. Yes, giving the site to a department stuck in the ’80s, allowing them to shut down free access to content in favor of paid subscriptions.
Talk like this has been going on for years. Yet now, there’s a lot of momentum behind this plan at some very large companies. Many circulation departments will take over their companies’ Web sites.
Why now? Talk of Web sites cannibalizing print circulation in the newspaper industry has been debated for years. The answer is be expressed in three words: deflection, fear, and greed.
Newspapers want to deflect attention away from the fact their core product is in decline. On Tuesday, the Audit Bureau of Circulation (ABC) released the latest circulation numbers for the newspaper industry. They were bad. Fewer people read fewer newspapers. It’s been happening for years.
What makes this particularly bad is ABC has relaxed the rules for years regarding what counts as legitimate newspaper circulation. One of the report’s only bright spots (beside improvement at USA Today) is a circulation gain reported by The Wall Street Journal, up 15 percent in six months.
How did the WSJ get such a big pop? Simple (and very smart). It added unduplicated Web site subscribers to its total circulation count. Now, every other circulation manager in the U.S. wants to do the same. Never mind the WSJ is a unique business-to-business (B2B) publication, and its online subscriptions are largely either paid for or reimbursed by corporate expense accounts. Forget that such combined circulation reach is virtually impossible to deliver to more than one or two advertisers on a regular basis. Every U.S. circulation manager wants to ramp up some kind of paid product and do the same kind of bundling.
Newspaper companies fear what they don’t understand. They don’t understand the Web. The median age of newspaper industry workers is dramatically higher than in other media industries. Newspapers have done a very poor job over the past 10 years recruiting and retaining a younger, more diverse workforce. Those in charge are out of touch with much of the Internet culture. They don’t understand it, and are just plain afraid of it.
The Online Publishers Association (OPA) recently presented research on media consumption habits of 18-34 year olds. This demographic doesn’t even know what print newspapers are! This is terrifying to people who have spent decades of their careers selling ink on dead trees.
Newspapers want the money Web sites make. Newspaper-driven sites are the steady, quiet winners in the online advertising marketplace. These sites routinely attract the largest audiences of any news sites on the Internet. They dominate local markets around the country, both in audience and advertising. Most of them are quite profitable. While maintaining extraordinary, top-line growth rates, they’re making some real money. That money’s getting noticed at the bottom line. Profitability gnaws at the managers of departments in decline. They want that money. They want it to be their lifeline.
I respect the newspaper industry and the people who work in it. That’s why I worry that, in the hope of propping up a declining circulation base, the industry will make bad decisions about how to use the Internet. They’ll accelerate the destruction.
Newspaper companies could learn a lesson from the travel industry. Use the Web to talk to customers, retain them, and acquire new ones.
Part two: how U.S. newspapers can save $300-500 million per year by using the Web for the right kind of circulation marketing.
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