Is the answer to declining newspaper print advertising really to give up on print?
Believe it or not, this digital media website, a strong proponent of digital, still thinks the future of newspapers involves print advertising, and more of it (not less)
The print publishing industry, as we all know, ain’t what it used to be. Whether you are talking about books, magazines, or newspapers, it is harder and harder to make a profit from print revenue alone. As a result, many companies have moved on and now consider print just another revenue line, one less and less important to the overall success of their company.
In B2B publishing, many companies now consider themselves more events or data driven, for example.
But the newspaper industry is still struggling to find an alternative way forward. Ken Doctor recently laid out the ugly state of reality on the NiemanLab website.
After summarizing the earnings reports of some of the top newspaper companies, he comes to a depressing conclusion:
“This paltry performance drives the landscape we see today. With little in net, these companies have little to invest,” Doctor writes. “They’re still paying off debt, issuing dividends, keeping up with pension obligations, and anticipating print ad results that can’t find a bottom. That makes it tough to invest in new products and to travel with the audience as it moves to mobile. And of course it’s bound to mean even more reductions in workforces, including newsrooms, which are already down by more than 20,000 in less than a decade.”
There is very little here that I would disagree with.
Then at the end of his piece he talks about the troubles newspaper have had moving to a situation where digital revenue makes up a majority of its total revenue.
“All these companies still find themselves more dependent on print than digital, and they haven’t weaned themselves off of it fast enough to absorb the now-brutal print losses.”
Today Journal Media said that it is seeing rate pressure on digital due to programmatic buying and the move to mobile. In other words, newspapers are finding that the direction they have chosen may be a deadend. That even winning – that is, getting more and more of its revenue from digital – may actually lead to lower earnings.
The common wisdom is that print advertising is going away and must be replaced by digital. Few what to even think that maybe this is not 100 percent accurate. It is simply accepted: print ads are going away, digital is the future.
You might be surprised to learn that I don’t necessarily buy this. The reason is that it applies to national advertising, but does it really apply to local advertising?
For most newspapers, classified advertising accounted for a very large percentage of total revenue – much of this from local businesses. But as that business went away, with newspapers hanging on to its classified sections until the end rarely looking to create new digital classified products, much of their locally based business went away.
Did newspapers, who saw digital putting price pressures on their rates, make rate adjustments to print to retain or even grow local print advertising? Rarely. So today many weekday print editions are barren of print advertising.
Yet rarely do we hear of newspapers making changes in their advertising executive teams because of poor print ad sales. In fact, many of these execs are adding digital duties to their roles (even though they have never worked at a digital-only company in the past, but have spent their whole careers at newspapers), and finding they can continue their rise in the business by being seen as digital gurus. From poor print sales to now heading digital, a head scratcher for sure.
As some who publishes a digital media website, one might expect me to be a cheerleader to growing digital ad revenue – and I am. But I think the idea that abandoning print advertising, and letting the ad side off the hook for continually decline print revenue is not something I agree with.
I sit in many earnings conference calls and I never hear a question asking about what a newspaper company is doing to grow print advertising. (Journalists are not allowed to ask questions, only investment companies.)
But so ingrained is the idea that print advertising is going away, and that new digital ad revenue will be less profitable, that one wonders why any investor ever bothers to call in. The picture many newspaper companies paint is so negative and depressing that even obligatory efforts saying that that “there is a plan” seem not very earnestly said.
(On one recent call an investor asked if the company had any real estate they could sell, basically suggesting that the company might be better off just selling off the hard assets. The answer back was “we’re looking at that.”)
The one move few newspapers seem want to consider is completely redesigning their rate cards. As one person said to me “we have the tiger by tail. We still get most of our revenue from print so reducing rates might kill us. But fewer local businesses are buying our print ads anymore because they are too expensive. So we try and sell them digital.”
Of course, it is not true that newspaper ad people are not doing something. Often the answer is complex new ad packages, something newspapers are notorious for producing. I once downloaded the Sun-Times rate card when they still owned their suburban papers (they recently sold them to Tribune), it would certainly be intimidating for any local business.
Many new local businesses have no experience buying print advertising. It’s not part of their history. This, combined with the fact that starting a business is always a crap shoot and so the owner is always on the look out for anything that will drive sales, means that there is an opportunity to start fresh with many local businesses, to reintroduce them to the newspaper – in digital and print.