It's make-or-break time for newspapers.
Over the last couple of months, I've spent a lot of time talking to newspaper companies about their digital futures, particularly when it comes to advertising. While I've had these kinds of discussions with them for many, many years, the current plight facing the industry has made these discussions take on an immediacy that I have never seen at any point in the past 15 years. They know that their future is now and that they had better figure it out fast. They know that their chance to dominate local online advertising as they have dominated local offline advertising is looking slimmer and slimmer. Google, Yahoo and Microsoft (GYM) are all lining up to take a piece of the $100+ billion local ad market as much of it shifts online.
What are newspapers' biggest competitive weakness relative to GYM? It's lack of scale and lack of vision. Yahoo and Google built their market positions first by establishing extraordinary scale and communicating a very compelling vision for the future into the marketplace and to their customers, partners and employees.
What do newspapers need to do to turn the scale issue around? Four things, I believe:
Set their digital divisions free. Newspapers need to stop the forced integration of online and print teams. These two groups are like oil and water, and the print people bring the online folks down. Newspaper should "rightsize" their print business according to future print revenues (anticipating at least a 5% year-over-year drop) and invest in their online business according to future online revenues (anticipating at least a 25% year-over-year growth). Forced integration online causes great customers and great talent to flee.
Think beyond the page. Local newspapers cannot simply repurpose themselves online. There are some excellent examples of how newspaper Web sites can reinvent their online editorial product in the current issue of Fast Company.
Embrace user-generated media. Newspaper Web sites need massive audience and ad impression scale. They will need to be twenty times bigger in three years than they are today. They cannot get this growth through newsroom content alone; not by far. As Fast Company noted, newspapers need to be the place where everything local is posted, shared, discussed, criticized, or mashed up. That means lots and lots of user content and very little "publisher control." That is what made MySpace and YouTube. That is the reality, and it must be faced.
Create local ad networks. Someone needs to aggregate every site and every page and every blog with any local connection onto local ad networks to create the kind of massive scale that advertisers want. This is already done on the national level; it should be done at the local level. This means that newspaper companies need to exclusively aggregate thousands of sites into their own networks, impose standardized ad units driven by their own centralized systems, and leverage their unfair competitive advantage--their large, local feet-on-the-street sales forces--to sell all of this inventory. They need to have bulk if they want to compete with GYM, and local ad networks will be key.
Are these ideas new? Absolutely not. Newspaper executives have been mulling these thoughts for years. Even if they do these things, can newspaper companies survive and thrive in a GYM-driven marketplace? Yes. They absolutely can. Google and Yahoo's combined penetration of local advertising businesses is still below 5%. That means 95% of the 12+ million small businesses in the U.S. are still up for grabs--and newspapers already know their names and are already selling them ads. That part of the market is theirs to lose--but it is now or never to make sure this doesn't happen.
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I believe newspaper executives/the industry from the previous generation have failed to establish the same interactivity the web has provided. There is a way to do so, but no one wants to open their eyes.
I can see the next movie to hit the big screen, Titantic 2, the newspaper industry.
Arthur Koff Founder/CEO RetiredBrains.com
These media giants are similar to dinosaurs - they can barely get out of their own way. They too often have stodgy old attitudes derived from the good ole days when they were the only game in town - print wise, that is. Furthermore, these attitudes often come from the corporate ownership box where they glance at the game and play 'armchair quarterback', making decisions that sound good but have no practical value. All for the bottom line -huge profits.
Newspaper websites are usually number one in most major cities (except for the GYMs), and they should be taking advantage of their local audience, local news and local reps selling local ads tagged to local events - Johnny's touchdown run in their high school football coverage. Yes, they can stream video as well with the right resources.
As you mentioned, newspaper management also insists on making the national sales team responsible for selling online as well as ROP (and everything else they publish - gee, if you can sell cars, then you should sell tires, batteries, etc.) with minimal training to boot. Often online sales reps come along on sales calls but careful not to 'interfere' with the relationship between the national sales rep and their client - which often doesn't really exist since the online managers and online agencies are usually different from main media anyway - and there is usually a battle over sales commissions, too. "But wait, I can sell a $75,000 full page ad vs a $5,000 online schedule - what to do, what to do?" It's just not smart and not healthy.
National rates vs retail rates is another perfect example - why should an advertiser pay more because they are national vs local? Same distribution, same print, same ink - hardly a reason to charge more. Oh - but, wait again - national rates ARE the same when it comes to online - interesting concept.
Enough? There's more but I'll refrain. Thanks for the opportunity to vent about just a few things wrong with newspapers - suppose my desire to change things was worth firing me over? Don't answer that.
GW
Or make an offer to buy a company that owns a User Generated Local Content patent.
"GYM" (I like that)
It was the thing that looked non threatening that took the biggest of the Galiaths down.
Best Regards, The Little Guy
The concept is to have sports entertainment be entertaining while including the audience, advertisers, and the media to interact with the sports broadcast. The catalyst being an easy to play card game. Sounds unusual, but I've found it hard to deny the reactions of the individuals who have played it when they start yelling for their commercials to air. If you want to know more, feel free to visit http://www.PlayTD.com or send me an email at msm@maveric.com.
Meanwhile, David the 4 "things" you suggested is right on the money!
For instance, we at OTAir can text enable any and every article in a newspaper or magazine with a unique article code that people can text to ask the reporter a question, post a quick discussion point, initiate a similar article archive search request with results viewable via the mobile web or sent immediately to their email address. Folks can be empowered to Digg (v) articles regardless of their location when reading the article or even add it to their Del.icio.us bookmarks. There are other possibilities too, not to mention the obvious of offering readers breaking news, weather, sports and traffic text alerts.
Great post and thanks for the opportunity to add another digital channel to your thoughts!
Jim Washok, CEO OTAir - impulse mobile marketing & media