Back to the Drawing Board

For media planners and buyers, newspapers have been something of an enigma over recent years. Readership and circulation have been decreasing for the most part. Yet ad rates and even newsstand prices have been climbing as publishers try desperately to stem the tide of falling revenues. But the past few months have seen a more aggressive strategy. In fact, one major publisher, Knight Ridder, has cut the newsstand prices of its Sunday editions in key markets. It’s just one example of how the newspaper business is trying to attract new readers and keep old ones. And once the business can accomplish this, it will try to build a case with planners for more ads and higher revenues. It all sounds like a good plan. Will it work?

"I like the fact that newspapers are doing a lot more to gain readers and make advertising work harder," says Sharee Johnson, SVP and media director for Kansas City panning and buying agency NKH&W. "Newspapers still have a role. Yes, that role has changed. But I still look at newspapers as the last call for action. Newspaper ads are where you turn when you really want the consumer to take an action. Consumers still actively shop newspapers."

The role of newspapers in the minds or readers and advertisers have indeed changed. And in turn, newspapers have shown a willingness to revisit and modify almost every basic brick of their structure, in some cases drawing up a new blueprint for success. The Internet has given consumers access to news by the second. Cable news channels provide even more urgently presented news and features stories. These and other factors have led to advertising revenue and circulation declines, and now newspapers are making changes to reverse these trends. They’re finding more creative ways to work with advertisers. They’re finding new ways to boost readership. And they’re finding news way to ensure that media planners continue to view the daily newspaper as the best route to local consumers.

On the revenue front, according to the Newspaper Association of America, newspaper advertising dipped 6.2% in Q1 2002, to $9.7 billion. This compares with $10.3 billion for Q1 2001, which was 4.2% less than Q1 2000, at $10.8 billion. Dips in national, retail, and classified advertising are reported, with classified the biggest loser, dropping 13.6% for Q1 2002. National dropped 3.5% and retail 0.8%.

According to Scott Harding, CEO of Newspaper Services of America, retail remains committed to newspapers, even in its current downturn. Harding’s firm handles planning and buying for large retail advertisers, including Sears, Kmart and Toys ‘r Us. He says newspapers continue to be the core vehicle for retail advertisers because newspapers drive traffic to the stores. "They offer a cost efficient way to communicate the event, the time and price and what's on sale this week," he says. He says retail advertisers are now spending heavily on inserts. "The insert market has grown to where more is spent on inserts than ROP (run of press)," he says.

On the readership side NAA circulation figures show declines in daily and Sunday readership, with 54.3% of the nation’s adult population reading a daily paper last year, compared with 55.2% in 2000. Sunday readership was 63.7% last year, compared with 65.1% in 2000.

Numbers like these are of course disturbing, but the industry is fighting back. Mort Goldstrom, vice president of display advertising at the Newspaper Association of America, points out that "no other media has the same reach, since six out of 10 adults read a daily paper, more than watch the top TV shows. Newspaper advertising can be bought and placed faster than other media. Newspaper advertising is a valuable commodity for readers, as important as the editorial content. And there's credibility and trust, if it's in a newspaper it must be true."

Newspaper publishers know however, they need to recover credibility and trust among media buyers as well. Media’s research has uncovered a variety of programs that boost advertising and circulation at both large and midsize papers. Examining them sheds light on what newspapers are doing today to confront the tough times and gives media buyers a compelling case to consider newspapers as an urgent and relevant opportunity.

Cross-Selling: The Orange County Register and Las Vegas Review Journal<\B>
The Register<\I>, owned by Freedom Communications, and the Review Journal<\I>, owned by the Donrey Media Group, formed an alliance in May. Entertainment ads appearing in the Orange County (Calif.) Register and travel ads appearing in the Las Vegas Review Journal<\I> may each have been sold by the other paper’s sales staff. Papers in the same chains sometimes sell ads for one another, but papers owned by separate companies haven’t done it before, which makes this program unique, according to Ron Redfern, vice president of sales at the Register<\I>.

"It’s the most innovative thing we’ve embarked on thus far, and we’re optimistic about it," he says, noting that the idea is to "leverage local competencies," which the entertainment category certainly is for the Review Journal<\I>. It can sell casino ads in Vegas that can be placed in the Register<\I>. Meanwhile, the Register<\I> is adept at selling travel advertising, which can be placed in the Review Journal<\I>. "We sell at their rates and they sell at our rates, and we each get fees for the sales we make," Redfern says, without disclosing the actual fees.

Neither of the papers has made a sale for the other yet, but "we’re starting to make calls," he says. The papers will start with travel and entertainment advertising but "it could go to other categories," he says.

Creative Services: Houston Chronicle<\B>
For local clients and agencies, The Houston Chronicle<\I> is trying to stir up business by employing a creative team to develop campaigns for companies that are new to the paper or have advertised infrequently.

Before ads are sold, artists prepare full-scale mockup newspaper campaigns for clients. For Stec’s Liquor Warehouse, a family-owned business that used spot cable instead of newspaper ads, the Chronicle<\I> created "a full-scale branding campaign that targeted messages to the demographics they were trying to reach," says Todd Neal, the Chronicle’s<\I> ad director. ROP (run of press) ads featuring a wine of the week and a four-color insert were included in the campaign that the Chronicle<\I> sold to Stec’s. It now runs a weekly ROP and a few inserts a year in a campaign worth hundreds of thousands of dollars, Neal says.

Sales comes to the creative team to give them a history of the client, then creative does a needs assessment before developing a campaign. They work together like an ad agency, Neal says.

Integrated Marketing: Tampa Tribune<\B>
Newspapers traditionally compete with other media, but the Tampa Tribune<\I> is now taking a cooperative approach to build a stronger audience. Media General, the Tribune’s<\I> parent, also owns WFLA, an NBC affiliate, and operates, a local website. "We brainstorm with all three media and come up with a big idea to present to the client," says Clifford Fewell, a marketing solutions manager who works for all three companies.

When the Lowry Park Zoo planned to open the Wallaroo Station, an Australian theme park for kids, it needed a new branding campaign. "We put together a $50,000 proposal with equal parts newspaper, TV, and dot-com," Fewell says. The elements of the campaign fit together, with full-page newspaper and TV ads promoting a "Name the Mascot" contest that was conducted online.

One could say the multimedia packages take money out of the newspaper budget, but Fewell disagrees. "The idea is to get new and nontraditional revenue from companies that may have never advertised with us. We’ve gotten revenue in for the newspaper that never would have come our way." The company has just hired three salespeople to sell multimedia campaigns. "This is going to be huge," Fewell says. "It’s a very successful venture because a media mix works best."

Expanding Niche Publications: Winston-Salem Journal<\B>
The niche publication business has become huge for newspapers. Many are starting new custom publishing divisions, developing their own niche pubs or distributing client-specific products. The Winston-Salem Journal<\I> is working with the city and county school system on a monthly newsletter it distributes by hand to 28,000 student households. The paper sells advertising in the newsletter to "orthodontists, remedial learning, anything for parents and kids," says William Downey, the Journal’s<\I> ad director.

The paper also works for Bell South, delivering phone books to new residents and sending them New Neighbor<\I>, a tabloid that’s published every six months with advertising from local businesses.

A third Journal niche publication is Homespotter<\I>, which includes four-color photos of homes for sale, with ads from local realtors. "Nontraditional revenue streams are critical to future success," Downey says. "As we develop the niche products, they could be up to 10% of gross revenues for papers."

Enhancing the Content: Cleveland Plain Dealer<\B>
Providing additional specialized content is another way newspapers are trying to build new opportunities for advertisers. Many papers are doing it, including the Cleveland Plain Dealer<\I>, which recently launched Health<\I>, a quarterly magazine that has run once, with a second edition planned for October. The first issue featured 49 advertisers, including many that wouldn’t ordinarily advertise in the paper. "The attempt was not to go after the biggies, but get underneath to advertisers not already running with us, like lasik surgery, plastic surgeons, and smaller hospitals," says ad director Terry Hebert. "The idea is to give them the editorial environment they want." The paper has 400,000 subscribers and sent the magazine to 300,000 of them by selecting certain zip codes. It hasn’t mailed to non-subscribers yet, although it may do so with future issues, Hebert says. It started as a quarterly, but "if it’s successful, it will be more frequent," he says.

Boosting Classifieds: The Denver Post and Rocky Mountain News<\B>
The biggest thorn in newspapers’ sides is classified advertising, with employment the biggest loser in a tight job market. The Denver Newspaper Agency<\I>, publisher of The Denver Post and Rocky Mountain News<\I>, has lost 20% of its classified revenue, but it’s fighting back by offering more to job advertisers: the ability to search its website for prospective candidates. Advertisers go to the site and search by criteria to find candidates, then pay the agency $75 per resumé for the candidates they find. Job ads in the paper also appear online, so the resumé service is part of a complete package for advertisers that includes both. "It will become a viable source for employers," says Rhonda Camino, the agency’s director of recruitment.

Inserts: Madison Newspapers Inc.<\B>
"For the first time, the distribution portion of newspaper revenues has matched display advertising," says Jeff Schroeter, ad director of the Madison (Wis.) Newspapers. The company, which publishes The Capitol Times<\I> and the Wisconsin State Journal<\I>, has succeeded in distributing inserts for advertisers to subscriber and non-subscriber groups.

For local grocers whom Schroeter wouldn’t identify, the company creates and distributes inserts that can be sent to store-card holders and local residents. Inserts that advertise specials are sent out weekly. The company is adept at managing customer and outside lists, which gives clients the opportunity to reach whomever they want. The company also creates the inserts and prints them. Inserts have become a key vehicle for grocers who "don’t run as much ROP as they used to," Schroeter says. "The main use of the paper now is as a distribution vehicle for supplements and inserts."

More Color: The Wall Street Journal<\B>
The Wall Street Journal<\I> first dabbled with color units in the mid-’90s. This past April, it debuted a total design overhaul, which increased its color page count markedly, with almost all of the new color pages designated for advertising. The company invested $225 million in the redesign and expanded the press capacity for color pages. It went from 80 pages a day and eight pages of color to 96 pages a day and 24 of color. Four of the new pages are for editorial, the rest for advertising.

The paper had sold about six pages of color advertising per day at $209,000 per page, but hopes to increase that. In addition, half-page color ads are now being offered. There are now 20 color ad positions every day — 15 full-page and five half-page — compared with six before.

It’s not just the quantity of color pages but the quality that makes a difference at the Journal. The paper’s press features a larger web than most papers, "so the color pops," says vice president general manager Dan Austin. "Newsprint’s challenge is to make reproduction excellent, but we have the capability with our press configuration."

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