Do Marketers Still Need News Brands?
First published at AdAge.com, March 11, 2010
Let’s take a quick, one-question quiz together.
Marketers need news brands:
A. less than before
B. about the same
C. more than before
First, bonus points to anyone who answered D: “Who the heck knows?”
I’m a news industry analyst and veteran of the newspaper industry, a witness to its slow and now rapid decline, which is now shared by all legacy news media, including broadcast. All the metrics are headed in the same direction: less revenue, far fewer reporters and editors, small profits that prevent much cash to be reinvested in the business and less community clout.
The U.S. print newspaper industry long received about 80% of its revenue from advertising, with circulation making up the rest. As ad revenue has declined 20%-25% since the recession, ad revenue now contributes close to 75% of total income. Publishers facing the heavy fog of uncertainty are budgeting largely flat in a recovery year, a sign they see permanent downturn in their fortunes.
Circulation revenue looks like it will stay flat for a while, as daily newspaper publishers mark up subscription and single-copy prices by 20% and more, making the old mass newspaper a niche for older, monied readers as the web becomes mass.
What they hope they see: stability. What may seem like a plateau, however, may be a ledge.
That stability, of course, assumes an ad world that’s stabilizing as well. In fact, publishers now must acknowledge a lot of hard truths while they hold out hope for a platform-switch rebound.
Let’s go back to the quiz and look at answer A: “less than before.”
If the recent past is a prologue, this seems like the right answer. News publishers have seen their print editions slide in circulation and readership. Where once — back just to 1998 — 45% of U.S. households received a daily paper, now print penetration approaches 30% in many cities. Publishers have seen their digital businesses grow slowly — contributing no more than 15% of their total revenues.
They’ve found themselves disconnected from brand-oriented readers and their content is aggregated on the web. Against what is now clearly infinite digital inventory, they’ve tried to position their products as “premium” yet still find themselves chasing lower and lower ad rates. Meanwhile, web users have made Facebook and Twitter their hangouts, spending hours there monthly, while spending no more than 10 to 15 minutes monthly on news sites.
“Less than before” acknowledges that, in at least the first round of web news, it’s the big four of Google, Yahoo, MSN and AOL that have won, while news brands pick up the crumbs. The old argument that paid circulation is better than free circulation (or controlled circulation) has lost out against digital targeting and measurability that seems to improve daily.
“Less than before” plainly recognizes that marketers are spending much money outside of traditional ad channels. For instance, according to recent Outsell research, marketers are now spending $65 billion a year on their own direct digital marketing, a sum that has tripled in three years.
In this world, news brands have waned in their reach, their meaning and their importance in assembling audiences.
Let’s jump to answer C: “more than before.” News publishers make one old and one new argument here. The old one: In the “blooming, buzzing confusion” of the digital world, as philosopher William James put it a century ago, marketers and their buyers need the reliability, the cachet and the known-quantity audience that brands like newspapers and magazines offer. Against digital tools, that appears to be more wishful thinking than strategy.
The new one, and one that we should now watch carefully: Forget the first-generation web news-reading experience (who really liked it anyhow?); get ready for mass tabletized, mobile reading.
Already, the Sports Illustrated tablet demo on YouTube has drawn more than 800,000 views. Note that all the tablet talk so far is around single titles, not aggregations of news content. Talk to publishers, and here’s what you hear: This is our chance to take back the web. This is our chance to offer marketers unprecedented ways to reach our readers, with new immersive, multi-touch, trackable capabilities.
So C is the best answer for those who believe that Humpty Dumpty can be put back on that wall.
Of course, the tablet — if it can hold such near-Biblical powers of resurrection — is at least a year away from becoming a mass platform with advertising infrastructure in place to use it.
Then B, “about the same,” is really a non-answer. Clearly, we’ve seen an unprecedented rupture in the decades-long partnership of advertising and news brands. Our only question now, as we sit a month away from the iPad launch, is whether the Apple device and its brethren will really be a next-generation game-changer, possibly renewing back-to-the-future advertising/news brands partnerships.
Further, to the complicating question of major platform change, what will be the roles of the device makers and the package assemblers, from Apple and Amazon to Comcast and AT&T? Everyone wants to “own” the customers, as marketers have to find the right landlords to rent them.
We’ll soon get to answer the quiz in real-time.
David Link, founder and creative director of Wonderfactory, which produced the SI demo and is working with Time Inc. on a couple of rollouts, says his company will have three or four apps ready for the iPad launch, all for media companies. He says that the company is in discussion with a half dozen newspaper companies, about half in the U.S. and half in Europe. Mr. Link is demoing tablet ad products for “cable, package good and auto” companies, including such nifty features as letting readers test-drive cars — with their fingers. Consider the rollouts as demos of small and large principles — and new tests of what marketer/news brand relationships mean in the second (mostly) digital decade of the century.