Heard While Outsell-ing: NAA and NEXPO This Week
What We’re Seeing: In the wake of McClatchy’s purchase of Knight Ridder, the Newspaper Association of America (NAA) held its annual conference in Chicago this week. Taking place concurrently was NEXPO, its annual tech trade show. Outsell’s CEO Anthea Stratigos and Affiliate Analyst Ken Doctor were on hand and note that while the McClatchy/Knight Ridder deal wasn’t formally on the program, it was on the lips of many in both places. Clearly, it has sent a new signal that business as usual will be hard to maintain. A few highlights:
- YourHub is a community social networking product that may have legs. Launched last May by both Denver papers (Rocky Mountain News, Denver Post), it now draws 1,400 community posts and 800 community calendar entries per week. Outsell believes that it has a number of ingredients for success that could lead to a critical mass of local use and potentially a national, interconnected network. If so, the emerging benefits are many: 1) regaining a sense of community essentiality; 2) free, user-generated, sticky content; 3) new “reverse-published” geo-targeted print tabs, for which 90 percent of the content comes from the community – importantly, these should be plus-business, generating new ads (and revenue) from new hyper-local advertisers; and 4) potential cost reductions in labor to write community items and collect events. YourHub is syndicated to 20 newspapers, largely owned by Scripps and MediaNews. While it has no national ad sales network yet, one is on the horizon and could be a great model for the new Real Cities Network that McClatchy’s is now re-thinking.
- AP Chairman Burl Osborne: “There is a large elephant in our living room,” noting the multiple dangers to the newspaper trade. “It may take a Manhattan Project to get us working together,” acknowledging that news companies’ separate attempts at transforming themselves are falling short. AP is positioning itself as a central leadership point of transition for its newspaper owner/members. That’s a position that New Century Network, TKG (Tribune/KnightRidder/Gannett), Real Cities, and others have tried. For AP to succeed, it will have to get the vision right and gain its publishers’ confidence that it will execute efficiently.
- NAA recently launched a $50 million ad campaign: “Newspaper Advertising: A Destination, Not A Distraction.” Its graphic theme is more old-timey than we’d like to see, still too turn-of-the-last-century, but it makes the point that newspapers’ overall reach is what advertisers should sign up for. Paid + Free + Niche + Internet (often in that order) was a creed we heard over and over again. It’s a great campaign to reach advertisers (many of whom read newspapers), and it’s running in a lot of newspapers. In just three days, we saw it in at least four major papers.
- Interesting research out of the Toronto Star, one of the most innovative dailies in testing new products. The Star’s Sandy McLeod made the point that free dailies are here to stay and that paid dailies had better either put out their own or get a piece of existing ones, before that competition takes another chunk out of their hides. “The [acquisition] cost per order of free is zero. The cost per order of paid is $42.” Outsell believes the warning here is clear: "free" print combined intelligently with the Web is a cornerstone for the future.
- Barbara Cohen of Kannon Consulting said she has to explain market segmentation at a more basic level to the newspaper industry than others. "The market is not a blob. You can’t please all of the people all of the time," she told a well-attended session. She also pointed to online banking is an example news companies should think about, saying that 50 percent of those online have tried online banking. “The standard is not in your newspaper. It’s your bank.”
- Outgoing NAA Chairman Jay Smith, head of Cox Communications, bluntly: “Stop whining. Start winning. The world changed a lot and we changed a little. It’s okay to acknowledge our missteps and move on, but learn and grow as you do.” Well said.
In Outsell’s Opinion: NAA is clearly in a state of flux, represented well on the floor of its sister NEXPO exhibition. Model printing press units shared space with software companies proclaiming their ability to launch newspaper companies into the future. We continue to believe that the industry needs to face head-on two major areas of transformation: 1) where it is going to grow substantial new revenue lines to replace income lost to classifieds and retail competitors; 2) how it will strategically cut costs as it makes a transition to dual-platform publishing. On the growth side, we would have liked to see a greater urgency around serving customers who don’t want to pay for content – on the desktop/laptop, on mobile, and in free papers. On the cost side, several presentations addressed the impact of oil prices and global warming, but there was little discussion about the implications of these issues on the economy (and thus advertisers’ purse strings) or the impact of the physical costs of producing and distributing papers. Publishers did not openly discuss new publishing models that will reduce costs and improve their competitive standing.
These challenges, which come when revenues are declining, can add up to a perfect storm that may force others along the route taken by Knight Ridder. (Already shareholders are more publicly pushing Tribune on maximizing its shareholder value.)
Major changes are underway, and we applaud them. Our biggest concern is that collectively those changes may be too little, too late. It’s noteworthy that at a time when publishers are revenue-compromised, they are so focused on their existing ad or paid subscription or transactional models that we don’t see them thinking of their offerings as products that could be put through additional revenue channels. We hope to see publishers focus more on the lifetime value of news and ways to monetize it through multiple distribution channels. The reading public’s appetite for news and information is only growing, fed by near-universal access. We believe newspapers aren’t going away, but that news companies need – quickly – to find a new equilibrium, balancing costs, revenues, and that elusive public service.