Law 10 – Media and Marketers Find New Ways to Mix and Match

Hearst’s strategy here is one to watch. There are good reasons (more on that below) why daily newspapers have opted to go for door number one and get more money from long-time subscribers while making new subs a largely second priority. But they know that’s a two- to three-year strategy. As 10,000 baby boomers turn 65 every single day through 2031, the older-reader market inevitably winnows and must be refreshed with new, paying customers. For daily newspapers, getting younger (yes, younger means under 55) readers to pay is mostly phase two.

So let’s see what Hearst learning, as it leads both newspaper companies in that quest and its fellow magazine chains as well.

There’s a lot to like about the demographics of the digital audience. According to the company’s data, the readers are 10-20 percent more affluent, 10 years younger, and more educated. Wilkes acknowledges that those good demographics may be skewed by early tablet demographics themselves, but they are directionally vital.

Digital advertising is all about technology in 2013, and you’ll see lots of talk of the ad-tech stack, and who owns it. Google, of course, owns much of it, through its successive AdWords/Doubleclick/AdMob and more creations, acquisitions and integrations. Its stack is so efficient that many publishers feel compelled to use it, though they are wary of getting their businesses tied ever more directly to Google — or the Google “Death Star,” as some critics call it.

For most publishers, Google is the classic frenemy. They work with it when they think the advantages outweigh the hazards, even as top publishers build their own programs. In fact, expect to soon see U.S. news publishers transition their Newspaper Consortium partnership with Yahoo into something intended to be broader, something that allows publishers to opt into and out of the ad programs of multiple portals — not just Yahoo — harnessing the ad tech of the day.

Six-month-old Smart Match is one of the FT’s latest innovations to stay “premium.” In brief, the content of an advertisement is matched, dynamically, to that of an article. The technology: semantic targeting of both article content and the FT’s current “ad library” for the best matches on the fly, as compared to standard keyword targeting.

Renamed NewsRight, it was an industry consortium, and here a truism applies: It’s tougher for a consortium — as much aimed at defense than offense — to innovate and adjust quickly. Or, to put it in vaudevillian terms: Dying is easy — making decisions among 29 newspaper companies can be torture.

It formally launched just more than a year ago, in January 2012 (“NewsRight’s potential: New content packages, niche audiences, and revenue”), and the issues surfaced immediately. Let’s count the top three:

1) Its strategy was muddled. Was it primarily a content-protection play, bent on challenging piracy and misuse? Or was it a way to license one of the largest collections of categorized news content? Which way did it want to go? Instead of deciding between the two, it straddled both.
2) In May 2011, seven months before the launch, the board had picked TV veteran David Westin as its first CEO. Formerly head of ABC News, he seemed an odd fit from the beginning. A TV guy in a text world. An analog guy in a digital world.
3) Publishers’ own interests were too tough to balance with the common good.

Design is an important part of these acquisitive moves. One reason these companies have value on the market is that they stand out. It must be said: For the most part, news companies have once again missed a chance to innovate, to make something new of a new platform. Flipboard, Pulse, and Zite each saw the potential of tablet news and magazine feature reading early and set to work to present it harnessing the glowing touchscreen. Now Flipboard 2.0 (build your own magazine) and Zite 2.0 are moving to a next generation. The best newspaper sites have mastered the utilitarian basics, but they hardly break new presentation ground. They also emphasize a single brand, where plainly many readers relish cross-title variety and a bit of serendipity. Innovation on tablet news design has been minimal, and it’s outsiders who largely deserve the credit for it.

One noteworthy exception: AP Mobile. While it lacks the finesse of Flipboard, it delivers a national and local experience, bringing in hundreds of local news feeds into its tablet and smartphone products, and is one of the top news apps downloaded in Apple’s App Store. AP Mobile is a rare case of newspaper cooperation, building a single customer experience; now it’s up to AP to deliver the next-generation mobile experiences.

As the Times Company readies its sale of the Boston Globe (at the Nieman Lab today, I further explore the sale of the Globe and Tribune metro properties), it’s clear the Globe is underperforming the Times. It was down 6.7% in overall revenue, as its reader revenue lost 1.9% and advertising declined 10.1%. Two takeaways here: 1) the new owners of the Globe face a tough challenge in getting back to growth, given those numbers; 2) as the Times emerges as essentially a standalone entity, its own reader revenue strategy looks better. Without the Globe, it was up 8.2% in circulation dollars.
The national ad market movement from print to digital may be faster than the regional one. As Gannett, the largest newspaper company reported yesterday, it announced a 4.5% decline in ads. Gannett’s ad revenue is more heavily tilted to retail advertisers,, whose movement from print to digital is slower than either classifieds (largely gone) and now national. Significantly, Gannett, also reported a 14.5 percent increase in local market circulation revenue.
In sum, paywalls are working, but will they be enough to turn the industry from red ink to black?