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March 29, 2024

News Ad Production Moves to Pune

Important Details: Ads, ads, ads. That’s much of what people in the news industry talk about these days, as paid circulation and subscription revenues dwindle and ad revenues are challenged on several fronts by a variety of competitors. But there’s another side of ads: the cost side, which is less high profile. It’s a side though that is garnering attention this year, as news publishers scrutinize every major expense line of their businesses. All of those newspaper display ads have to be put together, and newspapers do much of that work. Price/item ads, on everything from appliances and gutters to guns and autos, require assembly. Hundreds of thousands of ads a year produced by thousands of weeklies and dailies.

How much does it cost to put them together? No one’s quite sure, but estimates run from $400 million to $750 million a year, for U.S. papers. One estimate says that 2.5% of newspaper employees are engaged full-time in putting together ads.

Now, at least three companies are busy pitching publishers, picking up a few contracts, and beginning to move ad production out of newspaper buildings to……Bangalore and greater Delhi. The pitch: we’ll save you about 40% of your ad-building costs.

"If you’re publishing in Wyoming, it would be less than 40%, but if you are in New York City, if we can’t save you more than that, we’re doing something wrong," Robert Berkeley, CEO of ExpressKCS, told Outsell. ExpressKCS recently won a contract from MediaNews for some of its Northern California properties, including the Contra Costa Times. ExpressKCS is a London-based company, with 30 years of experience in India-based preproduction work, with European news clients including News International, a News Corporation company based in London, and El Sol News in the Canary Islands. It has long specialized in higher-end ad work for such agencies as Publicis.

A newer company with U.S. newspaper roots is also causing a stir among many of the largest daily publishers as they trial its wares. "At the end of the day, it doesn’t matter to the client where the ad was built, but how well it represents the brand," says Todd Brownrout, chief marketing officer of 2AdPro. Brownrout is a seasoned ad executive, having run the advertising operations for both the Los Angeles Times and Philadelphia Inquirer. His CTO partner is Pervez Sikora, who served as director of ad technology for the Times. Brownrout says a half-dozen pilots are underway, as publishers check out two essential results: 1) quick turnaround; 2) work quality.  "We can beat the turnaround [of newspaper-based ad production] on any one ad. It’s not about building one ad faster; it’s about building all ads faster."

Both ExpressKCS and 2AdPro also build online ads. Those two companies and Affinity Express, another offshore-oriented pre-preproduction company, say that the newspaper revenue squeeze is forcing publishers to examine such offshoring. The challenge the offshorers face with newspaper ad production is similar to the other publisher needs — but with faster turnaround. Other issues include managing follow-the-sun workflow, having the proper technology toolset, flexibly using diverse design styles, finding creative staff, and understanding "cultural" issues. Those cultural issues include understanding local place names like Poughkeepsie rather than Pune and brands like Penneys rather than Pantaloon Retail.

In Outsell’s Opinion: Outsell expects to see a major ramping up of ad creation outsourcing this year and next. There’s a learning curve in outsourcing — whether done down the street or half the globe away — and that curve has been mastered in many other industries. For news publishers, the challenges to successful outsourcing are threefold:

  • Culture: Newspapers are a legendarily vertically integrated enterprise, doing all the work from ad selling and newsgathering to distribution.
  • Timeliness: Daily changes in ads require tighter timelines.
  • Unions: The Newspaper Guild has of course already contested the loss of its member jobs.

Outsell believes each of these three challenges will be met, and quickly, because the cost efficiencies are irresistible. Already news companies have moved call centers overseas for circulation, finance, and other business lines.

The most intriguing question is how much outsourcing and offshoring will be applied to the guts of the business: newsgathering. Reuters caused a stir when it started producing global financial news out of India. KCSExpress says it is already doing some editorial layout work for newspaper and magazines.

In the US, local newspapers, of course, will find it more difficult to outsource, as they try to get increasingly local. The quality of local information is what will win — or lose — the day on the web and local knowledge will be crucial. So outsourcing in local newsgathering is problematic. However, gathering data, such as calendar and events information, and massaging it into great user experiences on desktops, laptops and cell phones can be done overseas. We therefore expect to see a greater delineation of tasks and workflow as papers from the Wall Street Journal to the L.A. Times to the Columbus Dispatch come to grips with our brave new, the-sun-never-sets world.