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How to save newspapers: with the right strategy, digital editions just may be the way out.

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Virtually all newspapers have websites that look good and have great functionality, so why aren't they all producing acceptable amounts of profit? The question probably should be asked differently, "What do consumers and advertisers expect from newspapers?" Then ask, "What do they expect from the Internet?" The answers are different, but there is overlap. The area of overlap is an area of opportunity for creating a business that is needed by consumers and advertisers, and capable of creating value that translates into profits.

To determine the real value of a website it is useful to measure the total advertiser dollars spent on a website-only ad buy versus those being bundled with a newspaper or distribution ad buy. These stand-alone purchases might give some insight into the job that advertisers are looking for newspaper websites to perform. The amount of money being spent by advertisers on pure website advertising versus the amount of resources being devoted by newspapers to the website might also be useful information.

Newspaper website ventures ought to be competing for Internet dollars, not newspaper dollars. With the amount of resources and talent being put into media Web operations, it seems the media should have invented Craigslist, Facebook, Farmville, or some of the other sites that generate huge amounts of traffic. So, another question is, "Are newspapers trying to convert their current business platform to an Internet model?" If so, then what parts of the model are being considered worthy of conversion? What parts of the media value created by a local or regional newspaper can be converted to the Internet model and retain real value? If viewers have access to all Internet sites, why will they come to a newspaper website?

The newspaper business model vs. the Internet

The key to a newspaper's success has been its ability to deliver an audience of dedicated readers (subscribers) to advertisers. This is best when readers are paid subscribers because it is easier to sell an advertiser on the "wantedness" of the product since people are willing to pay for the publication.

It should be noted that there are niche publications that can command strong advertising commitments without paid subscribers. These publications still have a quantifiable audience that can be delivered to advertisers.

Printed publications have another feature that is attractive: the fixed position of the product. The advertiser's ad is on the same page in all copies of the publication that is delivered to readers.

An additional feature is the serendipity of reading the printed publication, which increases the probability that unintended articles and ads will be read. Unintended readership is valuable to advertisers because it builds awareness that can be capitalized upon when a consumer becomes an active buyer.

Finally, the printed product is delivered periodically to the same household. Thus, advertising in the publication multiple times in different editions increases the probability the ad will be seen through multiple exposures. This ad frequency helps move consumers through the decision-making process.

So, in summary: Print publications are delivered to a definable audience, the ad is certain to reach all readers, the ad is in the same spot in all copies of the product, and the publication is delivered to the same group of readers multiple times.

This differs from the current Internet delivery of the news. First, the audience is composed of individuals who find a site compelling enough to visit. The publisher can't say that a certain number of individuals will receive the news delivered by the Internet. The publisher can only talk about the unique visits to the site and the number of clicks on a story after the fact. That is, it is not delivered by the publisher but is sought by the reader.

Second, the lack of adefinable audience requires the publisher's Internet site to compete with all other Internetsites. To drive readers to a particular site is difficult when there areas many as 150,000,000sites available to anyone with access to the Internet. Identifying an audience for an advertiser becomes problematic. The number of Internet sites will continue to grow, and these sites will find innovative ways to attract audiences. This will continue to fragment the market and make creating specific audiences more difficult.

Third, Internet advertising usually does not have a fixed position for advertisers. Typically, the ads rotate, which further amplifies the difficulty to deliver a definable audience to an advertiser. In other words, it is difficult to say that a viewer will see the advertiser's ad, because the viewer may not be online when the ad is rotated into position.

Fourth, the search mentality of the Internet reduces the serendipity of the reading experience and reduces the probability that unintended articles and ads will be read.

Finally, the lack of an identifiable audience that receives delivery from the publisher makes it more difficult to build advertising frequency, which is valuable to advertisers.

It seems then, the print publication has significant advantages over the Internet for the advertiser even with smaller audiences. The question becomes: How do you compare the cost of advertising between the two mediums? Is the "cost per thousand" still a beneficial selling metric?

The cost of reaching a print customer should be equal to or less than delivering an Internet reader. The cost of reaching an Internet reader will be much higher when the fragmentation of the audience is coupled with the rotation of the ads. The real metric should be the probability of consistently reaching a reader, which is likely to be more expensive for an Internet reader than a print reader.

So how do you convert the print model to the Internet? Consider Richard J.V. Johnson's decision to make the Houston Chronicle a morning publication. He started by converting from an afternoon to an all-day newspaper and gradually eliminated the afternoon edition through attrition (this process took 20 years). I think the same approach might be considered for converting a print newspaper to a digital product. The process should be methodical and would take years to accomplish. The bigger question is how to preserve the definable audience that can be delivered to advertisers in the same way the print product does.

Missed Opportunities

Most publications these days have digital editions. The digital newspaper edition is simply the print edition delivered by the Internet. The pages are in the same order and appear exactly like the print product. The product is delivered to subscribers by e-mail. It differs in appearance and functionality from the newspaper website, which offers rotating ads and delivers news in a different format.

What is surprising is that the digital editions are not robustly marketed. Newspaper marketing seems focused on the print product (decreasingly) and the newspaper's website (increasingly).

It seems that a lot of opportunities are being missed. Digital editions offer the ability to have in digital form a product that has a definable audience, has ads in a fixed position, allows the serendipity of exposure to unintended ads and articles, and can effectively build ad frequency.

The digital edition also offers advantages over the print edition in that subscribers can be offered various sections of the newspaper for different rates. Delivery can be made wherever an e-mail can be received at any time of the day.

Additionally, the digital edition allows counting of e-mails that are opened, which could be a powerful ad sales tool.

Finally, the digital edition allows the ability to launch new sections to digital readers to test the market before investing in or in lieu of the cost of print.

It is up to newspapers to recognize the value of the digital edition and develop a strategy to promote the print/digital product as something different from the newspaper's website. It is then possible to create new revenue streams and improve the overall profitability of the newspaper organization.

Methodical Implementation

Any program designed to roll out a digital product should be well thought out, and implementation should be executed in a manner that provides the ability to evaluate tactics and modify actions. It is likely that any strategy employed to launch digital editions will be evolutionary in nature and will require evaluation and fine-tuning.

Here is an outline of what might be an approach to develop a market in which the print/digital product could be combined with the newspaper's website in a way that builds market share, revenue and profits:

STEP 1:

* Identify an area to market the digital edition.

* For this effort, the current passive marketing approach would be replaced with an aggressive direct mail, telephone, and e-mail campaign.

* Sell the digital subscription if yours is a paid publication; ask for e-mail address "subscriptions" for a free publication. For paid publications, test both regular and discounted rates. The aim here is to build circulation.

* The offer of a digital edition should be in addition to the print product. If the contact is a current subscriber, then the digital issue is free. A subscriber can at any point opt out of delivery of the print edition and use the digital product.

* Work with an e-reader and offer subscribers discounted e-reader pricing for an extended-term subscription.

* Continually work with print subscribers to make certain that if they decide to drop the print edition they keep the digital edition. This should be the responsibility of the newspaper circulation division.

STEP 2:

* Present advertisers in the target area with a program for print/digital advertising.

* Sell the digital edition as another avenue to reach subscribers without increasing ad costs.

* Offer discounted e-readers so advertisers can monitor the product and their ad.

* Offer the ability to upload preprints in the digital edition for a separate fee.

* Let advertisers use video ads in the digital edition for an additional fee. The video would replace the ad that ran in the print edition.

STEP 3:

* After implementing in the first target area, review for program changes.

* Review best digital subscriber pricing and refine.

* Review marketing messages and refine.

* Review advertiser programs and refine.

* Move to the next target area.

STEP 4:

* Keep print/digital product separate from normal website products.

* This creates the marketing of two distinctly different programs that:

** Allows building of larger dedicated audiences

** Allows creation of new revenue streams such as e-preprints, direct marketing to compete with direct mail, micro zoning of editions and the introduction of video ads in a fixed position in a digital product

** Allows the ability to sell print/digital plus website

** Creates a stronger opportunity for advertisers to choose among different options

** Allows the print/digital product to more effectively drive traffic to the website and enhance that revenue model

The print/digital product provides the ability to create different subscriber programs such as allowing subscribers to receive sections of the newspaper for a different price. For example, the comic section, entertainment section, or Sunday preprints can all be offered for a different subscription rate.

Marketing Is Key

As with all new business initiatives, a strong marketing component is critical to successful implementation.

Steps for marketing the digital edition might be as follows:

* Display the link to the digital edition prominently on the website home page. Use a banner display encouraging viewers to visit the digital edition and sign up for a two-week free trial.

* Allow up to four individuals to view the digital edition on the same subscription (pass along readership).

* Collect demographics on households that sign up for the digital edition. Use these demographics to find "look-alikes" for new subscriber campaigns.

* Market to current subscribers as a way to read when they're away from home or for several folks to read the same section at once.

* Market the digital edition to everyone as a "green" initiative.

* Be prepared to offer special low pricing for new subscribers.

* Allow readers to subscribe for various days and even various sections for special rates. There will be those who want just the business, sports, or local sections. This also allows marketing of new products.

* Allow subscribers to mix digital and print delivery. For example, print on Friday, Saturday, and Sunday; digital the remainder of the week.

* Work to build the classified section in the print/digital product and on the website.

* Cross-promote between the digital edition and the website, touting the advantages of each.

* Track e-mails opened (subscription copies received) to determine readership, and use as an ad sales tool.

* Track the value of the strategy. Has ad revenue increased? Has traffic increased? Has profit increased?

In summary, the printed newspaper has advantages for readers and advertisers that are different from an Internet website, and the digital newspaper edition has delivery options that are different and superior to the print product.

By developing a symbiotic relationship between the print and digital editions and the website, newspapers have the ability to create audiences that can be delivered to advertisers. These audiences can become loyal consumers of newspaper products.

Answering the questions and taking the steps above can start your paper down the road of converting to digital. It will be some time before electronic displaces print. But if that is to take place shouldn't it be newspapers that drive the transformation?

Gary W. Randazzo is the founder of GWR Research. He served as a senior executive at the San Francisco Chronicle and Houston Chronicle and has also led small and large businesses as CEO, COO, and CFO.
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Comment:How to save newspapers: with the right strategy, digital editions just may be the way out.
Author:Randazzo, Gary
Publication:Editor & Publisher
Geographic Code:1USA
Date:Apr 1, 2011
Words:2225
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