The Newspaper Industry Today


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How important is local information online? Does the site on which an ad is placed affect consumer opinion of the ad? What sites do consumers rely on for trustworthy, credible information and advertising? Newspaper Web sites! This PowerPoint presentation gives you the full story on the comScore research that NAA commissioned in late 2009.

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  • 1 The Newspaper Industry in 2010   You may be anxious about the newspaper industry these days. It seems like whenever a newspaper person is added to a conversation, the conversation quickly turns to the vitality of the industry. Readers want to know if they will still have their newspaper, and advertisers want to know if they need to be thinking about alternative marketing plans.
  • You should know that the headlines have changed over the past year. The newspaper industry has moved from the D’s to the E’s: From Despair and Demise to Emergence and Evolution!   The real news is that newspapers are effective advertising vehicles today, and our industry is taking appropriate action to ensure that we are effective for you, your clients, and our advertising customers, today and for years to come.
  • Let’s take a few minutes to talk about what is going in newspapers today.
  • 1. Separating the business of newspapers from the business of owning a newspaper. The newspaper business tends to reflect the economy. While our economy has suffered, so have newspapers. In fact, the newspaper business is no different from almost any business: When our customers’ businesses suffer, we suffer. There is no doubt that business in many sectors, which have traditionally advertised in newspapers, have cut back. You read us; and you know how the real estate industry has suffered, the auto industry’s struggles persist, and unemployment is at a 25-year high.  These are the newspaper industry’s big three classified advertising sectors. When they cut back on their advertising, well, we suffer. The same is true from our traditional retailers. Some retailers have struggled and have cut advertising and others have gone out of business, merged, closed stores, or cut back in other ways. All have at least considered, if not substantially cut, all forms of advertising. As a result, newspapers have lost advertising revenue, which makes up nearly 80% of a newspaper’s total revenue. Many newspapers are public companies and revenue losses certainly reduce profitability for our investors. And investors want to own more than merely profitable businesses. They want to own growth businesses. Newspapers are profitable businesses, but frankly are not growth businesses at the moment. Newspapers may not be as profitable as they were a year ago or two years ago. However,
  • a Midwest-based 5 advertising agency studied a major metropolitan newspaper’s pages and could not find one advertiser in the pages of that newspaper with margins as high as that of the newspaper they were advertising in. According to newspaper consultant John Morton, newspaper companies average operating profit margins are clearly down, but they are still above what is typical for most non-media businesses. Morton wrote, “Overall, the beleaguered newspaper industry's financial health has been weakened but remains healthy by most measures. In this environment, that is an achievement.” Yes newspapers may have to settle for lower margins and honestly, a few are actually losing money and maybe a newspaper here or there will close, especially in multiple newspaper markets, ( we suspect that should newspapers close that these closures would likely be in cities where there are multiple newspapers. We do not expect to see any major city with no daily newspaper). You have seen the second newspaper in some cities like Denver and Seattle fold. but newspapers are not sitting still for declining margins. They are cutting costs, merging operations, forming partnerships, reducing staff and news holes. They are getting their proverbial ducks in a row. Newspapers are cutting newsroom staff, true, but they are cutting strategically by reducing duplicative coverage or coverage of news items that have low interest to consumers. Newspapers are re-focusing journalists on high-impact and high-interest journalism.
  • 2. The business of newspapers, part II. Over the past several years, the newspaper industry saw the home-owner equivalent of being upside down in a mortgage: companies owning newspapers expected to pay off debt with advertising dollars that are currently not coming in. Sometimes we forget how many people it takes and how big a capital investment it takes to run a newspaper: high speed presses, rising newsprint costs, smaller but still expensive news gathering and editing staffs are costly.  Adjusting for this debt caused some newspapers to refinance, or even go through bankruptcy to resurface stronger going forward. We are seeing significant progress in the newspaper industry regarding the financial position of the companies owning them. We have seen some newspaper companies who declared bankruptcy a year ago, emerging from it fiscally stronger. More companies should likewise emerge this year. In addition, investors are recognizing the progress newspaper companies have made regarding finances and cost control resulting in higher valuations and increases in stock price. The bottom line has improved.
  • 3. Putting readership in perspective. Here is an interesting tidbit that is getting lost among all the stories written about items one and two:
  • Three quarters of all U.S. adults read a newspaper in print or online in the average week.
  • Scarborough Research reports that nearly 100 million adults read a printed newspaper on an average weekday (and more than 112 million on Sunday).
  • Compare that to 105 million that watched the Super Bowl, 25 million who have viewed American Idol and 65 million who typically watch the late night local news. 58% of 18-24 year olds and 59% of 25-34 year olds read a newspaper in an average week. 61% and 65%, respectively, either read a printed newspaper or visited a newspaper Web site in the past 7 days. So much for the notion that younger people don’t read newspapers. In the past week, nearly three-quarters of all American adults read a newspaper, in print or online. Does that feel like a dying habit?
  • 4. Becoming platform agnostic. Newspapers are expanding the growing list of digital products and niches. Proctor and Gamble realized years ago that consumers want their toothpaste in a variety of ways. From the days of one size and one flavor, they have offered dozens of options to meet consumer’s needs,
  • from pastes to gels to whiteners to breath fresheners etc. Newspapers today are recognizing that their consumers too, enjoy their newspaper in a variety of ways and it is our job to deliver that newspaper to them in whatever form they desire. No longer will you expect to see one newspaper product be all things to all people. So, you see products like Red Eye for young people or Hoy for the Hispanic market, Briefing for non-subscribers etc. Niches and targeting are important to you and to us.
  • I am sure you know that newspaper websites are the no. 1 local Web site in 22 of the top 25 U.S. markets. Newspapers’ digital audience has grown more than 67% since 2005.  And newspaper sites are growing at twice the rate of the internet in general.
  • Newspaper Web sites now reach nearly 40% of all online users in the month
  • Yes, that is 75 million U.S adults turning to newspapers online. That is the largest monthly total ever for newspaper websites.
  • Beyond the websites, you are seeing more newspapers offering mobile applications, some newspapers experimenting with e-readers, newspapers working with printers on personalized editions and more. The bottom line here is that our reader’s needs must be met. We are moving quickly to meet those changing needs.
  • 5. Increasing Local Focus. Newspapers remain at the heart of the local conversation. No one tells consumers more about what is going on in the community than newspapers.
  • Newspapers are inserting themselves as the hub of community information and interactions, providing platforms to share local content, host discussions and
  • provide in-depth community information. A recent Pew Research Center study revealed that most local news flows from newspapers.
  • The Center’s analysis monitored 51 news outlets and discovered that newspapers and their websites provided 61% of the original reporting or fresh information on local stories.
  • Recently, the Columbus Dispatch placed small red icons on every story that was exclusively written by the writers for the paper. 61 stories on Sunday February 14 th . Stories, local stories you can not get anywhere else.
  • This year, comScore researched consumer preferences for local online information. What they found was that newspaper Web sites were preferred by digital consumers for all local information vs. the portals, the specialty sites and all other local sites. 57% of consumers use newspaper sites for local online information. Consumers rated newspaper sites first for trust, credibility and for being most informative. More importantly, consumers report that sites on which ads are placed impact the consumer opinion of those ads. Newspaper sites are the sites on which ads are most trusted and credible.
  • 6. Streamlining operations.   Newspapers are focusing on our core competencies – creative content and local relationships – and we are looking to outsource and streamline non-core functions. One way that the newspaper industry is retooling for a prosperous future is via the utilization of technological advancements in our back-end processes.
  • An obvious example is the implementation of self-service advertising
  • In addition, newspapers are taking a fresh look at win-win partnerships for both cost efficiency and revenue growth.
  • In addition, newspapers are taking a fresh look at win-win partnerships for both cost efficiency and revenue growth. Newspapers are sharing delivery systems with each other. Newspapers are outsourcing preproduction operations and in some cases even printing. We are also seeing newspapers restructure their staffs and their processes to allow for better service to you and simpler faster more accurate ways for ad order processing, ad delivery, credit, billing, e-tearsheets and more. And, while newspapers continue to experiment with days of publication, distribution strategies, pricing, and even formats, one thing remains clear: Large audiences still flock to newspapers.  
  • 7. Bringing targeting to a new level. Traditionally, when we think of targeting locally, we think geo-targeting and targeted preprints in newspapers. Newspapers are continuing to fine tune preprint targeting with the migration toward zip and sub-zip insert targeting, which costs significantly less than direct mail options. However, many newspapers are looking beyond merely zip and sub-zip.
  • Some newspapers are offering targeted inserts to non-subscribers through an opt-in program like Briefing
  • or Sunday Select..Of particular interest in this arena are the cooperative efforts of newspapers to do more things together that provide scalable solutions for advertisers.
  • Sunday Select is a good example of this in the opt-in arena. A joint effort in pre-print optimization (PPO) is another.
  • Of course, inserts are but one method of targeting. Another is niche print products focused on lifestyles and life stages. Again, Q uick,
  • or Fashion like Fashion Washington,
  • Hispanic offerings.
  • And then, largely through the partnerships newspapers are forming with companies such as Yahoo, newspapers are able to offer behavioral targeting options as well. In addition, newspapers are quickly offering online sites that appeal to niche audiences with sites carved out for moms, men, teens, dog lovers, sports enthusiasts and more.
  • 8. Making sense of circulation. During the past year, newspaper circulation numbers have declined, panicking advertisers who believe that these declines herald the demise of consumer usage.
  • While circulation numbers declined at a faster pace this past year, a deeper dive into the data suggests that newspapers purposefully took actions that will result in a more vibrant reader base for advertisers going forward despite this incremental decline. Newspapers dramatically reduced subscriber churn this past year (a 42% drop) retaining the most loyal readers. Newspapers also aggressively raised both single-copy and subscription pricing, placing a greater share of the revenue burden on readers vs. advertisers, and newspapers purposely retrenched on circulation in outlying areas that advertisers valued less. While most believe that the pace of these declines will not slow until year’s end, these actions will make the industry stronger and better able to meet advertiser expectations. By the way, newspapers, working with advertisers, have improved distribution and readership accounting working with ABC to allow for efficient and effective media buys.
  • 9. Engaging consumers. Although it is important that newspapers are read in print or online by nearly three-quarters of American adults, it is even more vital that those readers take action on what they see, especially the advertising. Readership is nice, but engagement is critical. This past year, the industry has conducted research aimed at determining the involvement and actions that reading a newspaper produces. The good news here is that for advertising, newspapers are a destination and not a distraction. 46% of U.S. adults do not like intrusive advertising. But when adults want to shop the ads, newspapers are the primary destination, exceeding all electronic media combined. Advertising remains an integral and desired part of newspaper media content.   For ads, newspaper media is the top choice of consumers in terms of being most believable and trustworthy, of being the preferred way to receive ad information, best for bringing sales to their attention, most valuable for shopping planning and more.
  • 52% of adults reported going to a store as a result of seeing a newspaper ad.
  • 82% of consumers took action on a newspaper ad in the past 30 days. 34% picked up shopping ideas, and 27% tried something for the first time in the past 30 days.
  • And, 36% of adults who claim they did not read a newspaper in the past week admit to using one during that period: Checking local store sales (19%), clipping coupons (15%), checking weather (14%), and local entertainment options (13%) lead the list. Altogether, this unofficial exposure adds another 9 percentage points to newspapers’ reach.   Half of American adults (49%) used newspaper preprint advertising in the previous seven days to plan shopping or for purchasing decisions. Note that this goes beyond reading, which is at 73% compared to active use.   Not quite one-half (45%) of preprint readers say they look through most inserts that come in the newspapers. Others do some sorting in a common Sunday ritual: 25% say they look at inserts from stores they shop plus a few others, and 28% say they only look at inserts from stores they shop regularly.   82% of adults, not just readers, took an action with a newspaper insert in the past 30 days. Those actions include clipping coupons, price comparisons, sharing with others and even carrying the insert to the store.   Keeping preprints beyond the day of delivery increases the odds of using them since there are more opportunities for reading. On average, newspaper preprint readers keep inserts they are interested in an average of 4.4 days.  
  • 10. Advertising option optimization . These days, when it comes to offering you advertising solutions that work better for you, newspapers are truly and literally thinking outside the box.
  • The days of square ads have gone
  • and shapes assist the attention gaining
  • of your message. Fixed positions including front of section advertising, content adjacency, versioning, and in test today even individualized ads. The world is changing and so are we. Newspapers are no longer a one trick pony when it comes to advertising options.
  • Consider poly bag ads, post it notes, we prints, spadeas, 46, 47, 48, 49 shingle spadeas,
  • scented ads 50 and even taste it ads. Color in newspaper is now pervasive. Event marketing, database marketing, e-mail blasts, e-newsletters, ad tags, glow in the dark, belly bands, temporary tattoos and way more.
  • According to Google, 56% of the people who searched onlinefor a product did so after seeing a print newspaper ad. Another new development has been the way that newspapers are measuring both their audiences and advertising effectiveness.
  • Research coming from RAM or IRI measure ad effectiveness. More frequent and comprehensive data collection and survey approaches allow for you to be more analytical in evaluating how we deliver.
  • One last point. Anyone who thinks that newspapers have an “audience problem” need only look at the recent numbers. Despite all the doom and gloom you read about, the just released Scarborough Research data points out that 44% of U.S. adults read the average daily newspaper and that number increases to just under 50% when you add the newspaper’s website. 49% read the average Sunday paper.  That average number of newspaper readers exceeds those who bought a lottery ticket in the past month, those who even own a DVR, and nearly doubles the number of U.S. adults who typically watch the network nightly news.  
  • Anyone who thinks that newspapers have an “audience problem” need only look at the recent numbers.  Nearly 100 million adults read the newspaper on an average weekday, compared to 68 million that watched the World Series, 47 million that visited in the past month and 61 million that watch any reality TV show.   This is all hardly an indication of an industry in the throes of death.  On the contrary, our audience – the true measurement of the health of a medium – is strong and getting stronger.  
  • I guess you can’t believe everything you read in the newspaper after all. These days, to be successful, you must be quick; you must be flexible and, just in case, you should wear a helmet!
  • The Newspaper Industry Today

    1. 1. The Newspaper Industry Today 2010
    2. 3. Newspaper Vitality Ten Points
    3. 4. The Business of Newspapers The Business of Owning Newspapers vs.
    4. 5. “ Huh? It says Newspapers are still a profitable business.”
    5. 6. The Business of Newspapers The Business of Owning Newspapers vs.
    6. 7. Putting Readership in Perspective
    7. 8. <ul><li>168 million adults read </li></ul>a newspaper in print or online in the past 7 days. –– Scarborough Research, 2009
    8. 9. 112 million adults read a printed newspaper on Sunday –– Scarborough Research, 2009
    9. 10. 105 million adults watch the Super Bowl –– Nielsen, 2010
    10. 11. Becoming Platform Agnostic
    11. 13. Newspaper Web sites are in 22 of the top 25 markets number 1 –– comScore, 2009
    12. 14. 37% of all Internet users –– Nielsen, 2010 visited a newspaper Web site in the past month.
    13. 15. 75 million unique visitors –– Nielsen, 2010 to a newspaper Web site last month
    14. 17. Increasing Local Focus
    15. 20. Newspapers provide 61% of original fresh reporting –– Pew Research Center, 2009
    16. 22. 57% of Consumers use newspaper Web sites for local online information –– comScore, 2009
    17. 23. Streamlining Operations
    18. 28. Targeting to a New Level
    19. 36. Circulation Sense
    20. 38. Engaging Consumers
    21. 39. 52% of adults went to a store as a result of a newspaper ad –– MORI, 2009
    22. 40. 82% of Adults took action with a newspaper insert in the past 30 days –– MORI, 2009
    23. 41. 36% of non-readers “used” a newspaper in the past week –– MORI, 2009
    24. 42. Advertising Option Optimization
    25. 51. either researched online or purchased a product after seeing a newspaper ad 56% of respondents –– Google Study, 2008
    26. 52. RAM Study on Effectiveness Macy’s “I Believe” Holiday Campaign
    27. 53. Audience Problem?
    28. 54. –– Nielsen, 2009 to a newspaper Web site last month 75 million unique visitors
    29. 55. –– Scarborough Research, 2009 on an average weekday 100 million adults read a newspaper 68 million watch the World Series 61 million watch any reality TV series 47 million visit
    30. 56. More People Read a Newspaper Than Own a Pet