Shaping the Future of the Newspaper STRATEGY REPORT ANALYSING STRATEGIC DEVELOPMENTS AND OPPORTUNITIES IN THE PRESS INDUSTRY Volume 9 N°5 JUNE 2010 © WAN-IFRA 9.5 New prospects for revenue- making and money-saving Million abound. Innovative newspaper companies have seized the opportunities Dollar and have earned millions Strategies for in incremental revenue Newspaper Companies

www.futureofthenewspaper.com All the strategy reports are available to WAN-IFRA members and subscribers at the SFN Web site Shaping the Future of the Newspaper

www.wan-ifra.org A WORLD ASSOCIATION OF NEWSPAPERS AND NEWS PUBLISHERS PROJECT, SUPPORTED BY WORLD LEADING BUSINESS PARTNERS

www.atex.com/ THE LEADING SUPPLIER OF SOLUTIONS AND SERVICES FOR DIGITAL, ADVERTISING, CONTENT MANAGEMENT AND SUBSCRIPTION APPLICATIONS.

www.man-roland.com/en/p0001/index.jsp A LEADING COMPANY FOR NEWSPAPER PRODUCTION SYSTEMS

www.telenor.com/ THE LEADING NORWEGIAN TELECOMMUNICATIONS, IT AND MEDIA GROUP

www.norskeskog.com/ A WORLD LEADING PRODUCER OF NEWSPRINT AND MAGAZINE PAPER, WITH 18 PAPER MILLS AROUND THE WORLD

© WORLD ASSOCIATION OF NEWSPAPERS AND NEWS PUBLISHERS, 2010 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

TABLE OF CONTENTS

Executive Summary 5 1 The SMART Advertising Department 7 Tools and Training 8 Audience Focus 10 New Product Development 12 Behavioural Targeting 15 Yield Management 16 2 Strategies for Advertising Departments 19 Online advertising networks 19 Local Advertising Strategy 23 Multimedia and Nontraditional Campaigns 25 Power of Newspaper Campaigns Targeted to Advertising Agencies 29 3 Subscriptions, Content and Circulation Revenue 31 Audience Research and Database Marketing 31 Price Elasticity 33 Charging for E-editions 35 Loyalty Clubs 37 Content Subscriptions Online 42 News Outlets Trying Paid Models 44 4 Efficiencies and Cuts 47 Job Cuts 50 5 Outsourcing 59 The Role of Outsourcing as a Money-Saver 59 Outsourcing Companies Discuss How They Can Save You Money 62 Conclusion 69 Cost-cutting 70

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4 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

Executive Summary

“The profitability that newspapers sustained in its own set of challenges and opportunities. this last century was an anomaly. Newspapers Each strategy is illustrated by case studies were not profitable for most of their lives. And around the world. as Warren Buffett would say, ‘when it was Experts say revenue-making and cuts should be profitable, it was a toll booth,’” Katharine balanced carefully. “It’s not about only cutting Weymouth, publisher of the Washington Post, the cost side, it’s about going to go back to said at a recent Poynter Institute gathering. “It rethinking and reinventing the business model, was a brilliant model. If you were an advertiser operations and manufacturing models, and and you wanted to reach the local audience, asking fundamental questions. How do we you had to advertise in the newspaper. So our distribute the newspaper? Is there a more classified section – for those of us local efficient model? How are our sales teams newspapers – were terrific and brought us in performing? Are they going to use rate sheets, hundreds of millions of dollars.” or is their entire focus on collaborative Newspaper industry experts say that the days selling?” said Sandy Nelson, CEO of Aperio of unbridled profitability with print advertising International, a consulting firm in Washington, are gone forever. Most newspaper publishers D.C., that helps companies rethink their around the world are seeking out new revenue businesses. It has worked with companies models and new business practices that will including the Orange County Register and Apple. sustain their businesses and pay for quality In Chapter 1, we explore five key elements of journalism well into the future. the “SMART” Advertising Department: The “Million Dollar Strategies for Newspapers •Tools & Training Companies” report focuses on three core areas •Consultative Sales Approach of opportunity to regain millions of dollars in •Yield Management this difficult media ecosystem: advertising, •Audience Focus circulation and cost-cutting. Each strategy has •New Product Development

5 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

In order to make millions more in incremental traditional costs of paper, ink, printing and revenue, newspaper companies must employ distribution top the list of tactics that an aggressive “Print Plus” strategy; one that publishers will implement in the next year. focuses on maximising print revenues and Of 500 publisher and top executive adding a focus on multiple digital revenue respondents from 84 countries, materials such streams now and for the future. as paper (48 percent), printing (45 percent), “A good media company should have in five administration (42 percent) and distribution years, on the revenue side, probably 30 percent (33 percent) ranked as the top four priorities of the revenue coming from digital, if not 35 for cuts in the next year. Content generation, percent,” said Moritz Wuttke, founder of the key deliverable of journalists, ranked a NextMedia Initiative and former CEO of close fifth, at 29 percent, followed by office PubliGroupe in Asia. On the net profit side space (27 percent), information technology (16 (after costs of goods sold, printing costs, etc.) percent) and content syndication (14 percent). “the gross profit contribution from digital, will Chapter 5 delves deeply into outsourcing contribute 80 percent and print will contribute functions across the value chain, including 20 percent of the total gross profit,” he added. editorial editing and production, advertising In Chapter 2, we hone in on several strategies production, accounting, IT, pre-press and that make millions of dollars for newspaper printing, administration, distribution and more. companies around the world: According to the Future & Change Study, 17 percent of the 500 newspaper executive •Online Advertising Networks respondents said they plan to outsource •Multimedia Advertising Campaigns functions in their newspaper company to •Hyper Local Advertising Strategies achieve greater efficiency and cost savings in •Power of Print focus the next year. Chapter 3 focuses on monetizing content, The potential for making and saving millions through subscription and pricing strategies, of dollars across the value chain of newspaper online content monetization and loyalty clubs. companies is immense, and is limited only by The underpinning to the most successful and the imagination. According to a recent survey innovative content strategies is audience of 1,500 chief executives by IBM’s Institute research and database marketing targeting for for Business Value, creativity is the most analysis, campaigns and product development important leadership competency for purposes. The strategy allows newspaper successful businesses in the future. companies to expand audience penetration Respondents said that success requires fresh with new products and platforms, target thinking and continuous innovation at all subscription offers more successfully, levels of the organisation. A strategy of engender loyalty and reduce churn. creative thinking should disrupt the status quo, Chapter 4 is focused on efficiencies and disrupt existing business models, and disrupt cutbacks. Saving millions of dollars through organisational paralysis, according to the budget cuts has become a top priority strategy study. among newspaper companies around the world. Among the tactics to save money include reduction of employees, consolidation of offices and printing plants, integration of multiple media staff members, consolidation of sub-editing and production units, shrinkage of newspaper widths and number of sections, reduction of publishing on certain days of the week, and so on. According to the 2010 World Newspaper Future & Change Study, conducted by the World Association of Newspapers and News Publishers (WAN-IFRA)’s Shaping the Future of the Newspaper Project, saving money on

6 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

1. The SMART Advertising Department

Most newspaper companies around the world revenue, newspaper companies must employ typically derive about half of their revenues an aggressive “Print Plus” strategy; one that from advertising and half from circulation. focuses on maximising print revenues and Even in the United States, where advertising adding a focus on multiple digital revenue traditionally represented two-thirds or three- streams now and for the future. quarters of their revenues, newspapers are “A good media company should have in five gravitating toward a 50-50 revenue split as years, on the revenue side, probably 30 percent advertising revenue diminishes and publishers of the revenue coming from digital, if not 35 raise subscription prices. percent,” said Moritz Wuttke, founder of Most advertising departments still earn 90 NextMedia Initiative and former CEO of percent of their revenues from print, despite PubliGroupe in Asia. On the net profit side the swirling cyclical and structural changes (after costs of goods sold, printing costs, etc.) affecting traditional advertising businesses. “the gross profit contribution from digital, will The other 10 percent is earned from digital contribute 80 percent and print will contribute business. As the development of print revenues 20 percent of the total gross profit,” he added. has proven more challenging over time, the In this age of transition and extreme change, opportunity for digital revenues has become what are the characteristics of the most more lucrative. Industry experts say newspaper successful media company advertising companies need to push digital advertising departments? What are the best practices? sales in online and mobile platforms as the What are the most lucrative business print platform becomes weakened. Some development schemes? What are the most suggest pushing their sales staffs to produce effective sales techniques? These and other one-third or more of their revenues from best characteristics of ad departments have digital in the next five years. been studied by the Shaping the Future of the In order to make millions more in incremental Newspaper project. The far-reaching study

7 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER determined that a healthy mix of audience Tools and Training focus in new product development content, a consultative sales approach toward advertisers Advertising sales training is among the most and ad agencies, careful adherence to yield important training and development priorities management and constant and appropriate for newspaper companies worldwide, and is as development of tools and training important as journalist training, according to opportunities represent the strategy going the WAN-IFRA’s 2009 World Newspaper forward for media company ad departments. Future & Change Study. Further, more than half of the respondents said Characteristics of SMART that in 2010 from 2009, they expect to increase Advertising Departments new business development and innovation training (68.3 percent), advertising sales training (57.3 percent) and e-business Yield Training development training (64.1 percent). Management & Tools Among the most popular forms of sales training is cross-platform sales training for formerly print-only and online-only sales Constant Innovation people. Many newspaper company sales New Product Consultative departments around the world are integrating Development Sales Approach print and Web sales units, and requiring single- media sales people to learn how to sell multi-media packages. Oftentimes, cross- Audience media sales houses employ both cross-trained Focus sales people and single-media specialists. For

Source: Shaping the Future of the Newspaper 2010 example, the Houston Chronicle and © WAN-IFRA 2010 Chron.com in the United States employs 75 cross-trained “generalists” and 15 online-only The underlying characteristic for successful specialist sales professionals. “SMART” advertising departments around the world has been a culture of constant For advertising customers purchasing large innovation and a tireless effort to change along campaigns, the Chronicle typically sends a with the fast-transforming marketplace, all generalist and an online-only specialist to amidst the tides of the evermore demanding understand the customer’s needs, and to advertisers and audience members. develop the multimedia campaign.

What are your training and development priorities for the next 12 months? (All respondents) N Multimedia skills for journalists 314 64.74

Advertising sales training 275 56.70

Management and leadership development 230 47.42

Journalism skills training 218 44.95

New business development skills 186 for editorial teams 38.35

e-Commerce development training 162 33.40

Change management 150 30.93

Legal & ethical knowledge 44 9.07

Count 0 50 100 150 200 250 300 350 Note: Base = 485 Source: 2010 World Newspaper Future & Change Study, WAN-IFRA, University of Central Lancashire and Norwegian School of Manageme nt © WAN-IFRA 2009

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Areas for Possible Development Please check those that your company is expected to prioritize over the next 12 months (All respondents) N More diverse workforce (age. gender. ethnicity) 52 10.61 Competencies of the board 61 12.45

Develop distribution partnerships 110 22.45 Develop technology/ technological partnerships 131 26.73 Develop content partnerhips 147 30.00

Develop a good working environment 181 36.94

Management and leader development 197 40.20 Encourage understanding and cooperation between different departments 229 46.73 Convergence of multimedia operations 251 51.22

Develop journalists' skills 270 55.10

Develop skills of sales people 282 57.55

Count 0 50 100 150 200 250 300 Note: Base = 490 © WAN-IFRA 2009 Source: 2010 World Newspaper Future & Change Study, WAN-IFRA, University of Central Lancashire, and Norwegian School of Managem ent

CONSULTATIVE SALES APPROACH for a year and a half, providing an array of print and digital products for their thousands Traditionally, newspapers have sold of advertising customers in Houston and advertisements based on the products they across Texas. have to offer – in other words, an internally focused sales process. The consultative sales The majority of campaigns are “audience approach focuses on the client, the advertiser, packages,” or campaigns focused on the needs and his or her business needs. If the client of the advertiser. The sales representatives wants to introduce a new product, highlight a conduct a “needs analysis” of the advertiser, grand opening, improve brand recognition, or and then offer an advertising campaign reach a certain demographic, then newspaper package targeted to audiences most suited to sales people can construct a campaign their product or service. including a host of publishing elements to “We really sell in an audience-based way, and achieve success for the advertiser. not in a product-based way. If it’s an advertiser “The first thing is to identify what customers who wants to reach men in the age range that need. This is very important. After identifying have a propensity to play golf, then we say what they need, it’s very easy to find some here are three options for you. Using our sales solutions for that. During these crisis years, it’s funnel, we place the products in the funnels not easy to demand budgets from the client. So and give the advertiser price points they may you should come up with good ideas, you want. That may include an ad in the paper, should come up with convincing ideas, in geo-targeting, a Facebook page, search – a vast order to demand budgets. That’s why we array of products to deliver what an advertiser should focus more on customers’ needs. That is trying to achieve,” said Stephen Weis, means we should we must create specific and executive vice president of the Houston special projects in order to get revenues. We Chronicle. should come up with multimedia ideas in order During the campaign, the sales team monitors to get better solutions,” said Jackie Ventom, the performance of the print and digital sales trainer from the Byrne Partnership in the advertising, and adjusts the campaign for United Kingdom. maximum performance. For instance, if search The Houston Chronicle and Chron.com in the is not performing well, sales people would United States have had an “agency” strategy shift the ad dollars to hit their performance

9 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER goals, he said. “We’re 100 percent transparent Singapore Press Holdings is a firm believer in based on performance.” the “consultative sales approach.” Geoff Tan, head of marketing for SPH, said the idea, the Some ways to track performance include concept and the solution for the customer is of putting an 800 number on a print or Web ad, or prime importance in the multimedia company a unique URL or a text code for more sales strategy. information, he said. “Don’t sell boxes, sell solutions. Sell ideas. Don’t Weis said that although it’s difficult to quantify sell inventory,” he said. Part of the company’s how many more dollars the customer-focused philosophy on consultative selling comes from selling brings in, he is sure the techniques give “Solution Selling. Creating Buyers in Difficult them the edge against their competitors in Selling Markets,” by Michael T. Bosworth. sales numbers and retention. Part of the solutions approach at SPH is based “Does it work? That’s the million dollar on creating “Print Plus” packages, or print, question about selling in agency way. The plus online and TV campaigns. “Don’t [be] answer is, it’s difficult. We find out as much selling your products indiscriminately. about [the] advertiser, and put an audience Remember, one size does not fit all.” package together, based on an array of products. We do a lot of product training, so you can do a better job of needs for clients, to Audience Focus put a media campaign together, it’s challenging for sure,” he said. In addition to becoming more customer-focused toward advertisers, news media companies “Our go-to market strategy and philosophy is, around the world are also becoming more we represent ourselves as a more of a full focused on their reader/viewer/user audiences media services organisation, from the on behalf of their advertisers and their editorial standpoint of what we own: the Houston departments. Hundreds of media companies are Chronicle, chron.com, and we represent third ramping up their audience research in order to party products like Yahoo and Zillow. Where develop new products in print and digital, and we feel our products don’t fulfill needs for our also to offer their advertisers more insight into customers, we act like an agency and put forth their own customers. the best portfolio of products for whatever the advertiser wants. One thing we don’t do is The Daily Telegraph in London has created six sling products.” segments of readers that are attractive to

The Telegraph’s 13 Touchpoints

E-mail Editorial Rewards

Specials Commerce

Supplements Magazines

TCUK Newspapers

Telegraph TV Sections

Mobile Call Centre

Source: Telegraph Media Group, 2010 © WAN-IFRA 2010

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The Telegraph’s Audience Segments

Work Hard Play Hard Family Focused Living the Dream TMG 13% TMG 12% TMG 23% Average age 27 Average age 41 Average age 42 Young and driven individuals Slightly older adults Upmarket and successful living life at a fast pace who are settling down professionals with broad horizons many moving into a life of routine and a penchant and family responsibility for enjoying themselves

Established Elite Platinum Spenders Discerning Indulgers TMG 21% TMG 24% TMG 8% Average age 56 Average age 62 Average age 54 Upstanding settled citizens, Older affluent individuals, Middle-aged and older married, middle-aged quality-driven and with the free individuals who enjoy and with a successful career time and money to enjoy shopping and like a bargain that has provided for them the good things in life (and their children) Source: Telegraph Media Group, 2010 © WAN-IFRA 2010 advertisers, including “Work Hard Play Hard,” The Sacramento Bee in California offers as an a group made up of young, active people with added value to advertisers a detailed profile of large disposable incomes with an average age their customers’ demographics and geographic of 27; “Platinum Spenders,” who have plenty locations, which assists them in creating more of free time, spending money and average age successful advertising campaigns that target of 62 years of age; and “Living the Dream,” the right people, on the right channel, at the upmarket professionals who live large and are right time, in the right geography. an average of 42 years old. For example, the Bee uses databasing The Telegraph also segments campaigns technology that pinpoints where advertisers’ according to 13 “touchpoints,” including customers live and profiles their incomes, newspaper, mobile, Telegraph TV, call centre consumer habits and media habits. The Bee’s and more. advertising department combines the database

Sacramento Bee Internet and Mobile Advertisements The targeted Silverado Nursery campaign

Source: Sacramento Bee, 2009 © WAN-IFRA 2009

11 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

Silverado Nursery Ad Campaign Segments Three demographic segments show a variety of media behaviour that informs media channel targeting. The highest usages are highlighted in red.

Affluence Under 45, No Kids 25-54, Children 45+, No Children Lifestage Group Y1 Y2 Y3 F1 F2 F3 F4 M1 M2 M3 M4 Total population (000) 195K 189K 40K 78K 213K 191K 49K 182K 244K 140K 67K Siverado company (%) 23.1% 9.4% 2.2% 11.9% 13.0% 7.8% 2.7% 9.7% 9.2% 6.0% 4.9% Siverado usage index 163 68 30 210 143 70 40 188 100 76 52

Weekly print audience 103 107 40 120 107 71 38 150 129 104 75 Sacbee.com 133 152 37 134 148 79 51 114 87 63 44 Weekly combined audience 106 118 41 114 111 71 36 146 126 99 71

Text messaging 130 110 43 121 123 108 108 97 71 72 64 Internet usage 124 107 67 129 113 98 72 114 97 75 72 E-mail usage 118 101 76 118 111 100 65 111 97 73 71 Yahoo! 124 107 81 131 121 88 84 112 89 81 71

Source: Sacramento Bee, 2009 © WAN-IFRA 2009 “In the future, we will definitely combine online and offline… and also mobile. These three are so important. Online and offline works together well, in my point of view, and mobile is very important; in Turkey, [there are] 65 million mobile users and just approximately 60 or 65 percent of them under [age] 25… That shows that mobile is going to grow very fast and mobile is going be very important in the media. So in the next five years, we’ll definitely combine online, offline and mobile in advertising campaigns,” said Altug Acar, deputy head of advertising at Hürriyet in Istanbul. knowledge of their customers with non- subscribers to form a robust database from New Product Development which to create a targeted campaign. Longtime The most innovative sales departments spend advertising customer Silverado Nursery and resources understanding the variety of the Bee’s advertising department cooperated to audiences in their marketplace, and understand create a targeted campaign to Silverado’s best which audiences are valuable to advertisers. customers (see demographic breakdown graphic) and plotted the customers on a map of Sacramento. This allowed the Bee to deliver New Product Development print advertising and online advertising to Top challenges for newspaper companies people in the database who had given both from 2008-2012 physical addresses and online registration 1 Product development – market and advertising identification information. 2 Stable and reliable distribution The result of the targeted campaign was that 3 Product development – editorial the print, Web and mobile advertising 4 Employee motivation campaign was the most successful ever in the 5 Develop employee competence history of the home landscaping business. 6 Improve integration between different media platform in your company Emphasis on target audiences using specific 7 Top customer service media channels also is an area ripe for 8 Focus on profitability in all parts of the organisation advertising exploitation, including mobile and 9 Rapid implmentation of changes iPad advertising campaigns, with an added 10 Develop a good working environment dimension of audience segments that have a greater propensity for using these devices. Source: Erik Wilberg Management AS, 2008 © WAN-IFRA 2009

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The best sales departments also study the owned subsidiary of Gannett Corp., America’s potential of emerging platforms, and largest newspaper chain, anchored by USA experiment with publishing to a variety of Today, the most circulated newspaper in the audiences on new platforms, such as mobile United States. and e-readers. PointRoll has been developing iPad campaigns, According to the WAN-IFRA’s 2010 World particularly for USA Today, and expects the Newspaper Future & Change Study, new company’s iPad advertising business to grow business development and innovation is the quickly with some of the world’s largest No. 1 investment in training development for advertisers including Ford motor company, the global newspaper respondents for the next retail outlet Target, Unilever household products three Some of the hottest new products include maker and hotel company Marriott. Courtyard development for iPhones and iPads, according by Marriott is sponsoring the USA Today iPad to the survey. Anecdotally, hundreds of media app for the first three months for an undisclosed companies worldwide are developing iPad sum, which entitles them to an exclusive content strategies, and are seeking ways to advertising campaign on the device on the create revenue models for the iPad. No. 1 most downloaded free news app in the world. But Marriott did not agree to bundle Some of the hottest new products include the iPad ads with a “Print Plus” package. product development for iPhones and iPads, according to the survey. Anecdotally, dozens of “For us it probably makes sense to have some media companies are developing iPad content flexibility with that,” Gini Gladstone, senior strategies, and are seeking ways to create director for Courtyard marketing, told Advertising revenue models for the iPad. Age. “Because we’re buying less print and more digital over time, it would be difficult for Enter PointRoll, a rich media advertising us to say ‘Let’s bundle those together.’” agency in San Francisco and Philadelphia, specialising in Internet, smartphone and iPad However, prices for iPad advertising could be advertising campaigns. PointRoll is a wholly sold at a premium.

PointRoll iPad, iPhone ad campaigns

Source: PointRoll 2010 © WAN-IFRA 2010

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“I actually think publishers should charge way you have – so I think in the next five years, the more for ads on the iPad than in print,” Gene digital is the future,” said Theo Blanco, vice Liebel, partner at the New York digital agency president of sales and marketing for the NTM Huge, which works with both publishers and Media Group, Sweden. marketers, told Advertising Age. “You’ve got PAYING FOR CONTENT ON THE IPAD roughly the same format as print but you’ve got way more measurement, way more targeting As Apple’s iPad continues to be launched in and the ability for cost-per-click tracking and countries around the world, the debate over even transactions that can happen.” whether the device will be the saviour of the newspaper industry continues. Most agree the PointRoll creates immersive, interactive ads iPad is no silver bullet, but rather part of the with videos and other creative provided from overall picture and one of many important the advertisers, according to Max Mead, revenue streams for the future. director of business development for PointRoll. The agency also works with As digital platforms grow and evolve, the iPad agencies to ensure the advertising campaign is is likely a stepping stone to the future, and properly tagged and reported. ignoring ways to showcase content and charge Jan Rezab, a social media and mobile services for it could be a fatal flaw. expert from Europe, says within five years, “I think the iPad is really delivering what we digital video and interactive advertising will be were all waiting for. It’s a device that enables key. “More and more people are watching TV you to visualize content in a very emotional via the Internet. Many people around me, and way. It is an easy-to-use device. The price is a many even much younger people in school, are mass market price,” Mathias Döpfner, head of watching Hulu in the U.S., they’re watching German publisher Axel Springer, recently told YouTube, and they perceive that as television. U.S. journalist Charlie Rose. They don’t perceive their standard television, they go to the Internet and download and “And, by the way, there are a lot of things that stream video. So, I believe, basically, digital have to develop if I’m saying we have to pray will eat a lot of that pie of advertising too... and thank Steve Jobs that he established this and it will become bigger and raise a lot.” device and that he most likely saved the whole journalistic industry. At the same time, we IPADS DELIVER ELUSIVE ‘ENGAGEMENT’ should sit down and start renegotiation with FACTOR the Apple people about, for example, the With two million iPads sold in America, and revenue share,” he said. “I mean, 30 percent upward of 10 million expected to be sold for Apple, it’s too much. But the competition worldwide by the end of 2010, the potential to among the devices will help. There is a reach wider audiences are growing for Microsoft device, there will be a Google advertisers. PointRoll calls the iPad the device, there will be the Amazon Kindle. That ultimate device for gaming and working on the will help.” go, which has implications for media Research from business and technology companies investment in the revolutionary analyst firm Ovum found that consumers’ medium. adoption of the iPad will likely be slow, and The touch screen makes the iPad highly publishers would be wise to take time in interactive, just at the time when advertisers developing products and workflows for the are demanding “engagement” in their iPad as one of many in a wide range of digital advertisements. Mobility and the large-screen and non-digital readers, according to Ovum’s format represent an excellent hybrid between report, “Reformatting News & Magazine smartphones and a PC experience. The high- Media.” resolution screen renders sharp, attractive still Meanwhile, the report also noted that, as and video images. strange as it may sound, part of publishers’ “[In five years] I would hope to give all my iPad strategy should be an investment in print: readers an iPad, and just from one day to the “The value of the presence of the masthead next to give them an iPad, and say ‘this is your brand at the newsstand and a print audience is new newspaper.’ Cut out all the printing costs [a] powerful tool for surfacing applications and cut out all the distribution costs, and here and promoting other premium digital services.”

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The iPad is unique because it creates a new Behavioural Targeting market segment in the gap between laptops and mobiles, one that many publishers believe Another key digital advertising strategy is gives newspapers a new chance to charge for behavioural targeting. “One of the hottest areas their content. The device also adds a new level of growth is how we do a better job of of interactivity, and enables publishers to optimising the dollars we have, one of them charge advertisers more for a more enriched being behavioural targeting. We are the top advertising experience. performer in selling Yahoo BT,” said Stephen Weis, executive vice president of the Houston Charging for content is still in the Chronicle. “We see a lift in performance when experimental phase, and is expected to change an advertiser uses BT. It’s better than typical and grow as more publishers release iPad apps. run of site or a content-matching (contextual) Below is a sampling of who’s charging what. play.” More than 800 newspapers in the United States iPad App Prices belong to the Yahoo! Newspaper Consortium. Part of the partnership is the use of Yahoo!’s The New York Times: Free technology engine, which enables the delivery The Wall Street Journal: $17.29 per month of behaviourally targeted ads. If a user is Popular Science Magazine: $4.99 identified for searching for a certain brand of Die Welt: Free automobile across a series of Web sites in The Australian: $4.99 per month partnership with the consortium, for example, Reuters News Pro: Free the technology will deliver advertising to that Eurosport for iPad: Free user that may inform him or her about an offer El Nuevo Día: Free applicable to the search. AP News: Free The algorithm can create behavioural USA Today for iPad: Free segments, such as auto buyer, furniture The Guardian Eyewitnesses: Free shopper, vacation researcher and a host of The Times of London: £9.99 per month about 400 segments, Weis said. Part of the Terra News per iPad: Free strength of the partnership is that Yahoo! Time Magazine: Free reaches 75 percent to 80 percent of the users in BBC News: Free each marketplace, so oftentimes the “buckets” *Note: Prices do not include other subscription of segments are large enough to serve targeted deals. Dollar prices are in U.S. dollars. advertising.

Oregonian’s Daily and Targeted Publication Circulation and Crossover Total Weekday Circulation 315,212

Exclusive Shared Exclusive Oregonian Audience Targeted Product 269,381 45,832 74,168 (69%) (12%) (19%)

Total Targeted Product Recipients 120,000 Source: The Oregonian © WAN-IFRA Shaping the Future of the Newspaper 2010

15 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

“When we go out and sign up an auto dealer, Yield Management we know they have sold autos off of those campaigns, we also know we have a good What is yield and why is it an important retention rate. We have one of the lowest element of profitable sales departments? Yield single digit cancelation for advertisers. We do is the net amount paid for an advertisement, or sell a ton of behavioural ads…more than run the actual price achieved against the rate card. of site ads,” he said. Yield is calculated by dividing the cost of the ad by the unit of volume selected. It measures The ads are still sold on a cost per thousand variance against published or standard basis, about two to three times the rate of run- advertising rates. of-site ads. Upward of 50 percent of those advertisers buying display campaigns online Ultimately, tracking yield trends in a sales also buy behaviourally targeted ads. organisation over time will red flag negative trends, and will point to opportunities for rate NEW PRODUCTS IN PRINT card optimisation, thus adding potentially The Oregonian newspaper in the United States millions of dollars of revenues to the bottom line. identified an underserved market in upscale At the heart of the yield and pricing issue is young adults with high disposable income, a fundamental change in the newspaper who do not subscribe to the newspaper. business. The Digital Revolution has caused The target market was very likely to use their a seismic shift in the media landscape, and has disposable incomes for wining and dining at challenged newspapers to rethink their entire local establishments, so the Oregonian advertising strategy. How do we change pricing developed a magazine called MIX. It is home as we incorporate digital product offerings? delivered to the demographic and focuses on How do we make money from digital? hip new restaurants and drinking A young newspaper salesperson asked his establishments in and around Portland, Oregon. then-boss, “Which of these is my priority, Currently the newspaper and targeted volume, revenue or yield?” Surprised at the magazine products at the Oregonian have a 12 naiveté of the question, the managing director percent crossover audience. MIX is profitable replied, “Clearly, I want all three and that’s a and reaches more than 100,000 new audience basic requirement.” members. The magazine provides a variety of Yield knowledge and execution are new advertising options for restaurants and fundamental requirements in every newspaper drinking establishments in print and online. sales person’s toolbox. Fundamental to S r k e D . e e e s r L b n n n

Oregonian’s Usership Breakdown of Young Target Groups i i i i d d r H z z z n R r c

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z h M M M e < 6 c S S o e e

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a - - l s e d d s e s s m g G G G t m n n r a b t n n d d i o a u a & & & i e o o o i i e u H H H D W P O H H G W K K S N M Segment N 03- Movers & Shakers X X X 20,505 119 149 106 108 136 120 119 117 82 95 130 98 122 04- Young Digerati X X 12,711 116 150 86 99 139 100 93 116 143 103 100 113 115 05- Executive Suites X X 7,166 120 140 105 97 135 110 115 120 116 83 85 117 117 11- God’s Country X X 11,299 118 143 115 117 129 122 126 118 95 94 100 95 121 12- Brite Lites, Li’l City X 2,167 115 122 114 111 119 120 113 113 96 79 85 126 109 16- Bohemian Mix X 4,819 92 117 72 82 123 76 64 111 97 80 62 119 106 19- Home Sweet Home X 29,058 109 114 113 103 113 113 109 119 97 87 77 120 105 22- Young Inluentials 17,505 107 102 95 99 118 82 81 122 110 82 39 120 98 23- Greenbelt Sports X 10,881 113 118 121 129 117 116 120 116 103 96 70 99 105 24- Up-and-Comers 1,840 107 100 99 111 117 104 98 115 142 105 48 141 96 25- Country Casuals X 4,287 114 105 125 134 97 116 121 118 78 86 80 94 97

Source: The Oregonian, Claritas © WAN-IFRA Shaping the Future of the Newspaper 2010

16 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES achieving the business plan is an thereof. Regardless, “Need” clearly has an understanding of the revenue mix and the impact on price and yield. Increased sales impact of price on profit. Some categories of effort implies a lower margin of need on the advertising allow automatic ad-system control advertisers’ part, while the reverse is true when of the price, while other categories allow the sales staff exerts decreased effort. “negotiating wiggle room,” that is, the ability A tried-and-true strategy to increase ad of the sales people to negotiate price in order volumes is to lower prices, which can to secure volume or frequency or sometimes encourage more ads from both existing and just the ad sale. potential customers. Some argue that lower It is this ability inbuilt in many market cultures prices are needed to raise market share. But the to vary the price that makes yield a vital tool economics of the newspaper business, where for building profit. The impact of even a small increased volume means increased costs, make variation of price can have dramatic results on this strategy dangerous. For one thing, it the business. creates lower yields. For another, discounting might leak into the existing customer base. The development of digital revenues presents a problem for some newspaper companies. Yield management, meanwhile, can have a Newspaper yields tend to be higher than other major impact on the profitability of the media, in particular, broadcast and digital newspaper company. Even junior salespeople media. The reasons for this are straightforward can make significant contributions to the bottom and linked to the relative costs of the media, line, if they are well-trained in how to negotiate economies of scale and the success of the higher yields from even the toughest advertisers. advertising they carry. The proliferation of choice available to Fixed costs are an impediment to a company’s advertisers, whether they are local, regional or tactical agility in times of cyclical, or national, perhaps begs the question of how structural changes in market demand as the realistic a yield strategy it is. After all, basic newspaper industry has experienced since the economics correlates the available supply with vast economic crisis. cost, so surely a decline in yields is inevitable in the current environment where media Newspapers are unrivalled as providers of choice, or fragmentation, proliferates. news and content, which puts them in a prime position to exploit digital revenue We can track yield and make comparisons opportunities. But the model for digital between the rate card and the yield, between revenue consists of drawing high volumes of one issue and others, one month or year and relatively low-yield ads, very different from the previous one, one month and the same the high volume, relatively high yield month in previous years, one business category advertising of traditional newspapers. with another, one advertiser within that category with another, one salesperson selling MANAGING YIELD:MARGIN OF NEED the same product mix with another. AND VOLUME DEVELOPMENT Over time, comparing like with like creates a The number of advertisers in any market is picture of discounting practices. It also lets finite. The number of media options is management look at why there might be constantly increasing. The ability to grow variations. revenue by developing new business may be limited. Such limits may present thorny Tracking yield over time shows the impact of challenges to established newspapers. They discounts, given for any reason on the price of will likely know most of the advertisers that advertising. It can be used to identify: benefit from newspaper advertising. Gaining •The effects of competition on price new revenue sources demands hard work, in a •The relative negotiating abilities of sales ratio called “the Margin of Need.” When that people and teams margin increases, sales efforts decline, •The impact of offers and discounting schemes meaning that sales staff must work much over time harder to get the sale. •The net contribution of categories of The Margin of Need can be rooted in either advertising and even individual advertisers actual economic reality or the perception •The short and longer term market price trends

17 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

18 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

2. Strategies for Advertising Departments

A variety of strategies can inspire newspaper affiliates, and having interactive media also company advertising departments to earn makes networks more powerful. millions of dollars in incremental revenues, Because ads are served separately from including online advertising networks, local content in an ad network, they allow different advertising focus and multimedia campaigns. people viewing the same content to see different ads. This creates opportunities for companies to deliver ads across multiple sites Online advertising networks (part of an ad network), while also enabling The issue of ad networks has become a sticky companies that serve ads on many sites to subject for many publishers who are trying to know more about users than a publisher decide when and how to use them correctly. delivering ads only on its own site, he said. When done right, these networks can provide REMNANTS the scale needed to effectively target ads, and provide an important revenue stream. When A publisher’s approach to ad networks makes a they’re used incorrectly, publishers say they do big difference when it comes to revenue nothing but bring down the cost of online generation, Gordon said. advertising. The first networks filled “remnant” ad space. Ad networks have been called “an enormous These types of networks “deliver many disruption,” said Rich Gordon, of impressions to advertisers for very little cost,” Northwestern University’s Media Management he said. For some sites this is an important Center. However, when media owners are revenue stream, while for others it’s “pocket brought together under one umbrella, they can money.” leverage their size to make a more powerful Following the first ad networks selling advertising sale. This can include a national remnant ad space came Google AdSense, network of newspapers, TV networks and which matched advertising to page content,

19 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

“an easy technology and business relationship owned by Tribune Co., Hearst Corp., Gannett for site owners to manage,” and one that also Co., Inc. and The New York Times. “collects [a] huge amount of data on user “We don’t use the word ‘network’ – it’s a bad behaviour.” word right now, and has a connotation of low As ad networks evolve, publishers are quality inventory and low CPMs. But wondering if they opened up their content to fundamentally we’re an ad network, but with networks too quickly, as many voice concerns quality inventory and high CPMs,” said (now over whether these networks devalue their ad former) CEO Andy Ellenthal, quadrantONE. inventory, Gordon said. The Interactive Advertising Bureau, for example, has warned sites to “not trade our assets like pork bellies.” However, Gordon cautioned that publishers should care about networks, mainly because networks enable targeting, which gets advertisers to pay more. Networks enable “a shift away from demographics and environment – and toward receptivity to [a] message as determined by previous behaviour (e.g. ‘researched mid-size SUVs’).” The large scale of networks also gives content creators “enough data to identify [a] target audience” and “enough target audience to serve ads to.” To create the best ad network strategy for your company, a publisher must know the “What I encounter when working with following, Gordon said: publishers is that local advertisers are willing • Know your site to pay a higher rate than national advertisers, –Understanding where traffic and ad demand and making that connection between the two is is low or high will clarify choices for joining that their needs are very different. We define or forming a network. ad sizes across the entire sites, and they’re going to flow in real-time. That might • Know current customers represent between 5 percent and 25 percent of –Who will buy more from you? online ad impressions. They push it to me –To whom are you advantaged in selling? because I need to see it in order to sell it. It –Who really isn’t likely to be a direct sales becomes important when it comes down to opportunity – given your size, focus, targeting – it’s all about scale. You can’t do geography, etc. worthwhile targeting without scale. You need • Focus on yield and inventory mass reach. It’s audience on top of high –Make “yield management” part of your quality content. The audience is different on culture: Know your RPM for every page, social networking than they are on the every impression and every category – you’ll newspaper site, for example,” he said. need this information to negotiate As of February 2010, quadrantONE’s unique intelligently with potential ad network visitors totalled 63 million, with page views of partners. 1.5 billion, according to comScore. –Create premium advertising opportunities for advertisers willing to pay high CPMs “There are a lot of local users that can be –Think long and hard before adding ad aggregated. The dirty little secret is that on positions. In other words, “create solutions, major metropolitan sites, 40 percent of their not inventory.” ads come from out of the market. Some advertisers just want sites in that geographic QUADRANTONE: NATIONAL REACH, footprint. The more granular you get, the more LOCAL RELEVANCY you reduce your audience and what you can U.S. ad network quadrantONE works with 500 sell, but the higher the price should go. It starts Web sites across the United States, 80 percent to get interesting in contextual and of which are newspaper sites, such as those behavioural. You want scale, because if we’re

20 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES talking about small businesses, for example, economics; gain full visibility on performance that’s a valuable audience to UPS, Federal data; and own your consumer data, he said. Express, Wachovia, etc. More generic stuff is Welch gave the example of the Martha Stewart less valuable. Scale is everything – the more company, which is part of the Adify network. you see, the more you can find those users.” “It’s a big company, but their own site wasn’t ADIFY doing that well, especially compared to such a Founded in 2005 because users started leaving large brand name. We handpicked blogs, large sites for more niche sites that are too which were put under the MS brand. These small to have their own sales forces, Adify small blogs love being associated with such a aims to leverage its sales force and brand to large brand name. This is now called Martha’s aggregate via a network. Circle – it includes 60 sites. Doing this increased O&O reach by five times,” he said. Lief Welch, senior vice president of Content Monetization and Strategy, said he has been The value proposition for the smaller sites is confronted with the opinion that “ad networks revenue through brand advertisers, content are bad” many times. His response? access, content distribution, traffic and fame/credibility. “Networks are good...if they are yours,” he said. “They serve a very valuable purpose, and Building your own ad network means first that is to aggregate audiences for sites that are analysing yourself to find out where you rank, too small. The problem is that they’re and where you should be. Step two is deciding maximising their own margin – they’re in it for “Who and how big?” by asking the following themselves. They’re optimising their own questions, Welch said: margin, while giving everyone else just enough • What are the categories and niche categories? to keep them in the network.” • What’s reach? How fragmented? If you are the network, then you can do five • How much audience overlap? important things: control your brand; control • How many high quality sites? key relationships (advertisers, publishers, • How big is niche? Should you care? influential consumers, etc.); control Finally, establish your profit and loss, he said. OPA: AD NETWORKS NOT EFFECTIVE An Online Publishers Association report, “Improving Ad Performance Online,” released in April 2010, showed that ads on quality, original content sites were generally more effective than portals, ad networks and the Web in terms of raising awareness, creating message association, generating brand favourability and driving purchase intent. In fact, ad networks “provide advertisers no significant impact on purchase intent,” the report stated. The quality, original content sites the OPA compared networks and portals to were OPA member sites, such those within Hearst Corporation, Bloomberg.com, The Huffington Post, GuardianAmerica, CNN.com, The New York Times, Reuters, Time Inc., National Geographic, Gannett Digital Network, Wall Street Journal Digital, Washington Post Digital and many others. “Ad network performance has declined to a point where they provide no significant increase in purchase intent to advertisers.

21 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

Ad Effectiveness Deltas by Site Category

Aided brand Online ad Message Brand Purchase awareness awareness association favourability intent A OPA (member sites) 3.1 5.1 3.3 2.2 1.7 B MarketNorms 2.1 4.3 2.3 1.3 1.1 C Portals 2.1 4.5 1.8 1.0 0.9 D Ad networks 0.9 3.0 1.7 0.5 0.1 Notes: Ad effectiveness deltas in red are statistically insignificant (i.e., there is no lift) © WAN-IFRA 2010 A, B, C, D indicate statistically significant differance between deltas at .90 CL Source: “Improving Ad Performance Online,” report, Online Publishers Association, April 2010, using data from Dynamic Logic's M arketNorms campaigns over last 3 years through Q4 2009 – OPA N=1,764 campaigns; MN=2,387; Portals=1,119; Ad networks=502

As a result of this insignificance, the average OPA member sites’ ad effectiveness brand campaign may not achieve greater brand consistently outperform other sites – including lift by advertising on an ad network,” Pam portals and ad networks: Horan, president of the OPA, stated in a press • These content sites generally do a better job release announcing the report. of integrating advertising into professional For an ad to be effective, “environment matters video, as well as rich media and interactive ads. – and content sites help advertisers ‘move the • Content site ad effectiveness spans product needle,’” the OPA report stated, noting that: categories

Ad Effectiveness: Financial Services 5 OPA MarketNorms Portals Ad networks 4 4.3 3.8 3 3.3 2.9 2.5 2 2.4 2.3 2 1.8 1 1.3 1.3 1.3 0.6 1.2 1.2 1.1 0 0.4 -0.4 0.1 0 Aided brand Online ad Message Brand Purchase awareness awareness association favourability intent -1 Notes: Ad effectiveness deltas in red are statistically insignificant (i.e., there is no lift) © WAN-IFRA 2010 Source: “Improving Ad Performance Online,” report, Online Publishers Association, April 2010, using data from Dynamic Logic's M arketNorms campaigns over last 3 years through Q4 2009 – OPA N=223; MN=253; Portals=146; Ad networks=64

Ad Effectiveness: Technology 3.5 3.3 OPA MarketNorms Portals Ad networks 3.0 3.1 3.1

2.7 2.8 2.5 2.6 2.6

2.0 2.1 2.0 1.5 1.7 1.7 1.5 1.4 1.3 1.2 1.0 1.1 0.9 1.1 1.0 0.5 0.4

0 Aided brand Online ad Message Brand Purchase awareness awareness association favourability intent Notes: Ad effectiveness deltas in red are statistically insignificant (i.e., there is no lift) © WAN-IFRA 2010 Source: “Improving Ad Performance Online,” report, Online Publishers Association, April 2010, using data from Dynamic Logic's M arketNorms campaigns over last 3 years through Q4 2009 – OPA N=223; MN=253; Portals=146; Ad networks=64

22 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

• Ad networks’ purchase intent impact is not statistically significant By industry, purchase intent, brand favourability and message association on ad networks was insignificant for financial services. Purchase intent and favourability on ad networks for technology was also insignificant, the study found.

Local Advertising Strategy Local advertising has always been the domain of local newspapers. When a local advertiser wants to publicise a grand opening, a seasonal The papers, called Nase^ Adresa, are distributed sale, build a brand or tout this week’s specials, from a central location through the Czech Post. local newspapers are the medium of choice. The weekly tabloid is projected to reach 230 Now local online websites also are an hyperlocal weeklies with a circulation of increasingly popular place for local advertisers 500,000 and 700 hyperlocal Web sites in the to promote their local goods and services. future, covering 14 regions and 75 districts in the Czech Republic, which has a population of According to Borrell Associates, an American more than 10 million. media research firm, local online advertising spend will continue to climb, as documented As the penetration of the newspaper grows for a decade in Borrell’s “What Websites across the country, so too are revenues from

Earn” study in the United States and Canada. circulation, advertising and, er, coffee. The ^

^ company derives 18 percent of its profit from

NASE ADRESA ^ coffee sales at their dozens of Nase Adresa Czech Republic coffee shops across the Czech Republic. In May 2009, PPF, a finance company based in The coffee shops represent a deeper strategy, the Czech Republic, launched seven hyperlocal that is, to become the hub of local discussion weeklies and 23 Web sites in three regions of and a meeting place for citizens in a multitude the country, covering about 4 percent of the of hamlets. Town officials and citizens meet country’s households. As of mid-2010, PPF is and discuss issues important to them. Content printing more than 30,000 copies of a 24 to 32 published in the newspapers and online are page tabloid at one offset printing plant in hyperlocal, granular content only focused on Brno, southeast of Prague. surrounding areas.

Local Online Advertising Growth in the U.S. US$ billion 18 16 15.9 15.5 14 15.1 15.3 13.3 12 12.6 10 8 8.7 6 5.6 4 4.2 2 2.1 0 2004 2005 2006 2007 2008 2009p 2010f 2011f 2012f 2013f Source: : Borrell Associates Inc., 2009 © WAN-IFRA 2010

23 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

Cafés at the Heart of Naše Adresa’s Hyperlocal Strategy

Teacher Fireman

Mayor Local artist

Jarda Sas ˇ a Daniel Martina

Local Handicapped entrepreneurs

Trainer Doctor football player Source: PPF Naše Adresa, 2010 © WAN-IFRA 2010

PPF earns 60 percent of its profit from well be closed,” he said. “The most profitable advertising and subscriptions to the weekly part is the café. There are no doors. Anyone print editions, 8 percent from online-activities, can go talk with reporters. We know that the 18 percent from cafés and 14 percent from the thinking of the editorial team is very close to training programmes at Futuroom in Prague. that of their readers.” Part of the hyperlocal strategy is to launch a local office in each district, featuring a news café to foster community spirit and create a central gathering space, with the newspaper at the centre of the conversation. Each district would feature a café, while Prague would have 14 cafés. In addition, PPF launched the Futuroom, the hub newsroom based in Prague where production and editing occurs for the weekly hyperlocal newspapers. The Futuroom headquarters is designed to earn money, while the news cafés are designed to cover costs. The rent for the news cafés is completely covered by café income. This means cafés can be located in the town centre, in the middle of community life, said PPF CEO Roman Gallo. “If we didn’t have the cafés, the project may as

24 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

IMPRESA Multimedia Campaign Spot Live

Print Web

Source: IMPRESA, 2010 © WAN-IFRA 2010

Multimedia and Nontraditional with a real estate operator in exchange for Campaigns advertising. Impresa made Û450,000 gross and Û320,000 profit from calls and texts from IMPRESA consumers wanting to win the apartment. Lisbon, Portugal Impresa managing director of classifieds Geert van Hassel tells how they constructed the Worst case scenario: Real estate sales have campaign, and why they will build many more plummeted, advertising sales are down and of these campaigns in the future: consumers are reluctant to buy houses. These problems are plaguing countries around the “The situation was that real estate and its world. But in Portugal, the mega-multimedia promoters have been sinking since 2006, and on house Impresa, with TV, radio, newspapers, the ground in 2008. Without cash to publicise, magazines, mobile and Web operations, came it’s even more difficult to sell their big, stagnated up with a clever solution to bridge all of the stock, and no more access to additional credit,” challenges: They created a multimedia he said. Meanwhile, “consumers are afraid of campaign with TV, Web, mobile and newspaper how the future might get ugly if they lose their to give away an apartment, which was swapped job, so they are reluctant to buy new houses.

25 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

Worse, banks discourage loans for housing SINGAPORE PRESS HOLDINGS because of lack of liquidity, asset trouble and Singapore uncertainties in near future. For us, it’s very difficult to sell publicity in print and Web, as Singapore Press Holdings, the largest multimedia the cash has dried up.” company on the island of five million inhabitants, In response to the downturn of the economy owns 18 newspaper titles, 20 radio stations, nine and real estate markets in Portugal, van free-to-air TV stations, 132 paid TV channels, Hassel’s department developed a concept for a four Internet service providers, 44 major cross-media advertising campaign that magazines and many more media companies. combined print, TV and Web that was about The total print run of more than 1 million 150 percent of the net value of the real estate copies per day provides a reach of 81 percent property offered by a real estate promoter, on of adults 15+. Cross media selling condition that they could also have some space opportunities include a multitude of newspaper on the pages, Web and TV spots. Since the Web sites, social media sites, Internet apartment and the advertising represented a classifieds, search, mobile services, radio and barter agreement, the revenue must come from more. Each of the media represent a portion of another source, he said. the “media funnel.” Each media inspire Van Hassel made a deal with the local telecom behaviours among consumers, which range to participate in a revenue share through an from awareness to interest to desire to action. “Interactive Voice Response” promotion. IVR An example of a cross media campaign is is similar to SMS, but with voice. Impresa SPH’s Australia travel advertising campaign, marketers created a contest drawing for the which ran in print, TV and online. The 12- bartered apartment. Every IVR call cost the week, sponsored advertorial ran in the travel caller 60 cents, plus 12 cents VAT. After section of the Singapore Straits Times, SPH’s commission to the telecom operator, Impresa largest newspaper, and featured a reader earned 48 cents per call. contest with a trip to Australia as the prize. The campaign ran more than three weeks, and The TV ran live spots from Australia and the consisted of saturated TV, Internet, magazine Web featured a microsite dedicated to and newspaper advertising. They added below- Australia travel. The campaign proceeds were the-line daytime and prime time programme divided among media outlets, and produced discussion about the campaign. Over the favourable results for the client, the Australian campaign, more than 940,000 calls from more Tourism Board. The campaign won the “Best than half a million participants resulted in in Cross Media Advertising” award for the Û450,000 gross and Û320,000 net revenue. Asia Media Awards in 2009. The revenues were distributed among the Consumer engagement is a key mantra among participating channels and titles involved in the advertisers and publishers as media channels multimedia campaign. proliferate and consumer audiences fragment. The campaign included: Singapore Press Holdings has created a strategy to target key audiences in order to • 43 full-page print insertions in 17 titles over reach audiences more successfully for three weeks advertisers. Its targeted audiences create • 10 TV spots for 20 seconds over three weeks, advertising campaigns that command intimacy, including three versions interaction, involvement and influence. • Microsite online, drawing one million TARGETING YOUTH CAMPAIGN impressions over three weeks • Endorsements during daytime TV Singapore Press Holdings’ plethora of • Drawing for winner on live TV show channels enable the advertising department to celebrating the channel’s birthday offer a wide range of audience groups, including those focused on age, ethnicity, “The bottom line is that the net revenue language, geography, gender, and demography. generated was slightly higher than it have One such target group is the youth been if the whole media plan was sold at demographic. Advertising client Fizz, a maker current prices,” van Hassel said. “We will do of beverages targeted to teenagers, wanted to it again! reach only the targeted demographic, and not

26 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

with “Special Brew,” for S$81,000, discounted Singapore Press Holdings by 32 percent. The campaign included four Fizz Campaign colour pages in the flagship newspaper The Cross-media campaign targeted to hip youth Straits Times, 200,000 impressions with leader boards on top Web sites, and multiple exposures in shopping centre videos networks. Focusing on audiences and advertisers will be the way forward for Singapore Press Holdings, according to Geoff Tan, senior vice president and head of strategic marketing, for SPH. For the near term, it will be print, SPH’s “cash cow,” plus a multitude of other media offered to audiences and advertisers. “In Singapore itself, because digital figures a very small portion… We hope we can get print going as long as we can because print is definitely the cash cow for us. In terms of the literal population in Singapore, in small geography, I think the reading habits of the population would probably go longer than other parts of the world. So we are not just resting with print, but actually adding on other stuff, so it’s print-plus strategy we are after. Source: Singapore Press Holdings, 2010 © WAN-IFRA 2010 Being the cash cow on print, it’s print + radio, print + online, print + outdoors… That’s gonna give us the needs for win, I feel.” waste its advertising on the general public. SPH offered three channels for a cross-media Many multimedia companies anchored by campaign: The New Paper, a newspaper newspapers are adopting a consultative sales targeted to youth; STOMP, an entertainment strategy; that is, selling advertising campaigns oriented Web site targeting youth; and location across their media channels by first identifying based mobile SMS ad messages. The the customers’ advertising needs. Do they have advertiser was given a 28 percent discount on a target audience for their product or service? the cross-media campaign, which resulted in What are their sales objectives? The first step elevated sales for the customer. is completing an inventory of the advertising customers’ needs, and then pairing their needs TARGETING ‘HEARTLANDERS’ with the creativity and media resources for a Another key demographic is the Singaporean campaign to reach their objectives. “heartlander,” suburban residents of high-rise TRIBUNE CO. flats. The advertising agency for Ultrafresh United States toothpaste wanted to reach this demographic through multimedia. The Tribune Company, one of the largest multiple media companies in the United States, SPH offered a campaign including newspaper, has key markets in Chicago, Los Angeles, radio and video screens in Heartland shopping Dallas, Baltimore, Fort Lauderdale, Orlando, centres to reach the target group. The and Hartford, with such media as TV, radio, campaign included a colour ad campaign in newspapers, magazine, Web sites, cable TV two Heartland regional newspapers, 100 spots and mobile, with media reach ranging from 61 on a local radio station, and multiple exposures percent to 82 percent. The Tribune leverages on video screens in local malls. The total that reach with multiple media advertising and campaign cost S$51,000, which represented a marketing campaigns for their customers. Over 30 percent discount for the customer. the past 10 years, the Tribune has experimented Another valuable target group is with a variety of cross-media advertising professionals/executives. The advertising tactics. The latest, launched in October 2009, agency client wished to reach professionals is called Tribune 365. (trb365.com)

27 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

Their sales objectives were to engage consumers and drive Christmas holiday decoration sales in 2009. The cross-media campaign with engagement features, included: • Holiday Decorating Photo Upload Contest: Chance to win a US$1,000 Home Depot gift card • Print: Contest promotion + seasonal price and item ads • Online: High impact and targeted display ads • Custom Microsite: Featured holiday tips and photo contest The result of the campaign is that the customer saw a 270 percent return on media value over investment. Holiday items “over performed” compared with previous years, and Home Depot’s ads performed higher than average in 14 of 16 categories in RAM (Research Audience Measurement), and significantly higher (20 percent or more) in nine categories. For most newspaper companies, classified The new department allows advertising and advertising revenue in the verticals such as marketing sales people to sell solution-based auto, employment and real estate have sunk to cross-media packages using a variety of media all-time lows. So creativity and impact are assets to drive their customers’ advertising sought-after elements of advertising success. campaigns in these categories. The Tribune Six steps to solution-based selling success Company has found one successful strategy: to include: create cross-media campaigns for auto manufacturers during the popular auto shows 1. Training hosted in major cities across the country. 2. Prospecting 3. Research General Motors, one of the largest auto 4. Needs Analysis manufacturers in the world, wanted to create a 5. Idea/Solution retail shopping destination across a multimedia 6. Execution platform in order to increase engagement, purchase consideration, and to drive traffic to the At the Tribune, sales representatives are trained auto dealers. The Tribune365 department created to start the sales process by going to the key an integrated multimedia campaign around the decision-maker of the client or at the Los Angeles and Chicago Auto Shows. advertising agency and determine the budget or “money flow” for a potential campaign. Sales In print, advertising appeared in the main news reps are trained to understand the research section, inside spreads, a center pull-out, back available about the market demographics as cover, metro showroom promotional ads, auto well as the clients’ own customer profiles. show preview special section and a cover Clients are presented with a needs analysis to wrap-around advertisement. determine their objectives in business in Online, GM created home page takeovers, auto general, and any pressing needs for marketing, show sponsorship, behaviourally targeted such as a grand opening, or a brand-building rectangles and leaderboards, and video preroll. campaign for a new product or service. On television, GM created auto show The sales rep partners with team members in vignettes, metro showroom promotional spots the Tribune 365 sales group to brainstorm and 30-second TV spots. On radio, on-air ideas and solutions for the customer, presents spots, interviews and showroom studio signage the ideas and closes the deal. were developed. One such advertising customer was Home As a result, the campaign delivered 73 million Depot, a home do-it-yourself superstore. impressions over a three-week period in Los

28 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

Angeles, and a 59 percent premium above paid media for Chicago markets. Dealers gave positive feedback about the added traffic the received from the promotions.

Power of Newspaper Campaigns Targeted to Advertising Agencies As the media space becomes more cluttered and advertising sales are diminishing, an industry-wide newspaper advertising campaign targeted to advertising agency decision makers, outlining the power of newspapers, is warranted to raise awareness and demand a fair share of advertising spend. One option would be to create a global advertising campaign that would tout the power of newspapers in print. The campaign could mirror the US$90 million “Power of Print” magazine advertising campaign from May to December 2010 in 100 major American magazines and newspapers. The Power of Newspapers Campaign objectives would be: 1. To reverse the tide of negativity against newspapers among consumers and advertisers 2. To change the conversation about newspapers’ future from “newspapers are dying” to “newspapers are a vibrant and relevant part of everyday life” 3. To raise awareness and desirability for newspaper advertising among buyers and planners Olympic swimmer Michael Phelps graced the May campaign WAN-IFRA and the SFN for the Magazine Consortium, published in 100+ monthly Project urges major publishers magazines plus The New York Times. The June advertisement around the world to help featured sacks of coffee and an upcoming ad will feature Lady finance an estimated US$1 GaGa. Another series of ads use the “rebus” format, which million plus newspaper is the use of artwork to replace words to create a narrative.

29 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER campaign for the cost of agency creative and then distribute the advertisements in their newspapers for an estimated US$100 million placement value. Like the magazine campaign included as many as two dozen versions for different newspaper sizes and ad units, that would be available on a secure FTP server for free download by campaign participants. Non- members of the magazine industry’s original five consortium are allowed to participate in the distribution of the advertising. Rolling Stone publisher Jann Wenner created the magazine consortium last year, which includes five major magazine publishing houses: Meredith, Hearst, Wenner, Conde Nast and Time Inc. See the powerful video made by the five publishers of these magazine conglomerates (http://www.youtube.com/watch?v=aGVniqg WSc0) that gives insight into the genesis of the consortium. The consortium sent out a request for proposal to half-dozen New York agencies for the pro- magazine campaign. Young & Rubicam was chosen because of its exceptional creative pointing to the power of the magazine industry. Upcoming campaigns include one with Lady Gaga, one with coffee beans, and several so- called “rebus” ads, or the use of artwork to replace words to create a narrative. The rebus ads are what “sold” the consortium on Y&R’s campaign proposal. They loved the powerful creative. Photos were donated by magazine photographers from consortium magazine groups, such as Lady Gaga’s photos from Rolling Stone, and photos of Michael Phelps from ESPN. For more information, see the consortium’s Web site at: www.powerofmagazines.com.

30 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

3. Subscriptions, Content and Circulation Revenue

As media companies around the world see purposes. The strategy allows newspaper advertising revenues decline, innovative companies to expand audience penetration newspaper companies are optimising their with new products and platforms, target circulation and subscription strategies in order subscription offers more successfully, to make millions more in revenues. The result engender loyalty and reduce churn. is an increasing importance of the content THE NEW ZEALAND HERALD revenue strategy for many newspaper companies around the world. The Herald, New Zealand’s only morning newspaper, has a circulation of 170,000. The content revenue strategy is multi-faceted and full of promise for the future of newspaper company profitability. Its elements include: New Zealand Herald: Higher • Audience research and database marketing Retention with Higher Incomes • Price elasticity A Subscriber Study Shows Potential Income for Future Campaigns • Charging for content on new platforms levels • Loyalty clubs 50 • Cover price optimisation 45 47 40 41 40 • Syndication 35 39 36 35 30 30 25 25 Audience Research and Database 20 24 Marketing 15 18 10 The underpinning to the most successful and 5 innovative content strategies is audience 0 1 2345678910 research and database marketing targeting for (lowest) Annual churn (highest) analysis, campaigns and product development Source: New Zealand Herald © WAN-IFRA 2010

31 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

The Herald turned to an aggressive strategy of customers,” said Matthew Wilson, general database-driven audience management in order manager for newspaper sales and marketing at to stem churn and to increase declining the Herald, owned by the international circulation. Independent News & Media company. “Then commenced acquisition activity. Acquisition “Ten years ago we sold all our papers through became addictive, we threw more money at it newsagents like in the UK. Circulation was each year but with a shot gun approach and a declining and we didn’t know who our singular focus on new starts we lost focus on customers were. So we took back our churn.” Between 2007 and 2008 the Herald lost 7,432 New Zealand Herald six-day equivalent subscribers. The climbing Loyalty Grows with Longer churn rate motivated the company to purchase Subscription Periods a database marketing solution called Astech Intermedia SmartFocus, which allowed the Length of Retention previous at 5 company “to focus on quality rather than order Customers Active Inactive months quantity” of subscribers, he said. 1-3 months 274 121 153 44.2 % 3-6 months 140 80 60 57.1% The Astech solution allowed the Herald to 6-12 months 287 176 111 61.3% combine a multitude of databases to get a 1-2 years 208 150 58 72.1% clearer picture of loyal subscribers, and the 2 years + 399 304 95 76.2% effectiveness of subscription campaigns. The

Source: New Zealand Herald © WAN-IFRA 2010 knowledge allows the marketing team to duplicate successful targeting practices, and avoid costly mistakes. The new integrated New Zealand Herald database includes: Multi-Channel Subscription Sales Multi-Channel Campaigns Net Robust • Circulation data New Starts • Telemarketing dispositions • Customer service 6DE subscribers Actual Direct mail 252 • Web interactions Door-to-door 6,868 • Financial account performance Events 150 • Demographics Other 993 • Contests/events In paper 2,016 • New movers Partnership/Real estate 1,272 • Postal delivery data Referral 200 Restart 1,012 The new system has allowed the Herald to Internet 587 optimise its retention analysis, campaign Telemarketing 4,682 management and reporting functions. Total new starts 18,030 6DE upgrades 745 For example, the tool has allowed them to Total acquisition 18,775 identify that the highest subscription attrition Source: New Zealand Herald © WAN-IFRA 2010 rate comes from low socio-economic areas.

32 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

2 5 Before: New Zealand Herald circulation 9 decline 4 6 Between 2007 and 2008, the Herald lost 7.432 6-day e4quivalent subscribers Subs. 3 2,000 4 0 2007 2008 4 7 1,000 3 4 3 0 1 3 8 -1,000 2 5 2 -2,000 2 2 9 -3,000 1 6 1 -4,000 3 1 0 -5,000 1 7 -6,000 4 Week 1 Source: New Zealand Herald © WAN-IFRA 2010

2 5 Decline: New Zealand Herald circulation decl9 ine reversed 4 6 After the implementation of aggressive retention stra4tegy, churn reduced Subs. 3 2,000 4 0 4 2008 2009 2010 7 1,000 3 4 3 0 1 3 8 -1,000 2 5 2 -2,000 2 2 9 -3,000 1 6 1 -4,000 3 1 0 -5,000 1 7 -6,000 4 Week 1 Source: New Zealand Herald © WAN-IFRA 2010

It also showed that this is where the highest events, in-paper, real estate partnerships, volume of acquisition of new subscriptions referrals, Internet and telemarketing. The comes from. The tool has allows the team to strategy was to start “soft” with e-mail and filter out the lowest socio-economic groups. As direct mail messaging, and then close the deals a result, there were 1,538 fewer cancellations with telemarketing and door-to-door over a full year, saving NZ$199,940 in re- campaigns. acquisition costs, Wilson said. The database tool also showed that the popular Price Elasticity eight-week subscription offer in the newspaper had the lowest retention rate (51.7 percent), Imagine if a newspaper company could charge compared to 26-week (64.0 percent) and 52- twice the subscription or cover price that it week (81.4 percent). As a result, the inbound does today, and readers would agree to pay it! contact centre was retrained on the importance Some media companies in the United States, of selling customers onto longer selling desperate to make up for losses in print periods. advertising, have applied a scientific theory of price elasticity to aggressive new pricing Another successful tactic was their aggressive strategies in hopes to recover revenues lost to cross-media subscription campaign in 2009, the advertising slump. which resulted in 18,775 new starts. The channels used were direct mail, door-to-door, In the past year, both the Dallas Morning

33 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

Value = Benefits – Cost Value KPI

Perceived Perceived Perceived value =–benefits costs

Intangible Tangible Actual price paid

Time spent reading Reader Content attitudes & Brand imagery customer Convenience perceptions service

Perceptions, attitudes, beliefs, habits, usage and content Source: The Modellers are all significantly correlated with value © WAN-IFRA 2009

creates models for price elasticity optimisation 7-day Subscription based on surveys of newspaper readers. Price Elasticity Employing predictive modelling, the Dallas Customer Toleration for Price Increases Morning News asked readers about their % change in subscription content preferences, and determined that local, 10 5 hyperlocal, national, state, sports, health and 0 entertainment were important to them. -5 -10 Then Morning News readers were asked if -15 they were willing to make tradeoffs regarding -20 price, content, platform, delivery or frequency. -25 The research technique is called “Discrete -30 % change in price Choice Modelling,” and helps the media -35 Less Same More -40 company understand the impact these 2% 5% 15% 25% 45% 55% preferences have on price elasticity. Source: The Modellers © WAN-IFRA 2010 For example, respondents are asked to choose from three option groupings. In Option 1, News and the Boston Globe, two of the most readers would get more content from national circulated newspapers in the United States, and international news, coupons and shopping have raised their subscription prices by as tips and business news, but they would receive much as double, and as a result, have less content from sports, entertainment and considerably increased their revenue and their local. They could access the content on the e- percentage of subscription revenue from about edition but not mobile text alerts. The price one third to one half of each company’s would be US$40 per month. Meanwhile, revenue. Option 2 would include less content from all Each company separately applied theories of areas except international news, but would be price elasticity to their roll-out strategies. In available on e-editions, online and mobile, for both cases, the companies fully expected to US$10 per month. lose customers, particularly in outlying areas, The process is the heart of choice precisely the areas that are considerably more methodology, which asks consumers to make expensive to distribute to. purchasing decisions and choices that simulate “The basic premise, every company needs to real-world trade-offs between what they want optimise what it offers and the price people and what they are willing to pay, said Randy pay for it. Primarily, newspapers have been Hill, vice president of the Modellers. “This advertising supported, and it’s getting harder to process allows us to derive preferences, which keep and profit from advertising,” said Jeff is much more powerful and accurate than Brazell, CEO of The Modellers. The company stated preferences.”

34 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

By analysing the value of the newspaper gigantic,” Hill said. “I think [publishers] will perceived by the consumer, based on the see an exacerbated defection because of intangible and tangible benefits the product quarterly billing.” He suggests either provides, minus the perceived costs of price, converting them to the popular U.S. “EZ Pay” time spent reading and the convenience factor, credit card payment, or a monthly invoicing. newspaper companies can determine “action levers” for driving value for the money. Charging for E-editions For example, if respondents prefer local and hyperlocal content and are willing to pay more Many newspaper companies with distribution for it, then the news publisher should promise zones in far-flung territories with sparse and deliver more of what the readers are populations are reducing or cutting off demanding. Explain the plan for the new distribution and offering e-edition product when announcing the new price. subscriptions in the place of print Ensure that the promise is delivered, and that subscriptions. The Denver Post saved millions the perceived value does not diminish at the of dollars by cutting back its distribution from same time the price is rising. 13 Western states to just one: Colorado. In the newspaper’s place, the company has sold “Probably the most important theme is we thousands of subscriptions to the e-edition, an have to make sure not to decouple content online edition of the newspaper that replicates from price. People have to get something for the newspaper format, with a page interface the price. You can up the price, but you have to and content found in the printed edition, plus be careful, because sometimes there is low access to archives and multimedia. quality there. Then you’ll have a big leak in subscribers,” he said. While the Post’s customers may have been motivated by being faced with no newspaper at Especially significant are the dismissals of all and choosing e-editions as the only option, thousands of journalists in the United States, some newspapers are offering the e-edition in United Kingdom and beyond. Without the hopes to sell a new product to an engaged journalists, the quantity of the content shrinks, readership. and the quality of the product suffers. Meanwhile, the size of the newspaper The Audit Bureau of Circulations now counts diminishes, so that the tangible, perceived readers of e-editions and mobile editions as value of the newspaper diminishes. part of the newspaper’s circulation, as long as the editions are paid for at least one cent. The Some newspapers have learned the lesson of top 25 newspapers in the United States now the connection between content quality and represent 1.36 million subscribers for e- price the hard way. The Dallas Morning News, editions, headed by the Wall Street Journal, for example, in 2008 doubled its subscription which has an audited subscriber base of price, knowing that its least valuable 414,036. While the numbers are dramatic, customers, living in outlying areas, are the many newspapers bundle their subscriptions, ones who drop subscriptions. The company print and e-editions together. Those was forced to make cuts across the board, newspapers that are creating incremental including in the newsroom, after the circulation include the Denver Post, and also advertising crisis hit in 2008. So when the the Detroit News and Detroit Free-Press, Morning News attempted to raise subscriptions which have suspended newspaper publishing again, this time valuable readers dropped several days per week, and do not offer subscriptions, indicating the diminishing alternatives other than the e-edition. quality would not justify the new price. For Gannett-owned USA Today, the most Consequently, the company did not proceed circulated U.S. newspaper in print, launching with another round of journalist layoffs. an e-edition in 2009 was a project filled with Another important consideration is the trepidation for the circulation and marketing psychology of pricing intervals. “People think staff. in terms of monthly payments. They have “Why would a reader pay for the e-edition monthly budgets. If you go from a $50 three- instead of getting it free on .com?” posited month subscription, and hit them with a bill Linda Ford, retention and database marketing over more than $100, suddenly it sounds

35 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

Top E-Reader Circulations in the U.S., April 2010

Rank 2010 (2009) Newspapers E-Editions 2010 E-Editions 2009 Percent Change 1 (1) Wall Street Journal 414,025 383,199 8% 2 (17) Detroit Free Press 105,210 15,776 567% 3 (4) New York Times 90,934 43,884 107% 4 (20) San Jose Mercury News 80,330 14,114 469% 5 (–) Detroit News 52,516 N/A N/A 6 (7) Houston Chronicle 49,016 28,595 71% 7 (2) Memphis Commercial Appeal 46,547 74,359 -37% 8 (3) Investors Business Daily 46,265 50,422 -8% 9 (5) St. Paul Pioneer Press 45,399 40,100 13% 10 (6) Denver Post 43,677 39,298 11% 11 (12) San Francisco Chronicle 33,971 22,382 52% 12 (13) Kansas City Star 28,668 19,991 43% 13 (10) Dallas Morning News 28,393 22,756 25% 14 (8) Minneapolis Star Tribune 28,337 28,295 1% 15 (9) Washington Post 27,713 27,255 2% 16 (24) Baltimore Sun 27,688 12,523 121% 17 (18) Seattle Times 27,046 14,853 82% 18 (11) Miami Herald 26,672 22,527 18% 19 (–) Las Vegas Review-Journal 26,337 N/A N/A 20 (14) Salt Lake City Tribune 23,305 15,922 46% 21 (–) Toledo Blade 22,757 N/A N/A 22 (16) Women's Wear Daily 22,474 15,811 42% 23 (–) Oregonian 22,335 N/A N/A 24 (–) Chicago Tribune 21,864 N/A N/A 25 (–) Colorado Springs Gazette 21,733 N/A N/A

Source: Audit Bureau of Circulations FAS/FAX © WAN-IFRA 2010 manager for USA Today. The team would • Why would they want it? focus on the key selling points, including: • How do we handle the customer transactions? • Which vendor(s) produce the best e-reader • Format, appearance and design: USA product? TODAY “brand” lovers • What features will resonate with the audience? • Beginning and end, as opposed to the • How should we include our print Internet product, which has endless content subscribers? • Ease of printing, e-mailing, saving and searching articles Through database marketing of their audience, • Text to voice capability and crossing the data with Claritas consumer • Access to archives data, USA Today was able to identify target • Multimedia and linkable content not groups that would be appropriate for the available to non-subscribers campaign. Ford said the team identified four • Unobtrusive advertising sub-segments of readers who are digitally • Readers say “It’s the convenience!” • Lower cost • Latest news and sports • Flawless delivery • “Weekend” section • Enhanced features and content • Interactive puzzles • It’s GREEN The first stage of the strategy was to explore basic questions, including: • Who is the audience? • Who are our best prospects? • How do we reach them?

36 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

USA Today Audience Target Groups for E-Reader

Prep schools & PDAs Wired for success Lawns & laptops Digital diversions Wealthy, middle-aged Wealthy, middle-aged Mid-scale, Mid-scale, younger families single/couples younger families single/couples Age 45-54 Age 45-54 Age 25-34 Age 45-54 Mostly owners Mostly owners Mostly owners Mostly owners Management Professional White collar, mix White collar, mix College graduate+ College grad College grad College grad White, high Asian White, High Asian White, Black and Hispanic White Use Internet-enabled Use Internet for Game boy, play station Desktop PC’s, not wireless cell phone or PDA, investment & real estate Focus on price not brand streaming audio/video camera and color screen Current passport American Baby, Family Fun Travel domestically Rent or buy family videos Hot tube & gaz grill Magazines Spenders not savers Parenting magazine VH1, HBO, comedy Honda Odyssey That 70’s show TV Lexus RX SUV central TV FHM, Maxim Audi TT Toyota Tacoma 02 Blue blood estates 03 Moovers & shakers 29 American dream 16 Bohemian mix 05 Country squires 04 Youg digerati 32 New homesteaders 22 Young influentials 06 Winner’s circle 08 Executive suites 33 Big sky families 23 Greenbelt sports 13 Upward bound 11 God’s country 34 White picket fences 24 Up-and-comers 17 Beltway boomers 12 Brite lites, li’l city 36 Blue-chip blues 30 Suburban sprawl 18 Kids & cul-de-sac 19 Home sweet home 37 Mayberry-ville 20 Fast-track families Source: USA Today © WAN-IFRA 2010 savvy and affluent and seemed like likely content. Both have more than 1 million candidates for the e-edition product: members each. • Prep Schools & PDAs The Asahi Shimbun sells 12 million copies for • Wired for Success their combined morning and afternoon • Lawns and Laptops editions, while the Yomiuri Shimbun has • Digital Diversions almost 14 million subscribers. In October 2004 the Asahi Shimbun launched the ASPARA Since its launch in August 2009, USA Today has club. The club is structured into three reportedly grown its e-edition subscribership categories to reflect loyalty: green, yellow and to more than 20,000. Subscriptions costs white. Green members have subscribed for at US$99 for 52 weeks, and US$59 for 26 weeks. least one year and include 85 percent of the The company also offers a discounted members. Club members can earn reward introductory rate for US$9.95 for eight weeks. points for answering questionnaires and attending events. Readers can win sporting Loyalty Clubs events tickets after accumulating a certain number of points. The readers also can partake In an effort to build loyalty to newspaper in the company’s phone services, and can use brands and reduce subscriber churn, reader discounts on credit card financial newspaper companies around the world are services. Some of these events and offers also rolling out loyalty clubs. The clubs typically earn extra revenue for the company. offer a variety of subscriber-only benefits such as e-mail newsletters, access to news archives JYLLANDS POSTEN /POLITIKEN and member-only content. The clubs also offer In less than a year, circulation revenues have special prizes, access to member-only events, risen 35 percent not because circulation has discounts to community retailers and risen for Jyllands Posten/Politiken in entertainment establishments and more. Denmark, but rather because the newspaper ASAHI SHIMBUN company made the bold move to no longer offer discounts for subscriptions. The most established and largest loyalty memberships belong to the two largest For most newspapers, eliminating discounts newspapers in the world, The Asahi Shimbun’s would be a bridge too far. But for JP/Politiken, “ASPARA Club” and the Yomiuri Shimbun’s the company offers its readership a variety of “YomyClub”. Both offer membership services incentives that they believe are the secret to that give registered users access to restricted success for the no-discount strategy.

37 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

“We are trying to find the right incentives to us is focused on very specific items of their raise the number of sales. We tell them what life, like a rock band for example. But of is in the newspaper, and offer them (a course this is a 20-year-old.” membership card called) Politiken Plus,” said The company has started communities in order Poul Skott, sales and marketing director, to reach targeted audiences and provide JP/Politiken. atomised content, he said. For example, they The newspaper has a circulation of 105,000 on have created an “exercise” community, weekdays and a 135,000 on Sundays. In focused on health and fitness enthusiasts. “You addition to the incentives for readers, the can buy one or two packages, such as the company has doubled the commission to Copenhagen Marathon ticket and a t-shirt.” subscription sales people from 2,000 Danish People can pay a one-time fee of 100 or 200 Kroners (DKK) to 4,000 DKK to sell an DKK and the company can establish a whole annual subscription. range of offers targeted to that community, he “We sell by phone and in the street as well. said. You call only target group. After that we send THE BALTIMORE SUN them a bill. The only credit card sales are on the Web site. We send them a bill afterward,” In countries such as Brazil and the United he said. States, a push is on to encourage subscribers to pay for their newspaper subscriptions with a For more than a decade, Politiken Plus has credit card because it can more than double the been a loyalty club and a way to activate subscription retention rate. At the Baltimore readers on a regular basis through discussion Sun, a Tribune Company newspaper in the forums and meeting the newspaper’s writers. United States, credit card payment is at the These club members tended to subscribe for heart of the strategy for the loyalty club called longer periods, Skott said. Six years ago, the Sun Rewards (rewards.baltimoresun.com). club was expanded to include a number of incentives and opportunities for members. “We get dramatically better in retention that if Among the most significant benefits is access customers pay the bill through the mail. It’s to a store at the newspaper, which sells books more than twice the retention than a bill at a deep discount. subscriber. If you have a bill subscription, we lose 1.4 percent every week. It’s 0.60 percent The store, which has recently become a with EZ pay (credit card autopayment),” said business with separate P&L from the Denisa Protani, manager of the Sun Rewards newspaper, has eight employees and grosses programme. 40 million DKK, which is 10 percent of the company’s newspaper sales, he said. “In The rewards programme offers a vast array of (separating the companies), the more prizes and premiums for customers, which interesting it is as a business, the more loyalty number 240,000 readers, about one-fourth of effect it has, also focus on it as a good which pay with EZ Pay. Subscribers are business.” encouraged to pay by EZ Pay with incentives: the discount period for subscription is Book sales, coupled with sales for other extended from 13 weeks to 20 weeks, and each popular items such as music and movies, have new EZ Pay subscriber receives free gift cards contributed to an increase of 40 to 50 percent to local restaurants and retailers. each year, he said. “We can say 70 percent of Politiken subscribers use Politiken Plus The rewards programme sponsors 53 events during the year. The more products we have per year, mostly movie previews sponsored by the better.the harder it is to say good-bye Hollywood movie distributors. Members enter to the newspaper. It's going to hurt a bit, a contest to win free tickets to the exclusive because you can only get a Plus card as a previews, held only for Sun Rewards newspaper subscriber.” members. Between 2,000 and 4,400 people enter to win each contest, and more than 400 The next challenge for circulation expansion is tickets are distributed for each event. the young readers. “(The older generation) love our newspapers, we would like to be The club also has hosted contests for free trips educated, and this is what the newspaper can to Iceland, Scotland, Italy, Florida and other address,” Skott said. “The generation behind destinations, as well as sporting and musical

38 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES events, and for prizes such as a big-screen BOSTON GLOBE television, Harley motorcycle or jewelry. All events and items are donated for the contests, In 2008 and into 2009, as ad revenues and prize donors are co-branded in the continued to dwindle, executives at the Boston promotions. Globe knew that additional revenue had to come from somewhere, and the best answer Protani says the programme not only reduces was that of consumer revenue. Circulation churn in newspaper subscriptions, but also strategic pricing was rolled out, with a greater promotes good will with the Baltimore Sun emphasis on the value of consumer revenue, brand. said Pete Doucette, executive director of circulation and marketing at the Boston Globe. “When we did a reader survey, we found that word of mouth was working. Of those who “We wanted to extract value, but do it in a way actively used the programme, 40 percent were where we could maintain the base as being a passing along recommendations to others,” she top media player,” he said. said. On May 4, 2009, the Globe raised its “The average American is in 12.5 rewards newsstand price to US$1, from 75 cents in the programmes or affinity programmes. The city zone, and to $1.50 from $1 in the areas question is, how can you make yours stand out surrounding Boston. Home delivery prices when we don’t put a great deal of money were unchanged. The newsstand price of the behind it? We’re trying to get people to feel Sunday Globe was increased from $2.50 to special,” she said. $3.50 in Boston, and $4 outside the region. “Of the people who registered for EZ Pay, In deciding to increase the Globe’s cover price, which is 25 percent of total group, about 45 the potential loss of ad revenue tied to percent had told a friend, a relative or a circulation declines had to be estimated, all neighbor about the programme, and almost 25 while continuing to achieve significant net percent said it was the best rewards revenue gains, Doucette said. At the same programme they were in. We’re competing time, the Globe had to minimise erosion of with at least 12. I think we scored so highly Sunday circulation in order to preserve ad because people feel like they are a part of revenue, as the Sunday edition accounts for 60 something unique.” percent of the newspaper’s print revenue. This would be done through “pricing and customer One of the most exceptional things the service.” Finally, to add value, the newspaper programme offered was a free wedding, would offer daily readers paid digital including a reception at a major hotel in alternatives. Baltimore. The winners had a compelling story, as the father of the bride had lost his job “We wanted to provide subscribers alternatives and the family home had burned down. A local to read our content in a digital format. We TV station picked up the story and the contest wanted to give consumers options to consume received a lot of community attention, she us at a price point that would resonate with said. Another unique event was an offer for them,” Doucette said. 200 families to spend a night at the Baltimore Prices were increased by 40 percent to 100 Museum. Family members camped in sleeping percent, said Christopher Mayer, the Globe’s new bags and were able to visit the exhibits as publisher. The cover price change was enacted exclusive patrons for the night. under the former publisher, P. Steven Ainsley. If Protani was asked for advice from other “When looking at percentage of revenue, we’re newspapers considering launching a loyalty now at 50-50, advertising and consumer. We programme, she said: “You can’t look at it as a were at 60-40, ad and consumer. The simple cookie cutter. What works for us, might not math is, you take the prices up X amount, you work for major paper like The New York lose a certain amount, and then see what that Times. Making people feel special, tying them net impact is. In terms of actual revenues, we’re into a social network, asking them what kind up with circulation revenues, down with print of contest they would like to see…that’s what ad revenue, up with digital ad revenue. I think works. We try to engage people in both that’s where we have to turn our focus now – directions.” rebalance that portfolio of revenue,” he said.

39 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

“We’re not going to cut our way from expenses for advertisers. To make up for the circulation, into a successful business model. Print we’ve been working on ways to get those advertising will continue to go through test and preprints out,” Doucette said. learn. Our marketplace and our position in the NEWS INTERNATIONAL marketplace is that ... the decision-making in the past used to happen locally. Now with In the first half of 2010, News International more national players making purchases, it’s a launched two successful print and outdoor different type of selling relationship. The way advertising campaigns. The first was unveiled we go to market has changed, and all this in February in The Sunday Times, and then makes additional challenges in print ads, and spread across all News International titles over it’s important to sell across mediums. We’re the following two weeks. currently more of a venture capital oriented Copy in the ads, designed to promote company, and we’ll have to test things and se advertising in its newspapers and magazines, how we’re going to scale. We’ll have to stated: “For every £1 spent on advertising by approach the business in Boston is different retailers, newspapers and magazines deliver than other markets.” £6.41 in sales – more than any other media and In June 2009, the Globe also launched Adobe 164% greater than TV.” air product in beta. Because subscribers were News International’s in-house creative team, being asked to pay more, it was made free to called NI Creative, produced the campaign. them as a value-added product. The figures used in the ads are from research “We are a regional publication, with three conducted by Microsoft Advertising, which main distribution zones, concentric around the found in December 2009 that for large retailers, city. We decided to really place a bet on the print advertising is more effective than online value of our product and let the market decide. ads, and more than twice as effective as We didn’t want to shrink delivery, but wanted television ads. Each £1 spent on print ads to do consumer-base pricing. We would garner £5 in revenue, while TV and Internet contract distribution footprint or days, but ads bring in £2.15 and £3.44, respectively. went into it as a market-based approach. Outer-market copies were unprofitable at the “Our close partnerships with retailers have time. We looked at it from a core market to helped to deliver exceptional results. These outer-market, and decided to not retract for robust new figures from Microsoft deliver outer-market, but do a premium pricing for all further evidence of retailers continued return copies out there – a significantly higher cover on investment with newspapers,” Paul Hayes, price for the outer-market,” Doucette said. managing director of News International Commercial, told MediaWeek. “We had the idea of making all circulation copies profitable. We restructured delivery To promote its daily tabloid’s lower cover routes, renegotiated rates with wholesale price of 20 pence (down from 30 pence), News partners, and had significant saving in delivery International launched its second campaign to as well,” he said. “We offered the Globe reader promote The Sun title in March 2010. as a value-added benefit, but said we needed The print and outdoor advertising campaign their help. We did it directly and indirectly, and not only touted the new, lower cover price in launched a brand marketing campaign where we promoted the value. We thought it was very important to not just raise prices, but to communicate why it was still valuable to them.” Charging a higher cover price has been a success for the Globe so far, despite the expected loss in circulation. “It’s been a bit of a challenge for our CPM- based business. Because there are fewer copies, we’ve lost revenue because they’re pre- print. But, we can say that the people who get the Globe really value it, so it’s a better value

40 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES the country’s south east region, but reinforced and playing, despite the fact that all four home the goods readers would continue to get in football teams had failed to qualify for Euro return – the newspaper’s colourful 2008. “Your country needs you. Get playing!” personalities writing about each of their the campaign slogan announced to readers. different specialties. While reinforcing The For its promotion, Mars gave away 100,000 Sun’s branding and quality through iconic footballs and 1,000 hours at Powerleague portraits of its columnists and short tag lines, football facilities. Through a microsite on the newspaper hoped to gain more readers in thesun.co.uk, readers were invited to get the south east region through the promotional involved in the six-week campaign, and pricing strategy, which will remain in place advertorial and other ads in print backed the indefinitely, the paper stated. promotion, which also included a free Mars The daily saw circulation decline over the candybar for each reader. previous four months, and in February an ABC audit showed circulation was down 3.6 percent, to nearly three million. Showcasing the columnists “can remind readers of the fantastic market-leading content they get every day in The Sun, for only 20p,” Rob Painter, interim marketing director for The Sun, told MarketingWeek when the campaign was launched.

The Sun hired four sporting ambassadors to champion each sport: football, rugby, cricket and tennis. The players were featured in The Sun’s print and online campaigns, as well as on TalkSport, where they discussed their views on the state of their sport today, as well as predictions for future tournaments. The campaign also included a “Bounce Off” competition in a Battersea Park in London, “where each Bouncer recruited a team of Some of the columnists portrayed include passionate people from around the country to Lorraine Kelly, as “The Nation’s Godmother” represent their sport in a one-off event. They for her Saturday column; television critic Ally were selected through an online competition Ross as “TV Anarchist;” and controversial plus ‘scouting’ days across the UK. A game of comic Frankie Boyle as “Leftfield Humour.” 4-halves (involving football, cricket, rugby and Martin Corke, head of digital advertising tennis) was played to win the ‘Bounce Off’ strategy and digital commercial chief, said that title,” according to News International. with all ads, working with editorial is a The microsite pulled in 25,000 unique users massive part of the job, and knowing what each week, with 8.3 million ad impressions. Of types of ads to not run is just as important as those who saw the campaign, 61 percent found running the right ads. it in The Sun’s print edition, 24 percent saw it “Advertising is not about saying how brilliant on The Sun’s Web site and 15 percent saw it your product is, its about what benefits to can on both, according to UK advertising and bring to the consumer,” he said. marketing publication Campaign. The ball giveaway, meanwhile, was 3.3 time over- News International is also well-known across the subscribed, and 790,000 Sun readers said they United Kingdom for its marketing giveaways. made time to play football. Twenty-nine In 2008, Mars partnered with The Sun on its percent of the audience said they now “Mars balls get Britain playing” campaign. associate Mars with football, while just 7 The national marketing giveaway of Mars bar- percent did so before the campaign, according branded footballs was aimed to get people out to News International.

41 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

Content Subscriptions Online proposition, or that it’s only about online revenue, Crovitz explained. It’s also about “the JOURNALISM ONLINE LLC value proposition of print,” “keeping [that] Launched in April 2009 by Steven Brill, direct relationship with the readership,” and Gordon Crovitz and Leo Hindrey, Journalism “print subscriber acquisition and retention Online wants news publishers to use their e- costs.” commerce technology in order to sell access to For member publishers, Journalism Online their content “without sacrificing valuable provides reports based on consumer data on traffic and online revenue,” the company strategies and tactics that are seeing the best states. results in building circulation revenue, all Journalism Online’s mission is to help restore while maintaining the traffic necessary to the viability of the journalism business model support ad revenue. In addition, the company through providing the technology and market is looking at “restoring a balance of power,” intelligence publishers need to generate Crovitz said. “We help establish improved revenue from readers and distributors of their terms with distributors, such as electronic digital content, all through a simplified process readers.” called Press+, touted as a one-click tool to buy, News departments, whether they are in track and manage paid content using a single newspapers or magazines, publish in print account. After readers register for a Press+ and/or online, are bloggers or others, need a username and password, they may use that sustainable business model. Doing this without same account to buy content across all Press+ blocking Google and other search engines or affiliate Web sites. social media, all of which have become Users will be able to buy yearly or monthly important sampling channels that can drive subscriptions, as well as day passes or single subscriptions, is important, he said. articles from multiple publishers, Crovitz The result of finding the right balance can be explained. In addition, they can also choose “renewed support for differentiated, unique topic-based packages, or all-inclusive journalism of real value to people, in exchange subscriptions for consumers wanting to pay for value,” Crovitz said. “Once readership one fee for access to common areas of content becomes a major driver of revenue, editors will across all sites of the Press+ affiliate members. have a much easier time of deciding where to “Our model is a hybrid, ‘freemium’ model, allocate resources. I’m hoping editors will be with publishers looking to convert their 10 able to invest more into independent percent most engaged online users to become journalism.” paying subscribers,” he said. CHARGING FOR FINANCIAL NEWS:THE With a freemium strategy, many readers will WALL STREET JOURNAL AND THE continue to receive free access, but the most FINANCIAL TIMES engaged users will pay for full access. The The Wall Street Journal and the Financial time for news publishers to implement this Times are classic cases of newspapers type of strategy is now, and for two reasons, he succeeding using with an online paid content said. First, publishers are urgently focused on model. Both provide quality business and reinstating the dual revenue model by adding financial news, and both have found that a core consumer revenues for digital access. Second, group of readers value that information enough many categories of online display advertising to pay, in both print and online. are under pressure due to excess inventory. “The Wall Street Journal and Dow Jones made “We are refusing to launch paywalls where bad decisions over the past years, but we made you say to first-time visitors ‘pay or go away’” one good decision, and that was in 1996, when and will instead give visitors access to 10 to 15 we created WSJ.com, and we said we would articles for free before asking for payment, not give our content away for free,” said Alan Brill told minonline in January. Murray, deputy managing editor and online The idea is to keep 88 percent of page views, executive editor of the WSJ. and 91 percent of ad revenue. There’s a myth Being a completely paid site “sort of stunted about the paid model that it’s an either/or our growth in the beginning, because we didn’t

42 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES do [search engine optimisation], etc. We were One of the reasons we can do that is because just making a place where we could give our what we’ve learned is the stuff that’s most online content to subscribers. Then several popular and most valuable is very different. years ago, we started making some of that Our most popular blog is Speak Easy, a pop content free, as a way of bringing in more culture blog. It does summaries of TV shows readers and expanding our audience. A lot of and music. People love it, but they won’t pay the arts and entertainment coverage, sports for it, partly because they like it from us, but coverage, etc., we made free because it wasn’t they could get it from other places. Same with core to our business of financial news,” he said. sports. We could never charge for it. That stuff is extremely popular, but not the most valuable,” Murray explained. “Often, what’s most valuable is the least popular, so it makes it possible to play both games, but still show the core business and finance stuff. Some of the U.S. metro dailies – if the Houston Chronicle had decided to be the ultimate source of information on the oil business – things would be different. The San Jose Mercury-News could’ve been the big source of technology news – they didn’t do that. Now other places have filled those needs... As big metro dailies die, smaller community newspapers are doing well. People subscribe because they want to see high school sports – that’s the only paper they have. You have to On the WSJ's Web site, headlines with the have your secret sauce – you have to find that.” icon of a key next to them mean the story is for subscribers only. Headlines without the icon are free.

Of the WSJ’s million paid subscribers, “I think about half are in bundles. Of that million, half are bundled, half are online-only. Total print subscription is about 1.7 million,” Murray The FT uses a metered paywall said. “Most subscribers are looking for news. on its Web site, In the Wall Street Journal itself, we don’t do a allowing users lot of stock picking. People come to it to find to access a set out what’s happening now. It’s the business number of and finance they’re really paying for.” articles before they are On the WSJ’s Web site, about 30 to 35 percent prompted to of all content is free, most of which is non- pay. financial news, such as sports, art and leisure, and all video. The Financial Times, meanwhile, has gone “If you look at where we get our traffic, half is from exceptionally rocky times in the first few still through the front door. Another 30 percent years of the 21st century, when it reported an comes through search, mostly Google and operating loss of £41 million. In 2009, it was Yahoo! Finance. Ten to 15 percent comes from one of the few publications in Europe to make aggregators, like the Drudge Report. Less than a profit, even amidst a global recession. 5 percent comes from social networks, but the In 2007, the FT doubled the cover price of its rate of growth is very fast, and we think it will print version to £2, while online subscriptions continue to be a bigger and bigger part,” he said. have increased by more than £105, from £65 to “What is free and paid is usually decided by more than £170. Why is the FT able to make editorial – we have a lot of discretion. We can such large increases without losing take a big story that will be a traffic driver. subscriptions? Just as the WSJ has found,

43 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER financial coverage has immense value, find ways to charge for high-value, highly especially for reliable, timely content. differentiated content, while continuing to offer more commoditised content fro free. In 2000, less than a third of FT Group’s revenues were digital; today that number is In 2010, newspapers have began switching to up to 73 percent, Marjorie Scardino, CEO of these new models and others have announced Pearson, told analysts in March, plans to do so in the future. Most plans are in MediaGuardian reported. And even though experimental stages, while others, even if revenues from online subscriptions and they have been around for years, are digital advertising likely made up only about constantly evolving. a fifth of the FT’s revenue base, they are THE NEW YORK TIMES expected to grow to a third of revenues by 2012. On May 13, The New York Times announced And, echoing the sentiment held by the WSJ that January 2011 will be the end of the free and Journalism Online, the Robert Grimshaw, NYTimes.com. Executive editor Bill Keller managing director of ft.com, has said many revealed the news, but did not give away any times that paywalls don’t cancel out online other information, such as pricing or the type display advertising. One source at the FT told of paywall model The Times will use. MediaGuardian that the publication is “not However, a report by the Wall Street Journal far off” £30 million a year in online ad stated that The Times will only charge for revenues. Another said that although print access to selected stories. advertising revenues fell apart in 2009, the Allowing users to access a set number of ft.com is holding its ad rates steady, and articles before they are prompted to pay is a digital ad revenues on the site grew by metered paywall, such as the one the threefold last year. Financial Times uses. Other models provide a The FT’s digital operations have become so mix of paid and free stories each day, such as important, and are expected to continue the model the Wall Street Journal uses. growing so strongly that Madi Solomon, CIVIL BEAT Pearson’s director of global content standards, told paidContent in late May 2010 In April, the founder of virtual marketplace that the FT will likely “pull back” its print eBay announced he would launch a paid news version. site in Hawaii. Honolulu billionaire Pierre Omidyar launched Hawaiian community “They’re investing a lot in their online news site, “Honolulu Civil Beat,” on May 4. presence. Yes, they do see the end of print. That pink broadsheet has such fond memories Civilbeat.com charges US$19.99 for a for so many people that I don’t think they’ll monthly membership, and has been termed an completely stop printing, but they will “online civic square.” Omidyar told certainly pull back – in fact, they’re already paidContent that the site is a place Hawiians pulling back,” she told paidContent. “They’re can go to “learn about and better understand not saying that, by five years, they’ll our home, the challenges we face, and debate completely stop it, but they do see that the and discover ideas and strategies moving sunset is going to be in about five years for forward.” them.” On the Civil Beat Web site, users can click on a headline and read the first part of an article before they are asked to become a member in News Outlets Trying Paid Models order to view the rest of the article. They are In 2009, newspaper publishers around the also given an introductory offer of 15 days for world began aggressively addressing the issue $0.99. of paid content head-on. Various associations John Temple, former editor, president and representing publishers, such as the World publisher of the Rocky Mountain News, which Association of Newspapers and News closed in February 2009, is Civilbeat.com’s Publishers (WAN-IFRA) and the Newspaper editor. Association of America (NAA) facilitated several meetings with publishers, hoping to “People are paying on the Web for

44 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

(publications such as) The Wall Street Journal; it has established value,” Temple told the Honolulu Star Bulletin. “We believe people will pay for content and experience that they value.” NIKKEI Also in April, Japan’s largest business newspaper, the Nikkei, put up a paywall and also announced it would restrict linking to its articles and its home page. The new rules are intended to ensure its paywall is not breached, When readers click on a headline on and to also prevent the linking of its content thetimes.co.uk or thesundaytimes.co.uk Web from “inappropriate” sites, The New York sites, they are prompted to become Times reported. members. After the paywall is raised, they will be promoted to become online A subscription to the Nikkei’s online edition subscribers. costs 4,000 yen, less than the cost of a monthly print subscription, which costs 4,383 yen. week, and all content will be paid. Times Outside Web sites must request to link to the assistant editor Tom Whitwell described the newspaper’s homepage, and staff members strategy as an “all or nothing” approach, respond to each request. The walled-off MediaGuardian reported. He also said content approach has led some to question whether the from both sites will likely disappear almost Nikkei is going too far, while others have said completely from searches on sites like Google the Nikkei is making the first move in order to News. The sites have also withdrawn from convince the next generation of readers to pay ABCe auditing. for content. Meanwhile, aiming to build more of a gated “Japan’s papers have seen their American community atmosphere, the Times will allow counterparts suffer by offering everything for users to post only using their real names. It is free,” Yoshihiro Oto, a journalism professor at also looking into creating user profiles, and Sophia University in Tokyo, told The Times. will increasingly use targeted advertising. “They’re convinced openness doesn’t work.” INDEPENDENT NEWS AND MEDIA THE TIMES AND SUNDAY TIMES Independent News and Media launched News International’s new Times and Sunday premium content across its 13 regional Times Web sites launched May 25, offering newspaper Web sites in Ireland in mid-March. readers a free preview for a month, before going behind a paywall in June. Even before Newspapers now under the freemium model the paywall goes up, however, readers must are the Kerryman, Corkman, Sligo Champion, register to go beyond the homepage. Drogheda Independent, Fingal Independent, Meanwhile, industry watchers will be keeping The Argus, Bray People, Carlow People, a close eye on Rupert Murdoch’s experiment Enniscorthy Guardian, Gorey Guardian, New with a premium, paid online experience for Ross Standard, Wicklow People and Wexford general news. People. Creating a separate Web site for the Sunday “This is very much a trial. There are no plans paper is unusual, but the two papers represent to launch across our national newspaper two distinct brands, and “readers value that brands (e.g. Independent.ie) as the national distinction,” a Times staff member said in a newspaper Web sites perform very well with live chat about the relaunch. The Sunday an advertising supported model – in fact they paper’s site will be updated throughout the day are market leaders commercially,” said Patrick each Sunday, and new content will be added Lenehan, CTO of Independent Digital. on every other day as well. The premium content is available through To access to thetimes.co.uk and the online subscriptions, an iPhone application and sundaytimes.co.uk will be £1 a day and £2 a a digital edition that replicates the print

45 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER version, via NewspaperDirect. To subscribe online, users are given options including a micro-payment for single article access, a bundle of 10 articles, several tim-based subscription options and the option to purchase premium content across all 13 regionals. To inform readers of the move to the freemium model, print newspapers included a full-page, colour ad, each of which included a letter from the paper’ editor and information detailing which content would be paid, and which would be free. LE MONDE In a move to create more of a “global brand,” on March 29 Le Monde began offering a new subscription package across all media platforms on which the French daily is offered. “The different platforms, paper and digital, are not competing but complementary,” CEO Eric Fotterino announced in the publication prior to the launch. Articles from the print version were once free on the Web, but are now accessible only to subscribers. Meanwhile, the Web version will have unique content, and Le Monde is betting consumers will be willing to at least pay for the print version on all platforms. For Û6 per month, users can access all of the newspaper’s content on the Web, as well as some extras, such as archives, topical newsletters and the site’s newswires. For Û15 per month, the package also includes Le Monde's iPhone app, which allows access to all print articles on the iPhone. The largest subscription package, which the newspaper calls “100% Le Monde,” includes the newspaper subscription, access to premium content online, access to the iPhone app and access to Le Monde on the iPad. 100% Le Monde will cost Û19.90 per month for the first three months, and then Û29.90 per month after that.

46 VOLUME 8 REPORT N° 4 WINNING MOBILE STRATEGIES

4. Efficiencies and Cuts

Saving millions of dollars through efficiencies Content generation, the key deliverable of and cutbacks has become a top priority journalists, ranked a close fifth (29 percent), strategy among newspaper companies around followed by information technology (16 the world. Among the tactics to save money percent) and content syndication (14 include reduction of employees, consolidation percent). of offices and printing plants, integration of But some media consultants will caution that multiple media staff members, consolidation a strategy of cost-cutting only is not a long- of sub-editing and production units, shrinkage term way to reorganise a company for the of newspaper widths and number of sections, 21st century. The entire value chain, revenue reduction of publishing on certain days of the model and mindset must change in order to week, and so on. achieve success. According to the 2010 World Newspaper “It’s not about only cutting the cost side, it’s Future & Change Study, conducted by the about going to go back to rethinking and World Association of Newspapers and News reinventing the business model, operations Publishers (WAN-IFRA)’s Shaping the Future and manufacturing models, and asking of the Newspaper Project, saving money on fundamental questions. How do we distribute traditional costs of paper, ink, printing and the newspaper? Is there a more efficient distribution top the list of tactics that model? How are our sales teams performing? publishers will implement in the next year. Are they going to use rate sheets, or is their Of 500 publisher and top executive entire focus on collaborative selling?” said respondents from 84 countries, materials Sandy Nelson, CEO of Aperio International, such as paper (48 percent), printing (45 a consulting firm in Washington, D.C., that percent), administration (42 percent) and helps companies rethink their businesses. It distribution (33 percent) ranked as the top has worked with companies including the four priorities for cuts in the next year. Orange County Register and Apple.

47 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

In what areas of your operations are you looking for cost reduction over the next 12 months? Please check the most important. (All respondents) N=481

Consumer sales 16 3.33% Training 25 5.20% Product development 28 5.82% Advertising 31 6.44% Marketing 37 7.69% None 40 8.32% Capital investments 54 11.23% Content syndication 61 12.68% IT 78 16.22% Office space 129 26.82% Content generation 139 28.90% Distribution 160 33.26% Administration 204 42.41% Printing 218 45.32% Materials (including paper) 231 48.02%

0 50 100 150 200 250 Source: 2010 World Newspaper Future & Change Study, WAN-IFRA, University of Central Lancashire, and Norwegian School of Managem ent © WAN-IFRA 2010

MEDIANEWS GROUP Singleton said. The paper is working toward regaining at least half of the 10,000 MediaNews Group, with 100 newspapers, subscribers lost in the strategy by selling e- including 52 dailies across the United States, editions to them in the far-flung Western operates flagships the Denver Post and San states. Subscriptions to the electronic edition Jose Mercury News. In 2009, MNG worked cost $30 per year. with consulting group Bain & Company to cut between 20 percent and 40 percent of its costs One major finding in the Bain study is that 80 out of its 100 newspapers, without cutting percent of the newspaper’s advertising revenue journalists. is derived from three days of the week: Thursday, Friday and Sunday. Readership is “Our goal was to focus our investment in low on Monday and Tuesday, when there are journalism, particularly local journalism,” no classifieds and fewer sections netting fewer MNG Chairman Dean Singleton said. “We will display ads. Sunday is a slower news day and aggressively move to monetize the online therefore Monday’s paper is lighter on news. business, and develop new niche products.” In some markets like Detroit, those days of In working with Bain, the executive team publications have been eliminated. The Post brainstormed a variety of money savers and eliminated feature sections on Monday money makers, led by closing printing plants, because readers said they did not have time to centralising copy desk and printing functions, read them. At MNG newspapers in California’s outsourcing ad production, increasing pre- San Francisco East Bay, there are two sections press automation, optimising mailroom instead of four, which cut millions in costs for processes and IT centralisation. The processes the newspapers. were categorised for “quick wins” and then secondary and tertiary priorities based on IMPREMEDIA AND JOURNAL REGISTER CO. complexity and level of benefit to the company. Former CEO of ImpreMedia, John Paton, who For the Denver Post, cutting back on recently took the helm at the Pennsylvania, distribution costs meant cutting distribution United States-based Journal Register Co., has from 13 states to just the state of Colorado. a particular modus operandi when he This move saved the company US$2.5 million, reorganises a company:

48 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

MediaNews Group: Prioritising Cost-Cutting

Circulation Sales & marketing Editorial Production G & A

High Immediate Roll-Out Sequence Appropriately Print consolidation: San B/ Victorville, Print consolidation: LANG, St. Paul Chico/Marysville Dist. Outsourcing: LADN, Bay Area, SPPP Dist. Outsourcing: Chico DC Agent: San Jose, Denver, SPPP DC Agent: Contra Costa Streamline Editorial process Best practice sharing Content centralisation Ad production off shore outsourcing Condensed Monday - Tuesday papers Finance outsourcing to Hearst SC IT centralisation / outsourcing Facility network rationalisation* Call centers centralisation / outsourcing Finance “hybrid” model* Total Ad sales force effectiveness* size of benefit Second Priority De-Prioritise Standardised editorial template Increase pre-press automation Later delivery of paper Optimise mailroom layout/ processes Streamlined financial reporting Reduce single copy returns Corporate G&A HR org optimisation* Ad modularisation* Conversion of print subscription to online* Elimination of TV Books* Withdrawal from ABC* Turning distribution into profit centre* Low Easier Complexity Harder (Timing/Investment Required/Degree of Risk) Source: MediaNews Group 2009 © WAN-IFRA 2010

1. Take control of costs at the ailing • Digital back-end outsourced to Mexico newspaper, reducing costs by 40 percent. • Communication costs lowered through voice 2. Focus efforts on local content and local over IP market share. • Centralised IT systems 3. Publish on digital channels first. 4. Cut costs on legacy models, such as print The vision for the ailing Journal Register Co. newspapers. is similar, although more drastic. Paton 5. Invest in infrastructure to deliver more maintains a daily blog called “Digital First” audience and attract new advertisers. (jxpaton.wordpress.com) on transforming the 6. Change the mindsets of the people who work company, which filed for bankruptcy for traditional media companies with leadership. protection early last year. While the company makes hundreds of millions in revenues, the “In 2006 we were nine products on two company is fraught with debt and exorbitant platforms. Now we are 97 products on 7 costs, like many U.S. newspapers. The blog platforms,” Paton said at WAN-IFRA’s World chronicles his decisions for the company under Newspaper Congress in Hyderabad, India, in transformation, and his vision for a new December 2009. “With infrastructure company with the following: investments we are 40 percent fewer employees in 2009 versus 2006.” •More feet on the street (reporters and sales people) From 2006 to late 2009, Paton cut 40 percent •Management more responsive to employees’ of the operating costs at New York-based needs ImpreMedia, including: •A blue-chip advisory board including top • Outsourced printing and mailroom services executives from New York media brass • Outsourced delivery •More video for both reporters and sales people • All pre-press centralised in Los Angeles – •More training for reporters, sales people and outsourced to Mexico beyond

49 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

•Cutting costs on technologies and other When journalists are lost, quality suffers, and budgetary items the newspaper's readers in turn dropped subscriptions, refusing to pay more for “At JRC, our strategy is to become the No. 1 diminished quality. The link between quality local platform for news information in the content and subscription or cover price is one marketplace, it means we have to deal with of utmost importance in the news industry. getting 45 percent of the costs out of the company,” Paton told SFN. UNITED STATES JRC owns hundreds of properties in the United Compared to some parts of the world, the U.S. States and has about 3,000 employees. Part of journalism market has experienced a more severe the strategy is to build local “MediaLabs” in downturn. According to the American Society of each of the company’s 18 daily newspapers, in News Editors, the country's newsroom workforce which citizen journalists and bloggers are grew from about 45,000 in 1978 to more than invited to be trained and to contribute content to 55,000 in 1989, but has been in a general state the newspaper, its Web site and other channels. of decline since then. In 2006, the journalism workforce totalled about 55,000, but dropped “They cover what we no longer cover, to less than 50,000 within the next two years. expanding our audience and our potential revenue base, for example NJ school systems,” According to the Amerian Society for he said. They are starting to monetize these Newspaper Edtiors census for 2009, a total of hyper-local blogs and other content with 5,200 newsroom professional jobs were cut, significant new local advertising revenue. “The not as high as the 5,900 in 2008. Online-only arrangements will increase in 2010 our true newspapers also cut 284 jobs in 2009. This digital revenue by at least 25 percent,” he said. caused newsroom employment to drop to 41,500, from 56,400 in 2000. The percentage What’s working with the Digital First strategy? of losses are higher at big metros and lower at “We bought 420 multimedia flip cameras for smaller titles, according to “The State of the every reporter. We have trained all of them News Media 2010,” a report by The Pew using webinar training. All cameras have been Research Center’s Project for Excellence in paid for by video advertising. We have Journalism. 117,000 video streams,” Paton said. “Our traffic is up 58 percent.” According to data from the U.S. Bureau of Labor, the number of jobs at newspaper The strategy is a work in progress. Paton said publishing companies in the country has he will need 18 months to reduce costs by 25 plunged from more than 450,000 in July 1990 percent, mostly on the newspaper side. to about 300,000 in July 2009. The decline Meanwhile, he will continue to push the began accelerating after 2001. “Digital First” agenda on both publishing and revenue-making, he said. The number of employees in other sectors, such as periodical publishing, as well as radio and TV broadcasting, reached a peak in around Job Cuts 2000 and 2001, but those employee numbers In order to survive in a difficult era, brought on have declined since then. The markets were by the global economic downturn and drops in even tougher after 2008, when many more jobs circulation, many news publishers have chosen were cut. However, periodical publishing and to reduce costs by slashing overhead, including radio and TV broadcasting have faced a milder eliminating jobs, offering buyouts or closing recession compared to newspaper publishing. offices and bureaux. Cutting jobs is a When contrasted to all other categories in the necessary tool, but one that must be “Journalistic” industry, the newspaper sector implemented as part of a larger strategy. It is a saw the most severe decline, according to the means to an end, not an end in itself. Bureau of Labor. In July 1990, there were As discussed in Ch. 3, The Dallas Morning more than 450,000 jobs in each category. All News learned this lesson the hard way when it other categories in the “Journalistic” industry simultaneously cut newsroom jobs and raised saw the number of employees rise, peaking at its subscription price. Readers surveyed nearly 700,000 in July 2001. The figures have reported they perceived that a reduction in started to fall since then, and by July 2009 valuable content did not justify a price rise. were down to a little less than 600,000.

50 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

Newspaper Newsroom Workforce, U.S., 1978-2008 Number of people 70,000 Total newsroom work force Number of minorities in workforce 60,000

50,000

40,000

30,000

20,000

10,000

0 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Source: American Society of News Editors, Newsroom Employment Census 2008. ASNE dates its data according to the release date. PEJ presents the data according to the year the data was compiled. http://www.stateofthemedia.org/2009/narrative_newspapers_newsinvestment.php?media=4&cat=4#9work © WAN-IFRA 2010

Job Losses: Broadcast vs. Print, U.S., Sept. 2008 – Sept. 2009 Number of layoffs 8,000 Print Broadcast 7,000

6,000

5,000

4,000

3,000

2,000

1,000

0 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Source: UNITY: Journalists of Color, Inc. © WAN-IFRA 2010 The newspaper industry; however, has continued to decline since 1990, and the fall Job Market: Newspapers vs. began accelerating after July 2001. In July All Other “Journalistic” Industry 2009, the numbers remained at about 300,000. U.S., Jul. 1990 – Jul. 2009 According to Unity: Journalists of Color, Inc., and Periodicals, radio, TV, cable, Internet, the Bureau of Labor statistics, between September Thousands other information services of jobs Newspapers 2008 and September 2009, the U.S. print sector 800 lost more than 24,500 jobs, while the broadcast 700 sector eliminated more than 8,300 positions. 600 Although print has been consistently impacted 500 to a greater degree, the broadcast sector faced 400 a dramatically high volume of layoffs in the 300 fourth quarter of 2008. 200 100 Total job loss in the journalism industry hit 0 7,398 in December 2008, the highest during 0 1 -9 9 92 3 4 ul l- l- -9 9 95 6 7 that period of time. Another spike was in J J u u ul l- l- -9 9 98 9 0 J J J u u ul l- l- -9 0 01 2 3 J J J u u ul l- l- -0 0 04 5 6 J J J u u ul l- l- -0 0 07 8 9 Source: Bureau of Labor, Bloomberg BusinJ essJ weeJ ku u ul l- l- -0 0 March 2009, when more than 6,000 job losses J J J u u ul l- (http://www.businessweek.com/the_thread/economicsunbound/ J J J u were counted. archives/2009/09/the_journalism.html) © WAN-IFRA 2010

51 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

Job Market by Sector, U.S., Jul. 1990 – Jul. 2009 Thousands Thousands of jobs Newspaper publishers of jobs Periodical publishers 500 200 450 180 400 160 350 140 300 120 250 100 200 80 150 60 100 40 7 8 9 7 8 9 50 4 5 6 0 0 20 4 5 6 0 0 1 2 3 0 0 0 - l- 1 2 3 0 0 0 - l- 9 0 0 0 0 - l- l- l 9 0 0 0 0 - l- l- l 0 6 7 8 9 0 0 - - l- l u u u 0 6 7 8 9 0 0 - - l- l u u u 3 4 5 9 9 - - l- l l u u u J J 3 4 5 9 9 - - l- l l u u u J J 0 1 2 9 9 9 - l- l l u u J J J 0 1 2 9 9 9 - l- l l u u J J J 9 9 9 - l- l- l u u u J J J 9 9 9 - l- l- l u u u J J J 9 - l- l- l u u u J J J 9 - l- l- l u u u J J J l- l u u u J J J l- l u u u J J J u u u J J J u u u J J J J J J J J J Internet publishing, Thousands Radio and television Thousands broadcasting of jobs broadcasting of jobs and Web portals 300 120

250 100

200 80

150 60

100 40

50 20 7 8 9 7 8 9 4 5 6 0 0 4 5 6 0 0 1 2 3 0 0 0 - l- 1 2 3 0 0 0 - l- 9 0 0 0 0 - l- l- l 9 0 0 0 0 - l- l- l 0 6 7 8 9 0 0 - - l- l u u u 0 6 7 8 9 0 0 - - l- l u u u 3 4 5 9 9 - - l- l l u u u J J 3 4 5 9 9 - - l- l l u u u J J 0 1 2 9 9 9 - l- l l u u J J J 0 1 2 9 9 9 - l- l l u u J J J 9 9 9 - l- l- l u u u J J J 9 9 9 - l- l- l u u u J J J 9 - l- l- l u u u J J J 9 - l- l- l u u u J J J l- l u u u J J J l- l u u u J J J u u u J J J u u u J J J J J J J J J Source: Bureau of Labor, Bloomberg Businessweek (http://www.businessweek.com/the_thread/economicsunbound/archives/2009/09/ the_journalism.html) © WAN-IFRA 2010 According to Bureau of Labor statistics, the 39 titles have done so, and 109 in 2009. So far U.S. journalism industry lost jobs at the pace in 2010, there are more than 18 papers closing of almost three times more than the economy's down or stop publishing print version. average of the total, at a monthly rate of 22.23 According to Paper Cuts, there have been nearly percent and 8.1 percent, respectively. 35,000 job losses or buyouts in the U.S. Since 2008, there has been more than 166 newspaper industry since March 2007. From newspapers in U.S. have closed down or March to December 2007, more than 2,256 stopped publishing a newsprint edition, newspaper jobs have been reportedly eliminated according to Paper Cuts. In 2008, more than or offered buyouts. The numbers increased to

Layoffs by Month, All Journalists, U.S., Sept. 2008 – Sept. 2009 Number of layoffs 8,000 7,398 Sep-08 2,565 7,000 Oct-08 2,909 6,050 Nov-08 2,524 6,000 Dec-08 7,398 5,000 Jan-09 4,818 4,818 Feb-09 2,546 4,000 Mar-09 6,050 Apr-09 2,329 3,000 2,489 May-09 1,132 2,909 2,329 2,000 2,565 2,524 2,546 Jun-09 1,341 2,151 1,780 Jul-09 2,489 1,000 1,132 1,341 Aug-09 2,151 Sep-09 1,780 0 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Source: UNITY: Journalists of Color, Inc. © WAN-IFRA 2010

52 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

Jobs Lost: Economy vs. Journalism Industry Number of jobs lost U.S., Sept. 2008 – Aug. 2009 % 800,000 250 741,000 Jobs lost: Economy 681,000 193.11 681,000 % change 700,000 652,000 200 Jobs lost: Industry 597,000 600,000 % change 137.63 150 519,000 500,000 463,000 83.43 85.61 100 380,000 400,000 57.11 52.81 321,000 303,000 50 18.38 276,000 300,000 40.24 14.07 8.81 -4.26 -8.10 18.46 216,000 0 200,000 13.41 -20.4 -13.58 -13.23 -41.62 -21.74 100,000 -34.87 -40.39 -50 -47.16 -61.5 -51.4 2,565 2,909 2,524 7,398 4,818 2,546 6,050 2,329 1,132 1,341 2,489 2,151 0 -100 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09

Source: Journalists of Color, Inc., and Bureau of Labor Statistics © WAN-IFRA 2010

Newspapers that Have Closed or Stopped Publishing a Newsprint Edition, U.S., 2007-2010

Google

Source: Paper Cuts, http://newspaperlayoffs.com/ © WAN-IFRA 2010 more than 15,992 in 2008 and were at more “Big Papers,” those with circulations of more than 14,783 in 2009. As of May 2010, there than 100,000, faced more severe job cuts in have been more than 1,797 job losses or their newsrooms compared to “Small Papers,” buyouts in newspaper companies in the country. which have circulations of 100,000 or under. Eighty-five percent of “Big Papers” said they The Pew Research Center’s Project for are cutting staff in newsroom, compared to Excellence in Journalism conducted a survey only 52 percent of “Small Papers.” targeting 259 Web-administered interviews with editors and senior-most news executives In the past year, job cuts, buyouts or pay of daily U.S. newspapers, from January 29 to freezes at U.S. publishing companies have February 29, 2008. According to this study, 59 continued. Some notable titles, such as USA percent of respondents said they are cutting Today, The New York Times and The staff in their newsrooms, while 27 percent said Washington Times, announced layoff plans in they would continue on with the existing staff. order to cut costs. The Wall Street Journal also Only 14 percent said they will hire new staff in announced plans to shut down its Boston their newsrooms. office in October 2009.

53 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

Newspapers that Have Closed or Stopped Publishing a Newsprint Edition, U.S., 2008-2010

2010 Art Review & Preview Greenville Press Pocono Business Journal Berkeley Daily Planet Greenwood Lake and West Milford The Post-Crescent Brick Township Bulletin, Woodbridge News The Sentinel Sentinel NASCAR Scene Sun Tribune California Real Estate Journal Peoria Times-Observer The Western Tribune Chicago Free Press Pinellas News Whitehorse Community News The District Weekly Placer Sentinel 2009 The Adit Dakota Journal Lake Elmo Leader Algonquin Countryside, Cary-Grove Danville Weekly Lake Norman Times Countryside and Wauconda Courier The Democrat Lakota Journal American Fork Citizen, Lehi Free Dennis Pennysaver and Yarmouth The Lemoore Advance Press, Lone Peak Press, Orem Times Pennysaver Los Gatos Weekender and West San and Pleasant Grove Review Des Plaines Times and Mount Jose Resident Ann Arbor News Prospect Times Loudon Easterner Arlington Heights Post, Elk Grove Detroit Daily Press Maricopa Tribune Times, Hoffman Estates Review, El Dia McCamey News Palatine Countryside, Rolling Donegal Ledger The Message for the Week Meadows Review, Schaumburg Douglas Times The Milford Observer Review and Wheeling Countryside Downingtown Ledger Ming Pao New York AsianWeek Doylestown Patriot Ming Pao San Francisco Baltimore Examiner Eagle-Times The Monitor-Herald Bay State Banner East Bridgewater Star, West New Hope Gazette Bedford Sun, Euclid Sun Journal, Bridgewater Times and Whitman New York Blade Garfield-Maple Sun, Nordonia Hills Times The Newton Record Sun, Sun-Press and Twinsburg Sun East Hartford Gazette Nichi Bei Times Bellevue Business Journal East Iowa Herald Northern Star The Bethel Beacon, The Brookfield Elizabethtown Chronicle Oak Cliff Tribune Journal, The Kent Good Times Fallon Star Press Oxford Tribune, Parkesburg Post Dispatch and The Litchfield Enquirer Fitchburg Star Ledger and Solanco Sun Ledger Big Sky Sun Fort Collins Now Pawling News Chronicle The Birmingham Eccentric, West The Franklin Chronicle Petoskey Citizen-Journal Bloomfield Eccentric, Troy Eccentric, La Frontera Plymouth Bulletin Rochester Eccentric, and Southfield Gazette Advertiser Putnam County Courier Eccentric Germantown Courier and Mount Airy Quakertown Free Press Bloomfield Free Press Times Express Register Herald Bloomfield Journal, Windsor Journal, Grapevine Sun The Rockingham News Windsor Locks Journal Hanson Town Crier Rocky Mountain News Boca Raton News Hardee Sun Seattle Post-Intelligencer Boulder City News Harlem Valley Times, Millbrook Stillwater Courier The Bridge Round Table, Voice Ledger South Florida Blade The Bulletin Henderson Home News Southern Voice Business Journal of Corpus Christi The Hershey Chronicle The Sun Business Times of the Rio Grande Hill Country View Sun Post Valley Hopi Tutuveni Today Newspapers Carson Times Hyde Park Townsman The Town Meeting Christian Science Monitor The Independent Tucson Citizen The City Star Iraan News Vail Sun The Clarke Courier Island Breeze Valley Journal Coatesville Ledger Jeanerette Enterprise Washington Blade Connecticut Valley Spectator The Journal-Messenger The Weekly Almanac Coral Gables Gazette Kansas City Kansan The Daily Reporter LA City Beat 2008 The Advance Leader, Penn Hills Studio City Sun News Gleaner, Northeast Breeze and Progress and Woodland Progress Eureka Reporter Olney Times Albuquerque Tribune Gooding County Leader Noblesville Daily Times The Argus Champion Hamden Chronicle North Haven Post Branford Review, Clinton Recorder, Hoy North Side News East Haven Advertiser, Pictorial Kitsap Free Daily Orfordville Journal & Footville News Gazette, Shelton Weekly, Shore Line La Tribuna Rumbo de San Antonio Times, Stratford Bard and Wallingford Lake Highlands People, Lakewood Rumbo del Valle Voice People and West Plano People San Juan Star Bridgeville Area News The Leader Southern Idaho Press The Capital Times Leadville Chronicle Spotlight Coraopolis-Moon Record Lincoln County Journal Suffolk Life Delaware Valley News Main Street News Thomasville Times East Side Herald McKnight Journal and North Journal Vail Trail El Nuevo Dia Orlando Minidoka County News Wood River Journal Encino Sun, Sherman Oaks Sun and The New York Sun

Source: Paper Cuts, http://newspaperlayoffs.com/ © WAN-IFRA 2010

54 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

Layoffs and Buyouts How Widespread Are Cutbacks at U.S. Newspapers, 2007-2010 in Newsroom Staffing?

1-24 25-49 50-74 75-99 100+ Unknown Papers adding staff Papers cutting staff % Papers holding 90 2010 80 85 70 60 59 50 52 40 30 32 20 27 10 14 16 7 7 0 Overall Big papers Small papers Base: 259 Web-administered interviews with editors and senior-most news executive of daily U.S. Newspapers, January 29 through February 29,2008. 2009 Note: “Big Papers” and “Small Papers” are defined as papers with circulation over 100,000 and a circulation of 100,000 or under respectively. Source: “The Changing newsroom: What is Being Gained and What is Being Lost in America’s Daily Newspapers?”, Project for Excellence in Journalism © WAN-IFRA 2010

According to the federal Bureau of Labor and Statistics, of the top 10 industries by job loss, newspapers rank seventh. Compared to 326,000 jobs in newspapers at the end of 2008, nearly 25 percent of them will no longer exist in 2018. These job cuts at U.S. newspapers have left 2008 newsrooms without many of their youngest reporters, editors and photographers at a time when they are most needed to help newspapers remodel and adapt to the challenges of the Internet. According to a recent study by The Associated Press Managing Editors, the majority of the 95 responding editors said they had seen their newsroom staff shrink by more than 10 percent over the last 12 months, with the 18-to 35-year-old bracket most affected by the cost cutting moves. 2007 “Newspapers have lost a lot of their mojo,” said newspaper analyst Ken Doctor of Outsell Inc. “If you are 25 or 35, you are going to be part of an industry that is going to thrive in the future. That is not the way newspapers are perceived right now, rightly or wrongly.” THE LOS ANGELES TIMES The Los Angeles Times has experienced waves of job cuts in recent years. In February 2008, it cut 40 jobs from its 900-person newsroom Note: 2010 so far: 1797+ layoffs and buyouts staff, and in July and October of 2008, 135 and 2009: 14783+ layoffs and buyouts 2008: 15992+ layoffs and buyouts 75 more jobs at newsrooms were slashed, 2007 (Mar. – Dec.): 2256+ layoffs and buyouts Source: Paper Cuts, http://newspaperlayoffs.com/ respectively. In February 2009, another 70 © WAN-IFRA 2010 newsroom job cuts were announced. All these

55 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER actions led the numbers of news staff down American papers have reached or passed that from 1,200 in 2001 to about 570. point – and that skimpiness drives a share of circulation losses.” Moreover, several notable editors, including John Carroll, Dean Baquet and Jim O’Shea, This will lead to a new question that all had quit or been fired after clashing with newspaper publishers need to think about:“If a Tribune Company’s management. newspaper is smaller, what is the optimal shape of that? Should all stories simply get shorter? Despite these sad stories and the fact that the Or should the medium-size story be sacrificed L.A. Times was late in developing its Web site, instead, so that paper that is a rich but less time many excellent journalists are making consuming read that is constructed with a key progress, and online traffic is climbing. group of longer stories, and many more very However, according to the report “The State of short stories that summarize events in brief – the News Media 2009,” by the The Pew perhaps with longer versions of some on the Research Center’s Project for Excellence in Web?” the report states. Journalism (PEJ), the dynamics of the title was OTHER PARTS OF THE WORLD totally changed compared to what it was six years earlier, when its ambition was to rival There have, of course, been job losses in with The New York Times, the Washington newspapers around the globe, including Post and the Wall Street Journal as papers of Swedish daily Dagens Nyheter, British title national rank. Trinity Mirror and The West Australian. Canadian paper Torstar also announced it The LA Times once had a Washington bureau would ship more than 100 jobs overseas. equal in size to that of The New York Times, but it was merged into a corporate Tribune In the United Kingdom, the newspaper industry bureau, which also changed the paper’s culture has faced tough challenges; since December and personnel. 2008, there have been at least 8,800 newspaper jobs lost and 54 local offices closed. “There has been a steady drain of the top health and science writers who brought the paper several Pulitzers for long-form Job Cuts and Office Closures explanatory pieces earlier in the decade. among Newspaper Publishers California and extended metro coverage have across the UK and Ireland thinned. A good many of the paper’s best Dec. 2008 – Apr. 2010 known reporters and editors are gone. The people at the top of the paper are relative newcomers,” the report stated. PROJECT FOR EXCELLENCE IN JOURNALISM SURVEY According to a PEJ survey targeting 259 newspapers in early 2008, 59 percent said they reduced their number of staffers, and 61 percent said less space was being devoted to news. “With less news space, papers do not need as many reporters and editors; with fewer journalists, the papers need less space to display their work. While the cutbacks may be unavoidable, they become part of a reinforcing downward spiral,” stated the report, “The State of the News Media 2009.” “At some point, restive readers conclude that there is not much news there anymore, that the Note: Blue means job cuts and red means office closures. newspaper, already something fewer people At least 8800 jobs lost, 54 offices close since Dec. 2008 Source: http://maps.google.co.uk/maps/ms?hl=en&safe=off&ie= wanted in print, is just not as worthwhile UTF8&msa=0&msid=116069118730922972880.00045d5ef442b 3823ae51&ll=54.316523,-3.55957&spn=8.980297,18.676758&z=5 anymore. We believe that a number of &source=embed © WAN-IFRA 2010

56 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

Efficiencies technology comprises various subsystems for complete production control. This means that Presse-Druck und Verlags GmbH has created the output control of the CTP imagers is significant efficiencies by adding a production covered, at the press (press utilisation, planning and management system at their imposition diagrams) and the entire finishing state-of-the-art printing centre in Augsburg, area, including insert splitting. Germany. The system creates higher productivity along the workflow, and The publishing house transmits the page data simplifies complicated processes, saving via an interface to MPS Cockpit. The insert considerably in the long-run. data is added by the ABB InsertManager. All information is pooled in MPS Cockpit; so that The German publishing house used the a homogenous environment is created. “We occasion of the technical modernisation of its can also generate all reports via this central printing plant, a project scheduled to be platform that then become available to all completed in the near future, not only to areas in real time. Therefore we have realised investigate what would be the optimal an extremely lean operative controlling. No technical equipment for its operation but also one generates Excel charts, extracts reports or to carry out an intensive analysis of its internal types out production times, all that is in the workflows. past,“ Bühring adds. “We established that we can make major Today, everything that concerns times, presses efficiency gains by redefining ourselves here,” and personnel is in MPS Cockpit. In contrast, says Eike Bühring, technical manager at the the commercial side of production has not yet printing centre in Augsburg. “This begins with been integrated. This Cockpit extension, with the editorial and publishing workflow at a very which for example material stock monitoring early stage, already at the time of page and all costs should be integrated, is the next creation, and includes advertising and insert project on the agenda in Augsburg. Bühring management, production planning and hopes to reach an ideal situation where the distribution management, up to the delivery commercial and technical areas are closely vehicles.“ linked, allowing optimal continuity. ALL-IN-ONE PLANNING SOLUTION “We are always pleased when we hear As Bühring explains, instead of planning a repeatedly from colleagues that we have made product repeatedly using the same basic data – major progress where lean production is separately for inserts, ads, editorial, printing concerned. And we will continue to work on and distribution – many synergies can be maintaining this pioneering role. The next big obtained by genuinely reducing everything to a step – after the technical integration is common denominator and by planning completed this year – will be the commercial comprehensively and only once. “That was our integration. It will be another major step, but target that we have now realised with ABB.“ also one that we consider to be absolutely necessary and feasible.” The editorial and publishing areas work with an alfa Media system. The ABB InsertManager is used for insert planning and an in-house development for ad management. A Ferag PostPressManagement System (PPM) is integrated into the finishing operation. “We in the printing plant work with the ABB MPS Cockpit production management system to which all production areas have access and that provides all systems with a central and uniform production environment,“ says Bühring. The systems are connected to the higher-level production management via XML interfaces. At the core of the operation is the MPS Cockpit, the central planning platform. The

57 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

58 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

5. Outsourcing

Newspaper publishers have found that one- The Role of Outsourcing time cost cuts are not enough to streamline as a Money-Saver their businesses for the future. Instead, lowering costs must be done as part of a long- ImpreMedia in New York outsources its pre- term business strategy; and for many press work to a Mexican company. The New companies, part of that strategy includes Zealand Herald outsources its sub-editing to outsourcing. Australian firm Pagemasters. MediaNews Group in Colorado and California outsources Saving money through outsourcing and/or its finance functions to Hearst Newspapers. offshoring has grown in popularity because it Several British newspapers outsource portions is not a one-time fix to help numbers on a of their editorial content to the Press current earnings report, but rather it is part of a Association. Several regional newspapers in plan for the future. Denmark outsource their ad production to a company in Bolivia. And the list goes on.

OUTSOURCING: Paying another According to the 2010 World Newspaper company to provide services or Future & Change Study, 17 percent of the 500 products instead of hiring in-house newspaper executive respondents said they staff to fill those same roles. plan to outsource functions in their newspaper company to achieve greater efficiency and cost savings in the next year. OFFSHORING: Paying a company outside a business's home country to Research group ValueNotes, located in Pune, provide services or products instead of India, the heart of the world's offshoring hiring in-house staff to fill those same operations, has taken a look at what it calls roles. news publishers' “two pronged” dilemma: publishers must increase revenues or decrease

59 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

Likely Options for Newspaper and Magazine Publishers

Rise of Integrating cost digital media and wage arbitrage with new model Monetizing Reducing Decrease all avenues operational Considering in corporate of content overheads cost arbitrage 0 spending

Decrease in Reducing subscriber base redundancies Considering 6 3 in operation wage Redefining arbitrage value Reducing proposition manpower flux

5 Consolidation 2

4 Incorporating cost cutting Unsustainable 1 in business mix operations Decrease Re-inventing Reducing in revenues revenue model costs Increasing revenues Probable path Factors affecting transition Alternate path Transition characteristic

Source: ValueNotes Research, “Magazines and Newspapers: Will publishers outsource?” March 2010 © WAN-IFRA 2010 costs in order to survive (and most need to do percent worked with publishers (the buyer both). To find out how outsourcing fit into the group for outsourced publishing services; 31 plans of the publishing industry, ValueNotes percent were service providers (sellers); and conducted a survey of management, 13 percent included industry trackers such as publishers, journalists, consultants, analysts, consultants and freelancers. freelancers, publishing service providers, The largest group (43 percent) were from the analysts, industry trackers, and more. United States, while 20 percent were from Of the more than 200 survey respondents, 56 the United Kingdom, 18 percent were from

Can Outsourcing Mitigate Challenges? % 30 Key challenge Effective mitigation via outsourcing 25 27 23 20 22 20 18 15 14 14 14 13 10 12 12 10

5

0 Diversifying Value addition Adapting Addressing Cost/margin Lack of info new areas within current to new new pressures in-house of business offerings technology geographies capabilities Source: ValueNotes Research, “Magazines and Newspapers: Will publishers outsource?” March 2010 © WAN-IFRA 2010

60 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

Asia, 10 percent were from (non-UK) of 15 percent to 25 percent while European countries and 9 percent were from outsourcing. Meanwhile, the wide range in other parts of the world. cost savings shows that smaller publishers – those with less than US$15 million in Forty-four percent of respondents came from revenues – are currently experimenting with newspapers, and 56 percent were from outsourcing. magazines. “Scale benefits large buyers tremendously. ValueNotes mapped the probable course of a One out of four publishers with revenues [of] publisher's operations in order to determine more than $500 million are capable of six stages during which the publishers achieving more than 40 percent in cost evaluate options in order to increase revenues savings,” ValueNotes pointed out. “These and decrease costs. cost savings also reflect a variance in the Most respondents indicated that they believe kind of work outsourced. Complex tasks and outsourcing is a good concept that may work higher value functions tend to affect cost sometimes, and just 8 percent of savings for the buyer. These publishers have management from newspaper and magazine expended appropriate amount of time and publishing companies do not support effort to increase productivity and efficiency outsourcing. However, understanding how of outsourced work. Although restricted to a outsourcing and/or offshoring can mitigate small group, 'no cost savings' have been constraints is important to understanding the experienced by some publishers!” value these companies provide. To understand this, ValueNotes asked respondents: • Do buyers believe that their business Cost Savings: challenges can be better dealt with by help of Overall Buyer Perceptions outsourcing? >40% 14 • Is there enough cognizance of the benefits 25-40% of outsourcing to mitigate a particular 28 problem area? 15-25% 45 10-15% 14 PUBLISHERS' PERCEPTIONS OF COST SAVINGS None 3 According to the survey, 45 percent of % 0 10 20 30 40 50 Source: ValueNotes Research, “Magazines and Newspapers: publishers said they have seen cost savings Will publishers outsource?” March 2010 © WAN-IFRA 2010

Cost Savings: Perceptions by Size of Company*

None 10-15% 15-25% 25-40% >40% % 100 25 50 40 60 20 90 80 13 70 25 60 33 60 50 50 50 40 20 30 27 20 10 20 0 7 >$500 million $100-500 million $30-100 million $15-30 million <$15 million * Size based on company's revenues, currency in U.S. dollars. Source: ValueNotes Research, “Magazines and Newspapers: Will publishers outsource?” March 2010 © WAN-IFRA 2010

61 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

Outsourcing Companies Discuss improved sales as well as reduced make- How They Can Save You Money goods), more flexibility (ability to quickly mobilise capacity to meet demands of new SFN asked five top offshoring and initiatives), operational efficiency and outsourcing company executives in India automation technology. how their services help newspaper companies save money, to give an example of how they Express KCS has a long history at the high end helped a newspaper save, and what savings of premedia services and as such often brings they think they can provide that can't be our clients the benefits of methodologies and found elsewhere. experience that are outside their usual domain. • Pervez Sikora, COO of 2adpro, Bangalore Tony Joseph: All • Robert Berkeley, CEO of Express KCS, newspaper publishers Gurgaon would agree that their • Tony Joseph, CEO of Mindworks Global, core proposition is New Delhi unique, compelling • Ken Swanson, CEO of Affinity Express, content that draws Pune audiences valued by • Sandeep Senjit, Client Services Manager advertisers. Most would of Infosys Technologies Limited, Bangalore also agree that that this proposition will increasingly find expression How do your services help newspaper online. companies save money? However, 30 to 40 percent of in-house Pervez Sikora: 2adpro newspaper resources are today devoted to tasks offers highly customised that are not part of the core proposition and are off-shore design studio not strategic. Examples include page layout, services to newspaper copy editing, pagination, image processing and companies. Newspaper ad production. companies outsource the production of print and Mindworks believes that this disconnect digital advertising to provides a significant opportunity for 2adpro. This is a newspapers to strengthen their core function that newspapers in the U.S. and UK proposition. By consolidating and outsourcing traditionally handled in-house. non-strategic tasks, they can free up the resources needed to keep their reporters on the By having this work produced off-shore, beat, and do more online. companies can achieve savings of 40 to 50 percent while improving turnaround times. The newspaper of the future, we believe, will The savings come from the lower production have a three-ring structure (see below). In the costs in countries like India and 2adpro’s innermost ring is a core team of reporters and transaction based pricing model which senior editors who focus on creating unique, allows a customer to better align their costs local content. The second ring would consist with advertising demand and volume. of an outsourced team of copy editors and designers who would take on a range of Robert Berkeley: production-related tasks including copy Express KCS specialises editing, page layout, content aggregation, in helping clients event listings, creating information databases identify the parts of and repurposing existing content. The third their creative services ring would consist of community residents operations that are who provide crowed-sourced or user-generated appropriate for content such as updates on school sports and outsourcing, and we videos of community happenings. work with them to put these solutions in place. Our clients benefit A consolidation/outsourcing project could from our use of lower-priced labor markets generate savings of anywhere from 35 to 60 combined with improved quality (better percent, depending on the existing costs of the design leads to more effective ads and newspaper publisher.

62 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

Ken Swanson: Sandeep Senjit: For the Depending on the specific last few years, we have client arrangement, invested in understanding Affinity Express the newspaper domain, provides savings ranging its nuances and have from 30-50 percent over developed a deep set of internal ad production competencies and operations. This is based services offerings which on reductions to internal has resulted in direct and staffs and labour arbitrage. indirect cost benefits to our clients in the On top of the labour savings, the move from information services area. Today, we are a very fixed costs and overhead to variable costs strategic partner for many newspapers, based on actual volumes with Affinity Express providing business consulting, technology and is an important consideration because it allows business process outsourcing services across publishers to weather the peaks and valleys in the value chain, i.e. advertising, content advertising demand throughout the year and creation, content aggregation, content delivery pay only for ads produced. and sales and fulfillment. We are helping our customers seamlessly manage their transition Along the same lines, the handling of to the digital media. Newspapers seeking to fluctuations in volume is valuable because optimise costs and improve their free cash publishers don’t carry the extra staff needed flows need these services to centralise and for busy times and Affinity Express is standardise existing operations, identify newer responsible for ensuring adequate capacity. models and revenue channels to monetize the Especially when there are multiple properties, digital supply chain. the standardisation of processes improves Who could have imagined in the recent past efficiency and allows the benchmarking of that business critical applications like printing, productivity, driving additional savings. billing, print production, advertising and In summary, Affinity Express offers: circulation could be supported from overseas? But, Infosys is doing just that and at the end of •30 percent to 90 percent headcount reduction the day, our clients have realised not only in existing staff direct savings of more than 20 percent, but •20 to 50 percent efficiency improvements have also benefited from enhanced service from software levels & rapid time-to-market for strategic •30 to 50 percent reduction in outsourced staff initiatives. For them this is a differentiator in costs the market place. •12-hour turn times on 99 percent of ads produced Newspapers are outsourcing their back-office •No expensive hardware or software purchases operations in the content management and necessary as the state-of-the-art, web-based customer management domains. We have a ad tracking system hosted by Affinity Express shared service centre set-up for advertising in Chicago is part of outsourced ad accounting process including-billing, production costs collections, GL entry, GL reconciliation, accounts payable and vendor management; Sample Savings Calculations advertisement order entry and ad operations Existing ad production staff 100 (ad creation). Due to outsourcing, our client Out-of-pocket average employment costs* $44,000 has realised cost savings of 40 percent to 50 Total employment costs $4,400,000 percent using a shared service model across Aggregation headcount savings their different properties and bringing in @ 25 percent $1,100,000 process efficiencies. Software efficiencies on 12 percent of remaining headcount after aggregation $396,000 Our best bet going forward will be our “News Outsourced savings using 70 percent Paper In a Box” (NIAB) solution. It is our remaining headcount balance fully hosted platform to support all functions @ 34 percent per FTE+ $662,000 and the perfect opportunity for newspapers to Total savings $2,158,000 hive off their infrastructure, reduce cost of Percentage savings on original total cost 49 percent operations and focus on their core strengths. If

63 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER newspaper properties are looking to other than news selection – copy editing, consolidate, then we strongly encourage them image selection and page layout – were to look at NIAB. Another key benefit of the outsourced to a low-cost location. platform is a transaction based pricing model as against a product license – thus moving As one of the editors said: “We had 2-3 your cost Ssructure from a Capex Model to a months to outsource and if we could make it Opex Model . This in the true sense changes succeed, we could keep the edition.” your cost structure thereby making you more The company set a clear target for the next agile in business conditions like today. three months: To outsource all production Please give a specific example of how a tasks for the edition and keep just one editor to newspaper company saved money using supervise operations. your services, and how much that Creating a base for outsourcing: Intense work company saved. was carried out in June, July and August 2008 PS: Treasure Coast newspapers in Stuart, to chalk out the details as September was the Florida was looking to create an on-demand month by when all staff, barring the editor, studio services solution to handle the were to leave. The main concern was whether production of print ads. The company selected it could be done at all, given the pressure of 2adpro in early 2008 as their partner and pulling together all the pieces to make within six months had transitioned close to outsourcing possible, while still producing the 100 percent of their total production ad volume paper locally, during the transition. to 2adpro’s studios in India. The project The newspaper appointed a chief coordinator enabled Treasure Coast to reduce their high for the project, making him the one-point cost on-shore operations by nearly 75 percent contact for the outsourcing partners, the and realise annual savings of nearly US$1MM. technical team and management and other Due to the success at Treasure Coast, Scripps – internal teams. It became a “project of detail” the parent company of Treasure Coast, has where he and his team worked on creating selected 2adpro as a single vendor to handle detailed documents outlining how the paper was advertising production needs for all to be designed and what it ought to look like. newspapers owned by the company. Read the complete case study at Identifying the right partner: For the http://www.2adpro.com/case-study-TCN.html. newspaper, getting the right partner at the first go was crucial. It needed a service provider RB: The San Jose Mercury News began a who could get under the skin of the newspaper review its advertising operations in 2006 to quickly and transition the process to the identify and replicate best practice wherever offshore team within three months. possible and rationalize asset use. Key to this has been the relationship built with Express Mindworks Global Media Services fit the bill KCS. We performed a thorough assessment of perfectly. Founded and staffed by senior media the existing workflow operations, systems and professionals who have created and led some technology to understand any potential gaps of the most respected newspapers and that might restrict remote operation, and magazines in India, and supported by people implemented a broad solution that enabled who have created some of the largest SJMN to work seamlessly with our production outsourcing companies, Mindworks offered a studio as if it were in-house. Our service rare combination of editorial skills and model delivered around 70percent savings industrial-strength processes. immediately and continues to bring new initiatives and operational efficiencies today. The client was already familiar with Mindworks’ other services such as archiving TJ: In 2008, as newspaper revenues came and comment moderation, two projects that under pressure, the international edition of a had been operationalised without much leading U.S. newspaper on the East Coast had difficulty. So it decided to test Mindworks’ a tough choice to make. The only way the editorial capabilities. edition could be saved was by a dramatic reduction in the cost of producing the 24-page Transition: The key challenges in transition daily. This could be achieved only if all tasks were technical and workflow-related.

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These included: year to less than $150,000 a year over time, which allowed the edition to survive. •Getting an off-the-shelf design software that Mindworks could use and that would work as KS: Affinity Express supports one of the well as the existing system nation’s largest diversified media companies. •Managing real-time information flow halfway Its major interests include magazine, around the world newspaper and business publishing, cable •Feeding material, photos, wires etc. to the networks, television and radio broadcasting, Mindworks system Internet businesses, TV production and •Documenting the way editorial decisions distribution, newspaper features distribution were made and real estate. The company owns 15 daily •Documenting step-by-step details for each newspapers. section of the newspaper. E.g. for the business The Affinity Express design services for this section, the team documented: client include print and interactive web ad – How many stories would go on page 1 production, marketing collateral and creative – How many of those would jump to page 2 design for commercial clients. For two – Which columns were to be used for business properties alone, Affinity Express produces briefs more than 100,000 ads annually. The chief coordinator held meetings twice a The bulk of ads are produced overnight, within week with the IT team to troubleshoot issues. 12 hours from input to output. The balance is He and his team wrote endless documents to typically completed during the same day for capture “what we do and how we do it.” They support of revisions and requests from sales worked 10 to 12-hour days, managing the people and advertisers. project with Mindworks, as well as bringing out the newspaper. An excellent working Workflow is engineered to support quality relationship with the Mindworks project output with automated interfaces to order manager, who was the one-point contact at booking, preflight software for quality image Mindworks, helped in accomplishing “what and file validation, electronic proofing and many here thought was impossible by approval tools to manage the sales process September,” says the Chief Coordinator today. with advertisers. Based on the success with the first two Project preparation: Several systems and properties, the client expanded the agreement processes were put in place at Mindworks to with Affinity Express to its entire newspaper ensure that transition from one stage to another group including digital solutions. Affinity was smooth. Express helped the client create a centralised Transition process: It was decided that the first ad production workflow to allow shared step towards outsourcing would be Mindworks production between all properties and increase taking over the production of the 12-page both service levels and staff utilisation. Sunday supplement – a mix of travel, opinion In addition to taking on ad production, Affinity and entertainment pages – that was produced Express has supported critical change over the week. The non real-time nature of the management from sales through delivery and Sunday supplement made it an ideal launch provided user training to lead the company pad for the project. Mindworks started into a common process for all users and building the supplement in July, after which facilitate outsourcing with Affinity Express. the client’s editors handed over more responsibilities – science page, feature pages, At the first two properties, the client realised people page, business and inside news pages more than 40 percent savings and a reduction etc. By October 2008, all pages were being in production staff of more than 50 percent, handled by Mindworks. The client’s editor while getting the AESB hosted technology to would provide page-wise story lists while manage the workflow, content and end-to-end relying on Mindworks to select photos, pull process with no capital expenditure. Affinity and copy edit stories and create attractive Express also improved turn times significantly layouts. on interactive web ads. Benefits: The outsourcing project reduced the For another major newspaper client, Affinity client’s editorial expenses from $400,000 a Express achieved the following benefits:

65 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER

•Cash savings of more than 40 percent In another situation we were faced with a •All digital assets consolidated at one location challenge to improve business parameters. Our for the use of all properties (in one move) clients were incurring high costs of running •Single workflow for all papers, small and functions like finance, accounting and order large management. There was a high dependency on •Workload balancing between properties to paper which resulted in low efficiency and accommodate absenteeism and changing there was shrinkage in circulation of demand newspapers, shrinkage in advertising revenue •The same graphic applications across the and revenue leakages due to incorrect enterprise bookings. •Ability to use ads effortlessly between We adopted YB, LEAN and OIP Six Sigma properties techniques across the focus areas to improve •Blackberry proofing for sales and production productivity, reduce cycle time and avoid •50 percent more face time for salespeople losses. The processes were offshored and then with customers optimised. With the automation of the SS: All initiatives start with the senior advertising process, overall savings of $140K management looking for cost efficiencies per year were delivered. without compromising on quality of service. What types of savings do you think The complex maze of legacy technology poses offshoring and outsourcing can provide serious limitations in aligning the applications to newspaper companies that cannot be to the changing business needs. Then there is found elsewhere? always the classical “business vs. IT” debate PS: Off-shore outsourcing offers a unique which actually acts as an enabler for such opportunity for newspaper companies to transformations. Today’s CIO is measured on access resources and talent in different parts of the success of these transformations. Senior the world at lower costs. This enables both Managements across functions are coming outsourcing of current functions to locations together to address these business needs. Our where the work can be done more efficiently client who is one of the leading publishers in and at a lower cost and outsourcing of new the U.S. had multiple print plants across the functions where talent is expensive and not nation to manage production of various print easily available on-shore. The off-shore products. Legacy applications dotted the outsourcing services industry has matured and landscape with multiple installations at there are many companies that provide different print plants. These applications create services within IT, call centres, circulation and deliver daily data to the print plants, management, finance and accounting and delivery partners and sales groups to manage advertising production. Newspaper companies the daily processes around newspaper delivery. must take a strategic long-term view of off- The senior management was pushing to cut shore outsourcing in order to successfully costs, reduce cost of operations and transform their business models to meet the modernising the systems. Legacy technology future needs of their audience and advertising stack posed serious limitations in aligning the customers. applications to changing business needs and initiatives. RB: Our ability to achieve savings above 60 percent in some cases, combined with a We partnered with business and IT to not only service level unrivaled in the industry, sets us streamline the business processes, but also apart from other types of ad production focus on aligning their IT applications to their alternatives and markets. Further, we have business needs by automating, rationalising considerable efficiencies of scale that allow us and re-writing some of the applications. The to provide technology solutions traditionally results were very encouraging. Eighty percent beyond the reach of a newspaper’s internal reduction in effort due to automation and 150 resources. We have also developed a set of best percent increase in orders and revenues due to practices through our work with hundreds of streamlining operations and processes. This publishers across North America, Europe, resulted in cost savings and business value Australia and Asia. This kind of experience, addition in the range of around $5 million to validated by our ISO 90001 certification, is the client. Their business case was met. generally unavailable from internal teams.

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These features of Express KCS combine to integration for efficiency, limited commitment deliver cost savings in three distinct to turn times and quality by vendors and dimensions: labour, technology, and quality. smaller savings. This means the Our skills not only include print and online transformational benefits cannot be realised display ad production, but also spec ads and and the financial impact for clients is reduced. campaign planning, editorial services and imaging. We also provide sales teams with True offshoring/outsourcing results in backup support, and underpin all this with significant cost savings. The biggest impact workflows, asset management and technology comes from the reduction in internal staff and that connects all stakeholders into a single labour arbitrage with offshore providers, which operating unit. can deliver an average of 25 percent to 40 percent in savings. TJ: For a single metro newspaper, the savings could range from 500,000 to $1 million a year, An additional advantage is the move to flexible depending on its existing cost structure, and transaction-based ad production pricing with the scope of the outsourcing and offshoring. savings defined in agreements. This means the clients save right from the start and pay only In the case of newspaper groups with multiple for the ads produced, switching from the titles, we tend to see these as consolidation- traditional fixed costs to variable. And the cum-outsourcing/offshoring projects, since positive impact on the bottom line is realised there are large efficiency gains (20 to 30 quickly and guaranteed. percent) to be had by combining copy editing and layout tasks across multiple titles. The In the high-volume, time-sensitive publishing gains for a newspaper group with 10 metro- environment, cost savings cannot come at the equivalent titles could be anywhere from $7 expense of quality or press deadlines. million to $14 million a year. Outsourcing reduces risk by managing the delivery of ads to agreed-upon service levels Apart from the savings, consolidation and covering creative quality and turn times, so outsourcing allows newspapers to focus their newspapers reduce expenses for make-good own resources on their core proposition – ads and lost advertisers. creating unique content. We believe this is as important as the savings at a time when Due to the nature of offshoring/outsourcing newspapers are being forced to reduce their agreements for ad production, technology is a reporting staff, thus weakening their long-term critical component to facilitate relationships. competitive advantage. Depending on the provider, outsourcing is a means to gain better technology without A third benefit of working with an established having to purchase any hardware or software. editorial services provider such as Mindworks This is a major advantage when most is that having worked with many newspapers newspapers have expensive legacy systems and around the world, we are able to bring to the budgets for capital expenditures have been table best practices and productivity slashed. Ideally, publishers also benefit from benchmarks that our clients find very useful in the ongoing enhancements to the providers restructuring their operations. release to all their clients. KS: Many newspaper groups and individual There are also “soft-cost savings” due to the properties have disparate processes and tools ability to cancel IT software fees, reduce across the enterprise with mostly internal investments in workstations and space, and design staff and some external suppliers for reallocate IT support staff from legacy ad production services. Today, publishers look to production applications due to the use of offshoring/outsourcing to significantly reduce providers’ hosted applications. the costs of ad production while streamlining and increasing efficiency. SS: If we compare other industries to the newspaper industry, we strongly believe that Some have tried a limited approach to the IT landscape in a typical newspaper outsourcing, which essentially involves company is easier to replicate than the other sending a portion of daily volumes or overflow industries. The overall workflow can be requests only to outside providers. While this streamlined effectively and there are little requires lower start-up costs, there is no variations between 2 different newspaper

67 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER entities. It is due to this unique feature of this industry that it lends well to outsourcing/offshoring. As we mentioned earlier our “News Paper in a Box” solution is being developed keeping in mind this unique feature of this Industry. Hence a “Shared Services Concept” fits well in this industry and will lead of cost savings. It is practically impossible to think the same for other industries. So, in effect it is the uniqueness of the newspaper industry rather than the uniqueness of the savings that can be provided. The types of savings or avenues to reducing cost of operations have already been discussed in the previous sections. Naturally, with a “Shared Services Platform” such as NIAB, cost savings come from adoption of a streamlined process, shared software & hardware infrastructure, shared resource pool (and offshore – makes it even more cost effective) and the ability to get a flexible pricing model. And, even if a newspaper does not want to go the NIAB route, then the advantages of outsourcing/offshoring anyway remain – which are labour arbitrage, ability to quickly adapt to changing technology needs, ability to release the bandwidth of internal SMEs to critical business enabling functions etc.

68 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

Conclusion

For newspaper companies, the era of vast profits mobile or tablet spaces, not strengthening and is over. In many parts of the world, newspapers developing those areas will likely mean a loss have let go of the dream of finding a silver of future revenues. bullet that will boost them back into the same Part of growing revenues is looking for new profit margins of the 20th century. Meanwhile, ways to use the advertising department. As publishers in parts of the world that are still discussed in Chapter 1, the “SMART” seeing growth know what's coming, and are Advertising Department uses tools and bracing themselves and looking for solutions training, a consultative sales approach, yield now – before they are faced with the problems management, audience focus and new product newspapers in North America and parts of development in order to strengthen and use Europe are dealing with now. advertising in new ways. The news publishing business is indeed According to the World Newspaper Future & evolving, and companies are looking for new Change Study, by WAN-IFRA, the University of revenue streams, while also using cost-cutting as Central Lancashire and the Norwegian School of a tool to drive the business toward innovation. Management, it seems that newspapers around The end goal is to create a new business model the globe are on the right track. New business that can support content creation and distribution development and innovation is the top investment across platforms, and one that can adapt as in training development around the world. technology advances and user behaviour shifts. Respondents said they are developing products To recover and begin making money from the such as new print and digital publications; new new media ecosystem, newspapers must aim traditional and non-traditional businesses, such as for a strategy that focuses on maximising print insourced printing and events and conferencing; revenues, while also strengthening digital and developing iPhone and iPad products. In revenue streams. Even if an area is currently addition, they are also developing and trying out only making incidental revenues, such as the new content strategies for the growing types of

69 JUNE 2010 SHAPING THE FUTURE OF THE NEWSPAPER digital platforms, and dozens said they are looking Cost-cutting to create new revenue models for the iPad. On the other side of newspapers’ strategy is Taking a new look at subscription and cost-cutting. Saving money from cutbacks is circulation strategies is also a way to earn necessary in the short-term, and part of a more in revenues, and lower distribution costs. slimmed down, more efficient business plan At the Boston Globe, for example, circulation for the future. Using cost-cutting as one of st strategic pricing, with a greater emphasis on the many tools to innovate into a 21 century value of consumer revenue, has proven to be a business is the end-goal for news publishers. way to extract value while also continuing to be Lowering costs while continuing to offer a more Boston's top media outlet. The Globe increased robust, higher quality product is indeed a its weekday newsstand price in outlying areas, difficult balancing act. However, newspapers are and also increased the price of its Sunday edition trying out different strategies, such as reducing both within the city and in the outer areas. employee numbers, consolidating offices and “When looking at percentage of revenue, we’re printing plants, integrating staff, consolidating now at 50-50, advertising and consumer. We sub-editing and production units, reducing the were at 60-40, ad and consumer. The simple size of print products or the number of math is, you take the prices up X amount, you sections, reducing publication days, and more. lose a certain amount, and then see what that “It’s not about only cutting the cost side, it’s net impact is. In terms of actual revenues, about going to go back to rethinking and we’re up with circulation revenues, down with reinventing the business model, operations and print ad revenue, up with digital ad revenue. I manufacturing models, and asking think that’s where we have to turn our focus fundamental questions. How do we distribute now – rebalance that portfolio of revenue,” the newspaper? Is there a more efficient Christopher Mayer, the Globe’s new publisher, model? How are our sales teams performing? stated in Chapter 3. Are they going to use rate sheets, or is their “We’re not going to cut our way from expenses entire focus on collaborative selling?” said into a successful business model. Print Sandy Nelson, CEO of Aperio International, a advertising will continue to go through test and consulting firm in Washington, D.C. that helps learn. Our marketplace and our position in the companies rethink their businesses, including marketplace is that ... the decision-making in the Orange County Register and Apple. the past used to happen locally. Now with At MediaNews Group in the United States, for more national players making purchases, it’s a example, a team was devoted to coming up different type of selling relationship. The way we with a list of money-savers and money-makers. go to market has changed, and all this makes Processes were put in categories for “quick additional challenges in print ads, and it’s wins,” followed by secondary and tertiary important to sell across mediums. We’re priorities, based on how they would benefit the currently more of a venture capital oriented company and the complexity of each. company, and we’ll have to test things and se how we’re going to scale. We’ll have to “Our goal was to focus our investment in approach the business in Boston is different journalism, particularly local journalism,” than other markets.” MNG Chairman Dean Singleton stated in Chapter 4. “We will aggressively move to News publishers are also finding ways to monetize the online business, and develop new charge readers for digital and print products niche products.” and also to charge advertisers more, and are making those decisions based on audience When it comes to cutting employees, many research and database marketing targeting. A newspapers have received the advice to use the wide array of paid models – from complete tool of cutting as a means to an end, not an end paywalls, to freemium strategies, to bundled in itself. In other words, it is a scalpel, not a options – are being tried out by newspapers machete. When journalists and editors are lost, around the world, such as The New York quality most likely suffers, and the strategy of Times, Japan’s Nikkei, the UK-based Times cutting can backfire if readers refuse to and Sunday Times, France’s Le Monde, and continue paying for a product of less quality. more, all detailed in Chapter 3.

70 VOLUME 9 REPORT N° 5 MILLION DOLLAR STRATEGIES FOR NEWSPAPER COMPANIES

THE PUBLISHER World Association of Newspapers and News Publishers Paris, France and Darmstadt, Germany Tel.: +33 1 47 42 85 00 Fax: +33 1 47 42 49 48 E-mail: [email protected]

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SFN BUSINESS ANALYST Erina Lin

PAGE AND GRAPHICS DESIGNER Marianne Audouard

World Association of Newspapers and News Publishers © WAN-IFRA June 2010

The contents of this report may be used in whole or part by publishers in the execution of their business. Use of any part of the content or intellectual property herein for the purpose of representation or consulting requires prior written consent of the author. Any reproduction requires prior consent of WAN-IFRA. STRATEGY REPORT Shaping the Future of the Newspaper Volume 9 N°5 JUNE 2010 © WAN-IFRA ANALYSING STRATEGIC DEVELOPMENTS AND OPPORTUNITIES IN THE PRESS INDUSTRY

A World Association of Newspapers and News Publishers project supported by four strategic business partners