It’s hard to climb out of the print revenue trap
For over a century, newspaper companies printed not just the news, but money. They were the essence of the term “cash cow.” It was not that long ago when community newspapers were operating at 50% margins and many metro dailies often approached 40%. Over the past 15 years, the demand for print advertising has quickly dried up, and with it those enormous top-line numbers. And, when the top line went, so did the bottom line. No amount of cost-cutting could keep pace with the plunging revenues.
The scale of news gathering is enormous. In order to generate a really comprehensive, factual and accurate product, it requires a large journalism staff. That requires heavy advertising revenue to finance it.
Unfortunately, demand for print advertising has been on a precipitous decline for 15 years. The money to finance a major news operation is just about gone.
Had newspapers really, really focused on transitioning from print to online 15 years ago, many would not be in this dire predicament. Heck, even a focused effort five years ago would have saved many newspapers from what is likely to be inevitable at this point: death by slow revenue suffocation. A June 1 article in Reuters (Digital revenues not enough to lift US newspapers), demonstrates that the tiny gains in online revenue are in no way able to stem the declines in print. I think the scariest line in that story is the last, which says, “…(E)ven a “complete transformation away from print entirely would eliminate the sizable costs of print product and distribution but the revenue loss is still too great for companies to make the switch yet.”
I’m no expert, but I have been associated with migrating an enormous amount of print revenue to online. So, for what it’s worth, here are a few suggestions for publishers:
- Start today — Not tomorrow, not after a month’s worth of meetings. Shift your focus from the legacy delivery medium to online.
- Don’t be afraid to charge higher online ad rates — Many of us have been so scared by the economy that we are heavily under pricing our online ad positions. News has a value to the readers within the community. If people are reading your news online, the advertisers have to be there in order to reach them. Don’t be a chicken — charge what you think you’re worth. Don’t listen to the ad networks and agencies. CPM is the wrong language. Community news is not a commodity. If it weren’t for you, much of it wouldn’t exist.
- Reward online sales — Your reps are motivated by several factors, including decent working conditions and recognition. They are also rewarded by compensation. So, pay more commission for digital sales. Drive behavior through well-crafted compensation plans.
- Reward your advertisers — Create value for their online buys by combining them with cross-promotions through social media and events. Drive traffic to their stores through clever promotions that effectively use social media as a spoke in the marketing wheel.
- Use legacy revenue to finance new products — Think of your print revenue as the investment dollars necessary to grow your online presence. Understand that you will need to be even less profitable in the short-term while you transition readers, advertisers and revenue to online.
- Be creative with your news gathering — Use the internet to your advantage. Begin to rely more on community journalists, bloggers and others who will trade their content for promotional space within your online product. Keep in mind that this is only a supplement to a staff of journalists. You need trained pros to cover certain stories. And, you need pros to edit and be able to properly vet community supplied content.
Nobody said this would be easy. But, every day that’s spent trying to protect legacy products from the inevitable is doing an injustice to your community, your customers and your people. Create a digital strategy and commit to it. There’s still time.
Thoughts, questions, comments? Please feel free to contact me or leave a comment.