Seven theses for a necessary paradigm change in the advertising business

Marketing and selling the digital offerings of newspaper newsrooms seems to be still a neglected topic in many newspaper houses. The focus in ad-selling is concentrated too much on columns and pages in print products. But especially news publishing companies in Scandinavia show that it is possible to make money with digital platforms of newspapers. At some news publishing companies, online revenues already account for 60 percent of the total advertising revenue and more than 40 percent of the effective yield.

However, such results can be achieved only if there is a fundamental re-thinking in the advertising departments. The following seven theses describe the change on the international advertising markets that foreseeably will be of existential importance for newspapers.

1. Advertising budgets go where the consumers are. And they are going increasingly to the digital media of online and mobile. The rate of increase of Internet use between 2004 and 2007 is about 43 percent (1), the average penetration of mobil telephones is in the region of 50 percent worldwide, with rates of increase up to about 60 percent, e.g. in India (2) . In the United Kingdom, for example, in 2007 more money was spent for online advertising than for placing ads in all national newspapers together (3).
2. Advertising customers are not interested in having themselves represented by a colour ad in a newspaper. Advertising customers are interested in increasing the number of customer contacts and selling products or services. For this reason, modern media houses need to consider first and foremost to be their job to support advertising customers in their efforts to obtain these objectives and not only to sell advertising space on paper.
3. Newspapers have all the means at their disposal to offer advertising customers attractive advertising solutions: Print products with a strong brand as well as attractive websites with topical, interactive and in part audiovisual contents that catch the attention of new target audiences and intensify the loyalty and frequency of contact with existing readers or users – produced by qualified newsroom staff.
4. It is not a matter of replacing print ads by other forms of advertising. A combination of different media and formats can increase both reach and frequency, and therefore enhance the effectiveness of the advertising message.
5. The circulation of a newspaper is becoming increasingly irrelevant as a yardstick and sales argument for the effectiveness of an advertising message. Instead, it is factors such as reach, frequency and ad recall that determine whether the products or brands of the advertising customers enter and stay in the minds of the consumer. This can be achieved much more efficiently by a combination of various media than just with the newspaper medium.
6. Advertising customers no longer depend exclusively on newspapers to draw attention to products and services as well as to carry advertising messages. Online, e-mail, mobile, direct mailing, sponsoring or info screens in public places are sometimes cheaper, faster and better targeted than a newspaper ad. The advertising customer can very easily gain access to some of these without even having to consider the newspaper sales rep. Consequently, it is essential that the newspaper becomes a partner for the advertising customer also for these new forms of advertising. Otherwise someone else will.
7. “Fifty percent of the advertising spend is always wasted money. But you don’t know which fifty percent.” This dilemma is becoming increasingly unacceptable for the advertising customer. Clear target audience reachability, transparency in the design and implementation of campaigns as well as a verifiable effectiveness-of-advertising control decide who gets the advertiser’s money.

In the light of these theses, it becomes essential to subject the following points to a careful reconsideration: existing product and service structures, sales processes and management structures, staff qualification profiles, business planning and contolling toolds. Cosmetic adaptations of rate schedules, additions of digital products (“We now also have banners in our programme”) or inciting sales teams to sell also online, without sufficiently adapting the bonus system, will not be enough.

It means re-defining the advertising business, where the publishing house, acting as an advertising partner, provides a complex service, namely responsibility for the entire process: analysis of the needs of both the market and of the advertising customer, advice on the best possible application of the available budget, planning the use of advertising resources, implementing and measuring the success of the campaign. What several newsrooms have already managed, i.e. the transition from a traditional, print product-focused organisation to an integrated multimedia operation, will in future increasingly also be a central challenge for the advertising area. Time is of the essence.

Sources/references:

(1) Internet use of 16-24 year old in hours per week, in average in Europe. Source: EIAA Mediascope Europe 2007

(2) Source: Telecoms & Media, Nov. 2007, GSMA

(3) Source: Online Advertising Bureau. Article on http://www.guardian.co.uk/business/2007/mar/28/advertising.newmedia