Newsletter No 20 01 March 2006
 
Advertising & Marketing:
2006 World Newspaper Advertising Conference

The 2006 World Newspaper Advertising Conference & Expo held in Paris last week stressed that newspapers are the best advertising platform. People continue reading them and they are their preferred medium to look for ads. “In a world of increasing media choice, newspapers represent the only true mass media market channel, being fragmentation proof”, said Gavin O’Reilly, president of the World Association of Newspapers.

The two-days event, that gathered over 480 participants from 75 countries, provided them with the last trends in newspaper advertising along with multiples examples on how to increase advertising revenues.


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» Five Strategies to Increase Online Revenue
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Arab participants at the 2006 World Newspaper Advertising Conference & Expo agreed that although online publishing is not as developed in the region as it is in other markets, they better get ready. The conference provided some advice for Arab publishers.

Martha Stone, Special Projects Manager of the WAN Shaping the Future of the Newspaper project, gave five strategies to increase online revenues. For example, “the way to increase revenues is through advertising to begin with. But there are other ways to make money. In the Arab world one very interesting way that is being explored right now is to translate what is in the Arab newspapers in English and make it available to governments and other sources in the western world. There is a great interest from the US and UK governments --to give examples-- on what is going in the minds and the press of the Arab world. Imagine if you created a syndication revenue model for this?”

Stone also gave some advice for Arab newspapers on how to make money online. Here are other ideas:

Change the culture of the sales department
Sales staff should be trained to understand that they’re no longer working for "just" a newspaper organization and that all the company’s media brands, together, are a powerful advertising sales proposition. The media buyers should also be trained to think of your reach in terms of print and online together. You have to change the dynamic between your media company and advertising agencies: regain control over your advertisers. Increasing, and regularly re-evaluating, the value of an online advertising has proved extremely helpful for many newspapers in
Europe and America.

The Art of the Upsell
It is very important to upsell your ads on the internet, for instance by proposing to advertisers the addition of photos, videos, clickable links, borders and shadings, preferred placements or by increasing the number of days running. Upselling represents one of the top revenue drivers for many western companies.

Diversify your revenue stream
Don’t only rely on advertising: diversify your revenue stream. Internet can have multiple functionalities. For instance, also use syndication, video advertising online, phonebooks, direct mail, podcasting, etc.

Build strategy against the competition
Newspapers have a strong advantage in local markets which should be leveraged against the national and global online companies that are now targeting local advertising. Local search, local auction and classifieds, aggregated online listings and cross-media retail packages are among the weapons. You can, for example, build your own database (that will give better results than Google, especially for local advertisers).

Improve quality of the website to drive more traffic
Aim to be the number one news website in your market and build editorial content of interest to the audience, including photo galleries, breaking news, community-generated content. These popular products produce valuable advertising inventory. Furthermore, aggregate as many classified listings as possible as this is a good traffic driver to the website.

Following Stone’s presentation, participants from two newspapers of
Bahrain discussed how to begin getting basic online. APN asked Stone the same question.

“Based on what is happening in the world, charging users is not a good idea. Especially when you are starting because you do not want to put a block in front of your website to make users not want to come in, not to pay. You will just get 5% of the people you get without charging,” she said.

As Magdy El Meligy, Al Ahram’s Advertising Department General Manager, said, “everything today is about online publishing and advertising. Although internet in
Egypt is in its first steps, it is the future, even if we approve it or not.” Kamal Shah, Chief Operating Officer at Khaleej Times, UAE, came to the conference to see how to add value to his newspapers through internet.

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» Optimize Your Ads Sales
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During the 2006 World Newspaper Advertising Conference & Expo, Leon Kubas, from Kubas Consultants,
Canada, said newspapers can improve their advertising revenues by better managing the sales process.

“Millions in revenue lie buried in obsolete rare structures and dysfunctional pricing strategies,” said Kubas. “Newspapers always want more revenue and profitability and so they raise prices. Of course, advertisers buy less and smaller. While papers lose circulation, costs multiply by a 1000. So, they cut staff. We have to stop this spiral.”

Pointing at the advertising spend fall since 2000, Kubas told publishers to change their way of thinking and forget about the culture of defense. “I ask you to focus on what is under your control. Do not focus on macroeconomic figures but on how you price advertising,” he said. Following this advice, he gave participants five strategies for more sustainable and profitable revenue growth.

Restore price discipline
Pricing must become simpler and more transparent. You have to organize your prices and believe in the validity of pricing lists. It is time to stop all those individual contracts that are never kept: you cannot manage your business with exceptions; neither can you accept low prices proposed by the advertiser. Let’s re-establish integrity: simplify and standardize prices. However, give yourself and customers a transition period of 3 or 4 years.

Do not be afraid of charging what the newspaper is worth. Explain to advertisers the value of your newspaper and the reasons to invest on it. And do not give discounts! Follow the accounts and reward advertisers depending on their spending.

Apply spending-based discounts
“Create incentives without altering the fundamental pricing structure and treat every customer in the same way,” Kubas said. For instance, offer a 1% discount for every 20% spending increase.

“By doing this, you encourage advertisers to spend more. And it is not a random system: it is a transparent one. Advertisers want transparency and justice. Prices must be the same for everyone. It is about following spends and not giving away discounts,” Kubas said.

Offering discounts based on spending also avoids negotiating contracts. You do not have to worry anymore about customers not fulfilling contracts. But you have to follow advertisers spending very carefully.

Introduce Modular Units
“Newspapers are the only media accepting every size for ads. Think about all the additional costs it represents, like filling gaps. It also increases production costs and makes the paper more difficult to read,” Kubas said.

Modular units mean using the page and its portions as the standard unit rather than linear measurements in centimeters. If an advertiser wants a non-standard unit, accept it and charge him a premium.

“Modules work better for the newspaper, the reader and the advertiser. They end with page-breaks and the paper looks and reads better,” he said. It also allows you to fix prices depending on the impact and not on the ad’s size.

Sell impact, not space
By applying modular ads, newspapers can move from a linear pricing structure to one based on impact, said Kubas, providing details on what he calls the ‘Visual Impact Pricing’ model that produces larger ad sizes, higher yields per page, lower production costs, more pricing leverage and increased revenues and operating profits.

“Impact is greater than the portion of the page that ad occupies, a half-page ad has a visibility of 63%” he said. “Linear pricing works against newspapers"

Consider conversion to compact
“Readers generally prefer compact formats and circulation gains for new compact formats,” said Kubas. But if you think about it, take your time now to prepare yourself: “Most format changers admit they made mistakes in pricing.”

Modular Units and ‘Visual Impact Pricing’ can be the solution since they get you ready for the change. For instance, in a six columns newspaper, both broadsheet and tabloid can be divided in 48 modules and therefore ads will have the same impact in a format or the other, said Kubas. It can help avoiding potential loss in advertising revenue that smaller pages provide.

Kubas said implementation of these strategies will increase revenue between 2 percent and 6 percent. Implementing all of them would raise revenues 14 to 24 percent.

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» How to Offer Advertisers Bigger and More Varied Audiences
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In a time when Arab newspapers are trying to reach new niche audiences such as youth and women, and while more specialized publications hit the streets, especially in the Gulf countries, John Zidich, publisher of The Arizona Republic, USA, spoke to participants at the 2006 World Newspaper Advertising Conference & Expo about the “audience aggregation” strategy that could be applied anywhere. The strategy calls for aggressive expansion of both print and online products to deliver the right product to each audience and, therefore, offering advertisers easier access to defined targets.

“This is about matching audiences with products,” said Zidich. “It is about delivering the right audience. There is a definite marketplace for selling audience through multiple publications that we had not exploited.”

The
Arizona Republic complemented the flagship paper with new supplements, niche and community newspapers and magazines, both free and paid, as well as an array of online products to reach many different segments of the market.

“The one common thread is news and information that is useful and local. Newspapers have the ability to gather quality and credible local information; package it better than anyone else and distribute it over many channels,” Zidich said.

The Audience Aggregation Model
The strategy is based on a new model -- “tell us what you want and we will build it” -- rather than the old one “build it and they will come.”

Three years ago, Zidich started looking at the market from a demographic and geographic standpoint.
Phoenix, where his newspaper is published and distributed, has a population of 4 million in over 32,000 square kilometers. Thirty per cent of the population is Hispanic, of which over a half prefer to get their information in Spanish.

“We identified segments that presented the greatest reader and revenue potential, assessed our current product mix in relation to those targets and started the process of filling what we call ‘the product holes,” Zidich said.

The new products included preprinted inserts, Hispanic publications, free distribution magazines focusing on concrete segments such as real estate or recruitment, magazines and community newspapers in addition to the online.

“Now we reach 76% of the
Phoenix area consumers weekly. And we reach them with an average frequency of 5.1 products. In a monthly basis it goes up to 81%.” Zidich said.

The question for Zidich was then if that reach was relevant to advertisers. “The aggregation models puts us in a position to replace losses from the few high spending advertisers by increasing penetration into the many businesses that make advertising decisions in the local market.”

“We now have an entry point into most of the markets households. Those entry points provide local businesses a more effective and efficient way to advertise. Through the right mix of products advertisers can penetrate their defined target at a high level and do it often,” Zidich said.

An example on how to deliver products to consumers throughout the buying cycle
Zidich also gave participants a concrete example about how the aggregation model applies to generate advertising revenue through the automotive category.

“An independent consumer behavior research company surveyed vehicle buyers throughout their buying process to understand media usage. The study showed that media preferences change dramatically during the six-months process. Therefore, to deliver the auto buying audience consistently to advertisers it was necessary to develop multiple product lines,” Zidich said.

The survey results proved that six months before purchasing, consumers go mainly to magazines in order to fulfill needs: develop their initial wish list of cars. “Consequently, the branding opportunities afforded in Republic magazines provides local dealers in Phoenix, auto manufacturers and dealer groups the chance to be in front of a consumer with the appropriate message for that time,” said Zidich.

As the process continues, the consumer’s focus shift from needs to features. According to the survey, the consumer then relies mostly on the internet to compare brands and different features. “Websites like Gannett’s cars.com let the consumer compare different makes and models of cars.”

Finally, when the consumer has just a couple of models in mind, he turns to the newspaper. “The
Arizona Republic boasts a section that carries advertisements from 90% of all franchised dealers in Phoenix creating the right marketplace for the consumer at the right time,” said Zidich.

“This is a great example of providing the complete marketing plan to a customer. Understanding first how auto buyers react to the various media during their buying cycle and then having the right mix of products to position throughout the buying cycle makes for a powerful campaign,” Zidich said pointing the advantages of his model not only to increase reach but also to attract advertising revenue.