The Newspaper Industry Today

Ten Ways Newspapers are Preparing for Tomorrow

By Mort Goldstrom
You may be anxious about
the newspaper industry
these days. Newspapers
are filing for Chapter 11
protection. Newspapers
are reducing their number
of days of publication.
Newspapers are going out
of business or threatening
to do so. Newspapers are
dead or at least dying. I have heard this also. Actually,
I read it in the newspaper. If there is one thing our
industry is good at, its self flagellation.

the real estate industry is really suffering, the auto

industry is terrible and unemployment is at a 25-year
high. These are the newspaper industrys big three
classified advertising sectors and when they cut back on
their advertising, well, we suffer. The same is true from
our traditional retailers. Some retailers have struggled
and have cut advertising and some have gone out of
business, merged, closed stores, or cut back in other
ways and all have at least considered if not substantially
cut all forms of advertising including newspaper
advertising. As a result, newspapers have lost revenue as
advertising makes up nearly 85 percent of a newspapers
revenue. Many newspapers are public companies and
revenue losses certainly reduce profitability for our
investors. Investors want to own more than merely
profitable businesses. They want to own growth
businesses. Newspapers are profitable businesses, but
are frankly not growth businesses at the moment.
Newspapers are not as profitable as they were a year
ago or even two years ago. Many newspapers have
dropped from a 30 percent margin to maybe a 10 to
15 percent margin. A Midwestern-based advertising
agency recently studied a major metropolitan
newspapers pages and could not find one advertiser in
the pages of that newspaper with margins as high as

So as major newspaper advertisers, you must be asking

yourself, Whats going on, really? And, of course
you are trying to figure out if your investment with
our industry is appropriate. I am here to tell you that
newspaper advertising works. Newspapers are effective
advertising vehicles today and our industry is taking
appropriate action to ensure that we are effective for
you in years to come.
Lets talk about what is going on and what the industry
is doing about it.

1. Separating the Business of Newspapers

from the Business of Owning a Newspaper
Generally speaking, business in almost every sector of

the U.S. economy is pretty lousy these days. Newspapers

are no different from almost any business. In fact,
when our customers businesses suffer, we suffer. There
is no doubt that business in many sectors, who have
traditionally advertised in newspapers, have cut back
due to the economy. You read us; and you know that

The Newspaper Industry Today

March 2009

that of the newspaper they were advertising in - and

that newspaper had declared bankruptcy! According
to consultant John Morton in a recent AJR article,
newspaper companies that have reported results for
the first nine months of 2008 had a weighted average
operating profit margin of 11.3 percent, clearly down
but still above what is typical for most non-media
businesses. He concludes the article by saying Overall,
the beleaguered newspaper industrys financial health
has been weakened but remains healthy by most
measures. In this environment, that is an achievement.

but still expensive news gathering and editing

staffs are costly. Adjusting for this debt will cause
some newspapers to refinance, or even go through
bankruptcy to resurface stronger going forward.

3. Putting Readership in Perspective

Here are some interesting tidbits that get lost among all
the stories written about items one and two.
People still read, respect and even treasure reading
newspapers. Scarborough Research reports that more
than 100 million adults read a printed newspaper on
an average weekday (and more than 115 million on
Sunday). Compare that to 94 million that watch the
Super Bowl, 23 million who have viewed American Idol
and 64 million who typically watch the late local news.

Yes, newspapers may have to settle for lower margins

and honestly, a few are actually losing money and
maybe a newspaper here or there will close, especially
in multiple newspaper markets, but there are several
thousand U.S. newspapers and these newspapers are not
sitting still for declining margins. They are cutting costs,
merging operations, forming partnerships, reducing
staff and news holes. They are getting their proverbial
ducks in a row. Newspapers are cutting newsroom
staff, true, but they are cutting strategically by reducing
duplicative coverage or coverage of news items that have
low interest to consumers and re-focusing journalists
on high-impact and high-interest journalism.

Newspaper readership in the top 50 markets

has declined about 6 percent in the past five years
(according to Scarborough). Compare that to a 10
percent decline in prime time audience and a 6 percent
decline in early evening local TV news in 2007 alone.
62 percent of 18-24 year olds and 25-34 year olds
read a newspaper in an average week. 64 percent and
66 percent, respectively, visited a newspaper Web site
in the past seven days. So much for the notion that
younger people dont read newspapers.

2. The Business of Newspapers, Part II

The business of newspapers part two. Over the past

several years, mergers and acquisitions of newspaper
companies have been taking place. We are seeing
the newspaper equivalent of being upside down on a
mortgage. Companies owning
newspapers expected to pay
off debt with advertising
dollars that are currently
not coming in. This debt
issue may be a bigger issue
these days than other issues.
Sometimes we forget how
many people it takes and
how big a capital investment
it takes to run a newspaper.
High speed presses, rising
newsprint costs, smaller
The Newspaper Industry Today

A recent poll by independent researcher Doug

Schoen showed that 75 percent of adults and 84 percent
of elites read newspapers everyday or several times
a week to inform them about the election. More
than half agreed that newspapers provided definitive
information that guided both the networks and cable
stations in reporting the news.

4. Becoming Platform-Agnostic

Newspapers are expanding the growing list of digital

products and niches. Proctor and Gamble realized
years ago that consumers want their toothpaste in a
variety of ways. From the days of one size and one
flavor, they have offered dozens of options to meet
consumers needs, from pastes to gels to whiteners to

March 2009

6. Innovating Content to Meet Consumer

Demand

breath fresheners etc. Newspapers today are recognizing

that their consumers too, enjoy their newspaper
in a variety of ways and it is our job to deliver that
newspaper to them in whatever form they require. I
am sure you know that newspaper websites are the
number one website in 22 of the top 25 U.S. markets.
Newspapers digital audience has grown more than
68 percent since 2005. More than 43 percent of active
Internet users visit a
newspaper Web site
in a typical month.
And newspaper
sites are growing
at twice the rate
of the internet in
general. By the way,
ads on newspaper
sites are 24 percent
more likely to
be acted on than
ads on portals. Beyond the web sites, you are seeing
more newspapers offering mobile applications, some
newspapers experimenting with e- readers, newspapers
working with printers on personalized newspapers and
more. The bottom line here is that our readers needs
must be met and we are in the information industry
not printing. We are moving quickly to meet those
changing needs.

Newspapers today are less Do It Yourselfers and

far more the curators of content. When it comes to
content that consumers desire, newspapers have a
unique talent for aggregating both the content and
the sources for that content in ways that best meet
consumers needs. Newspapers have
been quick to embrace incremental
sources of content including usergenerated content, partners who
generate content, syndicates, reporters,
columnists, wire services and even
advertiser generated content more
than ever before. And that content
takes many forms. Newspaper websites
lead the industry with video content
for example. Newspapers continue to
create a lot of original content but are
focusing editorial resources on unique, high-interest
content, including more investigative journalism.

7. Bringing Targeting to a New Level

Traditionally, when we think of targeting locally,

we think geo-targeting and targeted preprints in
newspapers. It is true that newspapers continue to fine
tune preprint targeting with the migration toward zip
and sub-zip insert targeting as these approaches cost
significantly less than direct mail options. However,
many newspapers are looking
beyond merely zip and sub
zip. Some newspapers are
offering targeting of inserts to
non-subscribers utilizing an
opt-in program. Additionally,
technology is allowing for
individualization of the
targeting to the household level
along with personalization that
newspapers are investigating.
Merging newspaper databases
with advertiser customer lists

5. Increasing Local Focus

Newspapers remain at the heart of the local

conversation. No one tells consumers more about
what is going on in the community than newspapers.
For advertisers, newspapers are finding incremental
ways to target locally. Newspapers are inserting
themselves as the hub of community information and
interactions, providing platforms to share local content,
host discussions and provide in-depth community
information. Most of this centers around geographic
communities, e.g. TribLocal, Bluffton Today. The New
York Times plans to provide hyper-local blogs for
various metro area communities.

The Newspaper Industry Today

March 2009

is another option newspapers are now employing.

Of course, inserts are but one method of targeting.
Another is niche print products focused on lifestyles
and life stages.

newsprint and even cross-market distribution. In

addition to revenue partnerships with large companies
such as Yahoo, Monster, Advo and Google, many
newspapers are pursuing revenue and audience
development strategies. For example, Zetabid online
real estate auctions, Metromix for entertainment, and
dozens more. We are also seeing newspapers restructure
their staffs and their processes to allow for better service
to you and simpler, faster, more accurate ways for adorder processing, ad delivery, credit, billing, e-tearsheets
and more.

Online, newspapers are quickly offering micro sites

that appeal to niche audiences with sites carved out for
Moms, Men, Teens, Dog lovers, Entertainment sites,
sports enthusiast sites and more. And then, largely
through the partnerships newspapers are forming with
companies such as Yahoo, newspapers are able to offer
behavioral targeting options as well.

9. Advertising Option Optimization

8. Streamlining Operations

These days, when it comes to offering you advertising

solutions that work better for you, newspapers are
truly and literally thinking outside the box. The days of
square ads have gone and shapes assist the attentiongaining of your message. Fixed positions including
front-of-section advertising, content adjacency,
versioning, and in test today
even individualized ads. The
world is changing and so are
we. Newspapers are no longer a
one-trick pony when it comes
to advertising options. Consider
polybag ads, post-it notes, we
prints, spadeas, shingle spadeas,
scented ads and even taste-it
ads. Color in newspaper is now
pervasive. Event marketing,
database marketing, e-mail blasts,
e-newsletters, ad tags, glow in the dark, belly bands,
temporary tattoos and way more.

Newspapers are focusing on our core competencies

creative content and local relationships and looking
to outsource and streamline non-core functions. One
way that the newspaper industry is retooling for a
prosperous future is via the utilization of technological
advancements in our
back-end processes.
An obvious example
is the implementation
of self-service options
for small to medium
sized businesses. In
addition, newspapers
are taking a fresh look
at win-win partnerships
for both cost efficiency
and revenue growth.
Newspapers are sharing
delivery systems with each other. Some newspapers
are even sharing content, reporting and other editorial
functions. You have probably noticed the transition
to narrower web widths that many newspapers have
implemented and these are proving to be a big hit
with readers. Additionally, while newspapers continue
to experiment with days of publication, distribution
strategies and pricing, it remains clear that large
audiences still flock to newspapers. Newspapers are
outsourcing preproduction operations and in some
cases even printing. Many newspapers are forming
alliances with their former competitors to share presses,
The Newspaper Industry Today

According to Google research, 56 percent of

respondents to their 2008 survey either researched or
purchased at least one product they saw in a newspaper
the previous month. Of those who researched a product
from a print ad, 67 percent research online and 48
percent visited a store. For those who saw a product
online and then saw it in a newspaper, 48 percent
considered the product more trustworthy and 52
percent were more likely to buy the product.

March 2009

Another new development has been the way that

newspapers are measuring both their audiences and
advertising effectiveness. Research coming from RAM
or IRI measure ad effectiveness. More frequent and
comprehensive data collection and survey approaches
allow for you to be more analytical in evaluating how
we deliver.

Hardly an indication of an industry in the throes

of death. On the contrary, our audience the true
measurement of the health of a medium is strong and
getting stronger

10. One Last Point

To download the PowerPoint presentation

accompanying this document, go to: http://www.naa.
org/Resources/Articles/Advertising-PresentationNewspaper-Industry-Today/Advertising-PresentationNewspaper-Industry-Today.aspx

I guess you cant believe everything you read in the

newspaper after all.

Despite all the doom and gloom you read about, the
just released Scarborough Research data points out that
46% of U.S. adults read the average daily newspaper and
that number increases to just under 50% when you add
the newspapers website. 52% read the average Sunday
paper. You may be surprised to learn that over the past
two years the decline that the pundits report as near
death is but -2.5%. That average number of newspaper
readers exceeds those who bought a lottery ticket in the
past month, those who even own a DVR, and nearly
doubles the number of U.S. adults who typically watch
the network nightly news.
Anyone who thinks that newspapers have an audience
problem need only look at recent Nielsen Online
numbers for the newspaper industry. In January 2009,
nearly 75 million unique visitors used newspaper
Web sites an all-time high and a 12 percent increase
from January 07. That means 44 percent of all active
Internet users visited a newspaper site in January 09.
Newspapers, in aggregate, delivered 80 percent more
unique visitors than CNNs digital network, 85 percent
more than Yahoo! News and 442 percent more than
Google News!

The Newspaper Industry Today

March 2009