It’s a world in which Google and Facebook are swallowing up 90% of all new digital ad revenue, hurting not just newspapers but once-high-flying digital ventures such as Buzzfeed and Vice.
What newspapers need to do is strengthen their value proposition, media analyst Ken Doctor said in his opening keynote at the Mega-Conference.
“What I’ve seen too much of (are newspapers) offering half the product at twice the price,” he said. “That’s why we have established subscribers—subscribers for 30 or 40 years—dropping their subscriptions.”
One weapon newspapers still have in their fight with the “unassailable ad spending duopoly” that is Facebook and Google is trust, Doctor said—trust that has actually increased over the past year according to the latest annual Edelman Trust Barometer.
He noted Facebook CEO Mark Zuckerberg’s claim that 99% of Facebook posts are authentic. “I did the math,” Doctor said. “That 1% means that 50 million posts are fake.”
By contrast, newspaper employees, from journalists to sales reps, know their community better than Facebook or Google, for all their data mining. But too many newspapers aren’t making that clear in their digital products.
Ken Doctor’s checklist for what it will take to “up the value proposition” of newspapers:
A long-term vision fueled with a passion to connect with the community
Prudent reinvestments in products and people
Acceptance of lower profits
A “crossover financial strategy” to shift from a mainly print/somewhat digital business model to a heavily digital/somewhat print model
Hire next-generation talent for an audience that increasingly wants its content on their phones
Jeff Light, publisher and editor-in-chief of The San Diego Union-Tribune:
“Our gut about who has great digital potential is not really very good. Is it the millennial with the earbuds and tattoos. Is it the sportswriter who might have a flask in his desk? Our conclusion is, it’s all of them. Age has no bearing on digital success. The one thing we’ve found that matters is journalism skills.”
Getting your audience to generate the great majority of your revenue is never the result of a single magic bullet, but The Seattle Times Director of Circulation Sales and Marketing says one thing comes close: newsletters.
“We have invested big time in newsletter,” Huber told the Mega-Conference breakout session on subscriptions.
“It’s newsletter for engagement,” he continued. “It’s newsletter for (converting) your users from unknowns to knowns. If there’s a way to get away from passwords and logins, it’s newsletter.”
Along with the newsletter strategy, the Times focuses on “digitally-motivated subscribers,” who can be persuaded to become full-blown digital subscribers. The paper aggressively prices its digital subscriptions to reflect its value, Huber said.
“We see ourselves migrating to a audience-based revenue picture and if we don’t move a print subscriber into digital, we won’t have enough to make digital subscribers” the primary revenue generators for the paper, Huber said.
Toward that goal, the newspaper lowered its meter three times in 2017. It also persuaded 35% of its users who installed an ad blocker to visit the site to turn the blocker off.
The Times emphasizes digital subscriber acquisition even in the newsroom, Huber said. “We’re at a point where we’ve got to align our content with our business,’’ he said.
The strategies are paying off, Huber said, with circulation contributing 60% of total revenue at The Seattle Times.
Michael Wilhite, vice president of data strategy for Kroeger’s digital agency 84.51°, told the media executives at the Mega-Conference that the supermarket giant has a couple of things in common with them.
“We share the same disruption from digital as you,” Wilhite said. “And we look at Google and Facebook and Amazon as competitors as well. We’ve got something in common.”
Newspapers and Kroeger have shared something else, of course—the kind of deep business relationship that comes with carrying advertising, coupons and inserts for a supermarket powerhouse that has 2,800 stories in 35 states and can claim one of every two households in America are customers.
As consumers increasingly turn to digital in making grocery decisions—Wilhite’s analytics shop estimates “90% of consumer shopping decisions will be influenced by data by 2021”—supermarkets and newspapers will have to rely on another thing they have in common: The trust of shoppers.
Wilhite said research shows as many as 81% of customers are “comfortable exchanging private information with grocery stories for relevant offers.”
Kroeger is aiming to build up trust so it knows much more about the customer’s “aspirational mindset.”
“Maybe a company with a subscription database could be a partner with us in this,” Wilhite told executives who didn’t need reminding that they have precisely that data asset.
“Earning trust of the customer is the most important thing—which is something you folks have to do as well,” Wilhite concluded.
Jim Brady’s digital-only local news sites—Billy Penn in Philadelphia, The Incline in Pittsburg and Denverite in Denver—have been the talk of the industry since Spirited Media was founded in 2014.
At the Mega-Conference, the founder and CEO’s talk was about finding a business model.
From the start, he said, advertising as a principal revenue source was out: “It just can’t support (the sites), it just can’t.” And advertising, he said, just drives people away from sites that are designed to be very clean with no pop-ups or page captures.
But being local had its revenue advantages. In their first years, the sites made 86% of revenue from events. But even that would not be enough to sustain the enterprises, Brady said. So this year, the sites launched memberships. And it is realizing some revenue by selling its “light, clean” platform and providing consulting on how to develop a voice in a local market, and curate content.
At another startup star, The Texas Tribune, the idea of trying to run as a for-profit enterprise was discarded from the start, CEO Evan Smith said.
The Tribune’s non-partisan public policy mission demands that it give away its content—in fact encouraging newspapers to publish its reporting.
“We make it as easy as possible to take our stuff,” Smith said. “And you will see our stuff routinely on the front pages of newspapers in smaller cities” in Texas.
But giving stuff away turns out to be a revenue play, Smith said. “Free distribution ultimately produces revenue because philanthropists in these markets understand that free content isn’t really free,” he said.
With a combination of individual and foundation gifts, memberships, corporate sponsorships and events, the eight-year-old Tribune generates almost $1 million annually, Smith said.
“The credibility of what we do is itself a business model,” Smith said.
The Honolulu Star-Advertiser, for its Digital Billboard Network, which puts video screens on top of single-copy newsracks, running a seven-minute loop of news and advertising.
“We have turned the racks into real revenue, putting up content we are already creating,” Star-Advertiser Chief Revenue Officer Dave Kennedy said.
Real revenue, indeed. Kennedy said the newspaper is projecting revenue of $1.2 million in its next budget year—a 70% margin.
The Star-Advertiser sells 15 advertisers 15-second spots, with the retail location of the racks getting five ad spots. Working with the location-based marketing firm Siteview, the video has the ability to determine the approximate age and gender of passersby.
“The feedback has been very positive for both our retailers and our advertising side,” Kennedy said. “We have not had a retailer say no to us yet.”