Turbulence in the advertising business has left newspapers scrambling to hold their share and worried about the size of the pie being divided.
At least a few of
these changes in the ad game, however, are breaking in newspapers' favor. By my count, there is at least one positive in progress and two more in prospect.
As visits to online news sites have boomed for the last five years, a counterintuitive trend has emerged. A great deal of that surfing goes on at work, where computers with quick broadband connections are always on, and a quick check of a news site or two constitutes a refreshing break from work.
When
Poynter faculty toured a dozen Web sites earlier this year we consistently heard about office surfing. It is one factor, among several, sparking news organizations to freshen their sites with breaking news throughout the day. A broadcast outlet's online manager commented that "sound is not our friend" in cubicle-land, suggesting that the silent text version of the news is a probable destination. Evening Internet use is substantial, another editor told us, but news site visits drop sharply after dinner as users turn to shopping, games or e-mail.
Formal studies show the same. Ball State's
survey observing media use by 350 individuals found the Internet more dominant from 8 to 11 a.m. than in any other time period. A
study by MORI Research for the
Newspaper Association of America found that 8 to 11 a.m., followed by 11 a.m. to 1 p.m., is the time when newspapers enjoy their highest traffic online, when compared to other uses of the Web.
In a brochure about online sales strategy, NAA sums the matter up thus: "Note that 8 to 11 a.m. is your newspaper's prime time. These higher viewing hours come with the bonus of reaching engaged, active viewers at work while they are out of reach of other media." In other words, you cannot practically watch television at work (or read a newspaper with your feet on the desk, for that matter) without seeming to goof off, but no one will notice some visits to online news sites.
As more advertising/marketing professionals learn how to create, plan and buy in the medium, newspapers stand to be the beneficiaries of "integrated" campaigns of national and regional advertisers. This is surely an advantage as news sites work to improve traffic and display opportunities for advertisers. It could be a factor in continuing online revenue growth of 30 percent-plus a year at most news sites. But is the industry, pardon the expression, living on borrowed time, until employers wise up and crack down?
A quick look at articles on the topic shows a wave of pieces on the costs of "cyberslacking" six or seven years ago and the introduction of monitoring products to detect it, along with a destination site for loafers,
www.IShouldBeWorking.com. But concern seems to have faded. Reading the news at work is not even in the same league as more serious abuses like gambling or viewing porn. There are privacy issues in looking over the shoulders of valued employees, so employers seem currently inclined to let pass a little casual surfing.
A 2005
study of Internet loafing by compensation consultants
Salary.com included this comment from the firm's senior vice president, Bill Coleman: "In some cases this extra wasted time might be considered 'creative waste' -- time that may well have a positive impact on the company's culture, work environment and even business results. ... Personal Internet use and casual office conversations often turn into new business ideas or suggestions for gaining operating efficiencies."
Visiting news sites at work probably gains some steam from the near-universal availability of broadband in office settings, compared to a penetration rate of about 60 percent on home computers. Should that gap close or should employers be more inclined to monitor and discourage non-job-related internet use, newspaper Web sites could lose their current edge. Meanwhile it's a plus.
A second scenario that could benefit newspapers is more conjectural. It was articulated at an NAA panel at this June's meeting for analysts and investors. Several executives of online advertising and media buying firms made the case that the state of the art is still in its infancy (a viewpoint not unlike that of Sir Martin Sorrell in
the first part of this series -- that traditional ad agencies are learning online, but slowly).
As more advertising and marketing professionals learn how to create, plan and buy in the medium, newspapers stand to be the beneficiaries of the "integrated" campaigns of national and regional advertisers. That dovetails with developments within the newspaper industry. Newspaper Web sites have become crowded and messy as material is gradually added. The coming redesigns are sure to include better display options for advertisers. With the introduction of
AP Video this year, we've seen a robust market for the 15- and 30-second ads users are asked to watch before viewing news clips.
A
study released early last week estimates that online video advertising increased by more than 80 percent this year compared to 2005 and will rise from $410 million to $2.9 billion in 2010.
We are also beginning to see the first truly interactive ads, like
this one from Pfizer, maker of Viagra, which offers lots of information without naming the market-leading brand.
Finally, there is considerable discussion, in the recent Newspaper Next
report from the
American Press Institute, among other places, of the possibility of forming a cooperative national network that would make big online buys much easier.
None of this amounts to a sure thing, but it is reminiscent of a period in the early and mid-1990s when some analysts were expecting a cooling off in sales of office computers and software. That didn't happen because of so-called "pull through" -- later adapters followed the first huge wave of purchases with second and third waves.
So if newspapers do, indeed, have a logical role in the coming rise of integrated campaigns, the benefit could play out over a period of years -- that tough and uncertain transitional period of searching for a new business model that clearly lies ahead.
One more positive for newspapers is that the core mass of print ads is potentially defensible, even as assorted competitors take away share. Local newspapers remain, by a wide margin, the biggest news game in town. Local television, collectively, is the top news source -- but any individual station rarely approaches the newspaper's reach.
Newspapers are especially well-adapted to certain kinds of advertising -- like a long listing of sales prices. Some recent NAA research makes the case that newspapers score high in user "engagement" and many view the ads themselves as a destination sources for shopping information. Newspaper advertising still works for many local advertisers or is perceived to work -- so custom, loyalty and relationships all come into play.
I was exposed to some of the detail of how newspapers remain formidable on a consulting assignment this fall to talk about the business at a meeting of the top ad sales executives of Time Warner Cable Inc. The cable business model is entirely different -- monthly subscriptions are the core revenue stream and advertising a welcome extra. Also, cable has potent zoning capabilities that may not be evident to a viewer. While you are watching an ad for a nearby restaurant, viewers across town may see a different ad. The array of channels facilitates well-targeted buys -- for instance, going after gardening and redecorating enthusiasts on the home and gardening network (
HGTV).
But for all that, cable continues to find newspapers tough competition. Newspapers deploy a big sales force, retrained from old-time order-taking to selling a briefcase full of options for online, niche publications or direct- mail marketing. Newspapers also price shrewdly, closing yearlong fixed-amount contracts on a rolling basis, with terms that include attractive discounts from the stated rates. Those contracts may leave a merchant's budget already spent when a cable salesperson comes calling.
It is not all sunshine for newspapers. Advertisers are beginning to push for rate reductions both on the early days of the week when circulation and readership are lower and in back sections like sports that some readers skip altogether. Conventional wisdom and research holds that nearly every reader at least thumbs through the A section, so that remains the preferred placement, even as national and international news have become widely available 24/7 on the Internet.
Newspaper executives no longer feel bulletproof. The complacency found in some circles at the beginning of this century is gone. But even in the crowded fast-changing new advertising marketplace, newspapers have some new opportunities, some prospects and significant residual strengths.
