When the Web became a consumer phenomenon a decade ago, newspaper executives first shivered and then rushed in to what they believed would be a gusher of growth. Online channels appeared to deliver incremental new readership, and advertisers were eager to reach more eyeballs.
Most publishers took the path of least resistance to exploiting the online opportunity. They simply layered the job on the existing ad sales force. Reps were given packages and incentives to upsell print advertisers with incremental business. And it all worked great. Until recently.
Ad Age sums up the alarming news that online ad sales by newspaper businesses is beginning to decline. Among the publishers reporting drops in the most recent quarter are Tribune, Scripps and Lee. For now, sales are dropping in the single-digit percentage range, but the falloffs are a sharp contrast to the 20%+ annual growth of the online ad market in general.
Why is this happening? Simply stated: greed. When most newspapers went online, they slapped the same stuff they were producing in print into an HTML template and uploaded it to a server. Today, few of them offer any reader interaction outside of a basic commenting capability and some shortcuts for bookmarking stories to Digg. The stuff they post online is still cut and pasted from print. There’s been no investment, no innovation and no effort to keep up with Web 2.0 evolution.
More problematic is that newspapers have failed to establish and train dedicated online sales forces. Their reps did okay when online ads were a simple add-on to free value-add to an ROP advertiser, but now that the online business is becoming the engine of growth, those simple upsells don’s work very well.
If you talk to most veteran print sales reps, you’ll quickly learn that they have no idea how to sell online advertising. The language and metrics are foreign to them. That’s not surprising, given that their incentives have historically been heavily loaded toward print sales. Print generated a disproportionate amount of their revenue and commissions, so they sold what brought in the money. Their motivations aren’t difficult to figure out. Sales people are coin-operated. They prefer the path of least resistance and sell what’s easiest to sell.
The problem is that upselling print advertisers is a losing business when those advertisers are fleeing print. This forces sales reps to prospect for new business, and all that new business is coming in online. What’s more, the revenues and commissions from that business are much lower than what the reps have been accustomed to. And they have to learn a whole new language and process to bring the business in the door.
So now you’ve got ad sales reps who have been taught how to close $10,000 deals that carry a 1% commission suddenly selling having to sell $500 deals that take just as much time to close. Even if you hike the commissions to 5%, it’s still a pretty unappetizing prospect for most of them. The fact that the products are uninspiring and expensive makes things worse. That means reps are basically selling brand and reputation, and newspaper brands are now becoming a liability.
Some nimble publishers have experimented with setting up online-only sales staffs and training new recruits in the intricacies of selling a highly targeted and measurable medium. They’re on the right track. Those that have deputized their print sales people to peddle banner ads as a companion to their ROP contracts are headed off a cliff. Sadly, that’s probably most of them.
Gannett Loses Control
What do you do when a blogger becomes the chief source of information about what’s going on inside your company for employees of that company? That’s the conundrum that’s facing Gannett these days, as Jim Hopkins’ independent Gannett Blog has apparently gone viral. Hopkins reveals some recent traffic statistics: 91,000 visits and 189,000 page views in the last 30 days. That’s serious blog traffic, folks. What’s more, the site is being swarmed by Gannett employees. It’s become the virtual watercooler for a company of 46,000 people
The conundrum for Gannett is what to do about Hopkins. So far, it’s chosen a strategy of benign neglect, which is a huge mistake. Hopkins remarks that Tara Connell, Gannett’s chief spokesman (and interestingly, a former managing editor at USA Today) has gone almost silent recently as rumors have swirled about layoffs and cutbacks. Meanwhile, check out the volume of comments on each post on the blog. Gannett’s strategy (and we suspect this isn’t Connell’s decision) is about as wrong-headed as it could be. It is allowing a brush fire to grow out of control. What’s worse is that it’s failing to address an important channel to its own employees, who are the most valuable spokespeople it has.
One of the great ironies of watching the newspaper industry collapse has been to see the same media icons that have long scolded institutions for their insularity become reclusive and inwardly focused when the spotlight is turned on them. Gannet Blog is exhibit A in how not to handle a new influencer.
Stiff Upper Lip at the Sunday Times
The UK’s The Guardian sits down with John Witherow, who’s edited the Sunday Times for 14 years, for his first interview in nine years. Jane Martinson finds the 56-year-old Witherow to be charming, disarmingly unpretentious and energetic. He’s full of passion for newspapers and optimistic about the future. Speaking of uber-boss Rupert Murdoch, with whom Witherow speaks every week, he says, “He intuitively believes in newspapers and thinks they can be successful. He believes that all titles should aim to expand their circulation.”
The Sunday Times has had limited recent success in that area. Witherow admits that a price hike to Â£2 two years ago was a tactical mistake that cost the paper 100,000 readers. Still, at 1.15 million weekly copies, it’s a profit engine that earns Â£50 million a year.Witherow is excited about a new design that has added full color. He doesn’t see his 14-year tenure in one of the country’s most visible journalism jobs as a liability. He loves the experience of reading newspapers and views it as his challenge to pass along that enthusiasm to others.
DirectTV Pioneer Takes Over at the LA Times
Broadcast veteran Eddy Hartenstein takes over as publisher at the beleaguered Los Angeles Times. The paper runs a terrific profile of the guy. Hartenstein is “regarded by many as the father of the satellite TV industry,” having germinated and nurtured the idea of delivering by satellite what had previously been available only over wires. He’s an analytical thinker who also has the people skills to lead an organization. He prefers to stay out of the spotlight and let his accomplishments speak for him. People respect and like him. He had lunch with Times editor Russ Stanton for 3½ hours before agreeing to take the job. Sam Zell assured him that Tribune Co. won’t micro-manage the operation. And mark this quote from Zell about the Times: “This [the Times] is a keeper.” Let’s see if that promise holds up when the next debt payments come due.
- The Chicago Tribune has cut 70 of newsroom positions – or about 13% of its total editorial headcount of 550 – in recent weeks. That’s more than most people expected, according to rival Chicago Sun-Times. The mood in the newsroom is described as “tense,” which is probably an understatement.
- More signs that the Modesto (Calif.) Bee is being absorbed into the Sacramento borg. The paper is offering a buyout to all of its 200+ employees, its second such offer this year. Last month, the paper said it will stop printing in Modesto and move those operations to Sacramento. That cost 33 full-time and 127 part-time employees their jobs. In April, the Bee extended a buyout plan to about 100 employees, 11 of whom took it. The McClatchy Co, which owns the franchise, is trying to cut overall expenses by 10%.
- The Indianapolis Star will lose 23 employees as part of the bigger cuts at Gannett. The story didn’t specify the size of the paper’s total workforce.
- Tucson Newspapers, which publishes The Tucson Citizen, will eliminate some 30 jobs, also as part of the Gannett cutbacks.
- The anonymous “Retch” at TellZell is exhorting readers to fill out an online petition. “It calls for Sam Zell to add two seats to the Tribune board of directors: one to represent the workers and another to represent readers.” Seeing as the workers own the means of production at Tribune Co., it doesn’t seem a half-bad idea. However, they’ve got to get more than the 128 signatures so far.
We Miss Copy Editors Already
If you’ve ever taken a “money shot,” you’ll appreciate this gallery of pictures that were taken just at the right time. A good 90% of them were no doubt accidental, but let’s pat the photographers on the back anyway. Everyone needs a good pat on the back once in a while.
This entry was posted on Wednesday, August 20th, 2008 at 8:27 am and is filed under Advertising, Business News, BusinessModel, Layoffs, NewMedia, Newspapers, OnlineMedia. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.