Reinvent Your Business Now, Papers Told

The question for newspaper executives is not whether to erect an online paywall, says advertising industry veteran and media consultant Barbara Cohen. The question is how to restructure the way they think about their businesses, from top to bottom, and to find new ways to monetize their content.

Local advertising revenues “will not be enough” to support newspapers in the coming years, Cohen told the Media Financial Management Association’s annual conference in Nashville this week.  “Twenty-one percent of local advertisers plan to advertise less in newspapers,” she said, “and disproportionately, it is the bigger advertisers who are planning to spend less.”

Not  only are legacy product revenues “not going to recover,” Cohen predicted, put publishers must understand that in the future, their big legacy products will no longer drive their businesses they way they once did.

“The day of the big spaceship and little tiny things around it are over,” she said. “We are going to be managing portfolios of many smaller businesses.”

Cohen offered advice on a wide range of business issues:

SMARTER SEGMENTATION. Before publishers can decide how to monetize these businesses, they must abandon their long-held practice of thinking of their users as readers, and begin to think of them as consumers.

“Consumers are no longer the stepchild of the newspaper business,” Cohen said. “They are now front and center.”

This means that publishers must understand how news consumers behave, to segment them into categories and to decide which categories they want to serve.

Consumers fall into three important demographics: How old are you? How much do you make? And do you have kids at home?

“Cut your data by these segments,” Cohen advised, “and build strategies on devices, monetization and products.”

Research by Cohen’s firm indicates that 25% of consumers “don’t care about local news and information,” she said, “and of those who do care about local, 25% have not read the paper or been to its website.”

**WHO WILL PAY? ** The best opportunities to monetize come with heavy users — those who subscribe to the paper and visit the website three or four times per week — and single copy purchasers, Cohen said.

Subscribers, for example, are open to paying more. “We have found we can charge a lot more for out subscription, and one way to do this is to bundle in full access to the archives, as a premium service.”

Subscribers are also open to receiving their news in different ways. “We can look at what is happening in Detroit. They have been adjusting home delivery so that subscribers get an e-edition on some days and a home-delivered paper on others,” she said. “You know your market. Are you making money on Monday and Tuesday? There is opportunity for blended subscriptions.”

THE TRUTH ABOUT ONLINE PAYWALLs: When it comes to paywalls, publishers must stop thinking about them as a way of limiting, Cohen said. “Think of them as: ‘What are we going to give?’ ”

Publishers are finding that paywalls can pay in non-competitive, isolated markets where a single paper dominates the news, Cohen said, and they work for papers, such as the New York Times, the Wall Street Journal and the Financial Times, that provide information readers can’t get elsewhere.

They have failed in large metros where two papers compete and content is not unique enough to command a fee.

“Freedom Interactive did some wonderful testing and shared the results at April’s Newspaper Association of America convention,” she said. “In competitive markets, their pageviews went to heck, money went out the door and they stopped the test,” Cohen said.

“The folks at Freedom will tell you it’s not about pay wall, it’s about penetrating your market.”

This means knowing your consumers and how they are using news, Cohen said.

ONLINE ADVERTISING remains an important revenue stream but here, publishers must invest in search engine optimization and search engine marketing, Cohen said.

“We are leaving behind the 27% of folks who come to the site only occasionally. The only way to monetize them is through advertising, but we need to get them to the site.”

Marketing is critical for reaching these occasional users, Cohen said. These are consumers who currently go to a local TV station’s site for their news.

Why? “It’s simple, easy to get in and get out,” she said. “Navigation is the biggest criticism we have. We need to redesign our sites, search engine optimize and get fantastic search engines on our sites.

DATA, MARKETING and HYPERLOCAL SEGMENTS: Analytics and marketing are critical, Cohen said, because publishers must think of themselves as running a retail business. “We need to know what our consumers are doing and how they are getting to the store,” she said.

Nowhere is this more critical than in top-50 markets where more than one publisher competes, Cohen said. In cities like these, publishers must move to a guerilla approach, battling it out zip code-by-zip code and deciding which types of consumers they want to cater to.