Strategy for newspaper company may differ from strategy for newspaper

Posted by Ben Compaine

 

Another week, another front paper story on the media business from The Wall Street Journal. Today it was the lead story: “As Market Shifts, Newspapers Try to Lure New, Young Readers.” (subscription required)

The article provides some fresh data on advertising in newspapers: The categories of customers that provide by far the largest proportion of advertising have reduced the percentage of their ad budgets devoted to newspapers since 2000. In the case of employment—the highly profitable classified ads for jobs-- the decline was nearly 6%. In a high fixed cost business such as newspapers, this is a serious trend, though not a surprising revelation. Consolidation in the department store industry, highlighted most recently by the merger of  May Co. and Federated, has only exacerbated the decrease.

The topic sentence for the Journal article: “Looking for ways to shore up their readership and broaden appeal to advertisers, many U.S. newspapers are adopting a new tactic: targeting narrower and younger audiences.”

Does this tactic (or is it a strategy) make sense? It depends on what the editors and publishers have as their long term goal. One question that newspapers editors and managers must get clear in their heads is the line between their newspapers and the entity that publishes the newspapers. That is, when we talk about “saving the newspaper” or “developing new strategies for the newspaper,” should this refer to the ink on paper product that is manufactured on Goss Metroliners? Or does this refer to the role of a newsroom, advertising department, and marketing organization that create of bundle of information for distribution to an audience by whatever channels?

I raise this question because the answer would suggest the direction for strategy. Emphasizing the current newspaper product might result in actions such as redesign of the paper’s graphics, changing the editorial mix to target a specific group of readers (i.e., “younger, current nonreaders” as the WSJ headline suggests), raising local ad rates for the dwindling core of “must have” advertisers, and so on.

On the other hand, if the strategy is to ensure the health of the company that publishes newspapers, then a  different strategy may emerge. That is more likely to focus on new products, such as online classified ad services, hyper localized neighborhood Web sites, specialized free print publications such as the Tribune Co’s RedEye.

The two strategies are not completely mutually exclusive, but how they are viewed by editors and publishers does make a difference. First is a matter of priority. If management believes that it is newspaper that is paramount, then it may over invest in that (new presses anyone?), making the new ventures skimp for internal venture capital. And new ventures may be viewed more as an end to subsidizing newspaper margins than to truly developing new businesses that will replace the declining size of the paper product.

On the other hand, a strategy that looks at threats and opportunities, at the publisher’s own strengths and weaknesses, would look at the pieces of the enterprise—the editorial resources, sales and marketing, even circulation – and be willing to strike out in a fresh direction. There are some innovations finally emerging that the tide may be turning to this latter mode.