Print still leader in advertising revenues, trumping digital [Print not dead]
Labeled a bit ‘on the old-fashioned’ side by some colleagues, I feel that it is incumbent upon me to start defensively, which, in sport, war and life, it seems, is never a good idea. Nonetheless, here goes…
I have no interest in paper, no investment in traditional print journalism (or indeed any other kind) and no interest in yesterday’s model. I don’t care whether content is delivered in paper format or digitally, or for that matter by carrier pigeon.
It’s all one to me, addicted as I am to my daily newspaper of choice in print and via every device Apple has ever unleashed on a suspecting public. I use the lot: from iPhone to iPad and all else in between, and for that matter every shiny new Apple device issued since 1990. If it’s shiny, I have it. And moreover I use them all, every day.
So why do I have this reputation for being a doubter of all things digital when the truth is I am an aficionado of multimedia in all its fabulous and interesting forms? It stems from the numbers.
If you look at the data which includes the last 10 years of actual data and the forecast for the next five or so, courtesy of PwC and more or less mirrored by ZenithOptimedia (albeit not exactly agreeing on the timescales), the fact is that newspaper digital advertising revenue lines for every region (EMEA, Latin America, North America and Asia Pacific) continue to be flat and are predicted to remain flat in the immediate years to come.
Despite the seemingly continuous avalanche of reports hyping digital (don’t get me started on social media – there’s no money in that for you either), it seems the money has not been forthcoming. No one, it seems, has been making a fortune from digital in the newspaper website business.
What about Schibsted and others? Fabulous profits and performance and an ever-increasing proportion from digital sources. Well, if you look carefully at Schibsted, leaving aside the very unique and small markets of Norway and Sweden (five and eight million, respectively), you will see that underpinning their success is a digital acquisition strategy. Put simply, they develop non-newspaper revenues by buying good digital businesses or by developing non-newspaper digital businesses completely separate from their newspapers.
A conversation with Pelle Mattisson, CEO of Mobile Business at Stampen, and a Media Partner at WAN-IFRA – Publish Asia 2012 in April revealed a similar position:
“Stampen. We have an acquisition strategy; that’s why we do so well. We are a separate business to the newspaper business – you cannot move fast and exploit the opportunities when you are attached to a legacy business like the newspaper.”
“The newspaper sites, meanwhile, are doing quite well, but the problem is that you cannot move the value from the paper to digital – you lose lots of revenue (yield). In the USA, it is said you lose yield (when you move revenue from print to digital) in a ratio of 1-7. I would agree with that.”
So, we have a clever, highly recommended and successful diversification strategy, but not a resolution to the problem of moving the newspaper model to digital.
Singapore Press Holdings Executive Vice-President Chua Wee Phong, also at the Publish Asia event, voiced a similar opinion:
“There’s no money in digital – every dollar in print is worth only a cent in digital…We need to wring every cent out of print for as long as we can while we explore ways of digital making real money.”
However, the focus in many areas remains on digital advertising.
In North America newspapers are achieving 20 percent and more of their revenue from digital, by virtue of the simple fact that newspaper print ad sales have collapsed. It has nothing to do with upward trends in digital ad sales – which are, for newspaper websites, at least, a flat line.
Furthermore, the ownership model currently in vogue does not help the game. Publicly owned newspaper companies are increasingly slaves to their share prices and to debt. So, they play up their digital success and vehemently avoid all discussions about print.
As a consequence some newspapers (no names) even fiddle the figures a ‘wee bit’. The most obvious tactics include:
- 1. Adding a few cents to a print ad and placing it online, sometimes without the real knowledge of the advertiser. This equals instant digital revenue success, but offers no real value to anyone.
- 2. Not including the cost of content of the newspaper website within financial reports, website content is provided largely by a print newsroom and at a great cost. By ignoring this, the content of the website is free and so equals instant digital profit.
There are other tricks but these are the most common.
So if this is true, what’s the solution?
Well, first of all, the future is digital – on that we must agree for the benefit of our audiences and our advertisers.
Second, print is not only ‘not dead’, but in some markets (India is at the forefront) print is blossoming. Moreover, for the rest of us, print will likely still be the revenue engine for some years to come (If you don’t believe me, look again at the chart above).
On behalf of WAN-IFRA I have presented detailed data on this for some years to incredulous audiences, so I am neither surprised nor offended if it seems a lot for you to swallow.
The reality is that print is not dead, and we need the money it seems capable of generating.
Print revenue is:
- 1. Deeply unfashionable;
- 2. In most cases 90% of the total revenue;
- 3. High yield;
- 4. Proven to work as a footfall driver and deliverer of brand values.
Digital revenue is:
- 1. Fashionable to an astonishing degree;
- 2. In most cases 10%, or less, of the total newspaper revenue (in real terms and without being fiddled with);
- 3. Frighteningly low yield;
- 4. Proven to be a driver of footfall and sales, but not currently very good at branding.
Doesn’t this point to a fabulous opportunity in which newspapers are uniquely placed to offer the complementary multimedia ad campaigns that include print, digital, video and more that will deliver superb value and ROI (as well as good revenue and higher yields for the newspaper), and meet key advertising objectives in one try?
‘Deep Throat’, the anonymous source of the ‘Woodward and Bernstein’ fame, soundly advised punters to ‘follow the money’.
When following the money look carefully at the historic money trail in your newspaper company over the last five years or more, not the fabulous revenues achieved by the likes of Google, because you’re not Google.
Digital revenue growth in the broadest sense should not be confused with something that you, as a media business, should be achieving or can achieve.
What you might want to follow is the high-yield print revenues that are currently paying your salary, and I bet will still be paying it for some years to come. Stop looking at Schibsted as a newspaper website success. They were quicker and smarter, and blessed with a unique and captive market.
Your future depends on digital; your now is still print. Get your multimedia act together and you may just have a unique offer that is both fashionable and profitable.
Eamonn Byrne, is a former deputy director general & business director of the World Association of Newspapers, and business director at consultancy and training firm The Byrne Partnership.
Image via Bigstock.com