Aqumena Review

Legacy Newspapers as Social Media Platforms: An Opportunity

There is unease in the boardrooms of the Indian newspaper industry.

This despite the fact that, bucking international trends, Indian newspapers continue to grow.

Newspaper circulation in India has grown from 39.1 million copies in 2015 to 62.8 million in 2016 – a 60% increase. While newspaper circulation grew in India it fell in almost every other media market: by 12% in UK, 7% in US and 3% in Germany and France.

Is the unease driven by a perceived shift to online readership? If so, I believe, the unease is unjustified. All indications are that online readership instead of being a threat is actually an opportunity – albeit an opportunity that comes with major challenges to be met – but a huge opportunity still.

Let me explain.

If a newspaper brand thinks of itself, in the larger sense, as a media brand than the opening of the online channel allows is to become a multi-media brand with an unlimited horizon.

Its remit expands from a fixed number of printed pages every morning to putting out unlimited stories and features 24X7 in all media – the written word, audio and video and even in the form of augmented and virtual reality.

Also unlike the fact that every copy of a printed newspaper comes with a substantial cost of production, the marginal cost of reach online is close to zero.

A newspaper that is confident of its digital strategy would have all the incentives to invest in re-tooling its content creation and production capability as also invest in state-of-the-art backend and front end technology for putting out digital content.

It is my understanding that a few Indian newspapers, especially among the large regional ones, guided by astute managers and owners, are already doing so.

Why then the unease that is palpable even among those who have read the potential of digital and are investing resources in meeting the challenge and harness the opportunity?

The unease I believe stems for two causes of worry:

  • Online readers have the entire gamut of reading choices literally at their fingertips. This puts extra pressure on a newspaper brand to retain the loyalty and the “share of attention” of the reader. This also increases the challenge that newspapers have in getting online readers to pay
  • The emergence of advertising technology is leading to increasing importance of programmatic advertising. Publishers feel threatened by this because this is leading to the them losing pricing power on most of their digital advertising inventory

Newspapers across the world are facing these challenges.

For example, the venerable New York Times, floundered for years with their digital strategy including trying to shoehorn their traditional once-a-day news-gathering and publishing rhythms to the 24×7 rhythms of the digital age or by sticking to its self-identity as a purveyor of the written word, ignoring the opportunity that video presented in the digital age. Such content missteps were exacerbated by confused pricing policies for their digital product that gyrated between free, pay-per-use and exorbitant subscription fees.

As a result, NYT up to 2015 continued facing revenue woes with print circulation falling, traditional advertising revenues declining and digital revenues not justifying the costs while the brand was being damaged by the wrong kind of digital advertising.

Then 2016 happened. The high voltage drama of the 2016 election and the continuing reverberations of the result had readers in the US and across the world lapping up NYT’s credible and in-depth political reporting. At the same time NYT started to get its digital strategy right with an increased emphasis on breaking stories 24×7, increasing interactivity between readers and reporters and the mainstreaming of video content and even sustained forays into VR. This combined with a digital product pricing policy that encouraged trail and retention.

As a result, 2017 has seen NYT back on the growth path. Total revenue was in 2017 was $1.7 billion, a growth of 8%. Subscriptions account for 60% of the revenue with more than 2.6 million digital-only subscribers with a major impact on the variable cost of printing. Digital only subscription revenue for $340 million, an increase of 46% and digital advertising revenue increased by 14% to $238 million while revenue from print advertising actually declined. NYT is well on its way to becoming a primarily a digital product with the printed newspaper becoming a legacy product.

A key to the digital renaissance of NYT over the past few years is that it addresses an international readership that is among the most digital savvy in the world.

Indians are making rapid strides in migrating to the digital world. A section of the readership of leading regional language newspapers is very digitally savvy, especially among the global diaspora that continue to patronize their “back-home” newspapers. However the bulk of the readership is still in the first stage of migrating to the digital world.

In this context the case of Schibsted, a Scandinavian media publisher, is relevant because it was among the handful of media houses that fashioned a successful digital strategy back in the early 2000s when the Internet revolution was in its early stages.

Bharat Anand, a Professor of Strategy at Harvard, lucidly reports on this case in his book “The Content Trap. A Strategist’s Guide to Digital Change”

According to Bharat the early crisis that newspaper’s faced with the coming of the digital age was a decline in classified advertising in their vehicles.

Between 2000 and 2013 revenues from classified advertising in print newspapers declined by 80%!

This was due to the factors that Internet based classified advertising offered that print newspapers just could not match – real-time updating, easier to search, greater variety, video format and anytime-anywhere access.

As a result, in the early days while readers were migrating online for news quite slowly (average weekly print readership for the New York Times declined by 7% from 1994 to 2006) while migration to classified advertisers and users migrated almost at breakneck speed to the Internet. And the beneficiaries of this mass migration were specialists like Monster.com, Craigslist and Trader Online

For newspapers all over the world news gathering was subsidized by advertising – not just retail advertising but to a larger extent classified advertising.

Schibsted, through trial and error, were the first newspaper group to successfully meet the challenge that the Internet so suddenly presented itself to their business.

In the infancy of the Internet from 1995 to 1999, Aftenpost, the Schibsted owned premier newspaper in Norway, paid desultory service to the opportunity that the Internet presented for the online classified business. The ads that appeared on the Internet were PDF copies of the classified ads in the printed newspapers with the pricing bundled in with print! Not surprisingly pure-play classified players like Job Line, StepStone (cars) and Tinde (real estate) ate Aftenpost’s classified lunch.

In 1999 Schibsted began its fightback. The cornerstone of the strategy was to recognize that Aftenpost had something that the online classified players did not have -the trust and credibility that the 150 years old Aftenpost had as a brand. The strategy was designed to leverage the strength of this brand

The other strategic insight was that online classified players cut across geographical boundaries offering economies of scale to classified ads in areas like cars and jobs. To counter this Schibsted decided to build a common online classified ads platform in collaboration with five smaller players with regional strengths.

This would require the creation of an independent brand:  Finn was created and Aftenpost than launched campaigns to get their readers to perceive Finn as “belonging to my newspaper which has been there for one hundred and fifty years and had built trust over time”

Challenges in structure a nd decision-making were met. A separate sales and marketing function was sneaked in despite protests from the sales set-up of the print newspapers.

Finn was launched in March 2000. Within a year and a half Finn had reached number one position in real estate, cars and jobs. By 2007, Finn had a 90% share of the classified market and Finn was valued higher than its parent, Aftenpost!

I believe that while Indian newspapers, especially the leading language dailies, while learning from the cases of Aftenpost and New York Times, can transcend and leapfrog with a digital strategy that is better suited to the age of big data, programmatic advertising, social media and artificial intelligence.

The core of such a strategy, as in the case of New York Times and Aftenpost, would be recognize the tremendous brand strength of a successful and established newspaper has and leverage this strength across the strategy.

In India a language newspaper’s brand strength, I believe, is to a significant degree higher than that of the leading English language dailies. This is because a language newspaper appeals to the core of its reader’s cultural and ethnic values.

ND Badrinath, my partner at the deep marketing services firm Aqumena (www.aquemna.com) and I  along with Ravi Shankar, a veteran of the newspaper industry, are designing such a platform and hope to do a beta over the next 18 months with a leading, well-respected language daily.

The core principles that this platform will operate on are:

  • A newspaper brand is rooted in core values driven by socio-cultural and economic world view as well as political outlook and affiliations
  • As a result, the loyal readers of a newspapers are a community in the deepest sense of the word: a community that shares not just ethnicity but an entire world-view
  • While a traditional newspaper is a one-to-many platform, technology presents the opportunity for a newspaper to leverage its brand to create and nurture a many-to-many platform whose engagement depth and intensity levels transcend those of plain-vanilla social media like Facebook
  • The other characteristic of a a newspaper brand is trust. This trust can enable a newspaper brand build a profile of a leader that increases in depth and width with time. Going beyond the cookie tracking profile that forms the core of programmatic advertising to permission driven depth profiling in terms of demographics and behavioral and attitudinal data-points. This profile gathering could be further strengthened by the individual’s interaction in the many-to-many network that the brand nurtures
  • The brand can then, through a proprietary or shared programmatic communication platform using state-of-the-art data mining and artificial intelligence tools promotes marketing communication solutions that are a win-win for the loyal reader as well as for third-party consumer products and services brands that are authentic and credible. Further strengthening the virtual cycle of engagement and loyalty between the reader and the newspaper brand.
  • This would lead to the newspaper getting a bigger share of the revenue generated from existing digital inventory as well as increasing the size of the revenue due to a greater and deeper interface with the readers through the many-to-many network.

 

We believe a platform that delivers on the above promise will allow Indian language newspapers to build a digital business that taps into the true promise of the digital revolution while strengthening and leveraging the brand strength built over decades of quality service to its readers.

 

In a nutshell – every strong newspaper brand has the opportunity to create, nurture and own a high-engagement, high-intensity next-gen social media platform that will allow them to leverage and strengthen their brand and business far into the digital future