The Biz Blog

When Gannett's USA Today announced 10 new executive appointments and a "pretty radical" restructuring August 27, the company left plenty of questions unanswered.

 

What exactly are these new "content rings," which eventually will supplant the familiar color-coded News, Money, Sports and Life organization of both the paper and the USA Today website?

 

How does it happen that two young execs from USA Today's BNQT action sports site are now in charge of all business development and digital development? Does success in covering dirt-biking and skateboarding translate to building a broad digital domain?

 

After the initial press release and an Associated Press article, Publisher Dave Hunke has been unavailable for comment. But let me take a shot at connecting some dots, starting with the most basic question: What are the problems to which this is a solution?

 

It is a long list, actually.

 

USA Today's print circulation and print advertising are both in a deep swoon.

 

Paid circulation has fallen 20 percent in less than two years and, at 1.83 million, is a full 500,000 below its peak in 2004.

 

USA Today has always been coy about what percentage of that circulation comes from hotel distribution, but it may have been as much as half. Its deal with Marriott and other chains has changed. As any traveler can observe, the paper-outside-your-door pattern is far from universal anymore. At many hotels you now find a stack of USA Todays in the lobby or dining room, often as not next to a stack of Wall Street Journals.

 

Business travel, USA Today's circulation lifeblood, has never rallied to pre-9/11 levels. Also, year by year, month by month, more of those travelers are packing a laptop or next-generation device so they have alternatives for a morning news fix, including a digital edition of their hometown papers.

 

For years, newspaper industry analysts have argued that the gradual switch of advertising dollars to direct marketing, much of it digital, could be the toughest challenge facing an eroding business model.

 

Suddenly, in August 2010, that abstraction has a name and a face -- Groupon and its youthful, music-major CEO Andrew Mason. The deal-of-the-day startup, less than two years old, had been largely under the radar (except to its 15 million e-mail subscribers worldwide). Now Mason, 29, and his venture are on the current cover of Forbes ("the fastest growing company ever"), and he was a guest recently on the "Today" show.

 

"It's just huge," said Gordon Borrell, a leading consultant on local ad and marketing spending, in a phone interview. "You have a smart man, a good idea and it works very well," he said. "Like Craigslist, it's just going to take off -- and it is already generating big dollars right now."

Read on to see how Groupon threatens traditional newspaper advertising and how newspapers can respond.