Bad as 2009 was financially for newspapers, one advertising staple held up pretty well — preprinted inserts and the accompanying coupons bargain-hunting readers love to clip and use in a tough economy.
There are rumblings, however that inserts, like classified advertising before it, may be coming under intense digital competition and other pressures over the next several years. This time, the warning comes from the industry’s own Newspaper Association of America.
In a little-noticed white paper published in late October, the NAA and Kannon Consulting, warned that inserts, which account for half of retail advertising, are ”under siege.” The industry, notoriously pokey in providing return-on-investment metrics or in facilitating ease of placement, needs to tone up its act in a hurry, the report suggests. (The paper was proprietary to NAA members and is not linkable).
Among the problems they cite:
- Stalwart preprint advertisers are restive. Sears demanded an across-the-board 15 percent rate cut. J.C. Penney’s chief marketing officer said he worries whether newspaper inserts can hold their own given big circulation losses and poor penetration among younger users.
- Digital coupon use, while still relatively small, is growing quickly, as are specials offered on companies’ own Web sites.
- Over the last several years the cost to advertisers of printing the inserts (with paper more expensive) and distributing (with fuel more expensive) hit at a time when marketing budgets are tight. (Paper prices fell in 2009 but are likely to head back up later this year).
- Return on investment and other measures of effectiveness have been sweeping through advertising/marketing circles. Newspapers are adapting, but slowly, to providing the specific information marketers demand and opportunities for ZIP code level targeting.
- The complexity for a national advertiser dealing with placements in many papers causes many to turn to “third-party intermediaries” to manage the transactions, adding another layer of expense.
Much of the NAA report is technical and operational — suggesting mechanisms for better cost management, targeting and communications. All this, the report says, is familiar to news managers. Some helpful responses are beginning to emerge.
The Dallas Morning News and Gannett have addressed diminished reach of the basic print edition by offering special products delivered free to customers in desired ZIP codes who opt in. For the Morning News it is a compact news report together with all the inserts. For Gannett, it is “Sunday Select” — essentially all the preprints without a surrounding newspaper.
This may help the Morning News and Gannett, but the report points out, “advertisers tell us that for our industry to be truly effective with them, we need to be scalable. A great idea is less great if only one or two markets do it and if those two don’t do it the same.”
The NAA itself has set up an “Advertisers’ Exchange,” allowing newspapers to communicate quickly if they are changing Web width or modifying distribution patterns. The Audit Bureau of Circulation has a separate “Preprint Projection Center” with several hundred newspapers participating to provide up-to-date information on circulation rather than waiting for the every six-month publishers’ statements.
That’s good as far as it goes, according to Kannon and the NAA, but not enough.
“Creating a third-party clearinghouse with a national sales function for newspapers representing the top U.S. markets would be one evident solution. Speed is a key desire for advertisers who desperately need to accelerate the pace to market.
“Anything that newspapers can do to help reduce time will be an important component of what we do.”
I’m beginning to see the difficulty of getting newspapers to act collectively on anything as a huge and recurring issue. On self-service ad platforms, charging for online content, or a uniform online audience metric (highlighted by incoming NAA chairman Mark Contreras in a Biz Blog item last month), the industry could help its customers and itself by agreeing on something simple and uniform.
However sound the logic, proposals for a collective response to an obvious industry problem tend not to happen. Blame inertia, blame the big papers and big companies who want to do it their own way, blame executives who can’t stomach the expense of abandoning a current vendor or internal system and creating a new one.
Urgent business distress doesn’t sweep away the objections. I get the difficulty of collective action (check out Congress). I wonder, though, if the execs were absent from eighth grade history class when the other boys and girls pondered Benjamin Franklin’s Revolutionary War aphorism: “We, indeed, must all hang together, or assuredly we will all hang separately.”
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