Wednesday, 17 December 2008

You are. Is it? Does Independent mean digital only?

Ok I wanted to come up with some awe-inspiring 2009 predictions about the future of media, advertising and the meaning of life (well, my geeky advertising techy life anyway). And to be fair I got a few…and then read what Peter Kim was curating, and it didn’t seem so groundbreaking any more. So looking at next year there was one over-riding theme

Well, hopefully not, but you know what I mean. But with all the talk of closures, losses and other economic related FAIL, one theme that seems unavoidable is that there is going to be a big casualty or two in the UK. And casting around for candidates throws up some unpleasant thoughts. In previous recessions, companies that invest in and build their brands have tended to grow at a greater rate in relation to competitors than they would in normal economic climates – due to less competition, greater share of voice, lower cost of media, etc. Actually The Economist sums it all up here

Ads on Edge
View SlideShare presentation or Upload your own. (tags: branding recession)

Obviously not everyone can afford to invest in their brands (that’s how the theory works: if 70% of your competitors cut their marketing budget as other costs are fixed, then share of voice is there for the taking. The 30% will see the benefit of their consistency through the years of recovery. Sorry for lack of links but it’s all in the slideshare deck). Amongst the traditional great and good of the UK media scene, there’s clearly some that can and some that can’t afford to invest, so those that are already struggling are where the first casualties will come from.

The TV market has its back firmly to the wall at the moment, but although I have been sceptical of Thinkbox in the past, they are absolutely right in saying that the country will be watching a whole lot more of it next year. Although that doesn’t mean more income for broadcasters, the model is far from broken, and (ITV share price aside) the big players will batten down the hatches next year.

Looking at the world of national press is more frightening though, as the medium has been managing decline for many years. Looking around for the weak and vulnerable here brings a bit of personal sadness here, as my introduction to the world of media agencies a few years ago was as a sales rep for The Independent, and state of my former employer now is downright scary.

Circulation on going fully tabloid (Jan - March 04) - 258k
Current circulation today - 201k

Full price UK circulation 2004 - 223k
Full price UK circulation today - 119k
(all figures Audit Bureau of Circulation)

Massive underinvestment over the last few years has meant that the world of digital sailed past without anyone noticing. The gulf between the Indy and the Guardian in press looks big, while the digital gap looks insurmountable.

Having spent a year of my life trying to convince people who really don’t care one way or the other of how great The Indy is, some of that has clearly sunk in and I’m struggling with the negativity of writing this…

So instead I thought I’d have a look at what can be done about it.

Well first you can’t manage decline in 09….

Reducing overheads by sharing office space and support staff is clearly a vital move to buy time, but looking at the figures it won’t buy much. Putting the cover price up from £0.80 to £1 seems totally short-sighted unless the additional sales revenue was needed to keep the paper afloat THAT WEEK. Otherwise it just gives the ever-decreasing readership an opportunity to reconsider the newstand and see whether their brand loyalty is worth a 25% price hike in a climate of cutting their outgoings.

The Indy titles are as or more dependent then their better funded competitors on Retail, Finance and Auto categories, and it doesn’t take Nostradamus to predict that there won’t be much ad revenue from there next year.

(% of ad revenue from Finance/Autos/Retail)

I think there is a real opportunity here to change the game. Other than genius, the main advantage that Apple have had when revolutionising first music retail then mobile phones was that they weren’t trying to protect a legacy business. There were no existing vested interests to water down the business model, the design, or the idea.

So this isn’t the case for the Indy, but if you have a brand that will probably not be here this time next year unless it does something radical, and is already a loss-leading figurehead for a larger global plc, then you are going to have to think like that.

Fixed costs for a newspaper are all based around content (journalists), production (paper and printing) and distribution (physically carting the thing out to newsagents to try and sell to people who are busy checking their RSS feeds). None of this will change just because there is a recession on (except they will all be housed in a different building and their accounts done by the Daily Mail). All that has changed is that their scarcity business model is no longer valid. Income on the other hand is reliant on copy sales (down: see above) and ad revenue (down: see the news). Both hugely variable and not in a good way. Now this isn’t the first time that the paper has found itself in this position: the launch of the tabloid in 2003 was said to be a last ditch attempt to save the paper, and it not only worked, with sales up 21% after the first year, but it was copied worldwide.

And this is all totally consistent with the values and heritage of the brand. The Indy was launched as a response to a formulaic rightwing royalist press in the 1980s, and has tried to break the mould whenever it could afford to since. The viewspaper concept of running single issue analysis-based front pages, the avoiding all royal family coverage, taking minority sports seriously, anti-Iraq war, all innovative stuff for a newspaper. However having run with the idea that we don’t need breaking news on the front page of a paper as we already know it through 24-7 media they failed to invest in the sort of 24-7 media that would also allow readers to choose to opt in or out of all the other innovative stuff. They are failing because they aren’t being true to the brand. The ad campaign that launched the paper drove sales of close to half a million by asking

It is. Are you?

Now the tables have turned.

You are. Is it?

Because the core readership for the Indy is still far younger than the Times and Telegraph, and more financially literate and business orientated than the Guardian. Young, affluent and techy. Brands’ favourite people. But not people who like turning up for work with ink on their fingers.

The Indy isn’t the only one to feel the pinch though: according to a recent column, former Guardian editor Alan Rusbridger believes local papers should be supported by public funding. In France print unions seem serious in suggesting that Google owes them a living now that out-of-date scarcity business models can’t support them any more.

So what is the solution? Scott Karp talks about newspaper execs having to think about how they would survive if forced to move out of print. This is exactly what those established US publishers that he is referring to should be doing, shoring up their digital assets and looking at how their brands will maintain a share of the revenue that moves out of newsprint. But not the Indy: it is too far behind the digital curve already for digital revenue to make a difference. They need to think what Apple would do. Okay, probably not quite as cool as what Apple would do, but think about how to redefine the category. What replaces print? It needs to be as mobile as print, but as connected as a mobile. So a mobile then? That really doesn’t do it justice: reading heavy text-y articles is about the least fun you can have on the mobile internet and is only marginally less bad on a proper browser like the iPhone.

The Kindle on the other hand was designed for reading text. So was the wave of competitors sweeping in from Japan. None have launched in the UK yet, although the Kindle has taken the US by storm this year. They make newsprint sexy again (or is that just booky-geekness?) One of the most profitable areas for a newspaper publisher is subscriptions: if you make sure readers pay you something every day, it doesn’t matter if it isn’t very much. The Telegraph for instance does 25% or so (might look it up and post a correction, but it's getting late...) of its total circulation through subscription – readers guaranteed every day. Digital print reading devices have no advertising model. If someone decides to bring them into the UK on an adfunded model then it is not out of the question that they could persuade some media agencies that 25x4 ads, or the 5” screen equivalent, were a more realistic way to advertise on such devices than banners. And that this could then be added on to press campaigns that would formerly have run in newspapers…..

So if you can maintain the variable income such as it will be in 2009 by maintaining ad revenue in a way that looks like print, but cut the fixed costs by not printing any more and distributing digitally, then the economic model starts to look more robust. Except of course no-one has a Kindle, and as I've suggested above a mobile phone, even an iPhone, won't cut it. So how about The Independent moves one step ahead of the game into the technology business. Skip all this creating digital content that their traditional competitors have been mucking around with. Don't worry about trying to be a TV channel. Just provide a subscription model that includes the cost of a year's worth of content (which in an attention economy of course is free really, but let's take this one step at a time) and more importantly a device to play it on. Oh, and do it in time for Xmas, as it will be a great gift. Doh!

This is a little bit slash and burn as survival plans go, and does beg the question what will be the strategy in 2010. But the brand will still be around then, some of the staff might still be employed, and the future of newspapers will be rewritten. And if the 2010 plan doesn't work, at least you went down fighting. Good luck!


Graeme Wood said...

Not sure why the fonts are all weird. Except that I wrote the text in Word and pasted it. Last time I do that. Word appears to write 30 lines of HTML just to switch font.

Graeme Wood said...

This post appears to be broken due to dodgy microsoft HTML. It will return shortly....

Post a Comment