Two reasons why Canadian newspapers are failing
Writers are never supposed to repeat the headline in their lede, but in this case it bears repeating: What the hell is wrong with Canadian newspapers?
Graphic: Reflections of a Newsauer blog.
Sun Media closed 11 newspapers and laid off 360 workers several weeks ago, adding to the 500 employees it gave the pink slip to last year. Not long ago, Postmedia reported a $112 million loss in the third quarter and a 13 per cent decline in print advertising revenue. An infamous internal memo to Vancouver Sun and The Province employees details the sorry state of those two newspapers and braces staff for upcoming cutbacks and layoffs.
Across Canada urban newspapers are reducing payroll, slashing costs and in some cases going out of business altogether. The exception to the rule is the small town weekly, which seems to be doing just fine, thank you, because it is one of the few options for local business advertising, but that’s grist for another column.
The angst in the metro newspaper community, which covers 80 per cent of the Canadian market, is palpable. My spies in various Western Canadian newsrooms tell me management is in full panic mode and grasping at every revenue opportunity that crosses the publisher’s desk, including the ill-thought out pay wall, the solution du jour across the North American industry.
So, what the hell is wrong with Canadian newspapers?
As the publisher of a network of online daily newspapers, I can offer a unique perspective on that question.
When I founded Beacon News in 2008, I knew creating an online revenue that worked was the key issue. Fix the revenue problem and the journalism problem will fix itself, was my mantra.
The first rule of creating a revenue model is to ask customers what marketing issues they needed solutions for. Consequently, I spend part of each day talking to or meeting with customers (most are also my competitors’ customers). Over the past five years I’ve talked to hundreds, maybe thousands. Based on those conversations, I’ve learned two things.
First, ads have to be effective. Well, duh, you’re thinking. But you’d be surprised how many businesses advertise in newspapers because that’s what they’ve always done, not because they know for a fact the ads work.
Last year I was sitting in the office of the CEO of one of Canada’s largest condo developers, who for over 30 years had been a faithful newspaper advertiser. The phone rang. It was his sales manager. The CEO’s end of the conversation went something like this:
“How much did the ads in the (Calgary) Herald cost us? $20,000? How many calls did we get over the weekend? None? You’re telling me we spent that much money and never received one lead? This has been going on for too long. As of now, we’re stopping all newspaper advertising.”
The condo developer’s experience is not an isolated incident. During a week of Calgary sales calls during June I met with 13 customers and everyone of them told me they had already permanently abandoned print advertising or were in the process of doing so.
I rarely have a customer tell me print ads work. Even if they do work for some customers, the perception is now wide-spread in the business community that they don’t.
Second, advertising has to be measurable.
How do you measure a print ad? The number of phone calls it generates is a crude measuring stick because maybe the customers showed up in person. Unless the condo developer’s sales reps were surveying everyone who visited the show suites that weekend, it would have been pretty hard to say what motivated prospective customers to check out the product.
A few days ago I met with a prospective customer. As the was explaining his needs, the first thing he mentioned was data measurement. Guessing wasn’t good enough. He needed to demonstrate a return on his investment in advertising or he wouldn’t consider us. Fortunately, between Google Analytics, Doubleclick for Publishers and surveys, we could promise him all the data he needed and then some.
Print advertisers, not so much.
One more anecdote. A marcom manager for a major pipeline company recently told me about how his advertising agency presented an expensive newspaper and television advertising campaign worth many millions of dollars. He turned down the proposal without hesitating.
Why?
Because his executive team is comprised of engineers, who love numbers. The manager can spend a small fortune on traditional advertising and have trouble explaining the ROI to his superiors or he can spend less money on Google Adwords and have reams of data to justify his decisions at the next management meeting.
The decision was a no-brainer.
As the graphic above attests, over the past decade Google advertising has risen to $46 billion. During that time American newspaper advertising has plummeted from $43.4 billion to under $20 billion. And it’s still in free fall.
As with most things, Canada is a few years behind the Americans when it comes to the decline of the newspaper industry, but we’re catching up rapidly.
Until Canadian newspapers come up with new ways to deliver measurable value to advertisers, both in print and online, expect to hear more tales of failure in coming years.
That’s what the hell is wrong with Canadian newspapers.
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