It doesn’t take a brain surgeon to understand what the internet has done to the newspaper industry. That isn’t to say Newspapers weren’t having a tough enough time with the 24 hour TV news cycle, which Ted Turner basically invented with CNN in 1970. What drives newspaper profitability? Advertising does and advertising is a newspaper’s lifeblood.
Newspaper advertising rates are usually based upon the paper’s circulation, the numbers of people the newspaper reaches, and how many have bought at newsstands and with daily subscriptions, not how many are printed. Usually, the demographic and even psychographic characteristics of these newspaper subscribers are as wide as the saying, “I love you from here to infinity.” A newspaper sells a subscription to ANYONE that will buy it, at any age, any income, any lifestyle even any geographic area, from here to infinity wide.
Advertisers today, at least most of them, are advertising to reach vertical markets. Rolex isn’t trying to reach everyone reading a metropolitan newspaper (maybe the Wall Street Journal but that is a different animal). Neither is VW (especially VW’s less expensive models). Rolex and VW are virtually working to reach different metropolitan demographics. Also, not every subscriber reads the paper they subscribe to every day.
So let’s say a newspaper has a circulation of 50,000 subscribers and a page rate of $2,800 per day (this is not only accurate, they are rates used in Orlando). That’s $2,800 a page per day or $19,600 a week. With $19,600 a week in a regional geographic area,Search Engine Optimization (SEO) or Pay Per Click (PPC) could attract the attention of EVERYONE searching for a specific product on a search engine and have money left over. But that topic will be another blog.
Let’s say, as earlier stated, one Newspaper advertiser is Rolex and a second advertiser is VW. For any given metropolis, there is no accurate research of any published paper (there estimating) that can accurately tell the advertiser how many subscribers would have the propensity to buy a Rolex or a VW. Even guessing, the numbers would be a percentage of the total circulation, which equates to the total cost per page. But as stated, Newspapers do not base their advertising rates on numbers of possible readers interested in a product, brand or service as is in PPC. Newspapers base its ad rate on the total circulation, which is the total number of people who buy the paper. A rate base business model on the total newspapers that a newspaper publishes when an advertiser only wants to reach a percentage of the reader’s demographics, psychographics and genergraphics, is an irreverent financial model to the advertiser. Someone needs to tell this to newspaper publishers.
People thirsty for news have numerous alternatives to feed their thirst. They’ve cut their subscriptions leaving some newspapers with an incredibly smaller circulation percentage than they were just 30 years ago. Readership has dwindled and newspaper publishing costs have sky- rocketed. Cost of paper and printing the paper has gone through the roof. The cost of building readership/circulation has gone through the roof. Distribution by car, planes, bus, trains, people, these costs have gone through the roof. The costs for newspaper employees, print people, editors, reporters, salespeople have blasted through the roof. Yet for some reason or secret in the Universe, Newspaper owners and publishers tell us they are thriving, as well as the ink of their papers doesn’t come off on our fingers.
Many papers have created digital versions of their news. Some of these enterprises have figured out how to create news driven digital advertising revenue but their online revenue is no more than 10% of what total revenues were 30 years ago. Many publishers have now turned to selling digital products as in SEO, Web Development, Search Engine Marketing (SEM), Retargeting, etc., but in reality, they are really trying to become resellers of those same digital products and are diluting an already stressed digital marketing profit margin.
What we then have in today’s world, is an irrelevant newspaper marketing model for advertisers, a slow moving news source, and a non-cost effective business model for an owner/investor. The first known newspaper was the Roman Acta Diruna, published on orders from Julius Caesar in 59 B.C. Newspapers as we know them have had a darn good run.
– Jim Cone, Independent Representative