Thursday, March 31, 2005

The Print Stains on My Fingertips are Starting to Fade

I know a big secret. A lot of people know about it, but few are willing to talk. It could throw the entire newspaper and magazine publishing business into turmoil. Here it is: An increasing number of publication houses are making more money from their online versions than from their print editions. The media won’t publicize this story because it could result in the beginning of the end for many print periodicals.

It started happening last year, but really picked up in the fourth quarter when online advertising became more popular, hip, cutting edge, and savvy. Corporate marketers and the advertising world started experimenting with strategically-placed ads on search engines, newspapers, and magazines, and found very high responses. All of a sudden the ability in a digital publication to dynamically place an automobile ad next to editorial about the car industry became very sexy.

The advertising industry has fallen in love with the concept of buying space next to online stories that are associated with their client. For example, if I was the ad agency for General Motors, I could ask the New York Times to place my client’s ad next to any major or minor automobile story in their business section for a certain period of time. That means if any competitor to my client scores an editorial announcement, General Motors is right there, too, reinforcing its message.

This new means of advertising is driving companies with smaller advertising budgets crazy. Every time they manage to get an editorial hit, they can expect their deep pocket advertising competitors to be right next to them reminding the world of their existence. HWH PR/New Media is getting calls from current clients, former clients, and potential ones asking us if we can help them beat the new system. Two days ago, a client that is in the digital signage business issued a major funding press release. The good news was that it got picked up by their hometown’s online newspaper. The sad news was that their major competitor -- who they have been trying to beat to death for years -- magically displayed their multimedia ad right next to the story.

Advertising tricks like this one, plus so many others, are causing online sales to soar like crazy. Plus, a lot of publishers have privately told me that their costs for printing and distribution are at an all-time high and they’re losing more money than they would ever admit. Digital publications cost relatively little to publish, are much timelier (most publications are issuing minute-to-minute online news with the post time so readers immediately know how fresh the story is), and never run out of editorial space. Stories that used to get cut because of editorial space considerations are now prominently listed in a much more current and fashionable style.

Another major element that is causing the print death of certain publications is the ability to use a search engine for information that we all formerly secured from our print informants. I personally am finding it less and less important to get my decorating magazines by mail each month when all I have to do now is Google “minimalist contemporary furniture” and receive thousands of pages of information. Yes, I still like getting the monthlies, but the need is just not as great. A friend of mine used to rely on his monthly computer mags to tell him the hottest trends for his trade. Now he reads everything online and has cancelled his subscriptions.

The digital frontier has certainly changed the lifespan of print. Many of my friends who told me a year ago that they would never read a newspaper online are now turning on their computer in the morning with their first cup of coffee. The minute publications start to figure out a way they can shut down their print versions without signaling a major negative spin on themselves, you will see a lot of empty spaces on the newsstands.

8 comments:

Ben said...

According to an article on this very subject in the New York Times: "Can Papers End the Free Ride Online?" 14 March 2005, larger newspapers online advertising revenue only accounts for 2 or 3 percent of their overall revenues.

So...either you are very, very wrong in your analysis. Or the New York Times is lying. I know who I believe. (Hint, it's not you.)

Anonymous said...

Of course, The New York Times has never gotten something wrong, or misled its readers. Perhaps Ben doesn't know that the paper is debating whether to start charging for its online content -- a fact the paper omitted in its March 14th story. The paper would certainly have no interest in suggesting it wasn't making any money online now, would it?

Anonymous said...

The New York Times didn't omit to say that it was debating charging for content.

'The New York Times on the Web, which is owned by The New York Times Company, has been considering charging for years and is expected to make an announcement soon about its plans. In January, The Times's Web site had 1.4 million unique daily visitors. Its daily print circulation averaged 1,124,000 in 2004, down from its peak daily circulation of 1,176,000 in 1993.'

Same article.

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