THE LIFEBOAT SYNDROME
by Kip Cassino
Anyone who has watched “lifeboat” movies knows how they progress. As the days lengthen, the crew stretches rations to a few morsels of food and a single sip of water. The weak are cast into the sea as they swoon. But, eventually, the rations run out and the remaining survivors begin to look to each other as the awful remaining alternative.
To some extent, that grim scenario is playing out in the media industry. Newspapers, for example, have cut staff to levels never contemplated in years past, in order to preserve the “core product.” But beyond the cuts, it’s pretty much business as usual, even though the ad categories responsible for the majority of past revenue – the auto dealers, department stores, real estate, and recruitment – have all continued to slip as the century nears the end of its first decade. But cuts assume that things will ultimately be better … that the lifeboat will be found, and those still onboard rescued. What if that’s not the case? What if the lost revenue is not coming back?
An evaluation of the trends driving the downturn in advertising spending for each of these categories does not hold promise for a return to the past. Without getting too technical, the statistics show the opposite: that there has been a break between past spending patterns and those in place now in every one of these ad categories. Return to the past is unlikely. Nor is it likely that some major new ad category will arise to take the place of the lost revenue. A look through the lists of businesses and their ad spending patterns does not show promise in any market, large or small.
There are no quick fixes for the current situation. There are indicators, however, that – when taken together – at least show the direction newspapers must go to regain their market strength:
1. Be aware of how you got here. Newspapers are in the situation that exists now because they chose to measure revenue and ignore share. So, when revenue dropped, the reduced share caused even greater reductions – unanticipated by past results.
2. Find out where the money is going. In both recruitment and real estate, the lost share did not all go to some online intermediary. In many cases, it moved to the advertisers’ websites themselves. This means the “Upsell,” the classic vehicle newspapers have used to become the largest local online advertisers in the markets they serve, is ending. The online money is now moving to paid search engine placement, e-mail marketing, online promotions, and streaming audio/video.
3. Play to win. That means measuring share, and looking to win it. Just counting money isn’t enough. If your revenue isn’t growing faster than the whole pie, even if it’s growing you’re still losing ground.
4. Get measured. Newspapers have the reputation among advertisers as resistant to measurement. Yet measurement is, increasingly, what advertisers demand. Programs to offer reasonable metrics in this area must be developed.
Newspapers are not going away, though they may change dramatically during the coming decade. However, the longer they continue their “lifeboat syndrome,” the more painful their transition will be.
~ KC