US Newspapers: Asia to profit from your hard work?

The newspaper industry in the United States is in crisis. However, despite a recent worldwide pullback in ad spending, newspapers in other countries are not doing as bad. In fact, newspaper circulation and advertising is rising worldwide.

Much of that push is coming from Asia. According to a 2008 report by the World Association of Newspapers, China is the world's largest market for newspapers with 107 million copies sold daily, while India trails closely behind at 99 million. China newspaper advertising revenue has grown nearly 50% in the last five years.

India's demographics support growing readership over the longterm. That said, in the short term the global crisis has injured Indian newspapers through scaled-back ad budgets and increasing costs for imported inputs. So while we will wait and see on India, this article looks at the factors that are supporting the newspaper business in China, with a mind that these factors can be used to understand India and other developing markets as well.

Factors Behind China's Circulation

• Maturation. China's newspapers have evolved from 45 publications after the revolution that merely printed party propaganda, to more than 2200 newspapers today. While still strictly regulated and required to adhere to the party line on many issues, they have subjected themselves to the pressure of the market economy (some more than others). While journalism still has its setbacks, the newspaper business has matured, and newsrooms are much more adept than they used to be at creating content that will sell papers in a competitive environment.
• Urbanization. Unlike the USA where people are relatively spread out, Chinese cities are heavily and densely populated, and they are growing, as more people move to cities in search of work. As Chinese newspaper distribution is almost entirely focused on cities, the number of people a single newspaper can reach is growing.
• Digital Divide. While the Web and digital devices have given people more choice in where they go for information, there is no sign that the rapid growth of Internet use in China has come at the direct expense of traditional media the way it has in the West. Part of this is the nature of Internet content and user behavior in China, but more significant is the digital divide between young and old, haves and have-nots, urban and rural, which have created a bifurcated media environment where print, tradition electronic media, and digital are all flourishing.

Factors Behind the Growth in Advertising

• Economic Growth. Double digit growth has given advertisers more money to spend on an nascent consumer market. Advertisers frenzy to reach consumers whose consumer habits are not yet established. When you are advertising to a new middle-class that has money and has not yet figured out what to spend it on, you get a better ROI on your advertisement dollar.
• Urbanization. Simple. If more people are concentrated in one place, then you can reach more people through fewer newspaper ad buys.
  
• Immature Internet Advertising. I assume that in the short term, successful models for online advertising are a threat to newspapers, because they are not yet in the position to take advantage of them. In China, these online advertising models is plagued by problems. The lack of reliable third-party measurement means online ad space is still sold on a "cost-per-time" basis, rather than by CPM, since buyers don't reliably know how many impressions they are paying for. Ad-targeting technologies from companies like Tacoda and Blue Lithium do not exist, with the exception of a few start-ups. High click-fraud has so far made PPC an extremely tough ad model. As a result, when you take the most optimistic projections of 2008 online advertising revenue in China, you still get about one month of the Guangzhou province print market.

Innovation Will Come from the West
The innovation necessary to find a new digital business models for newspapers is going to come from the US newspapers, who have the Darwinian choice of innovating or dying. Then when the newspaper business comes under pressure in Asia, local entrepreneurs will hire inexpensive software engineering labor and copy whatever US-born models worked or showed the most promise.

Links and Sources

• MSNBC: Newspaper Circulation on the Rise, Just Not in US
  


• World Association of Newspapers
  

Newspapers should learn to push like Google

Google threatens newspapers because it intends to convince local advertisers to advertise on its platform rather than directly with the paper.

However, newspapers can learn from Google's strategy. Google is working hard to be a 360 degree company--no matter where you look, its there. What is your newspaper doing to be 360 degrees?

Google wants to reach you on every screen you interact with. As Jeff Jarvis puts it in his book

Most companies think centralized, and they have since the decline of the Sears catalog and the dawn of the mass market. Companies make us, the customers, come to them. They spend a fortune in marketing to attract us. We are expected to answer the siren call of advertising and trudge to their store, dealership, newsstand, or now, web site. They even think we want to come to them, that we are drawn to them, moths to the brand.

Does that sound like what you are thinking about your newspapers website? Driving traffic to the website is not enough. Jarvis reminds us that people who find specific content on your website after search, do not even remember your website's brand afterward. They just remember how they found it, i.e. Google. Yet we spend money on SEO, and in doing so we make Google search results even more valuable (which in turn makes Google Adwords even more attractive to your local advertisers.)

So like Google, newspapers need to push their content to their subscribers. But wait, we have a model for that already... it is called a print subscription. Is there a digital form? Yes, an email edition is one way. Content delivered via 3rd party widgets and applications, as well mobile applications is another.

The real test of any model for pushing content out to your audience is how well you can maintain and promote your brand in the process.

But remember that Google works hard to make the content it sends out to us as relevant as possible. That is because if you are sending info to my inbox or mobile device, it had better be damned useful, because that is my personal space. Newspapers have an even greater opportunity than Google, because contextual advertising will always fall short of local advertising.

However, I find many of the e-newsletters newspapers send out to be lacking. What attitude does your newspaper have with the emails it sends out? Is it "get as much out to them as possible"? Do you take comfort in having a CMS that automatically sends out emails without you having to do anything? Are you sending (shudder) AP articles to my inbox? Chances are that your automatically generated e-newsletter that isn't ugly and soulless.

My company is does email editions for newspaper clients, and some email technology companies provide self-service platforms that can be used for the same purpose.

Using push-tech for digital delivery

I am an advocate for newspapers using push technologies--applications where the newspaper sends content out to its audience, who have typically subscribed to the content. This is directly analogous to delivery to print subscribers.

It contrasts with pull technologies like RSS for example, where the audience uses and RSS reader that requests (pulls) the content from the newspaper's server.

The strength of push out products is that local advertisers can understand them the way they understand a print ad--it is "going out" there to people's doorsteps, or in the case of email, to the inbox that people check first thing in the morning.

My company has been working on an email edition product for some time. People tend to find us because they want to promote their website, but are surprised when they see how well it works with local advertising.

It is not spam if it is local. AP stories in your inbox are annoying, but stories about your community are useful. The key is to have local advertising focus on time-specific promotions and coupon deals. For example, you have local restaurants place a discount coupon in an email edition for days of the week when lunch crowds are lower. That coupon is placed in content sent to subscribers' emails every morning, and seen when people are thinking about what they will do for lunch.

Newspapers' opportunities in local content and advertising with push technologies will grow as content is increasingly consumed through mobile devices, such as the iPhone and the Kindle. Rather than speculating on what will be, this blog would rather keep you posted on developments as they occur. But needless to say, mobile alerts and some of iPhone applications from the likes of NYT and BBC are only the beginning.

Comparing to Pull Technology
The weakness of pull products for newspapers is two-fold. Firstly, it's tough to brand the content because it tends to be aggregated with other content--how can you tell how the end user is mixing it with other content? Secondly, for RSS in particular, it requires your audience to be pretty web-savvy. If it is tough for the average user to understand, you can be guaranteed it will be a tough sell to local advertisers.

The best thing to do with RSS and other pull technologies in my view is to send out limited stories, and force the user to click back to the website to see the whole story, so they can engage in the website's advertising. Internal advertisements, such as "click here to place a classified ad" are a good idea as well.