We must think of ads as content

It's about the buyers, not the sellersThe extent to which people have paid for the local newspaper in order to access commerce-related content is vastly underestimated when people examine the newspaper crisis today. The arguments are all about the news content and “what’s happening to real journalism,” which has bled over into strategies resulting in pay walls for digital “editions” of the paper, including Rupert Murdoch’s iPad experiment, The Daily. The industry seems to believe that at the height of their popularity, people subscribed to the paper to get at the news content it created, rather than as an access point for commerce within the marketplace.

I know what the studies say, but asking people their opinion and observing human behavior are two different things.

I live in the Dallas/Ft. Worth market, and so I’ve been able to watch the marketing of the Dallas Morning News and its paywall. The TV ads say it all, “Introducing the next generation of the Dallas Morning News.” From the imagery to the prose, the newspaper content is emphasized. It looks like a paper, as the video reveals.. It has those same sections as the paper. “By God, it’s the next generation of the paper.”

It’s designed to get you to think that you’re simply transferring your subscription from one form to another. What we should be doing is innovating something that guarantees subscriptions, instead of trusting our gut on the old model. Such innovations should stress participation in the local economy.

We need to look at the essential question that separates a person from her money: “How does it help me?”

For the newspaper industry, we could answer saying:

  • Reading the paper makes me smarter.
  • It gives me something to talk about at the water cooler.
  • It makes me feel in sync with what’s going on.
  • It makes people respect me more for my knowledge.
  • It makes me a better citizen.

All of these are nice, but none is strong enough to pry open wallets. There is nothing about news content — especially that which is commodified — that is compelling enough to justify paying for it. Nothing.

Let’s look at this another way,

In response to a provocative question by the New York Times, Arianna Huffington defended her enterprise by saying “I didn’t kill newspapers, darling.. It wasn’t The Huffington Post; it was Craigslist.” This is true and requires a simple examination.

According to Pew’s “State of the News Media” report, classified advertising for newspapers is off about 70 percent in the past decade. When current observers look at this, they generally only consider the actual revenue generated by classifieds, but that doesn’t take into consideration people who paid to have access to those same classifieds — the buyers. For every person who has something to sell, there’s at least one other who wants to buy. In this way, therefore, free classifieds such as Craigslist have doubly impacted newspapers, and I don’t think this can be overstated. I remember back when my family was really into garage sales and how the Saturday paper was a necessity. We rarely sold anything, but we sure wanted — i.e. paid for — access to the classifieds.

The same is true for the Sunday sale papers — and by extension — access to any sale paper any day, to say nothing of access to the movie guide, automobile sales, grocery store sales and on and on.

The value proposition for which consumers paid for newspaper subscriptions was vastly more associated with commerce than people think — the need to participate in selling and, more often, buying in the community. This is a strong, highly compelling reason for people to open their wallets, and it’s being overlooked as newspapers try to reinvent themselves. We’re all about the content when we should be all about the advertising.

But what about the Wall St. Journal and the Financial Times? Don’t people pay to access that news and information? There are many who believe these two publications are different, because readers use the information to make money, but I think the reason for their success is much more basic than that. These two papers don’t share the data, but a considerable number of those subscriptions — I’d guess the vast majority — aren’t paid for by the subscribers themselves, but rather the companies that employ them.

Advertising is in the midst of a revolution. The fastest growing local online category includes advertisers spending tons of money creating their own content. According to the latest from Borrell, the Top 5 local online companies derive all their content from their own advertisers. In fact, half of the top 20 are all-advertising sites.

In 44 of more than 200 markets we track, Groupon or Autotrader.com generates more revenue than the largest local newspaper, TV or radio station online operation in that market. It is a startling revelation considering the fact that Groupon did not have a dime of revenue two years ago. This year, about two dozen of its local operations will generate more than $10 million each. Craigslist, meanwhile, generated about $20 million from its site in New York and about $1.6 million each in Phoenix and Houston. Autotrader.com will bring in more than $10 million per site in more than two dozen cities.

If newspapers are going to beat the thing that’s disrupting them, we must first understand what that thing is. It’s advertising’s increasing use of the personal media revolution to reach potential and real customers via the Web. We simply must tap into that, if we’re going to find the kinds of revenue streams we need to be successful in the months and years ahead. Let’s get our eyes off the content paywalls and onto the distribution of ad content, and let’s make it so compelling that people will be willing to pay to access it, just like the good old days.

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