I was in a 7-Eleven last week and watched a middle-aged woman in a sweat suit pay $1.50 for the Sunday newspaper, then walk outside and dump half of it in the trashcan. Care to guess what part she dumped?
Like 37% of newspaper readers (according to Scarborough Research), she’s interested in the advertising. Her $1.50 was likely to have bought her at least $5 in coupons that she’ll redeem at the grocery store, Rite Aid or Wal-Mart. Smart purchase.
While most of the newspaper industry frets over giving away its precious news content, its most vulnerable franchise is produced by the advertising department. Newspapers should thank their lucky stars that the woman in the sweat suit did what she did. She could have stayed at home and gone to SalesCircular.com or one of the many other sites that would have given her the same thing. If she were in Long Island, she might get her coupons from www.yourli.com, an incredibly useful and popular site run by a group of radio stations. If she were in Bakersfield, Calif., she might go to www.shopkern.com, a shopping and coupon site run by KERO-TV.
I hope publishers learn soon that their most important content isn’t its local news. It’s advertising. The issue was underscored last week when the president of the Newspaper Association of America sent a e-mail warning that J.C. Penney’s and Sears were threatening to pull their circulars because of lower circulation and the industry’s inability to reach younger demos. Circulars, he said, account for half of all newspaper retail advertising.
I wouldn’t count newspapers out. Despite layoffs, bankruptcies circulation scandals and thinning classified sections, they are still king when it comes to local advertising. The crown is tarnished, but at the end of the day newspapers still control the largest slice of the $143 billion local ad pie, 26%. The next-closest share: Interactive at 14%. Then broadcast TV at 12%, then Direct Mail at 11%. Advertisers know about the lady in the sweat suit, and they’re eager to meet her on Saturdays and Sundays when she’s got her wallet and credit cards ready. Newspapers remain the No. 1 source for coupons, representing 50% of all coupon sources. The Internet represents 11%, but is certainly growing.
Newspapers are vulnerable, but their managers aren’t dumb. Gannett owns ShopLocal.com, an Internet distribution mechanism for its print circulars now plugged into all its newspaper and TV sites. The Suburban Newspapers of America this fall launched www.zip2save.com and is signing up smaller newspapers across the country. It’s modeled after www.flyerland.ca, a highly successful site created by Metroland Newspapers in Canada.
The debate over charging for news content is silly. Rupert Murdoch may be carrying the battle flag, but the legions of publishers following him over the hill appear to be heading into the sunset. Charging for online access may slow the erosion in print circulation, but it’s never going to lead the industry to riches. Understanding the behavior of the lady in the sweat suit will.