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"Saving Newspapers: Ideas from Marketing"

“Newspapers need to figure out how to create value before they figure out how to make money,” Mantrala said. They need marketing research to tell them who their customers are, what the customers need, and how to satisfy those needs. Only then can newspapers best decide how to price their products, he said.

The average newspaper has been slow to recognize that it has a “myopic business model,” Mantrala said. He noted that advertisers have become extremely concerned about whether their ad dollars are being spent effectively, and newspapers need better metrics to show what return advertisers are getting on their investments.

Mantrala pointed out that most newspapers are still profitable, that more than 80 percent of online newspaper readers also read a printed newspaper at least once a week, that Sunday and late-in-the-week print papers are still flush with ads, and that print still commands premium ad pricing. But the trends are not promising. More people in the U.S. got their news online for free in 2007 than paid for it by buying newspapers and magazines, he said. In addition, newspapers have faced a big downturn in ad revenue and the bulk of online ad dollars flows to groups that do not actually create content but piggyback on it, such as aggregators, search engines, and portals.

The question facing many publishers is whether to offer free or fee-based content on their websites. The answer, said Mantrala, is both free and fee. To support this, Mantrala presented findings from Professor Koen Pauwels of the Tuck School of Business at Dartmouth College.

The research suggested that newspaper websites first need to build strong momentum and traffic before considering charging for content. Then they can begin by charging small, justifiable tariffs and raise them later on. Mantrala also said that newspapers need to use a variety of marketing tactics to build both traffic and online subscribers. For example, free newsletters and email blasts which provide teasers to online content and which may contain advertising are good for driving traffic to a newspaper’s website and for gaining free subscribers. Price discounts are more effective at building monthly contracts. And search engine referrals and emails better at gaining longer-term contracts.

Mantrala suggested that newspapers focus discounts on their most price sensitive customers – those with short-term contracts – and focus email and search engine referrals on quality sensitive customers – those with longer term contracts. At the same time, newspapers should keep nurturing free subscribers while giving them good reason to upgrade. “Newspaper publishing is like any other business: ignore your customers at your own risk,” he said.

Mantrala also said that print publications should find ways to monetize their unique content. For example, U.S. News & World Report sell access to school rankings and detailed college data; Consumer Reports sells objective product rankings, The New Yorker sells reprints of cartoons, and Congressional Quarterly sells high-priced, inside-the-Beltway information.

Mantrala pointed to the Wall Street Journal as one newspaper that has “figured it out,” both getting paid for its online product and increasing print circulation.

Contact Professor George Sylvie at 512-471-1783 or mantralam@missouri.edu

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