From my experience, there are two approaches to business planning. The first is to simply say: “What are your figures for next year?” After which battle commences; the commercial guys are over ambitious on revenues. The accountants are over demanding on cost cutting. The result is a plan failure.
The second is that a business development process is created, through analysis and strategy formulation, after which the figures follow.
I have a confession to make. I have friends who are accountants. I hope that doesn’t put you off reading my articles, or being my friend. Some accountants are quite nice people. But in the last decade, our business, in most cases, has moved from being emotionally driven – and we are a creative industry are we not? – to being a numbers driven industry. Which is better? To have newspapers in the ownership of rich, over-opinionated megalomaniacs and egotists, or those that are owned by hardnosed financial vultures? My view is that there is a positive compromise where attention to the demands of the market – readers and advertisers - leads to growth, rather than the accelerating decline that we are seeing, caused by the two extremes of current ownership.
So, if you are pondering the strategic issues for your plans for 2012, here are some ideas:
1. Revisit print
Don’t believe everything you see in our own medium. Yes circulations, and consequential advertising revenues are under-pressure. But the reality is that, globally, only around 8% of newspaper revenues are from digital. But media journalists and trade organisations are obsessed with the failure of print, and the altar of digital. It is the great Dean Singleton, one of our industry’s great visionaries, who said that the best thing newspapers could do to increase share price and reduce costs was to sack their media reporter. While the trend exists, this is contrary to the likely economics of our industry over the next five years, and print is suffering from lack of love and attention.
2. Branding
Because of our lack of love of print, we have forgotten our brand values. At a time when digital companies are increasingly using traditional media to promote their brands, newspapers have disappeared from the consumer landscape. Why does Coke spend 14% of its turnover on advertising, but we spend less than 1%?
3. Customer loyalty
Newspapers aren’t losing customers. They’re losing loyalty traction. Yes, circulations are declining, but, in the UK at least, while readership has declined by 17% in the last five years, “ever readership” has declined by 3.7. In terms of advertising, my analysis shows that while revenues have remained relatively stable over the last ten years (OK, in some markets there have been economically driven declines), advertiser count has halved. And my discussions with advertising directors and accountants show that there is little or no awareness or measurement of these trends. All of these factors are measurable and actionable. We’re not talking Nobel Prize science here. This is simple implementation, tomorrow, and a few simple templates can provide the tools to deliver performance improvement.
4. What isn’t advertising
Today, two thirds of marketing expenditure is not on advertising, compared with only 30% twenty years ago. And what’s more, the vast majority of internet revenues are from the conversion of the 70% non-advertising marketing spend. Yet newspapers remain focused on traditional advertising. Instead they should be focusing on the alternative forms of marketing revenue.
5. Challenge cross-media ownership
The world of cross media ownership is blurring. Regulators are continuing to live in a naive bunker, where each medium is considered in isolation. Yet the reality is that in the digital world, cross-media playing is logical and realistic. Why can Microsoft control 90% of the PC software market, News Corp, owning 40% of the UK national newspaper market, be allowed to acquire the UK’s largest commercial TV station (this is no fault of Rupert Murdoch by the way!), but publishers are constrained from acquiring their competitor, or setting up alternative media services within their markets?
Publishers must become more assertive in, firstly, legally challenging the illogicality of this process, and become more inventive about how they can develop alternative services in the new, digital, non-regulated age.
6. Cooperation
Newspaper companies are pathologically incapable of partnering. In part, it’s ego. In part, it’s an inability to envision the market landscape. But with an approximate 8% of the global communications industry, newspapers can hardly be described as predatory or monopolistic. Yet there is a paranoia about newspapers working collectively on, for example, creating a shared online newsstand service to allow readers to choose between news services or for newspapers to collectively sell their advertising value, other than generic marketing imagery.
7. Journalists are publishers
Journalists have always, and understandably, been reluctant commercialists. Those days have gone. My own experience is that as soon as journalists are offered a bonus based on company performance, they soon come into line. Meanwhile, so called “paid-for-content” is becoming more acceptable. I’ve had two recent projects with FMCG companies seeking to “place” content in newspapers, in print and online. This coexistence has existed in magazines for years, but is still a reluctant entrant in the newspaper world. In reality, it not only can enhance advertising revenue, but also can attract readership.
8. Changing working practices
Three experiences come to mind.
The first is a friend of mine who examined the work of his team at dozens of weekly newspapers, and concluded that the staff worked inefficiently two days a week, and were over-worked three days. His solution was that they shared the working week, sometimes part-time, sometimes twelve to fourteen hours a day to produce their paper. The result was that staff on average worked three days a week, but the same weekly hours, but more time at home, and costs were lowered by fewer people being at the work place.
Another experience was an argument about job-sharing. In a previous life, I was told that job-sharing was disruptive. But I discovered that having two people working half time, results in two 50% salaries, each producing 70% productivity. In creative roles – and we are, after all, a creative industry - I would argue that the creative output is 100%. Does a writer produce less good material in four hours than in eight?
Given our industry’s predilection toward redundancy over any other strategic alternative, would it not be better to offer staff half time working, in which they can enjoy half their income, but with the opportunity for other work, while the company can enjoy 70% of their value?
What is more interesting is that because of the rules of taxation, the employee gains far more than 50% of their income, because of minimal tax rules.
9. Measurement systems
As an industry, we continue to under-measure our business. As I’ve written before, we do not track advertiser count, or the impact of purchase frequency, or the relationship between circulation and online audience. Yet all of these measures provide simple indicators of business improvement. Similarly, we reject ideas of measuring editorial performance, because somehow it is heretical. But within these measures, is an opportunity to increase our business performance.
10. Management cycle
Finally, there is the issue of the management cycle. Most companies work on the basis of quarterly reviews. The smartest newspaper company I worked for had three board meeting a year. A budget meeting. A review of performance. A further review and preview of next year. No messing around. It followed logic and the economic cycle, and minimised the relentless cycles of reporting.
After 35 years in this business, what is interesting to me is how simple these things are. A two day workshop can instil into a management team a new set of principles that can be adopted, implemented, and tracked on a week by week basis. Am I confused? Or is this rocket science?
