Are Press Barons Sleep Walking in Economic Climate?

The recession has hit press hard. A number of large press spenders have been victims of the credit crunch (MFI, Land of Leather, Zavvi and Woolworths) removing £25m of advertising revenue, the growth of internet usage has placed extreme pressure on print publishers and more specifically the success of search engine marketing has been damaging for classified adverting revenues.

Many titles during January have needed to resort to cover price increases as a way of fuelling alternative revenue. So far, with 3 out of 4 readers being loyal, the relatively small increases have not negatively impacted on circulation. However with rising paper costs at +25% and reduced advertising budgets set to continue, any price increase is a short term solution and is unlikely to be sufficient to bridge the gap.

How does the commercial press sector need to respond to the greatest market challenges it has ever encountered and who are the likely winners and losers?

Three of the most talked-about proposals involve a relaxation of cross-ownership rules, a relaxation of merger controls and state funding. Almost every British newspaper publisher seems keen on the first two, which overlap of course. There is much less enthusiasm for the third way which raises all sorts of questions about the relationship between the state, the people and private capital. It may also open a debate, in many eyes long overdue, about the concept and practice of press freedom.

Roy Greenslade in his Guardian Media blog even suggested Newspapers should consider a not for profit business model; the argument being that newspapers should be preserved because they are essential to democracy, providing valuable information to people for the general benefit of society. However I can't see the barons relinquishing their profits that easily for the greater good.

More immediately media owners need to consider more radical and creative measures to drive revenue. The initiative from Express Newspapers to cover wrap their publication for the launch of the Fiat 500, the day after the Obama inauguration is a good example of how creativity can drive commercial success. Many will argue this approach devalues the Express brand, others will argue it is an innovative approach to drive new revenue streams in a struggling market.

Critically, Press owners still need to drive circulation and identify the role of print alongside digital.

News International, although continuing short term promotions and cover price fluctuations, are embarking on a long term brand building strategy. They have recently appointed a Director of Commercial Strategy and with marketing budgets doubling we should see more brand communication throughout 2009. The debate is whether this will merely slow the inevitable circulation reduction or lead to unlikely circulation growth. It will be interesting to see how long they can maintain this approach and how deep their pockets are.

In our minds the bigger problem facing the Press market is how they can work together as a medium to regain marketing budgets. The two industry bodies PPA and NMA have had limited success and often seem to slow to react to change or are under resourced. We need to see greater collaboration both amongst media owners and internally between departments to make press a more attractive proposition.