- October 19, 2009:
The recession is catalyzing a permanent change in the media landscape, with increased pressure on newspapers and magazines. Overall advertising revenues fell in 2008, while newspapers, consumer magazines, and business-to-business trade publications saw print advertising declines of two to three times higher. With aggressive action to foster innovation and more aggressive cost management based on new success strategies, media companies can position themselves for a bright future according to a new study by Booz & Company.
Two major forces are washing away the profitability of print media. The first is the ongoing shift in marketers’ spending focus - away from paid advertising to priorities such as below the line marketing, which will account for the bulk of marketing spend as the economy recovers. The second long-term trend devastating print profitability is the rise of digital media. Print media must now compete with a much broader, and expanding, set of rivals including social networking sites, blogs and social media.
“The steps that print media companies have taken to expand their share of marketing budgets and to succeed in the new digital environment have been largely unsuccessful, such as charging for their content online or moving entirely online without charging,” explained Gabriel Chahine, a partner at Booz & Company. Making content available free on the Web while continuing to charge for it in print, may well be the best path currently available, but it does nothing to change the underlying trend toward lower revenues and profits.
Hope on the horizon
There is a way forward for print media companies to adapt their business models to succeed in the new digital marketing environment, through at least four strategies:
1. Develop deeper relationships with readers around targeted interest areas.
2. Tap into revenue streams beyond advertising and circulation.
3. Reinvent the content delivery model (with a particular focus on lowering costs) and to emphasize a “profitable core” of unique and brand-defining material.
4. Innovate with new products and pricing models.
“We believe that companies that pursue these four strategies can have an attractive future if they make the most of these opportunities, while building on their traditional strengths,” said Chahine.