IFRA

Participants from 19 countries gathered at the Frontline Media Club in London on 29 September for WAN-IFRA's Managing the Crisis Conference.

The moderators for the conference, Dr. Dietmar Schantin, WAN-IFRA Group Director for Publishing, Editorial and General Management, and Sarah Schantin-Williams, WAN-IFRA Associate Consultant, n-able consulting, opened by takes opposing sides on the current state of the economy with Sarah Schantin-Williams saying the crisis is over, and Dietmar Schantin countering that it is still upon us.

Sarah Schantin-Williams cited recent statements from Rupert Murdoch, AOL CEO Tim Armstrong and US Federal Reserve Chairman Ben Bernanke, all of whom have recently said they believe that economy is beginning to turn around.

Dietmar Schantin, however, cited media analysts, such as Edward Atorino, of the Benchmark Company, who was quoted in late September by The New York Times as saying: “You’ve had Bernanke saying the economy is better, Murdoch saying advertising is getting better, broadcasting looks like it’s in a recovery stage, even magazines may be picking up a bit,” Atorino said. “But for newspapers, I don’t think I see much to cheer about yet.”

Dietmar then asked, “Are we in a crisis or are we not? Should we duck and cover or try to aggressively fight our way out?” He then noted that the Chinese word for crisis means danger, but at the same opportunity, so “we should see this as an opportunity to get better, faster and stronger than our competitors.”

Emerging stronger from the recession

“This industry has not managed to overcome its crisis because competitors have always been one step ahead,” said WAN-IFRA Joint CEO Reiner Mittelbach, in his welcoming address to participants.

Pointing out that the real crisis the industry has been facing for some time is really a structural one, Mittelbach said “newspapers have to segment their markets.”

He noted how several other industries have successfully segmented their offerings. For example, in the past, bicycle manufacturers offered only one or two styles of bicycles. Today, that industry has evolved “to make sure that each customer finds the bike he wants,” he said. Likewise, the modern skiing industry offers eight to 10 different kinds of skis for everyone who wants to go skiing.

The news publishing industry is still too print-focused instead of being focused on the media offering, Mittelbach said. “The big thing is really to get a handle on the structural crisis: Be aware of opportunities, and when you see them, start to act,” he said,

Defining the crises (as if one were not enough)

Speaker Terry Maguire, Principal of USA-based International Media Development & Counsel said that for newspaper managers, there isn’t just one crisis, there are many, and this means managers face challenges at every turn. Among them are:

> The customer-consumer crisis;
> the compatibility crisis;
> the confidence crisis;
> and the continuation crisis.

“Ultimately,” Maguire said, “I think we are overwhelmed by these crises.”

He also noted the declining role that newspapers have in society by citing two personal examples since his arrival in London for the conference. For instance, he pointed out that from the time he landed at Heathrow, one of the world’s largest and busiest airports, he did not see a newspaper in any form until after he passed through immigration.

Maguire said he had spent part of Sunday walking around Hyde Park. Of the hundreds of people in the park, “how many do you think were carrying, reading, sitting on, or otherwise using a newspaper?” he asked the audience. “Only four.”

“We have to be aware of our customers,” Maguire said.

How to deal with crisis

News publishers need to “stop thinking of the world in terms of newspapers, and start thinking about people and create things that bring meaning to their lives,” said the next speaker, Anna Kirah, Design Anthropologist, Psychologist and Vice President of Norway's CPH Design 1 2 3. “It’s not about paper and print, it’s about people, relationships, experiences, context and conversation.”

“You must understand people’s motivations and needs. The most important message I have for you is: You can’t create anything meaningful and relevant for them, you have to do it with them.”

To do this, she said publishers need to bring in younger, more rebelious “digital natives” (those born after 1980 who naturally and easily switch among various mediums and technologies as it suits their needs).

“We hire people just like ourselves when we should be hiring the rebels, those different from ourselves. The conservative people are not the ones who can help you in a crisis. Bring in the people who make you feel uncomfortable – they will help you make change.”

How to profit from the crisis

The following speaker, Dr. Rainer Esser, Managing Director of Germany’s Die Zeit, a high quality weekly newspaper, discussed how his company has done many of the things that Kirah had just been talking about, and how well this has worked for them.

“We have to innovate all the time, and we have to have rebels. The paper’s circulation went down at the same time that we stopped innovating and stopped hiring rebels. It became boring.” However, several years ago, Die Zeit rediscovered its roots and has since rebuilt itself.

While acknowledging that Die Zeit’s advertising revenues this year will go down by 5 percent, Esser said that “total revenues will go up because our sales revenues increased faster than our ad revenues decreased.”

How has Die Zeit accomplished this?

“Most important are the people who are responsible for our product. You can get along very well without reading a newspaper, so each week, we have to prove that we are necessary. We have to come up with new ideas, great authors (such as former German Chancellor Helmut Schmidt) and editorial craftsmanship.”

When the crisis started and cost-cutting become necessary, Esser said Die Zeit did not “cost-cut on the editorial team. We cut costs in printing and services from third-parties.” However, the paper’s staff has changed over time, and the people who write for Die Zeit today are different from those writing for paper several years ago, Esser said. “We used to have people with degrees in politics who had been to journalism school. Today, we have more women, we have scientists. It’s more creative when you have diversity in your editorial team.”

Furthermore, a key success factor for the company has been the strong expansion of the brand. “Die Zeit used to be a newspaper,” Esser said, “Now we are a group, publishing seven magazines. The group addresses people from kindergarten on. We have more than 50 events a year aimed at university-age students.”

Beyond the magazines and other print products is merchandising. And here Esser says Die Zeit makes an effort to incorporate original, meaningful content to whatever it is offering. “We don’t just put our name on something without adding something original to it,” he said.

Capitalising on new audiences

Maeve Donovan, Managing Director, The Irish Times Group, pointed out something a young student once said to her: “Why do I need to read a newspaper? If something really important happens, it will find me.”

Noting that people’s media behaviours and expectations have changed, Donovan said that the industry has not kept pace. “We’ve stubbornly stuck to what we know, and our strategic focus has shifted from growth to survival."

“To capitalise on new opportunities and audiences, we need to focus on insights, i.e. understand our readers and marketers needs, so that we can develop products that really serve them, and ‘serve’ is not a common word in our industry.”

“The new expectations and demands are simple,” Donovan said. “Readers want to be able to consume our content in the format and on the platform that best suits their needs. They expect to be able to participate in the debate, contribute to the discussions, and interact with our products and people.”

While there has been a lot of talk in the media world about the Huffington Post, Donovan pointed to a lesser known Canadian site called themarknews.com. “In the 5-6 months they have been up and running, they have created a network of several hundred contributors recruited solely based on professional credibility and expertise. It’s Huffington Post without the movie stars,” she said. “It’s about curation and filtering, and the value it adds is a wider debate.”

“Readers want to be able to ask questions in real time and make their voices heard.”

How to generate more online ad revenue in a crisis

Moritz Wuttke, Founder of NextMediaInitiatives based in Switzerland and Shanghai, China, told the participants that interactivity has changed. The Internet has moved onto the couch and, as a result, consumers use the Internet differently now.

All of the biggest Internet sites are sites that allow sharing, and none of these are newspaper websites, Wuttke said.

He added that the biggest advertising growth is happening in social media, mobile, display and that interactive advertising will grow until 2014.

“The advertiser does not care about your brand – they care about the audience,” Wuttke said.

Newspapers also need to take a good look at how they actually sell their own space online. “Often, it is impossible to place an ad in your newspaper using your website,” he said.

Furthermore, newspapers are being pushed into a corner of being paid on performance (how successful an ad is). “You should deliver value to advertisers by telling them how successful their ad was,” Wuttke said. “People want to pay for performance.”

Another idea is to expand local and hyper-local search. “You should become as close to your customers as you can. Create local information,” he said.

“Integrate Facebook, Digg, contextual advertising,” Wuttke said. “Pick the one that is strongest in your environment and work with them. Ultimately you want to create more eyeballs to increase advertising.”

“In a crisis, don’t fire anyone,” he said. “I think everyone should take a pay cut, from the top management own down. Don’t fire young people – bring them in. Some of them will work for free to get experience.”

His parting advice to publishers was not to stop investing in digital media. “I know it’s tough,” he said, “but if you stop investing now, it’s not good – you can’t stop young people from using their laptops, and keep in mind young people will use your assets differently.”

Boosting ad sales in a slowdown

Theo Blanco, Senior Sales and Marketing Director for Sweden's Upsala Nya Tidning, described how his company has dealt with the crisis by taking on a new pro-customer policy that is more advertiser friendly and uses a hyper-local sales strategy.

Echoing something that Moritz Wuttke had said about advertisers caring about your audience not your brand, Blanco cited a quote from Trevor Edwards of Nike: “We’re not in the business of keeping media companies alive, we’re in the business of connecting with consumers.”

“We launched five print products in the past year,” he said, “this might seem crazy but we have a reason.”

The new print products are all heavily local and focus on the following topics: lifestyle, motoring, real estate, travel, and there is also a daily freesheet. Each product has different publication cycles from the Monday-Friday free paper to the six times a year travel magazine. Most of the publications have very small editorial teams of only two or three people, which helps to keep costs down and allows for higher profit margins, which Blanco said typically range from 20 percent for the motoring magazine to a high of 265 percent for the real estate magazine. He said that even the free daily has had a profit margin of 50 percent from its first day of publication.

“When a business window opens you have to take it,” he said. “I always say: ‘Make money now,’” he said. “We don’t see this as a crisis period, we see it as a transition period.”

Cost savings or how to manage an earthquake

Vasily Gatov, Vice President of the Russian Publishers Guild, Strategy Director at Russia's MEDIA3 and an IFRA Board Member, said he was going to begin where people usually finish: The end. "Is the 2008-2009 crisis really the end of known media history, printed media, press retail & subscriptions," he asked. "Don't panic," he said, "it's not."

MEDIA3 is the largest Russian print media company. It produces the No. 1 national weekly, which has 53 local editions, as well as the daily newspaper, Trud. MEDIA3 also has a network of home delivered shoppers/classifieds, as well as magazines and websites. Overall, it is Russia's No. 1 newspaper printer, its No. 2 press retail company and its No. 2 press distributor.

While the company has done well in the past, Gatov said that in every line of success they had for 2008 creates a problem for 2009 (and beyond). Today, MEDIA3 continues to have strong copy sales (2.3 million copies a week), its ad sales decline is less than the average, it has solid editorial performance and its Internet ad sales have grown more than 100 percent, (but the base was low, he said). Furthermore, MEDIA3 did not rush to make cut costs, but instead took more thinking about where to make them. The area of concentration remains on the main product.

Gatov said the company is taking active measures, and holding the line on things like copy sales, which it believes need to be real sales, not giveaways, “so no more free copies.” MEDIA3 is also doing creative cross-media sales, and cutting costs in places where no income is present. In addition, it is taking a tough internal stance toward any signs of staff panic or negativity. Gatov said it is essential to “talk about strength, not weakness: PR should be positive all the time."

MEDIA3 also has made several other measures to combat the crisis. First, they merged the back office in January 2009. "All editorial and sales merged at one new location (previously they were located in four different offices)." In March, the back office staff was cut to 50 percent of the levels of 2008. These efforts have so far had a positive financial effect of more than US$ 4 million for 2009 EBITDA. MEDIA3 has also developed a media park, which offers 10,000 sqm of open space.

Gatov's advice to other publishers is that "Newspapers are like ships - capital leaks are the danger, so start with areas where you are losing money right now."

However, not every loss is a leakage of capital, and investment is crucial even at a time of an earthquake, so publishers must stay smart. Lastly, he advises, “never make irreversible decisions while the decline continues: Your saviour could be among those you killed at the last Board meeting."

Vendredi – The French printed blog

Jacques Rosselin, Publisher of Vendredi (French for “Friday”), discussed his latest media project, "Vendredi hebdo" a newsweekly.

The 12-page, broadsheet paper launched in October 2008, and is made up of content from bloggers and information sites. It is produced by eight people, six of whom are journalists, and sells for 1.50 euros a copy. Rosselin said the break-even point is 30,000 copies, and today, one year after the launch, it has a circulation of 12,000.

“It’s general information, not specialised,” he said, and classic editorial meetings are used for the selection process.

His readers are people who are already on the Internet, but who value the selection process he and his newspaper offers. Afterall, most people know how easy it can be to spend hours on the Internet looking at articles and stories that can often be of little real value.

“I’ve always been interested in aggregating information,” Rosselin said. “Twenty years ago, I founded Courrier International, an international weekly newspaper taken from many sources and translated into French, which has since been bought by Le Monde.”

The explosion of online use in the past 15 years has led to an infinite number of new sources because “anybody can literally become a source on the Internet,” Rosselin said.

Twitter is an example of this, he said. “We’re also talking about linked journalism in this environment. We’re coming from a world where there were few writers and sources to many ‘propellers,’ – people who publish links to the information.”

Rosselin says he has always asked permission to use stories from other publications and also pays to use material. For example, he pays bloggers 50 euros to use one of their postings.

The paper’s content focuses on two general types of articles: Top down, and bottom up. Top down is what everyone is talking about, whereas bottom up are specific subjects that you don’t see in the mainstream press.

Vendredi is also acting as an agency for sources, he said: “We are processing so many links we are now able to propose content.” The regional press in France is now buying Internet content through them, and money is going back to the bloggers, whom he has found are thrilled to see their postings in print.

“My conclusion is that this information circulating on the Net is very new, Digg and all these tools are not efficient for the guy who wants to profit from this information, what he needs are tools that select.”

Leading in a crisis

Richard Wellins, Senior Vice President, Global Marketing and Business Development for USA-based Development Dimensions International, discussed his research on leadership and why many CEOs are unable to be effective leaders during times of crisis.

Wellins regularly analyses top managers across many different kinds and sizes of industries around the world. These executives are put through an extensive process that addresses multiple perspectives, and includes in-depth interviews, assessment simulations and personality inventories.

“We have a database of more than 1000 leaders from all sorts of companies,” Wellins said, including a few media companies although he acknowledged that because his work is broadly based, he does not know a lot about the newspaper industry specifically.

His research, however, does show that no matter where they live or what industries they work in, leaders often have numerous traits in common, both good and bad.

Wellins also discussed cases of both good companies and good leaders becoming bad ones and why this happens, such as from losing focus, or through arrogance, greed and vanity.

Ultimately, getting out of a crisis requires change, which can be extremely difficult for both people and organisations.

“I’m going to put out a proposition that very few people here want to hear,” Wellins said. “People change very little.”

As a personal example of this, he cited a comment his wife made to him recently. “ ‘The older you get Richard, the more like yourself you become.’ She did not mean it as a compliment,” he added.

“The key point I’m making is it’s hard to change,” Wellins said.

“The message I want to leave you with,” he said “is that we talk about development of leaders, but we don’t talk a lot about selection decisions and promotions.”

The final slide in his presentation was a quote from Edward Lawler of the University of Southern California that underscored the importance of this area for the long-term health of a company: “Decisions about people should be made with the same rigor, logic, and precision that are applied to decision about capital investment, products, technology, and physical assets. To do anything less is to risk creating an organisation that cannot perform effectively.”