Riding out the downturn

As the advertising downturn bites, some of our more alarmist commentators and analysts have once again been writing off the regional press. But do current economic woes really spell the end of this 350-year old industry?

The £4 billion UK regional media industry has been through advertising recessions before and not only survived but thrived. The timing and severity of the current advertising drop, after a buoyant 2007, clearly shows that it is largely cyclical. The difference this time is that it is taking place against a backdrop of transition as regional newspaper businesses evolve into regional media businesses. As well as 1,300 core newspapers, the sector has 1,000+ websites, 700+ niche publications and hyper-local titles, as well as radio and TV stations.

Although the City may not recognise it at the moment, these remain hugely profitable and vibrant businesses which are embracing a range of print and digital opportunities. 2009 will be a tough and testing year – possibly one of the toughest - but regional and local media businesses are ensuring they are well-placed to weather the storm.

Regional media has two distinct advantages over other media - localness and speed of innovation. It is in a perfect position to exploit what is viewed by many as the key to future media success: localisation and personalisation. Local media companies – the first to introduce direct inputting and colour printing – have always been more fleet of foot and have recently been leading the way with converged multimedia newsrooms, video journalism and digital innovation.

The regional press has evolved into a successful multimedia sector, employing many thousands of journalists and news-gatherers dedicated to providing local news and information to readers and viewers across a multitude of platforms – paid, free, print, online and broadcast.

Competitive threats are raining in from every direction, with Google, the BBC, national newspapers and others all wanting to grab their slice of local markets. This has meant that regional publishers – from the largest groups to the smallest independents – have had to adapt and innovate even faster, ploughing investment into new digital ventures, systems and technology.

The result has been massive growth in websites as well as new print titles, radio stations and magazines - particularly hyper local titles and postcode sites. Publishers are demonstrating that they can maintain and grow their audiences as a result, delivering better results for advertisers.

So, what are regional publishers doing to combat the current downturn and ensure their businesses are in good shape to reap the rewards when the market eventually picks up?

Focusing on local

We know that people spend the vast majority of their time and money within just ten miles of where they live (see: Consumers Choice V) and that the economic downturn has prompted people to do their shopping even closer to home (see: the wanted ads Retail). And we know through Local Matters research that where people live has a major impact on their views and behaviour. The local press has always been the first port of call for local news and information in print, because no other medium can come close to understanding and reflecting differences in local communities as the local paper does. Now, as local media businesses, the aim is to become the portal for the local community across any media platform, connecting people and giving them a voice as well as being their most trusted source of local news, sport and information. (The research reports referred to above, can be downloaded from the Newspaper Society website: www.newspapersoc.org.uk)

There is a growing thirst for all things local - and the more local, the better. People actively seek out information about their immediate locality – where to shop, eat, work out, or entertain the kids. The postcode websites in Teesside (ts10.gazettelive.co.uk/local_news/) and Glasgow (airdrie.eveningtimes.co.uk/) are prime examples which local people are setting as their default sites. No one else can drill down to this level and offer such comprehensive and intensely local news and information. Groups such as Johnston Press and Northcliffe have been busy launching hundreds of hyper local print titles. Geo-targeting software is being introduced across local media sites. And users are proving highly receptive to these new platforms – both in print and online – simply because they’re so relevant and useful to them and their lives.

Growing multiplatform audiences

Around 40 million people already read a local paper in print and the growth in local media websites means they now collectively represent one of the top UK online properties, attracting an estimated 20 million unique users a month. The industry is working hard to expand its cross-platform audiences and many groups are reporting traffic increases of over 40% for their sites. The growth in online is allowing local media brands to reach new, younger and more affluent audiences.

The Portfolio Audience Project was launched by the Newspaper Society alongside JICREG and ABCe to develop an industry-wide multimedia audience currency for local media. It aims to extend the JICREG regional press readership database to encompass local media internet audiences and provide agencies and advertisers with a geographical system for analysing the combined net reach of a newspaper and its website within the newspaper’s circulation area down to postcode sector level. As part of the project, audited website figures for some 50-60 of the largest local media websites are due to be released alongside print circulation figures in the next ABC release.

Embracing digital advertising opportunities

Regional publishers have been reporting 50%+ growth in digital advertising revenues and, for a few of the larger centres, it already accounts for up to 30% of total revenues. The local media sector took around £137 million in online revenue in 2007. But even this revenue stream won’t be immune from the advertising downturn.

Interestingly, newspaper websites – regional and national – look like they’re beating the online recruitment specialists at their own game. According to the latest Advertising Association data (Q2 2008), regional online recruitment revenue grew annually by 32%. This increased regionals’ share of online recruitment to 29% (from 28% in 2007 and 26% in 2006). Online specialists’ share dropped to 63% (from 65% in 2007 and 68% in 2006). Local media accounts for half of total UK recruitment spend across both print and online.

Publishers are protecting their classified and display revenues, developing new sites like MEN’s Jobsmine (www.thejobsmine.co.uk) and Archant’s drive24 (www.drive24.co.uk). Some groups are even cashing in on overseas traffic to their sites, with Johnston Press signing up specialist monetiser AdGent 007.

Improving publishing processes

The industry has long embraced the concept of integrated solutions which can help to streamline publishing processes. One example is AdFast, the NS-owned internet artwork transmission system, which has now become the default method of sending artwork from agencies to local media centres.

A number of publishing groups are introducing new editorial and advertising systems across their multimedia newsrooms to integrate content for their print and internet operations. Trinity Mirror’s Media Wales operation has brought together the morning, evening, Sunday and weekly newspapers and magazines, along with the Wales Online site, under a single editorial structure with content hubs and a video studio. Other groups are looking at similar models with the aim of improving processes, eliminating duplication and freeing up editorial resource for more journalism.

Investing in quality and innovation

In introducing these new integrated systems, it is important that editorial standards do not suffer and that content uploaded straight to the website, for example, maintains the same quality as that in the printed newspaper. Publishers have been rolling out extensive training programmes across their centres including video journalism courses and multimedia workshops. Trinity Mirror pioneered a multimedia champions scheme to share best practice across the regional divisions.

The commitment to online video is evident across the UK’s local media websites – both large and small – and this should grow as more and more sites become video enabled. Examples include Northcliffe’s Hull Daily Mail (www.thisishullandeastriding.co.uk) which has been producing daily video news reports since 2005, and the independent Newbury Weekly News (www.newburytoday.co.uk) which offers online TV bulletins and video stories.

But these services, seen as vital to the future growth of traffic and revenues for local media sites, are being threatened by BBC plans to launch a network of 65 local news video sites across the UK. The proposals are currently the subject of a BBC Trust public value test, including a market impact assessment by Ofcom.

The industry has voiced major concerns about such use of public money to duplicate local news services already provided by existing local media players. Publishers are worried about the adverse impact such services would have on their audience share and ad revenues. The Trust’s provisional conclusions were due to be published on 27 November.

User-generated content, search, and mobile internet sites are three other growth areas for 2009, as publishers develop their plans to become the central hub for local community networking in their areas which people can access on the move. Northcliffe’s Your Mail site (www.thisisyourmail.co.uk) enables people in the local community to communicate with others. Johnston Press was one of the first groups to introduce a coordinated mobile strategy. Midland News Association titles Express & Star and Shropshire Star have launched mobile versions of their websites www.expressandstar.com and www.shropshirestar.com allowing users to access and comment on news, sport and picture galleries from internet-enabled mobile phones. Trinity Mirror titles including Teesside Evening Gazette and the Liverpool Daily Post are developing personalised mobile platforms serving up content tailored to specific postcodes.

Adopting flexible distribution models

Local publishers are reaching new and growing audiences across a range of platforms and a variety of distribution methods – print, digital, part-paid, part-free – as they develop strategies to meet consumer demand for local news and information at a time and place that suits them. Daily titles such as Manchester Evening News and Liverpool Daily Post have already introduced part-paid, part-free strategies and a number of weeklies are doing the same.

This year saw the introduction by ABC of combined paid and free reporting, bringing greater clarity for advertisers who are now able to see all elements of a regional title’s print circulation figure - paid, free door-to-door delivery, and free pick-up - on one certificate.

Delivering an audience to advertisers has always been more important to the regional press than cover price revenue and, if a newspaper can expand its audience via a paid / free model, then it makes sense to go down that route, so we should expect to see more examples in the coming year, particularly among weeklies. But it won’t work for everyone.

Thinking long-term

The advertising downturn undoubtedly presents serious challenges for 2009, but the innovation, creativity and investment of recent years should stand local media businesses in good stead. Publishers will be focusing on extending their brand reach across local markets and becoming the primary portal for their communities, delivering trusted local news and information and interacting with readers - where and when they wish - via a range of targeted print, broadcast and digital products and services.