(Michael P. Smith)

Newspaper ad departments have been slow to change. Even faced with research that suggested better ways to grow the business, they failed to invest, train and innovate. Now many in the United States are playing catch up.

One focus of the International News Media Marketing Association (INMA; note name change) in its recent world congress was on advertising innovators. Marcelo Benez, ad director of Folha de Sao Paolo, entertained the crowd with his presentation on unique advertising styles (like origami ads). Jagoda Pike, publisher of the Toronto Star, drew a lot of attention with something we at the Media Management Center have advocated for more than 15 years – modular ad makeup and section pricing.

The Star has been a leader in Canada in this type of price modeling. Several smaller newspapers in the United States have embraced the concept, but it has found its greatest success in compact newspapers like Nuestro Diario in Guatemala and 20 Minutes in Paris. Each has a large circulation. For the Star to take it on means other larger format newspapers may follow. The Star is a Berliner format.

What we have advocated in our programs (and told our friends who listen, like Nuestro Diario) is that advertising can be a readership tool. There are ways to make the ads more interesting and, therefore, more effective for the advertiser. You can work hard on the content and consider the experiences that the target customer has with the newspaper and your product. You can make the ads modular, so that they have greater impact on the page.

The issue of ad impact has gained energy as many newspapers have reduced page size. In a presentation for Inland, Chris Kubas asked: How will you protect against the potential loss of ad revenue? He has made several pitches for modular ads and pricing, including this one for IFRA in India (PDF of PowerPoint presentation). Two European efforts come to mind regarding impact in an era of reduced page size. When the European Wall Street Journal redesigned as a tabloid, they looked at the mistakes made by several of the dailies in the United Kingdom and decided that before the Journal switched formats, it needed to convince advertisers of the value of having an ad of impact. Before the WSJ Europe made that move, The Guardian in London decided the same and developed its own research and marketing tools to convince advertisers that modular and impact were in their best interests.

My colleague Hervey Juris, who consulted with Publisher Pike at another newspaper, also has suggested that newspapers could find more advertisers for the sections that have few ads - sports for example - if you would price the ads differently.

The villain in readership of ads, impact of ads, and the placement of ads is line pricing. Len and Chris Kubas have tackled this problem in their consulting work and have documented the efforts (and successes) of newspapers that have gone to modular ad makeup.

We at the Media Management Center continue to push for fixed formats and fixed ad placements (in effect, fixed inventory). This is where the compact newspapers have found their biggest success. When they sell out their ad inventory, they just raise the rates.

The Toronto Star is not quite doing that... yet. At INMA, Pike said the changes were driven largely by the need to reconnect price and value for advertisers, and to simplify choices and prices. Issues included pricing and selling by line, resulting in smaller ads and reduced frequency; no reward for an advertiser who chooses larger ads, or ads that are in color; and a dizzying array of sizes and rates for ads.

In her INMA report Pike said that, from a sectional standpoint, research found that there was a poor incentive structure for advertisers, inconsistency in pricing, and a lack of control and measurability. The answer was to tie the price paid by the advertiser to the audience that would be delivered, she said, and ultimately to the value of the customer rather than the size of the ad. Sales departments had to provide more information about readership and demographics to advertisers; give them increased control over ad placement; create "right-priced, targeted advertising opportunities;" and simplify contracts to maintain integrity of the new pricing structure.

"Sectional pricing recognizes that the A section is mass reach," Pike said, "while most other sections are niche-based." Other factors included sectional readership, day of the week, demand, and competitive position. Ultimately, she said, the pricing structure allows the newspaper to become more competitive because of the enhanced targeting ability.

A number of rates were reduced, Pike said, "but it was a risk we felt compelled to take. It was a nightmare scenario: They would buy the same advertising in a less expensive section." So far, she said, that has not been determined to be the case.

Pike then turned her attention to the group’s modular strategy. Advertisers can choose from a standard set of 24 modules when purchasing display advertising. Sales would no longer be determined by the line, Pike said, but instead through a pricing model that would reward advertisers for increased size, as well as the use of special ad formats.

Who else is doing this? In his various presentations, Chris Kubas listed some of the ad innovators: The Register Guard in Eugene, Oregon, The Record in Stockton, California, and The Record-Eagle in Traverse City, Michigan.

Is it time for the industry to move together as a group and say to advertisers, we want to make it easier for you to buy an ad, and we want to help you create ads that have impact on the page?


By Michael P. Smith (m-smith3@northwestern.edu)
Michael P. Smith is executive director of the Media Management Center.