Newspapers race against TV for advertising dollars
Pity the unglamorous newspaper. While 15-second and 30-second television advertisements swirl and sizzle in multihued images, the lowly newspaper ad just sits there on the page - mostly in black and white.
As the power of television has grown, national advertising dollars have been vacuumed out of newspaper pages and become rooted with ad agencies that see television as the easy, cost-effective way to reach the multitudes.
Now, however, there are signs that many of the nation's 1,657 daily newspapers are girding for a tooth-and-nail battle to lure national advertisers back onto the printed page.
``We've been talking about it for so long,'' says John Lescott, advertising manager of the New York Daily News. ``The excitement is that in the last two or three years the publishers and the ad directors got together and decided to do something on a national scale.''
What the newspaper industry has done is neither glamorous nor glitzy. Basically, the industry has tried to make ad space cheaper, easier to buy, and more appealing to advertisers and agencies. It has done so by:
Standardizing ad sizes so agencies will find it easier to prepare one ad to run in several newspapers.
Standardizing invoices to decrease the complexity, cost, and time involved when ad agencies figure costs and billing for clients.
Doing the expensive and time-consuming nationally syndicated research into the effectiveness of newspaper advertising so as to justify its cost to advertisers.
Beginning to move toward lower national ad rates. Last year, a group of 280 newspapers in the United States agreed to lower national advertising rates to about 17.5 percent above local retail rates.
When only a handful of national advertisers responded to the joint plan to lower rates, a recent Wall Street Journal headline said the experiment ``seems to be fizzling.'' But plan participants say it is far from dead, and is only part of a dedicated, long-term effort by newspapers to woo back national advertisers.
Price isn't the only issue
Most newspapers, however, still charge national advertisers 50 to 100 percent more than local retail advertisers pay. This premium is still a big sticking point with advertisers and agencies. But newspaper trade groups say rates will come down as individual newspapers realize the necessity.
The problem with attracting advertisers back to newspapers is that ``price is not the only issue,'' says Leo Scullin, executive vice-president of Young & Rubicam, one of the architects of the 280-newspaper discount plan.
Advertising agencies and customers have grown into the habit of advertising on TV. ``It is very difficult to educate national advertisers to use newspapers, because they almost feel like there's no need,'' Mr. Scullin says.
Still, with broad, growing support for lower national newspaper ad rates, ``it would appear that all the clients need to do is figure out a way to use them. Well, that sure is understating the problem,'' Scullin says. ``You can fix the problem with lower prices, but it doesn't automatically create solutions for how to use newspapers creatively, effectively, and appropriately - therein lies the rub.''
``The idea that you institute a rate practice and the world comes rushing to your door is wrong,'' says Craig Standen, president of the Newspaper Advertising Bureau. ``The changes are evolutionary rather than revolutionary.''
The need is for newspapers to educate advertisers and agencies on how to be creative, and also to lower prices, Mr. Standen says. He predicts eventual success countering a long, slow decline. Newspapers held 15.9 percent of advertisers' budgets in 1950 but have only 5.9 percent today. Standen predicts a rise to 7.3 percent in the next five years.
Television's loosening grip
``The grip television historically has had on many national advertisers has weakened,'' Standen says. ``Television is undergoing the first really dramatic change since broadcast television was invented.'' Some of the changes include:
An increase in regional advertising, as companies and ad agencies try to get the most out of their advertising dollar. General Motors, for example, uses a mix of TV and newspaper ads to pitch its pickup trucks to markets in the South and Southwest.
Videocassette recorders in about 50 percent of American households. Using a VCR for ``time shifting'' devalues time-sensitive advertising - making special airline fares obsolete, for example. More important, many viewers with remote control will fast-forward past commercials on recorded programs.
A.C. Nielsen Company's new television ratings based on ``people meters,'' which indicate 10 percent fewer television viewers than networks expected. The networks dispute the findings.
Cable television in nearly 50 percent of US homes, which has given viewers more options, lowering network ratings by diluting audiences.
Advertisers who are ``fed up with increases in the cost of television,'' according to Hall Katz, executive-vice president of Vitt Media International Inc., a New York City-based media buying firm. ``They are very unhappy about production costs, which are exorbitant, to produce a 30-second commercial. The average is about $125,000.''
These changes have given newspaper publishers and advertising managers a sense that just maybe there is a chink in TV's advertising armor. Agency executives support the view that while TV is still very strong, it is vulnerable.
``Our own surveys indicate that if the newspapers become negotiable, and the rates do tend to go down, then a substantial number of advertisers - 45 percent, according to our survey - would take money out of things like television and put it into newspapers and magazines,'' Mr. Katz says. ``Newspapers wouldn't reach more people. The switch would be purely on the efficiency of reaching people.''
Newspapers wake up
Newspapers are trying to retrieve some of the national advertising dollars partly due to an increase in local competition for what has traditionally been their bread and butter - classified and retail ads.
``The industry is not in the healthiest of conditions,'' Katz says. ``If they can't start to bring the national advertisers back into the fold, then there could be long-term future problems.''
Large chains have remained lucrative by snatching up surviving dailies in near-monopoly markets. The problem is that earnings gains based mainly on price increases due to monopoly status are not as healthy in the long run as gains made on volume increases.
Newspapers continue to face a host of competitors, from billboards to radio, slick magazines to free-distribution weekly newspapers.
The incredible growth of ``free-standing inserts'' (the preprinted material inserted into the newspaper) has meant many local retailers are shunning print ads for cheaper inserted ads. And, of course, there is a growing loss of local retail advertising to local television stations.
``You're witnessing newspapers' recognition that they just have to be on the lookout for competition, not only from local TV stations, but from shoppers and local newspapers,'' says Charles Crane, a newspaper analyst at Prudential-Bache Securities.
``We're slowly evolving to understand that, `hey, we better pay attention to what the advertiser wants and make it easier to buy the newspaper,''' says Gerald Anderson, national advertising manager at the St. Louis Post-Dispatch. ``The retailer is what keeps the newspapers alive, we're not kidding ourselves about that. But we need the manufacturers.''
The `uphill battle'
Even with TV's suspected vulnerability and vigorous efforts to increase newspaper advertising, nobody in the newspaper, ad agency, or manufacturing community believes it will be easy to make a comeback.
``I've been a strong believer in newspapers,'' says Dean Bair, senior marketing executive at the Campbell Soup Company. ``But let me tell you, it has been an uphill battle. Newspaper advertising is hard work. It isn't easy to run a national campaign in newspapers. It is easy to run a television campaign.''
Mr. Bair points out that there is still a strong financial incentive for ad agencies to stick with television.
``You just make one commercial,'' he says. ``All you do is take it over to the network and it runs everywhere. It doesn't work that way for newspapers. You have to send that material to every newspaper you want to run that ad in - that's a lot of materials and labor cost. Agencies are in business to make money, and when it's that tough, it's costly.''
Nevertheless, when trouble strikes, newspapers are apparently still the premier way to make a serious message come across.
Two days after the stock market took its October swan dive, the first full-page advertisement by brokerage giant Merrill Lynch appeared in the New York Times.
Designed to reassure the public, two columns of dense type appeared beneath a banner whose giant letters read: ``After October 19: A perspective.''
That ad and others like it appeared quickly and relatively cheaply in scores of newspapers around the country, thanks largely to AD/SAT, a satellite ad copy transmission service owned by Robert Maxwell and based in New York.
Bouncing ad copy off satellites and back to earth in as little as five minutes gives ad agencies up to a day longer to write copy. The AD/SAT system, now being used by 112 newspapers in the nation's 100 largest markets, is also expected to make newspapers more accessible to national advertisers by making it easier to reach 60 or 70 newspapers at a time - enhancing regional advertising efforts.
``The biggest kick an ad agency has is that newspapers are difficult to do business with,'' says David Farren, director of marketing at AD/SAT. ``Essentially what our system does is make it easier for N.W. Ayer, or J.Walter Thompson or whoever, to do business with newspapers.''
The glamour factor
While the advanced technology promises to cut down on the number of mechanical paste-ups that have to be shipped out, the main problem for newspapers in recapturing ads from TV may be psychological.
``Logistics may not ultimately be as big an obstacle as the fact that, frankly, broadcast is more glamorous,'' says Donald Gordon, a journalism instructor at the University of Houston, specializing in advertising.
``It is more appealing for everyone connected with the advertising and marketing of an organization to be able to point to a TV commercial on some top-ranked show and say: `This represents me, this represents my company.''
Mr. Bair at Campbell Soup agrees. ``Anybody would have a very tough row to hoe to go to top management and convince them they should be taking millions out of TV or radio and spending it on newspapers,'' Bair says.
``You have to have some substantiation. You have to know why you're doing it and what it will get for you. It is not impossible. But newspapers have got to be willing to work with a manufacturer and an agency to make that point and to prove it.''