The Hindu Business Line : ‘Media has to be ready for storm of digital migration’

Earl Wilkinson, Executive Director of the Dallas, Texas-based International Newspaper Marketing Association (INMA) is quite dramatic when he says that a storm is coming and media groups in India better recognise that it’s around the corner. The storm he refers to is the migration of readership to the Internet and other digital forms of consuming news. Newspaper groups in the US, he says, were caught on the wrong foot when their readership and advertisers began to migrate to the Net and audience perception of news too underwent dramatic change. However, with the Indian growth story intact and with readership for print still evolving, that scenario is a while away. But, he says, this is the time for Indian media groups to invest and build a digital infrastructure and prepare for the future. In Chennai recently, meeting with members of the INMA, Wilkinson, a 42-year-old Texan, spoke to BrandLine on a wide swathe of issues confronting media. Excerpts:

What’s the core idea behind the INMA?

We help redistribute ideas and practices from the newspaper world. So if there is a good idea that The New York Times has, perhaps a newspaper here can take it up. We do that through conferences, workshops. We are very strong as an association in North America, Europe, Latin America and South Pacific but we are not well known in Asia. About three-four years ago, we began talking with our members here, primarily in the North, and now we are cultivating relationships with newspapers in the South. I make presentations on the state of newspapers and media worldwide and then they tell me about their business, their story, and we integrate both stories.

How do you find the Indian market different from those that your other members operate in?

India is such a huge country. According to the government, there are 57,000 registered newspaper titles, of which 2,100 are daily newspaper titles. I don’t know how many are published, but, that’s a huge market. What amazes me is how the Indian newspapers have evolved in a way separated from their colleagues in North American and Europe. So what I see here are some amazing business practices, some that can be improved upon and some the rest of the world can look at. My experiences are confined to North India, but for example you’ve got groups such as Dainik Jagran and Dainik Bhaskar which have become aggressive in door-to-door campaigns for subscriptions. They are really tapping into the new India as people acquire wealth and the ability to subscribe to newspapers, and at the same time you’ve got the giant English newspapers, which have been brand-first companies, which, in many regards, have not been adopted in my country, the US. American newspapers are hurting now because of that.

Newspapers in India tend to spend five to ten times more than what papers in the US would spend on marketing their newspapers. It’s a tragedy if we publish newspapers that nobody reads. In the US, newspapers spend only one per cent of their revenues in marketing themselves. A typical FMCG is going to spend at least 8 per cent of revenues. Every quarter newspapers wake up when they have to report their ABC (Audit Bureau of Circulation) numbers, ask the question why circulation is down – there is a painful transition going on there.

So, you would say there are a lot of positive takeaways that you can have from the newspaper world in India?

I come to this country and everything has such an upside – you only have three-tenths of one per cent of GDP spent on advertising whereas by Western norms it is between one and two per cent of GDP. You’ve got literacy rising, for every one percentage point rise in literacy you’re talking of five million more readers! The issue I can’t get my head around is when will the trends in Europe and North America relating to digital migration, which results in fracturing of audiences, catch up with this amazing upside in India. Blackstone (a large private equity player) is saying that there is a lot that is hidden in India because of the population and advertising growth that everyone is seeing, but beneath that there are underlying trends happening elsewhere in the world which are happening in India as well, whether it is consuming news via a mobile phone or computer-based Internet.

What would you say are the challenges in a developing country vis-a-vis the West in terms of developing newspaper readership?

In the short term you can’t see the trends, there is going to be more advertising, more readers, more titles than today. But what you have to see though is that the storm is coming, and that storm is the Internet and the digital migration. Take Singapore Press Holdings; it’s a developed economy but they have been seeing the digital trends coming. Like a meteorologist seeing on the radar what’s coming their way they believe in looking long-term. They saw that they needed to be setting aside a percentage of their classified advertising revenues aside and prepare a digital infrastructure which will allow that to happen. This could be years later in India but the leading publishers have to see that. The Americans saw the storm coming in the mid-’80s and early ’90s and did nothing about it and then had to play catch up.

How would newspapers be affected by this? What are the trends in the US and other markets that could have a bearing on Indian newspapers?

In India it would be more slow. The wave of growth will continue to overwhelm for the foreseeable future but if you look at trends in the UK and the US, and see where India fits historically, my guess is that the Internet will temper newspaper growth a little bit. There will be a lot more people who come on board but it will be a slowdown of growth eventually and then the equations will start to change. In the US, newspapers are going through the worst period in their history, they are having to react to this in a panic. Now you have a slowdown in terms of circulation and also migration of advertising.

So, how are newspapers groups reacting to this? Do newspaper groups have to be willy-nilly in multimedia?

That’s what I was referring to – you see the storm coming and invest now in digital infrastructure. Because it’s an ultimately new way of publishing, if you want to use that word, and newspapers are struggling with this. Broadcast publishing, as they do now, which is nothing more than a snapshot of the 10 o’clock news last night, while at the same time building up a digital infrastructure that allows you to send out SMS news alerts, plus Web sites.

What’s the value of those audiences? European and American publishers and even advertisers are struggling with that right now. The models are Web site, print and mobile. But what is the value of the total audience? Advertisers want to know what the total footprint is today. They are asking what is the duplicated audience? There is some value in you reading the print newspaper in the morning, reading the Web and mobile during the day — how does the advertiser’s creative relationship with you as a publisher to capture brand-loyal eyeballs change across these three media during the day? American newspapers are creating these concepts out of panic. The storm is coming – you must be able to learn from those mistakes and calmly create that infrastructure. It might be superior. For example, Indian publishers tend to be more multi-media than their counterparts around the world. My observation of Indian media is that they are not creating the synergies between various media. You have time to create those synergies, unlike your American counterparts.

What’s in this media fragmentation for the advertiser ?

The changes in consumption are very easy to understand. They are driven by technology and by abundance. And it’s fracturing the audience; we’ve gone from a big news buffet in the evening to a big news buffet in the morning. Now audiences are consuming little chunks of media through the day and advertisers are reacting to that to say that we can no longer invest in only one medium. So, we’re going to have to go multi-media; the question is, how do newspapers reorganise to meet this new reality. It’s a tough conversation. I find that media-buying companies love this concept; they know that it’s not the 52-year-old CEO making the decisions, it’s the 24-year-old consumer who says so; I will buy a bit of TV, radio, newspapers, it’s a conversation that is evolving.

Do you say pure play publishing is out then?

It’s about the spaces and not the product; to a lot of journalists, it’s all about the products and the audience be damned. Now, it’s all about the audience and the product had better be in conjunction with it, and it’s not about owning one big audience but about owning lots of little audiences and connecting them together.

Which newspaper organisation has been able to occupy all these spaces very well, without any loss of revenue and readership?

Let me say that there are those who are doing it better than others, nobody is doing it perfect. The poster child for synergies which adds value to the company is Schipsted in Norway, which owns the two leading newspapers. Twelve years ago, in 1996, it looked at where the early digital trends were going and started investing and experimenting with various digital ideas whether news or classified advertising and started acquiring businesses. Now they own the leading search engine in Norway; they have been at the forefront of the digital revolution and now 50 per cent of their profitability comes from online — 12 years ago it was all from print. Even Schipsted is looking at the math of digital and saying if digital displaces print, what is the vision for how that happens in an environment where print advertising generates 10 times more revenues on cost per thousand basis than online and how do you manage that transition.

I am not suggesting that India has to be concerned with this issue in the foreseeable future but it’s right on top of what’s happening in Europe and North America and if Blackstone is correct it will eventually be a worry – the question is, can you make some strategic investments now that will ease your way into owning that total market across platforms.

What is INMA’s agenda in India now? Share ideas?

Learn more about what newspapers here are doing. Have them join as members in the association so that they can fully participate in what we do worldwide and share ideas with them. I have no illusions that many of the newspaper companies have ever heard of us. Our meetings are introductory, some of them do know us and have participated in our conference in Delhi. I am just as interested in learning about what they do.

One of the big concerns is how to get to young audiences.

For those who say young people don’t read, I present to you the latest 700-page, non-illustrated Harry Potter book! They will read, they will stay in line, if the story is compelling.

The cynical part of this is some publishers believe that a big part of it is media-specific. The Atlanta Journal-Constitution, one of the big papers, said that they would cease to market the paper to those under 35, saying they won’t stay. And they decided to market their Web site to them, and hoped to create a funnel that people will read a print newspaper as they got older.

The big issue for Internet-driven news channels on the Web is how to monetise their readership.

This is the mystery. Nobody has an answer because you’re looking at a 10:1 advertising ratio. The economic rules of advertising online are being written today. When I make these presentations to corporate boards, behind closed doors, that’s the question I get, right between the eyes and I don’t have a direct answer. I will say that it is in many regards a leap of faith; publishers are coming to the realisation that online is the way of the future.

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