Summit Notebook
Exclusive outtakes from industry leaders
Recession’s perfect storm speeds up change in ad industry
Why is it that the United States’ advertising as a proportion of marketing services is at its lowest point since 1977, maybe even lower than since the Second World War?
You may have guessed it it’s the recession.
But it will get better, Martin Sorrell, CEO of advertising giant WPP, said.
“The recession is less worse,” Sorrell said, repeating a favourite phrase of late, and while it’s the biggest recession since 1929 it is also “a perfect storm” that has brought forward change.
“The recession has accelerated structural changes that were already happening,” Sorrell said at the Reuters Global Media Summit.
Will advertising ever go back to where it was? Yes, if you are looking at new media advertising on Kindles and mobile.
Will the United States rebound? Western Europe? Yes, to both.
Amazon’s Kindle a double-edged sword for newspapers
Amazon.com’s Kindle “wireless reading device” is an example of both the threat and opportunity that new media platforms pose for the newspaper industry, according to Quadrangle Group’s Josh Steiner.
Steiner owns one of the hard-to-find devices, which have been consistently sold-out on Amazon . He said its wireless features are particularly promising — you don’t have to plug into a PC or look for a WiFi hotspot. It’s also searchable and allows you to customize the type of news you want to read.
“That’s the threat and the opportunity because it’s not just the question now of (newspaper) content being divided and repackaged,” he told the Reuters Global Hedge Fund and Private Equity Summit. Quadrangle, the private equity firm founded by former reporter Steve Rattner, is an advisor to the New York Times Co.
He admitted that the Kindle is very far from a complete package, but said it’s still worth a close look “if you want a sense of where I think the world is going…where technological evolution has the ability to disrupt existing business models and in some cases enhance them.”
Steve Rattner is right. He is also one of the few people connected to the newspaper business whom I have seen openly acknowledge that an electronic newspaper is the answer for most of our nation’s dailies.
I’m a journalist and live daily with the ongoing demise of our current business model. No one seems to get this. Papers can’t replace local ad revenue losses by going online. Putting stuff online is fine and should be done. But we have to find a new way to deliver our subscriber-base product and its revenue-generating local advertising. A tab-sized electronic newspaper is the answer. Change the business model. Stop printing the newspaper. Give subscribers the e-readers for free and run the whole operation like the cell phone business. Run the local ads like we do now. Protect and grow the subscriber base. It is a newspaper’s most valuable asset. Offer multiple “buys” of special products and other papers in large chains such as Gannett.
We’ve been printing stuff on dead trees for 600 years. It’s time to embrace technology and change the business model.
I’ve ordered my Kindle and Amazon says it is on the way. It’s a first generation product, to be sure, but it is the wave of the future for newspapers.
