Congratulations to INMA for identifying a vital industry issue that is largely ignored.
The international newspaper marketing group's recent workshop in London touched on some of the most important issues facing our industry: How do we attract news consumers? How do we retain them and expand their revenue potential? And what does this mean for print? Whether our self-professed industry visionaries like it or not, 80 percent of our revenues will still be in print in five years' time.
I first tackled the issue of loyalty and frequency back in the early 1980s. The assignment: identify target groups and find new revenue opportunities.
In the United Kingdom, where I worked then, our vision was a long street, where we knew our "touch points" (circulation and advertising details) with every address, be it a home, a small business or a major brand. We were able to create a profile for every address, together with a strategy for maximizing our potential from that address, be it circulation, advertising or alternative revenues.
Trust me: The current CRM, value-added concept is nothing new. What has changed, however, is the analytical capability to manage and exploit relationships with your customers. This is extraordinarily exciting for those publishers willing to invest what is a small cost - relative to an enormous potential.
That said, I sense that much of the passion for CRM largely died in the 1990s, and it is good to see that INMA is now revisiting a key strategic component.
But why have we wasted 15 years? It's time to realize that print will drive our fortunes for many years to come, and that digital, while vitally important, will neither be our savior nor our nemesis.
•Today, fewer than 10 percent of the newspaper industry's revenues stem from digital activities. According to forecasts I've produced, by 2017, optimistically, digital will generate about 15 percent of the industry's sales. It is difficult to determine profitability from each revenue stream of the business, but my rough guesstimate is that today, digital accounts for about 4 percent of a newspaper's earnings, after direct costs are taken into consideration. By 2017, that should rise to 12 percent. There are, of course, exceptions. Norwegian media outlet Schibsted claims digital generates 50 percent of its profits, but questions have to be asked about cost allocation.
•Readers or loyalty? Newspapers are not so much losing readers as they are losing reader frequency and loyalty. In the United Kingdom for example, over the last five years, the number of people who ever read a newspaper has fallen by 3.7 percent, but average issue readership has slid by 17.5 percent.
As I've noted before, digital news consumption patterns are even more erratic. In the United States, the average newspaper website user spends around 4.4 minutes a day reading 5.7 pages, and they view approximately four sources, compared with 1.2 in print.
Yet while around 60 percent of Web users visit a newspaper website, newspaper sites account for less than 1 percent of all pages viewed Internetwide with the average site achieving about 3.6 pages per visit.
Take a look at the chart below:
What is interesting is that in most markets, the wealthiest media consumers are also the most likely to be infrequent and disloyal. While up-market media consumers are more likely to use a wider range of print or digital media, their usage tends to be less frequent and less intense.
In the United Kingdom, for example, fewer than a third of consumers read at least three out of every four papers printed in an average week.
Among the up-market "quality" newspapers, the figure drops to less than one in five. In the digital world, while up-market papers show a ratio of online monthly unique visitors to circulation that is six times that of the popular tabs, the number of print pages consumed is less than half. So the audience that offers the greatest value to our advertisers is also the least loyal in terms of frequency or intensity.
Web doesn't eat into print
The final point - and I make no apology for repeating myself - is that there is not one shred of evidence that the Internet is harming print circ.
I base this on analyses of correlation tests in four countries. In addition, my most recent analysis - a study comparing newspapers' website traffic with their circulation in 17 countries - suggests that where newspapers' online audiences have grown the most over the last three years, their print circulation numbers have performed the best (or at least, the least badly).
Indeed, the analysis suggests that for every 10 percent newspaper online audiences have grown since 2008, circulation grew 1.4 percent. I challenge anyone to demonstrate - factually, not anecdotally - that I am wrong.
Rather than investing all our intellectual capital in the fashionable world of digital, our industry needs to refocus.
That starts with recognizing the 80 percent of the revenues that will continue to underpin our industry for the foreseeable future: print circulation and advertising.
Then, let's revisit the key drivers of our success across all of our businesses, namely frequency, loyalty and intensity.
I have a multiplier model that demonstrates to publishers how they can identify and exploit these drivers in their loyalty ladder. If you would like more details, drop me an e-mail with your comments. It would be great to hear from you.
Jim Chisholm is a France-based independent media consultant. He can be reached at email@example.com.