Paywalls take back-seat as trading debate gets serious
They came to talk about 2% of the business (paywalls) but left buzzing about 98% (print) and how it should be traded.
MediaTel Group’s Future of National Newspapers seminar this morning was plain-talking from the outset – and certainly went as far as any public debate on print trading and auditing that I have witnessed over (too many) years.
Alan Brydon, trading director at Media Planning Group kicked it off with a provocative opening: “The newspaper industry is traded in an anachronistic and ridiculous way… it has got away with it for years from a revenue point of view, disguising inefficiencies and cost inflation.”
Dominic Carter, trading director at News International agreed to an extent – “trading principles based on scc do need challenging” – but then went much further: “Agencies are driven by procurement, the auditor being opaque and the lack of client understanding sometimes.”
Brydon suggested that the mix of cost performance reward, the scc trading model and auditors meant that ultimately – even after serious planning has taken place – the target audience is not part of the final brief: “If we worked from a better model, we would get better results and clients would spend more.”
As it is, “agencies get more from PRFs than commission and fees,” John Billett (no longer an auditor) chipped in from the audience. “We invented cost per scc twelve years ago (when he was an auditor) and it has not been re-invented since. All auditors recognise and understand this and will change the system. It is long overdue.”
News International are going to take a lead in changing this (making CPT not scc the key measure). “If we don’t, jobs will go at newspapers and agencies,” Carter said. He admitted NI had a vested interest in doing so – “the best newspapers should be getting more… the model benefits the weak and those who don’t invest.”
Others in the room were willing to support this but clearly upset they had not been involved to-date. “I applaud the work NI is doing, but wish we knew about it. Currently it is not shared, it is just about competitive advantage,” said Adam Freeman, director, consumer media, at Guardian News & Media.
“We would welcome a new way of modelling, but this is led by NI and we want more involvement,” added Claudine Collins, head of investment at Mediacom, from the audience. It’s not going to change quickly either, she stated, despite John Billett’s suggestion that it would. Mediacom have negotiated their 2011 deals and have had no conversations with auditors yet, Collins said.
And paywalls? “Digital pennies, print pounds” – Claire Enders, managing director of Enders Analysis, summarised it rather neatly.
And no, there weren’t any Times figures forthcoming from Carter today. But we left thinking – does it really matter…?
Your Comments
The extra pressure that this move puts onto readership research must be a correct observation.
But being ‘off the pace’ might indicate that the NRS (or TGI for that matter) doesn’t offer a level playing field of measurement in the same way as BARB offers to TV.
But surely the fragmentation of the TV audience has undermined that claim and surely News International’s retreat into its own online subscription measurement silo is a major reason why readership comparisons are being undermined?
As all circulations/readerships decline, the desire to have less detail in the market on which to make decisions becomes inevitable.
I wonder on what basis David Spon-Smith makes his comment that “NRS is off the pace and would need to bring it up to the standards required”?
NRS receives substantial investment from the newspaper, magazine and agency constituencies, and is widely respected throughout the industry for its high standards of research.
Its large, robust and high-quality sample provides a substantive base for planning and trading decisions, and a high degree of granularity in terms of the demographic and other data available for print advertising.
The next stage in the development of the survey is to extend the coverage of NRS into the digital arena, so that publishers and agencies have a view of the reach achieved by publisher brands across different platforms of delivery.
I think it is perhaps ill-judged for an auditor to comment openly on the CPTs of a particular newspaper group, especially with the cacophony of target audiences that press titles trade on for any given day.
However, I do agree with my colleagues at NI, that the cost of advertising should not merely be reflected in terms of on page real estate – but indeed how the newspaper engages with its audience, how it influences perception of a brand and how it fits into the consumer purchase decision process.
This is a challenge for NRS, as it is any other media measurement body. If they can get this right (demonstrating measurable engagement and value rather than procurement led “cost”) then the pressure will be on TV trading to change, rather than press.
News International’s red tops deliver huge readership figures and subsequently the cheapest CPT in the UK press market. NI’s argument is why should this be the case? If advertisers are prepared to pay top dollar for ITV and C4, then why shouldn’t they do the same for The Sun or NOTW? The logic is sound.
However, this has the potential to polarise the press market. I think it is a safe bet that if NI do push for a CPT model, Associated will not be far behind. The MOS, Daily Mail and Metro all deliver strong coverage, and would no doubt do suitably well from a CPT model, should it arise. But what about the rest of the pack? Those whose circulations have suffered the most, but have protected their pricing will not be keen to trade on a CPT basis. They will be exposed by this metric.
The other issue is where does this extra investment come from? NI will move to a CPT basis if they feel they can make more money from it. But the overall press ‘pot of money’ will not grow. If anything it will continue to decline as it has to compete with a growing and fragmenting media marketplace. Simply put, they will look to demand more share as advertisers and agencies will kick back against blatant price hikes. If Associated join suit, where will this leave the other major press media owners as their potential market shrinks?
There will be teething issues around formulating a viable trading model, but TV companies have been doing this for years, and they have been able to maximise the value of their content by optimising against various demographs, in a sophisticated way. Newspapers are currently well off the pace in comparison, but NI have the resources to meet this challenge. The rewards of extra revenue and a stream-lined trading CPT across their print and online output will be the proverbial ‘carrot’.
Lastly, from an auditors point of view, I don’t think this will be an issue. TV has traded in this fashion for many years so we are well versed in the intricacies of the metrics involved. Most agencies and ourselves already provide CPT data by media for many clients so there will already be an expectation of CPT pricing levels against the main audience demographics. The main issue, I would argue, is actually NRS. The TV model works due to the sophistication of the BARB data it relies upon. Currently, NRS is off the pace and would need investment to bring it up to the standards required.