Metro Sun Business Model

Metro Sun Business Model

The following is a business model of a newspaper company in a metropolitan area five years from now. It includes descriptions of consumer and advertiser products and services, as well as investments made and other operating costs. It is intended to be illustrative and not a prediction of a future newspaper model.

Consumer Products and Services

Metro Sun has transformed itself into a 24/7 information engine providing news and information to consumers whenever, wherever and however they want it. While content remains a key driver in the audience aggregation process, the ability to adapt content into the reader’s context has become a major consideration for Metro Sun. The newspaper has also recommitted itself to “own local,” focusing its content on the local marketplace and building stronger connections to local consumers.

Technology and the Internet have opened up an array of distribution opportunities that Metro Sun has begun to fully exploit. Metro Sun’s “24-hour multi-media newsroom” distributes content in multiple formats and through a variety of channels, including print newspapers and niche publications, radio, television, online, as well as through mobile or wireless devices. Stories delivered through the Internet are not limited to “news hole,” but provide both breadth and depth of information (i.e., text, sound, images, and video) to consumers depending on their needs at the time.

Consumers are able to personalize the information they receive. In addition, they are also able to choose from a spectrum of delivery options (e.g., cellular phones and other mobile devices such as PDAs) as well as the timing of information delivery. New delivery options and interactive formats continue to entice occasional readers as well as non-readers of Metro Sun to read some version of the newspaper. Total audience continues to grow, particularly outside of Metro Sun’s traditional markets.

A trusted brand identity is important in this environment. To capitalize on the divergence of information distribution, Metro Sun has packaged its information into one branded service for its readers, transferring the equity of the print product to the new environment. Its value proposition is anchored on its ability to provide reliable news, opinion, entertainment, and advertising in more convenient, interactive, and useful ways to consumers—when, where, and how consumers need them. For a monthly subscription, for instance, avid sports fans can elect to receive the “Metro Sun iSports” service through their mobile or wireless device. With it, they get sports news headlines throughout the day, a daily sports column, and results from selected sports matches or games. Consumers can also select and download content a la carte (e.g., sport stats) for a set price.

Metro Sun’s newspaper Web site also continues to develop in terms of audience and advertising support. Metro Sun’s strategy has been to use its newspaper site to enhance service and expand readership in print and digital form. Readers of the printed newspaper, for instance, are directed to related content (e.g., interactive graphics, video) on the newspaper site in two ways: through a specified URL or an online ID embedded in the article that readers can enter into their computers or wireless devices.

Metro Sun has also developed a portfolio of different Web sites independent of the newspaper site, serving unique content targeted at different segments of the market. These Web sites, with their own identities but promoted under the newspaper’s umbrella brand, include entertainment, local sports, gaming and other special interests. Consumers can choose from a range of subscription services available through Metro Sun’s Web sites, including: a streaming video news service; a daily news service providing subscribers with news and features throughout the day; and an archive service where subscribers can access content in various formats using keyword searches.

Content in Metro Sun’s Web sites are wrapped with various user-friendly functionalities to help consumers execute different searches and conduct transactions online with local merchants. Through their registration and subscription to any of Metro Sun’s sites, consumers are able to tap into the newspaper’s various databases to search for local businesses, shopping information and carry-out purchases, schedule appointments or make reservations.

The printed product itself continues to evolve to meet reader and advertiser needs and takes on a different complexion depending on the day of the week. Metro Sun has replaced its Saturday and Sunday print products with a Weekend edition. Metro Sun Weekend is features-oriented, with recaps and analyses of news events from the previous week, along with a full classified section and inserts for local, regional and national advertisers. Delivery of the Weekend newspaper to the consumer can be made either on Saturday or Sunday, which gives advertisers the option of timing the placement of their ads or preprints to suit their promotional needs.

The Metro Sun’s Wednesday and Friday print products look similar to the traditional definition of a newspaper. These broadsheet products include a full array of sections (front news section, local, sports, business, entertainment, etc.). The Wednesday print product is advertising oriented, including traditional preprints and inserts from local food and drug advertisers. The Friday product is local entertainment oriented.

On each of the other days of the week, the newspaper print product is offered as a tabloid and is more specialized in scope. It contains thinner news sections offering top stories and insights that impact the community. The remainder of the paper is devoted to a different specialty topic each day: Monday is devoted to sports at all levels – international, national, college, high school and local – and is essentially a recap of the weekend’s sporting events. Tuesday is devoted to business news, including personal finance information. Thursday is devoted to food, health and nutrition. Of course, a full complement of news is available online every day.

Delivery of the newspaper is highly customizable; for example, a subscriber can receive the newspaper at home on certain days of the week, at the office on other days and at a second home on weekends. Subscribers can also choose to receive the paper on specific days (e.g. just Wednesday and Sunday) and choose to receive a digital version of the print product on their computer or a portable device. In addition to the subscription price, Metro Sun charges subscribers for this individualized delivery system.

Niche markets continue to emerge and Metro Sun has adopted finer zoning for its newspapers, allowing for very small runs for specific communities, interest groups or specific trading areas (e.g., 10-mile store radius) in its markets. Producing such “tailored” newspapers allow for greater advertiser targeting while reducing the cost of printing sections with little or no interest to readers. It also allows for the economical development of special interest sections. Smaller runs also make advertising more affordable for local advertisers that otherwise would not be in the newspaper.

Advances in technology have also allowed Metro Sun to make its product available to readers through printing kiosks in select locations such as supermarkets, airports and train stations—in effect moving farther away from the “print-distribute” model to the “distribute-print” model in which centralized printing at the newspaper is being replaced by localized printing closer to the reader.

In addition to the daily newspapers, Metro Sun has also created free, advertiser-supported weekly tabloid publications targeted at the youth segment, local participatory sports, and ethnic communities in some of its markets.

Advertiser Products and Services

Through its advanced database management and CRM capabilities, Metro Sun provides advertisers the ability to reach consumers in targeted and differentiated ways, across multiple products and technology platforms. Advertising is delivered together with news and information based on a deep knowledge of the consumer, making all content highly compelling due to the context in which and through which they are delivered.

The classified categories have undergone major changes over the past few years. In real estate, Metro Sun has built comprehensive databases in its markets of new and existing homes for sale, commercial real estate and rentals. The database is populated primarily through paid listings from brokers and agents, but also includes builders and FSBOs. Brokers and agents, in particular, utilize the newspaper as a branding medium to differentiate their services. Lead referrals and information management services to these brokers and agents also represent major revenue streams. Advertising from ancillary-listing businesses and related providers of local services (e.g., home inspection and repair) also contribute to total category revenues.

In employment, Metro Sun continues to invest in making its Web site robust for employers to submit listings and search posted resumes, and for job seekers to find the right opportunity. The Web site continues to be free for job seekers and employers have several flexible advertising packages to choose from depending on their hiring needs. In addition, Metro Sun offers employers fee-based services such as resume screening, email alerts and applicant tracking through its sites. Metro Sun’s strategic goal, however, is to own the hourly, non-exempt category in each of its markets.

Within automotive, use of the Internet across platforms by consumers to buy or sell new and used cars continues to grow, albeit at slower rates. Consumers are increasingly using the Internet to research car purchases but not for or direct sales. Over time, Metro Sun has managed to assemble a robust database of used cars for sale across its markets by partnering with local dealers and marketing aggressively to the FSBO segment. Moreover, Metro Sun continues to work with automakers in pursuing new media advertising opportunities and trying new forms of marketing to consumers to break through the clutter in the marketplace.

Advertisers are increasingly using Metro Sun’s preprint product which can now be targeted at the household level. Distribution has also become more precise, in the process minimizing waste for advertisers. Higher CPM rates of targeted preprints, however, are offset by lower insertion counts although the frequency of insertions continues to be driven by advertisers’ promotional calendar.

In an effort to diversify its advertising revenue streams, Metro Sun made a strategic decision to target more local service providers, such as local insurance agents and health providers. The needs of these local advertisers have been met through the newspaper’s core and niche products, print and online directories, as well as through aggressive pricing and multiple zoning options. Other new advertising opportunities for Metro Sun have included local niche retailers in the apparel and general merchandise categories, as well as local ethnic retailers and food shops, which are thriving in the Hispanic and other ethnic communities.
Through aggressive pricing and sales efforts, Metro Sun has increased its national advertising sales, across such industry sectors as pharmaceutical, health care, financial services, telecommunications, and travel/hospitality. To further enhance its position in getting national advertiser dollars, Metro Sun has joined a consortium that provides selling coordination across different markets in targeting discounters, supermarkets and department stores.

Metro Sun has designed its advertising system to have a user-friendly advertiser interface that allows advertisers everywhere to produce, upload and pay for advertising content electronically via e-commerce. Through special templates, advertising can be adapted easily to different types of delivery platforms. Advertisers create and publish their ads once but they can be distributed in many ways via print newspapers and niche publications, online, radio, television and mobile or wireless devices, depending on their choice.

Thus, advertisers can make “combination buys” in which a single purchase of advertising appears in several Metro Sun print and electronic publications or across several markets.

Just like editorial content in the technology-enabled environment, advertising information has multiple layers within the context of the ad and can be searched, sorted, browsed or pushed to consumers. If a person is interested in more information on an ad, for example, they simply click on the ad and can either get another layer of information within that ad or be able to hyperlink to a full-page ad. Some ads will have video and audio capabilities and features that give them a more multimedia type of presentation. More important, advertising has transaction hooks so that consumers can make purchases or reservations using their computers and mobile or wireless devices.

As consumers seek out only information that is of interest to them, advertisers are paying significantly more per capita knowing that they are reaching the right audience even if it represents a fraction of the total population. Given multiple layers of advertising content and delivery options open to advertisers, Metro Sun has developed flexible advertising packages that follow a tiered-pricing structure that takes into account total audience reach and depth of the advertising—i.e., local vs. multi-market, format differences, placement premiums and other charges. In addition, the variety of platforms and formats now being offered also provide opportunities for smaller advertisers who could not otherwise afford to be in the main printed product.

Metro Sun’s value proposition to advertisers, however, is less about selling packages but more about helping them develop effective marketing campaigns and communications programs. Given the high measurability that technology provides, Metro Sun is able to provide advertisers with the results of their advertising campaigns as well as support recommendations based on expected returns on investment.

Over the years, Metro Sun has evolved into a more consumer-supported business model in which 60 percent of its revenues come from traditional advertising, 25 percent from consumers (print subscriptions, premium online content, etc.) and 15 percent through merchandise transaction-related fees from both consumers and advertisers.

Investments and Costs

To become the most comprehensive source of local news and advertising information in its markets, Metro Sun has made significant investments to transition its newsrooms into
“24-hour multi-media information engines” involving new technology, equipment, optimized work spaces that maximize coordination, personnel and training.

Content management systems have been put in place to manage content in different formats, as well as aggregate and repackage static or archive materials for a highly customized reader or user experience. These resources allow content creators to incorporate sound and motion to tell a story, for instance, or turn news events into games or prepare content for interactive delivery.

To effectively manage the range of distribution channels and formats available to Metro Sun for its news and advertising, content development is coordinated out of a single umbrella or “superdesk” and advertising delivery is orchestrated from a common environment. This set-up allows Metro Sun to integrate both static and dynamic content in different formats and distribute them to consumers through their channel of choice.

Metro Sun continues to build on its database marketing and CRM capabilities to offer readers richer experiences while providing advertisers highly targeted delivery mechanisms to reach its audience. The newspaper has aggregated household data, circulation and classified histories and online registration information, along with third-party lifestyle, shopping and family profile data, to create a sophisticated customer database. Sales people, in particular, have been highly trained to leverage such capabilities and act as consultants to advertisers, especially smaller retailers who have relatively less sophistication when it comes to targeted, one-to-one marketing.

Metro Sun has also had to make investments to build its organization. Metro Sun continues to hire and train a more diverse advertising sales force with the ability to sell more complex products and services across multiple platforms. In an effort to grow its national advertising business, Metro Sun has contracted with a national representation firm and developed more sophisticated call centers. The competition for talented and experienced personnel, however, remains strong and Metro Sun has evolved its compensation and benefit packages to attract and retain a competitively-structured workforce, especially in several functional areas—such as technology, marketing and management—where Metro Sun may not have met market demands.

Within print, as versioning has become increasingly critical to maintain and grow readership, Metro Sun has made significant investments in refining its distribution processes, techniques and technology to become more targeted in its delivery of news, advertising and other information.

Newsprint remains a commodity that experiences price fluctuations as demand and supply increase and decrease. Traditional newsprint cycles are expected to continue, although may not return to historical lows due to increased consolidation.

Summary

In summary, Metro Sun has become a “24-hour multi-media information engine” focused aggressively on local news and information. It is moving away from a primarily advertiser-driven model into one that is more customer-based across print and non-print platforms. Within advertising, an increasing proportion of revenues come in the form of fees charged to advertisers for value-added services. Consumers, on the other hand, are increasingly paying for targeted, tailored and contextual content through subscriptions and on-the-spot transactions.

The business itself has become more complex requiring new technology and greater investments in people. The enterprise, however, enjoys greater revenues and more profits than before, although margins have declined from historical levels due to investments and competition from other sources of news and information.

First Published:
April 1, 2004