Finding
GOLD in Diversity
(continued
from the home page)
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his revisioning, so to speak, of America, provides the impetus behind NAA’s major, about-to-be-released report called Growth Opportunities by Leveraging Diversity, or GOLD. The report takes a hard, dollars-and-sense look at how appealing to diverse segments of the population can bring profits from new sources while still maintaining the old.
GOLD takes as its premise that there has to be a better way to understand, serve and derive increased circulation, reader loyalty and revenue from underserved and emerging markets.
Dan Sullivan spent 14 years as a senior business economist for Cowles Media Co. and the Star Tribune in Minneapolis. Currently the Cowles Professor of Media Management and Economics for the School of Journalism and Mass Communication at the University of Minnesota, he is a key member of the GOLD project team.
“The idea was to interview a cross-section of [newspaper] people from around the country—publishers, editors, circulation managers, ad directors and administrative people in finance and human resources—and focus on the issues that keep them up at night and the business challenges [that might result from those issues]. We tabulated the responses and identified a number of themes that came up over and over again.”
The concept was to conduct an analysis of the socioeconomic trends in which diversity plays a central role, constructing case studies that use real markets and publicly available data to seek out profit-potent scenarios. Those test cases were taken to industry focus groups and newspapers to stimulate discussion and generate the dialogue necessary to create the toolkit and training materials.
The interview process was key to getting information about real concerns plaguing the people who run newspapers. For the purpose of gaining accurate comparisons, the country was divided into five geographic regions and four newspaper size categories based on population—creating a working matrix with 20 cells.
GOLD’S Top Nuggets
Major conclusions
and observations from the interviews include:
• Newspaper revenues and profits must grow consistently year-to-year.
• Margins are at significant risk of decline from classified-ad competition and other threats.
• Management teams are consumed/challenged by the short term.
• Fundamental market changes are underway and recognized but are not being seriously addressed.
• Individually, niche competitors don’t matter. Collectively, they do.
• The challenge must be to find replacement revenue streams.
|
The
report takes a hard, dollars-and-sense look at how appealing to
diverse segments of the population can bring profits from new
sources while still maintaining |
More than 40 themes also were mentioned frequently as needing attention, about a dozen almost universally. Frequently referred to themes were:
• Circulation churn due to in-out migration
• Lack of time as competition with the rest of life shifts the newspaper from a required read to an optional one
• Spanish language products and the impact of growing Hispanic populations
• Training new hires
• Competitive niche products
• Targeting content
• Targeting reach
• Building and using brands
• Fragmentation of markets
• Retention of staff
• Immigration impact
• Costs and issues of diverse workplaces
• Diversity of thought, moving beyond race, gender and ethnicity.
“We selected seven themes that were relevant to newspapers today and built cases around them that we wanted to be real,” says Sullivan. “We selected two markets of different sizes in different regions of the country to build each study.” The concepts used for each case included:
• Assimilate and DifferentiateÐAttract Hispanic readers, taking into account specific Hispanic subgroups.
• Those PeopleÐStrategically attract non-newspaper readers, typically those in low-income households in ethnic neighborhoods, to newspaper products.
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Yes, Sveinson says, senior executives said they are willing to make investments in diversity that do not earn short-term profits. |
• Preferences–Motivate current time-starved readers, in this case working women, to make your newspaper their first choice.
•
Future Tail–Establish
relationships with all market segments by creating a product and derivative
products for everyone.
•
Radio/Cable
Game–Create a portfolio of niche consumer and business information
products and services.
The only exception
to the two-market per case rule was in the Hispanic market study.
“People tend
to think of Hispanics as monolithic, but we found real tension in communities
between those who want to assimilate into the majority and others who
want to maintain their cultural identity and be served as a separate entity,”
says Sullivan. “The situation depends on two things—country
of origin and the length of time people have been in the U.S. To get a
picture of the difference created by those two variables and be able to
look at all those different situations, we felt we needed three test communities
rather than two.”
(A closer look at
an actual case study, “Preferences,” which deals with targeting
and better serving markets created by working women, appears on page 3.)
The consistency of
the results from GOLD impressed Pam Sveinson, former vice president human
resources for Cowles Media and a member of the project team.
“The most interesting
thing to me is that at a time when the newspaper industry is really concerned
about continued gradual decline in circulation and the very real threat
from new information providers, there is the potential of meaningful readership,
circulation and ad revenue gains,” says Sveinson.
It is hoped that
newspapers, hungry for new markets and increased revenue streams, might
find something appealing in the blueprints outlined in the GOLD case studies.
The question remains, however, of confidence in the process.
“There are two
distinct concepts here,” says Sullivan. “The purpose of the
case study is to demonstrate opportunity. This is what we see as potential
revenue from better serving this particular market.
“During the
interviews, executives said here’s how to do what needs to be done
and what should be taken into account. Based on that, we built profit-and-loss
statements. We said, if I close the gap with working women to read at
the same rate as working men, what would that translate into as circulation.
We then talked about various ways that might happen.”
In a similar manner,
in areas where the study indicated further profit potential, the project
team looked at standard industry figures of what it costs to generate
certain kinds of revenue.
“If you’re
trying to quantify any type of opportunity, you have to speak to the problem
of effectively using conventional industry models,” says Sullivan.
“It’s the same as deciding how profitable it will be to expand
home delivery or add a new section. There are a lot of standard practices
about what it takes to do certain things, and if you get a certain audience,
what value you can expect to derive from it.”
Mining
GOLD
Over the long term, according to Sullivan and Sveinson, benefits from
following GOLD may be even more than the study projects. But such potential
benefits may also require a struggle in the short term.
“It takes persistence
on the part of the newspaper management team,” says Sveinson. “That’s
why we say there will be profits in a relatively short term. In the immediate
term, investments need to be made to position the newspaper with particular
diversity markets in ways that make the newspaper credible and reliable
to these groups. That’s a challenge.”
The challenge also
may be one of communications as much as money. Some managers are less
than enthusiastic about the project and say it is because superiors are
not willing to make the commitment of necessary resources.
“Particularly,
mid- and senior-level managers told us that their senior executives would
have no interest in initiatives that did not turn a profit in the immediate
term,” says Sveinson. “What we found through focus groups is
that senior executives are frustrated to hear that mid- and senior-level
managers do not believe that [their bosses] are willing to make the commitment
to a market that has the potential we demonstrated.”
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“Most significant is that in every case study, we took issues people say are the kinds of things they worry about, and we created a real opportunity for someone to address a particular problem,” says Sullivan. |
And yes, Sveinson
says, senior executives said they are willing to make investments in diversity
that do not earn short-term profits.
“Newspapers,
media and the information business are in such a significant state of
change that no one is confident,” says Sveinson. “Investment
in the Internet and the electronic future is an obvious example of [spending
money] because [newspapers] know they have to be in the arena, though
they may not have confidence in that investment.”
Sveinson notes that
GOLD initiatives require strategic planning, something underutilized in
this industry. Many senior managers indicate they tend not to deal with
long-range challenges, focusing on the shorter term and what’s happening
now.
“That’s
where the GOLD training comes in for managers who have not done analysis
and strategic planning,” says Sveinson. “Training kits will
be presented for review by publishers at NAA’s Annual Convention
in New York City in May.”
Both Sullivan and
Sveinson encountered surprises during the project, ones that were remarkably
similar.
“I expected
to hear a lot of people tell us that they’ve already tried that and
it doesn’t work,” says Sullivan. “What we got was a lot
of acknowledgment by newspapers that they are not doing a good job in
the area of diverse markets and hadn’t figured out what works or
hadn’t started a push.”
Sveinson sees the
key as a seeming lack of realization.
“What I see
is papers dealing around the edges,” says Sveinson. “But I don’t
see a realization by newspapers that in 5-to-10 years their whole customer
base will be entirely different. I’m surprised there’s not more
longer-term visioning and strategic planning going on.”
For Sullivan, it
seems that specific pressures often dictate how much effort goes toward
diversity.
“As you talk
to people about this, there is a great amount of variation in the sense
of urgency. For many, it is, yes, it’s a good opportunity and it
would be nice to pursue, but it is not something they have to do,”
says Sullivan. “But in areas where they have to do marketing to a
significantly diverse population or where the paper is really struggling,
there is more enthusiasm.
“We also found
a high degree of varying knowledge on the market segments we presented.
Some know very well, and some have incomplete knowledge and are surprised
at the data we showed them.”
Limited
Visibility
Some of that surprise may result from a lack of focus, and that could
be because diversity doesn’t seem like news, at least not to the
news industry.
“It hasn’t
gotten as much visibility as the changes in technology. There’s nothing
sexy about the number of immigrant Somalis growing faster than any other
segment of your market,” says Sveinson. “But the changes in
U.S. demographics are, over the long term, as earth shattering as the
Internet and other changes in technology.
“The face of
America is changing dramatically in lifestyle, preference and cultural
orientation and will have a fundamental impact on information providers,”
says Sveinson. “But there is not the sense of urgency or excitement
that accompanies
technological changes.”
Sullivan is certain,
however, that GOLD moves the industry in a direction that it will ultimately
have to go.
“Most significant
is that in every case study, we took issues people say are the kinds of
things they worry about, and we created a real opportunity for someone
to address a particular problem,” says Sullivan. “It is valuable
if it simply gets newspapers to start thinking about diversity not as
threats, but as serious opportunities.” 
Senior writer Don Williamson is an award-winning career journalist who has worked for newspapers and television stations across the country. He can be reached at donw222@aol.com.