For the better part of their storied history, IBM focused all of its energies against selling hardware. And for a good long time that’s all that was required as they were the only game in town. In the 1980’s that began to change. Competitive pressure on the personal computing front forced them to begin to cut distribution deals with national retailers -- a decision that would have at one time been considered heresy. Ensuing pricing pressure would force IBM to ultimately sell off their personal divisions and reconsider their overall go-to-market strategy.
The game change would come in 2002 when IBM acquired PricewaterhouseCoopers consulting. It was then that they officially morphed into more than a technology company. This acquisition decidedly positioned IBM as a company committed to business consulting. They applied their talents to helping companies analyze data more effectively and in turn make smarter decisions. Salespeople became consultants and they used products within their own portfolio as well as those from other companies to help their clients solve problems through 360 degree innovation.
This business turnaround redefined an American business icon. The leadership reimagined what the company could be and expanded and reinforced a weary revenue line that had been their only source of income.
Newspaper finds itself in a similar space. To date their primary sources of revenue come from advertising and circulation -- both in steady decline. A number of digital acquisitions intended to expand revenue streams really only tend to support the original two places they make money. So is it best to continue to double down on strategies that are presented with market challenges difficult to truly reverse? I think so, but these efforts aren’t broad enough to change the industry’s future. To truly reimagine the business, publishers will need to think beyond circulation and advertising and acknowledge what they do best.
Newspaper is all things local. No one covers a local market as thoroughly as newspaper. This applies not only to editorial but to sales pressure as well. When you look at the numbers, there is no industry except for big pharma that has more sales feet on the street than newspaper. Local newspaper ad sellers know every small business in town, developing relationships that in some cases are as old as the small businesses themselves. The exchange for years between seller and small business was limited to pitching ads in Sunday’s edition. They have evolved to include some digital, and in more sophisticated selling organizations mobile is now entering the media sales mix. However, local buyers are becoming savvier with digital and many companies are cutting their own deals with Google and Facebook. The trend line suggests that if the portfolio that newspaper sellers represent doesn’t expand beyond ad products it will become increasingly more difficult to compete with the do-it-yourself ease of the RTB interface offered by the world’s biggest tech companies.
The question I pose is why limit the publisher relationship with small business to advertising? Why not become, as IBM has, a business consultancy? For newspaper, the focus would be on small business. Sellers would open the door and new divisions could provide counsel on business strategy, research, financial planning and employee benefits just to name a few. Instead of trying to retain a relationship one ad page at a time, why not allow advertising to simply become a piece of the overall value proposition? Played out to the fullest degree, the newspaper could become the one stop shop for all business needs that fall outside a customer’s core competency. If you run a restaurant, why not focus all of your energy on making great food? Assign the business related nuisances that range from payroll to pensions to your highly informed local business consultant. Subscription revenue moves away from single stream to a fee-based relationship that grows with each additional service small business clients sign on to.
Would sellers need expanded skills? Absolutely! But this is not new, as they already need them if they intend to compete in a digital world. This consultative market orientation doesn’t happen overnight. Instead it’s the result of an overarching commitment to change and a series of small steps tied to measured expectations.
In many markets around the country publishers are test driving new ideas and expanding capabilities. This kind of change requires courage, capital and commitment. But it’s both possible and exciting -- a perfect combination for a new path.
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