CAMPAIGN REPORT: TOP EUROPEAN NEWSPAPERS - Recessionary tactics How did European newspapers survive the last economic downturn, and are they fully equipped to weather another one? Karen Yates reports.

The 90s have been a difficult decade for newspaper groups. First came recession, and some misguided forays into the newly liberated Eastern Europe. Then soaring world newsprint prices began to hit their bottom lines, and all the while new media, specifically the internet and interactive television, were threatening.

The 90s have been a difficult decade for newspaper groups. First

came recession, and some misguided forays into the newly liberated

Eastern Europe. Then soaring world newsprint prices began to hit their

bottom lines, and all the while new media, specifically the internet and

interactive television, were threatening.



But newspapers remain resolutely positive and seem prepared for whatever

an impending recession might bring. They admit that circulation is still

in decline in Europe, but add that sales have stabilised after the big

falls of the early 90s. TV is still making inroads, they concede, but

credibility among consumers is still higher for newspaper news than any

other medium. Finally, newspapers point to rising ad revenues around

Europe. These, they say, demonstrate without doubt that the lessons

learned during the hard times have given them an edge never seen before

in the European newspaper industry.



’There’s nothing like a near-death experience to teach you how to

survive,’ comments the media analyst, Laurel Brunner, who has just

completed a report on the European newspaper industry for Pira

International. She feels that the recession taught the big newspaper

groups the value not only of slicker marketing and new technology, but

also of the need for leveraging your best brands and spreading risk

across different business areas. ’Diversification has become a very

important thing,’ she says, ’Newspapers aren’t just newspapers any

more.’



There are some good examples of this in Europe. Germany’s Westdeutsche

Allgemeine Zeitung has stakes in more than ten radio stations across the

country, and recently teamed up with the giant media group, Bertelsmann,

to pool their television interests. Rupert Murdoch is another example,

with titles such as the Sun and the Times sharing the same stable as TV

interests in 90 different channels around the world. Others also

demonstrate the trend.



Switzerland’s Ringier, for example, which restructured its Blick Group

(Blick and Sonntags Blick) last year, and consolidated its TV interests

into a separate television division.



This diversification has been slow to improve the offering for large

multinational customers, however. Packages that deliver advertising

campaigns across different media and countries are still not widely

available, according to media buyers. Newspapers still lag behind

magazines in this respect. ’Newspapers have been putting their eggs in

several baskets,’ one buyer from Motive explains, ’but very few people

are using that as a route to approach large advertisers.’



However, it has created the opportunity for cross-leveraging between

brands. Leading French sports title, L’Equipe, began by sponsoring

sports events to publicise its brand, and has now moved into full-blown

brand extensions, such as its own range of clothing. Even the more

traditional names in the marketplace have been at it, notably the Daily

Telegraph, with its foray into insurance.



Another trend on the increase is co-operation between different media

groups, or ’partnering’. Holtzbrinck has become a bit of an aficionado

of this game, and the German newspaper giant has set up a variety of

deals ranging from special ad rates, in partnership with the regional

press, to joint ventures with outside groups. Its financial daily,

Handelsblatt, is active with Dow Jones in the US, Bilanz in Zurich and

Economia in Prague.



Partnering is also taking its first tentative steps on the pan-European

stage, as illustrated by last year’s well-publicised banding together of

seven different publications into the World Press Group. The

International Herald Tribune, Businessweek, Time, the European, Fortune,

the Economist and Newsweek have joined forces to set up a single

marketing and information presence across Europe. But here again, words

have been slow to translate into deeds.



Although the World Press Group is a single point of contact for

information, it has yet to deliver a one-stop shop for advertising

campaigns across all of its titles.



More impressive, perhaps, is the way new technology has swept Europe,

providing more colour, better graphics and a generally more readable

look to newspapers, according to Bengt Braun, the president of the World

Association of Newspapers.



’Pick up a newspaper and compare its current design with the way it

looked five or ten years ago,’ he is fond of saying, ’this will show the

transformation newspapers have gone through.’



Braun, the chief executive of Sweden’s Bonnier Group, has experienced

this phenomenon first hand, since Bonnier survived Sweden’s economic

downturn through some judicious revitalising of its titles and a merger

with its fellow media giant, Marieberg. Now, as the industry braces

itself for the next bout of economic self-doubt, it runs two of the

country’s top three dailies and one of its most profitable, Dagens

Industri.



Braun, however, warns that more investment is needed to meet the

challenges ahead.



’High-tech companies invest 25 per cent of their sales in research and

development. Newspapers invest around 2 per cent, which is too little,’

he declares, ’We must invest more.’



This development has already yielded advances unthinkable only a few

years ago. One of these is zoning, or the printing of different pages -

or entire editions - for different parts of the country. Spain’s El Pais

is a good example of this, being published in 11 different editions

throughout its geographically disparate regions. These provide a tightly

targeted medium for advertisers as well as the strong regional flavour

readers demand.



So it’s a tough world, and newspapers are adapting, but this is no time

for complacency.



According to Timothy Balding, director general of WAN, analysts are

warning that the recent rise in ad revenues and decline in circulation

have left newspapers exposed to any economic downturn. Balding offers no

solution.



However, Brunner has her own views on how to raise readership.’We are

not far from the age of customised newspapers, and these will have to

rely on quality editorial,’ she says. ’People just won’t pay a premium

unless they are getting what they want.’



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