A consortium of Finnish newspapers provides a clear advantage for
advertisers and is at fighting weight to take on its rivals, Scott
Traditionally, newspapers in Finland have been in a powerful position -
87 per cent of households have one delivered. And until 1985, papers
benefited from a heavily regulated broadcasting system. Paid-for
newspapers managed to maintain well over 50 per cent of available
Then, in 1985, legal commercial radio was launched, and Finland’s cable
network began to grow. By the 90s, the country had entered the deepest
recession in its history and newspapers bore the full brunt with a
dramatic decline in ad revenue, with recruitment advertising the main
victim. Next year, competition will be further heightened with the
arrival of the country’s first national radio station as well as the
launch of the seventh commercial TV channel. It is this growing
competition that has prompted newspapers to fight back.
In 1994, the three largest morning daily newspapers formed an
advertising consortium, the so-called ‘Top Three’, to sell packages to
national advertisers. The Top Three expanded, attracting other titles,
and a second consortium was set up. In April 1995, Karkimedia was
established, representing 27 morning daily titles and the other
consortia were disbanded. The combined weekday circulation of the
Karkimedia titles is 1.7 million, 1.8 million on a Sunday, with a
penetration of 83 per cent.
Asko Siukosaari, managing director of the Association of Finnish
Advertising Agencies, says: ‘The important point is that everybody seems
to be happy with this arrangement. There is no competition between the
Karkimedia titles as the circulation areas do not overlap.’
The main benefit, according to Leena Paananen, managing director of
Dagmar, the country’s largest media agency, which spends an annual FM700
(pounds 92) million, is that ‘it gives the agencies and advertisers a
dialogue with a seller that understands both national advertisers’ and
brand advertisers’ perspectives’.
Finland has a population the size of Manchester and a land mass greater
than the former West Germany. The remoteness of towns and cities means
that most national newspapers have a heavy regional bias, which is
reflected in the advertising. For example, ads are frequently placed by
supermarket chains to show the price of branded goods in an effort to
Paananen says: ‘We now have partners to whom we can talk about brand,
advertising and that will, in the long run, be best for newspapers and
It has also helped correct a pricing anomaly between rates for national
and local advertisers. Local advertisers benefited from larger discounts
because the media buyers and newspaper sales forces often live and
socialise in the same communities. This has prompted some local
advertisers, particularly supermarkets, to enter deals whereby they
would purchase advertising on behalf of brand advertisers, whose
products are then featured prominently in the local advertiser’s ad. ‘By
having the Karkimedia package, it is possible to buy brand advertising
at almost the same cost as retailers,’ Paananen says.
Establishing Karkimedia has not forced redundancies at the newspapers.
Its staff of eight are responsible for research and development,
marketing and sales co-ordination. Newspapers sales teams sell local
advertising as before, but also nationally, as part of Karkimedia.
Pekka Harju, marketing director of Karkimedia, states that it has been
‘very successful’ for participating newspapers. Karkimedia’s turnover -
around FM200 (pounds 26) million last year - is expected to rise to a
little over FM300 (pounds 40) million this year.
The total newspapers’ market share of advertising has increased by 4 per
cent from 1995 to 1996, while television’s share fell, for the first
time in several years, by 1 per cent in the same period. The total
advertising market has risen by 3 per cent. In 1991, at the height of
the recession, the total spend was 11 per cent lower.
The only drawback Paananen identifies is Karkimedia’s complicated
pricing structure. Calculations and discounts are made on the size of
the ad and the circulation, or the size of the ad and how often it will
run, which appears straightforward enough. ‘It is more complicated than
it sounds,’ she maintains. Deals are infinitely flexible. The only
stipulation is a minimum requirement of at least three newspapers. Harju
admits the pricing structure is a ‘little bit’ complicated but insists
that a package deal will always work out cheaper than when ads are
purchased separately for each paper. Paananen suggests, however, that
there are deals to be done and it can still pay to place ads
Nine years ago, Radiobookig (RABO) was set up to sell packages to
national advertisers, although its performance has pleased many, it
hasn’t matchedKarkimedia’s. RABO is owned by nine of the 61 commercial
radio stations, and deals commercially with 46 of the commercial
RABO’s managing director, Heikki Wahlroos, admits that growth has been
‘quite slow’. He says commercial radio has traditionally suffered from a
down-market image and has failed to attract the big-name advertisers.
This depressing perception of radio has been challenged by the recent
launch of Kiss FM in four cities. According to Wahlroos, the station was
an instant hit with young Finns and is selling aggressively,
consequently stimulating more interest in the medium.
He is confident that radio’s reputation will be further enhanced next
year with the launch of national radio. The increased competition means
media planners will plan schedules for radio too. ‘It has been only us
selling nationwide radio coverage, so this competition will increase
[radio] sales,’ he says.
At the moment, RABO’s turnover is about FM15 (pounds 2) million - total
spend on radio is about FM200 (pounds 26) million, and Wahlroos predicts
RABO’s turnover will grow to FM20 (pounds 2.6) million next year.
Karkimedia has taken on board suggestions from Dagmar that will help
simplify transactions. An annual price is fixed for a guaranteed volume,
and the agency can buy at that price for the year, and not have it
calculated according to circulation and size of advertisement.
Digital transmission of ads is also expected to extend the scope of
newspaper advertising, where the same ad could include regional
variances in pricing, for example. At the moment, 20 per cent of all
material is transferred digitally, and this is expected to increase to
between 30 to 40 per cent next year.
Not everyone is as keen on co-operation. Sakari Almi, vice-president of
marketing at Ilta Sanomat, the largest evening daily newspaper,
emphatically states: ‘We don’t want to be involved with any consortium.’
And this despite the fact that its sister title, Helsingin Sanomat, is
one of the original ‘Top Three’. ‘We have been doing fine,’ he says, and
points to the fact that volumes were up by 40 per cent even during the
recession, when the morning titles lost more than 20 per cent of their
Almi attributes the paper’s success, at least in part, to it being the
closest thing Finland has to a national newspaper. Ilta has recently
secured a deal with McDonald’s where it will sell the paper in its
outlets from the beginning of 1997. McDonald’s has agreed to use the
commission from sales to advertise in Ilta.
But newspapers have reason to be cheerful. Television viewing habits
have changed dramatically and, increasingly, TV channels are starting to
charge for services such as films and sport. This has made it harder for
advertisers to reach their target groups - this is where newspapers
could score high.
Scott Beagrie is the features editor of PrintWeek