SCANDINAVIAN MEDIA: Scandianvian newspapers on the attack; The finnish press pact

A consortium of Finnish newspapers provides a clear advantage for advertisers and is at fighting weight to take on its rivals, Scott Beagrie reports

A consortium of Finnish newspapers provides a clear advantage for

advertisers and is at fighting weight to take on its rivals, Scott

Beagrie reports



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

advertising revenue.



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

attract customers.



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

for us.’



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

individually.



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

stations.



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

volumes.



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



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