Media: Perspective - Troubles ahead as papers try to build loyalty, not brands

You could forgive ad agencies with national newspaper clients for wanting to pack up and go home. Or at least avoid being paid by results, given that most titles in the sector are experiencing slides in circulation on a par with the global financial markets.

Last week, the Mirror Group parted company with M&C Saatchi. The reasons were clear: the Mirror's £3.5 million spend is five times less than it spent when it last pitched in 2002, and the Mirror itself has said that it is looking at different types of solution.

Newspapers, like other media owners, may remain exciting clients to be around, but notwithstanding the odd exception (notably the Financial Times and the Mail titles), most are getting to grips with long-term print sales declines.

So while they will probably enjoy the challenge, I don't envy those pitching for Telegraph Group and, soon, the Mirror account. There seems to have been a schizophrenia, more than ever, in newspaper marketing. While the industry deserves praise for backing itself through the Newspaper Marketing Agency (which is admirably well supported compared with its rivals), this schizophrenia has manifested itself in a reluctance to invest in building brands while showing an ability to chuck millions into chasing readers with short-term promotions. There are signs that most groups are at least attempting to cure this by adopting one or the other approach.

Associated Newspapers still seems committed to large-scale DVD promotions (The Mail on Sunday, for instance, was hailed for its standout Prince promotion that added 700,000 sales on one issue). On the other hand, News International is not. It remains a big supporter of above-the-line advertising (it spends £23 million), but has stopped supporting some titles (ie. the News of the World) with such giveaways. This week, its editor, Colin Myler, said: "In 2006, we did 40 million discs in a year. We've gone from 40 million discs to zero."

"Where is the loyalty?" Myler questions, and he's not the only newspaper executive to query this. You only have to look at the Telegraph pitchlist (with its mix of ad and direct agencies) to see how things may evolve. Relationship marketing, through the post box or online, coupled with a strong online editorial presence is an obvious way forward. Strong marketing of online readership figures will also play a part in survival (and some newspaper groups are already masters at this).

Otherwise, newspapers will have to do what some have already done and give it away. Rumours swept the industry this week that The Independent would be the latest to scrap its cover price. For the time being, these rumours seem ill- founded, but it's easy to see that this is a business facing major structural issues that can't be solved by advertising.