Newspapers keep feeling the chill: Bleak January adds to industry's woes

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Adam Feibel
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January was a nasty month for print newspapers in Canada.

Twelve local journalists lost their jobs in January when the Ottawa Citizen and Ottawa Sun merged newsrooms at their facility on Baxter Road.

Hundreds of Canadians lost their jobs in a month of closures and cutbacks at the Toronto Star, the Guelph Mercury, the Nanaimo Daily News and, on a miniature Black Tuesday for Canadian journalists, the national Postmedia Network newspaper chain.

The cost-cutting measures are primarily brought on by declining readership and revenue, especially from advertising. But newsroom cutbacks are also a self-fulfilling prophecy, a chicken-and-egg situation that doesn't bode well for the newspaper industry’s future, according to Al Albania, president of Ottawa-based advertising agency Acart Communications.

“If you don’t have good revenue from advertising, you tend to reduce your editorial,” he said. “So you’ve reduced your editorial, and then the newspaper doesn’t seem like it’s got enough meat for the reader, so people stop advertising. It’s a never-ending cycle that eventually comes down to those purists that will only read newspapers.”

Just days after the Toronto Star cut 13 newsroom jobs, Postmedia, the country’s largest newspaper chain, laid off 90 journalists and merged tabloid and broadsheet newsrooms in four cities. Here in town, 12 Ottawa Sun journalists lost their jobs when the paper merged with the Ottawa Citizen. Both are now produced by a single news team.

The following week, Black Press closed the Nanaimo Daily News, affecting 10 staffers, and the Guelph Mercury halted its print edition and cut all 26 editorial staff.

Mr. Albania said advertisers haven’t turned away from newspapers, but explains they’re just one option among many in an integrated advertising approach.

“We’ve always done exactly the same thing, and that’s that we will buy the best media to get the job done,” he said. “There are some people you can only reach through the newspaper, and of course the newspaper is very much still a worthwhile endeavour.”

But as these news organizations scale back operations, they face not only the challenge of generating revenue from their digital assets, but also maintaining the quality of work that made them a desirable channel for readers and advertisers in the first place.

“The advantage that traditional media has is all the expert content creators, journalists who have integrity and are careful about what they publish,” said Kelly Rusk, digital director at another Ottawa-based advertising firm, Banfield Agency. “I’ve always thought it’s a backward approach to keep cutting the editorial side, because that was the advantage they had over some of these new publications.”

Even as they make gains on the digital side, traditional media organizations continue to post flat or falling revenues, according to PricewaterhouseCoopers. Its media outlook report published in 2015 predicted that digital ad revenue will surpass that of print by 2019, but noted that it won't be enough to offset the losses from print. For every $1 earned online, newspapers lose $10 on their print production, according to the Pew Research Center.

“There’s still the desire to have channels that are more in line with what print advertising was giving them in terms of building brand awareness and visibility,” said Véronique Gravel, account director and partner at Banfield. “When clients are looking at digital, I think they’re making progress, but they’re still caught a little in the measures of success – looking at clicks, for example. We’re trying to shift that mindset (to other elements such as brand awareness) so they are considering digital spaces.”

Evolving trends on the advertising industry side have also made it harder for general news publishers to appeal to companies running targeted ad campaigns, some ad firms say. The news media casts a fairly large net in terms of readership demographics, and that breadth may be an even more problematic long-term barrier to revenues.

“No one wants to use ‘shrapnel shots’ to – maybe, if we are lucky enough – hit the target. Advertisers tend to choose the ‘sniper’ approach using more and more targeted vehicles,” Kirill Kornilov, director of advertising sales at Ottawa’s gordongroup, wrote in an e-mail.

Gordongroup’s publishing division is an example in itself, focusing on niche magazines rather than broadsheet dailies.

“While quite a few newspapers had to discontinue their print version, a number of new print magazines appear every year,” said Mr. Kornilov. “The ones that sustain are usually hyper-targeted publications about food, sports, design, outdoor (living), etc. … And these are actually growing.”

That’s of little help to general-interest news organizations, print or digital, that cover a broad range of current affairs. While some have tried to build profitable new platforms such as magazine-style tablet editions – including Postmedia’s recently shuttered tablet experiment – a new strategy announced by the news chain in January has turned some heads in both the news and advertising industries.

Postmedia’s new deal with Mogo Finance Technology will give the online short-term loan provider at least $50 million worth of advertising in Postmedia’s print and digital assets over three years, in exchange for a cut of Mogo’s revenues. Postmedia’s chief commercial officer told The Globe and Mail that the model is a way to convince startups that are hesitant to advertise with legacy media that the company is a worthwhile advertising platform. If it’s not an industry first, it’s certainly a very new approach.

“That’s thinking outside the box,” said Ms. Rusk. “It’s not that there’s no risk, but everything’s in it to make sure it works.”

Advertisers are looking for a holistic package, and a carrier that can deliver it in full would be ideal, Mr. Kornilov said.

Whether news outlets can – or should – take on that role is hard to say.

“Bundling print with website banner exposure, social media, native advertising, events and so on is the way to go,” he said. “If you can help them set up their media campaign on various channels through a single media purchase, you’ll be the champion.”

Organizations: Daily News, Toronto Star, Acart Communications Ottawa Citizen Black Press Banfield Agency PricewaterhouseCoopers Pew Research Center Banfield Mogo Finance Technology Globe and Mail

Geographic location: Ottawa

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