Charting a Path

The UNC team envisioned a three-part process over two to three years—research and analyze market and proprietary financial data; formulate an overarching strategic plan; and implement the new strategy.[14] Like most newspapers, the News Reporter had done little market research in recent years. The most recent reader survey dated to 1994 and was woefully out of date. Relying on newly available digital tools as well as time-tested interviewing techniques, UNC students were able to quickly obtain reliable and inexpensive reader and advertiser feedback and trending information.

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First, they gathered readily accessible data from local, state and federal government sources (such as the US census) to build a profile of Columbus County and its 57,000 citizens. Next they posted a brief online survey of 10 to 15 questions on, querying readers about their media consumption habits and engagement with content on the website. Simultaneously, they conducted one-on-one interviews with 10 print-only readers of the News Reporter, chosen by calling every 100th person on the subscriber list.  Finally, they conducted similar one-on-one half hour interviews with 10 current and former advertisers.

Readers. The reader results were striking and, in many ways, reassuring to Les and Jim High. Using a technique employed by other newspapers, students calculated that reader loyalty to the News Reporter was “off the charts,” as Les puts it.[15] Asked if they would recommend purchase of the News Reporter to a friend, colleague or newcomer, more than 80 percent of readers responded affirmatively. Compared to other news sources, they said the community paper was “the most credible and comprehensive” source of news and information they “cared about.” This included stories about local politics and sports, nearby entertainment and leisure activities, as well as the highlights of life in Columbus County, such as births, deaths, graduations and promotions.

The research showed that at least half the readers of the online edition routinely read the print edition—but for different reasons. As heavy news consumers, the dual print-web readers used the digital version to stay up-to-date on breaking stories, especially on days that the News Reporter did not publish, and looked for information behind the stories they read in the print edition. The average print-only reader was over 60 years old; the dual online/print reader was 15 years younger; and the average online-only reader was 35. The print-only and dual print-digital readers were exceedingly loyal, while the online-only reader tended to “check out the site” when a friend or colleague mentioned a particular story.

Both the dual print-online readers and the online-only readers expressed a strong desire for the News Reporter to offer digital coverage of even more topics, such as school sports, parenting or politics. Print-only readers said they were satisfied with the content currently offered in the print edition, and would not cancel their subscriptions if the News Reporter started producing more online material. In fact, some indicated they might even be prompted to log onto the website if it had content that supplemented what was in the print edition, such as expanded obituaries with video, photos and online condolences.

The student researchers also found a reservoir of goodwill toward the newspaper among local advertisers. But even though the research had demonstrated strong reader loyalty and engagement with News Reporter content—including advertisements—local business managers said that “newspaper sales reps don’t make a compelling case for buying either the print or online editions.” By contrast, they said, the News Reporter’s competitors—the television and radio stations, digital portals and even billboard companies—came armed with “facts and figures.” Many also complained that they wanted the newspaper to give them “options other than print.”

 As Les High reviewed the market research and analyzed recent financial statements, the Internet’s effect on his paper’s business model was all too clear.First of all, printing and distribution capability—once a barrier to entry that kept potential competitors at bay—was now a financial albatross, consuming more than half the paper’s revenue. Simultaneously, the Internet was siphoning off potential readers, especially younger ones who surfed the web in search of specific information rather than read a general interest newspaper. Even more worrisome long-term, the print edition of the News Reporter was becoming less attractive to advertisers. In order to reverse the advertising revenue decline, the paperhad to reposition itself as an effective multi-platform advertising vehicle.

Recommendations. In 2011, the UNC team recommended a three-pronged strategy to address costs, readership and advertising revenue while moving the News Reporter from a print-only to a viable digital business model. They included:

1) Shed 30 percent of legacy printing and distribution costs over the next five years, either by cutting back on publication days, moving print features online, or outsourcing print and distribution. Ideally, this would free up funds to invest in the digital operation;

2) Develop a stronger editorial presence online, creating sections or pages focused on areas of special interest such as sports, parenting and local politics;

3) Increase digital advertising revenue by 30 percent over five years by revamping the advertising rate card and the sales process to stress “combo sales” of print and digital editions; training the staff to engage in “consultative selling” (i.e. understand the marketing objectives of local businesses) instead of simply “order-taking”; and creating a new incentive system to compensate ad staff for achieving new sales goals.

Les took a calculator to the cost side first. He concluded that the printing operation was essentially “breaking even,” thanks to contracts the News Reporter had with other area businesses, including two newspapers. So outsourcing printing and distribution did not make financial sense for the moment. Nor did he think it would be wise to save on newsprint expenses by moving content from the print to the online edition, since that would most likely antagonize loyal print-only readers.

As for moving to once-a-week publication from twice--that, too, seemed premature. The News Reporter was making money on both publishing days, primarily because of preprinted advertisements routinely inserted into the paper at the beginning and end of the week by grocery, pharmacy and other national retailers in the area. High concedes that “preprints are probably going to go away entirely someday in the near future and when they do, or we lose several major national accounts, we will have to cut back printing to one day a week. But not now.”

[14] All statistics and recommendations in this section of the case study come from Saving Community Journalism.

[15]  The loyalty survey was based on the recommendation of Frederick Reichheld in The Ultimate Question: Driving Good Profits and True Growth, Harvard Business School Press, 2006.