The Newspaper Society, which represents the regional press, will this month engage an advertising agency to conduct a generic campaign. Many observers may find themselves muttering: “not again”.
Although the regional press is a huge player in terms of advertising expenditure, it has always found it difficult to make itself heard among advertisers and agencies. The sector has tried a number of schemes but has never been able to shake off its shabby cloth-cap image.
Regional press accounted for more than 20 per cent of UK ad expenditure in 1997, or 2.2bn, which represents an 8.5 per cent rise on 1996. Only television attracts more money.
Many titles have been bought up in recent years as newspaper groups have consolidated their positions. Last year alone, 20 groups changed hands – for more than 580m.
At first glance, these figures suggest a growing industry with little to worry about. But this is not the case. On average, local papers receive 80 per cent of their revenue from advertising, with the remainder coming from the cover price. (On the nationals, the spilt is roughly even.) Around 60 per cent of this advertising is classified, which is highly sensitive to recession.
NPS marketing director Chris Stanley says most regional papers only attract four per cent of the money set aside by companies for national campaigns. Local press performs particulary poorly in the area of display advertising. Display advertising accounts for only 240m of the 2.2bn total UK spend.
This helps to explain the consolidation over the past four years, which has seen half of all local UK papers change hands. It is a defensive measure to protect the industry’s large but recession-prone ad revenue by concentrating it into a small set of major players.
The four top players are: Trinity International Holdings, Johnston Press, Northcliffe Newspaper Group and the Newsquest Media Group. Next come Southnews, Bristol United Press, Midland News Association and Portsmouth & Sunderland Newspapers.
Panmure Gordon analyst Lorna Tilbian says: “I expect more consolidation in this sector. Over the next five years or so. These eight players are likely to buy each other out so that you are left with four.”
Regional papers have tried to get a greater share of national advertising. Regional paper sales house The Word was set up to attract national campaigns and syndicate them through the local press.
But the local press has been here before. MediaCom deputy managing director Bill Jones comments: “I’ve been in this business for 20 years and in all that time the regional press has talked about how it intends to capture a greater share of national advertising. One scheme or another is brought up, but nothing much seems to happen.”
Another senior media buyer says: “Advertisers simply don’t want to pay good money to put display advertising in environments they consider second class. When regional papers do national display drives, they give such big discounts the space is virtually given away – and there is no shortage of advertisers. But when they put the price back up, advertisers fade away. They are not prepared to pay a fair price for it.”
A NPS source says he hopes regional papers’ four per cent of national advertising will rise to seven per cent in the next five years.
The NPS’s Stanley sees two factors standing in the way of rising revenues. The first problem is that there are 23 regional press sales houses; most medium-sized groups have their own. By comparison, television has just three. Local papers are simply too confusing a buy.
The NPS has called for consolidation which would result in four to six sales houses. Trinity has recently taken over sales house AMRA, as well as unconnected titles such as The Manchester Evening News and The Wolverhampton Express & Star. So moves are afoot. But there is much vested interest to overcome. The NPS’s target is years away.
Second, Stanley blames London. “Agencies are very London-centred and they decide 90 per cent of where and how a client spends its budget. We have got to influence them. In Newcastle, the strongest brand is the Newcastle Evening Chronicle. But it is not recognised in London. We have to convince people that we are not just a tactical tool – that we can be used for brand building.”
Stanley says that once he has chosen an agency he will begin a direct mail campaign to target decision makers at agencies and advertisers. There will also be some press advertising and accompanying PR.
The Newspaper Society had invited five agencies to pitch for the business: Faulds, GGT BDH, IMP, CMB and Smith Bundy Carlson. Faulds and Carlson did not make it through the initial round, so the three remaining agencies will pitch for the account this Thursday (January 7).