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NEWSPAPER10•PRINTED ON MONDI ENVIROTEXT 60
gsm
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NEWSPAPER10
July/August 2008
SA newspapers feel the pinch
Locally, advertisers and consumersare feeling the pinch, tightening theirbelts and looking for ways to maketheir rands stretch further thanever. And while global adspendfigures show that SA’s adspend isgrowing (Nielsen’s Global AdViewreports that our adspend grew15.3 per cent in the first quarter of 2008), the decline in sales acrossthe motor vehicle sector and thestate of the property market signalthat the economic decline is having aserious impact.Looking closely at the newspapersit becomes clear that while they viewthe downturn as part of a global trendsome are facing greater challengesthan others. “The impact is not toodramatic, but it’s tougher. Newspaperspassed through a comfy phase wheretargets were reached. Now newspa-pers must become more professionaland more relevant,” says GavinRheeder, marketing manager,
 Beeld 
.He points to declines in motor andproperty advertising in newspapers asindicators of the increasing pressureon incomes. “There is evidence of adownturn but it’s definitely notnegative as it’s still a single-digitdecline,” says Francois Groepe,CEO, Media24.Lucille van Niekerk, independentmedia consultant, reports that shehas seen an impact on the generalbuying patterns of newspaper readers.“Not only is there pressure from theconsumer and the advertiser, butthere is also competition: there are somany community shopping mallsand new competitors to take intoaccount,” says Van Niekerk. She addsthat subscriptions too, are showingsigns of strain. “I can see the crunchin everyone’s circulation figures andeven in the margins. The magazinesand newspapers on the shelves arethinner and some are carrying moreads to buffer their losses,” she says.The daily broadsheet as a category,has been struggling for some time,given it is challenged by the evolutionof the tabloids and weekend papers aswell as the rise of online news read-ership. “Dailies are under pressurefrom people who prefer to read onthe Internet,” says Ferial Haffajee,editor,
 Mail & Guardian
. She says theniche papers are holding their own.“Some readers are dropping thedailies and buying the Sunday papers,”says Van Niekerk. She goes on tosay that newspapers must adapttheir portfolios and their offeringsto take into account the crunchon consumers.The
 Mail & Guardian
, for example,is looking at special packages forthose markets that would be mostsensitive to the crunch. “Our copysales are holding steady though witha cover price of R16.50, I amconcerned. As an editor, I would likeus to get our coverage of this importanttime in our country’s history to asmany people as possible, so we arecrafting special offers for students,pensioners and other vulnerablegroups,” says Haffajee. “I think we areat the end of a market where readersare less price sensitive, but we stillneed to work to protect our student,younger and retired readership,which may hurt from a decline indisposable income,” says Haffajee.Looking ahead, says John Bowles, joint MD, Newspaper AdvertisingBureau (NAB), dailies and, to a certainextent, weekend papers will alwayshave a role to play, but will facemassive challenges as they encounterthe impact that youth culture willhave on news consumption.The same cannot be said, however,for the newspapers aimed at the black middle class. “For some newspapers,there is significant pressure on circu-lation as people have less disposableincome. For some of the black emerging middle class the growthrate in advertising numbers is verypositive, and I think there will beopportunities here,” says Groepe.
City Press
editor, Mathatha Tsedu,says his newspaper’s advertisingrevenues have not seen losses; circu-lations, however, have declined by fiveper cent (mirroring similar declinesacross the majority of newspapers).“This signals that there is some-thing happening at circulation levelin the South African market,” hesays. Tsedu believes that the steadyad revenues are the result of anincreased number of governmentrecruitment ads. “A year ago, we sawadvertising from cellphone brandsand service providers, banks and soon. This is no longer the case. Theseadvertisers and these sorts of ads aretapering off and are being replaced bygovernment recruitment advertising,because there has been a majorgrowth in the number of upperLSM black readers that we attract,”he says. “If you are not gettingreplacement advertising as we aregetting, you will most certainly see adecline in revenues.”For the business newspapers, thecredit crunch may be a good thing;after all, investors, home owners andpeople with assets are increasinglyturning to these titles for up to dateand reliable information to helpthem navigate the tough times. PeterBruce, editor,
 Business Day
, has foundthat in spite of the fact that the coverprice has almost doubled over thepast few years circulation hasremained steady. However, theincrease in cover price has been inresponse to declines in ad revenues.“This is one of the reasons we havesteadily been raising our cover price.It reduces our dependence on ads alittle, and helps us to get throughtough times because readership stayssteady,” says Bruce.For the tabloids, and some of the weekend papers, sales appear tobe holding firm. “Weekend papers,globally, are doing better than theirdaily counterparts as they are stillregarded as a leisure read – some-thing to put your feet up with overthe weekends,” says Haffajee. “Wesee the downturn as part of the cycleand hope it will turn next year,” saysWillem Pretorius, editor,
Sondag
.Meanwhile, the
 Daily Sun
, thecountry’s most successful tabloid,reports very healthy circulation. “Weare beating our budgets by millionsand this is partly explained by ourresolute campaign that you only needto use the
 Daily Sun
to reach theLSM 4 market, which is a powerfulmarket,” says publisher, Deon duPlessis. “Our newspaper is dedicatedto the guy in blue overalls, and hechanges. When we launched, he hada kid aged five and now that kid isnine. There is increasing wealth inthis market and some sections of the townships are indistinguishablefrom the suburbs,” says du Plessis.The changes in this market are huge– consider the development of shop-ping malls and the way they arechanging behaviours and patterns of shopping. “There is no evidence of these fast changes slowing or of theupward mobility slowing,” says duPlessis. He adds that this market iswhere the boom is, and averageincomes are growing. “And yes, someof them are leaving for higherLSMs,” he adds.However, he is realistic about thechallenges of the current economicsituation: “I’m sure we haven’t seenthe worst of it yet. I’m not going tobe cavalier about it just because ithasn’t affected us yet.”Fergus Sampson, CEO: EmergingMarkets, Media24,is a little moreconcerned. “Advertising sales aredefinitely contracting, especiallynational advertising. Single copy salesare still holding steady under the cir-cumstances. We are planning for asevere and protracted downturn –possibly as long as 18 months beforewe can breathe comfortably again,”he says.What’s clear is that the next year ortwo will be very challenging fornewspapers that have not invested inthe technologies and platforms tobuild relationships with readers andadvertisers, and differentiate theirnewspaper brands. And certainly,all the editors and publishers that
 Newspaper 10
spoke to said theywould be investing in developing thequality of news reporting or newmedia platforms.Haffajee, for example, says that shewill build up expertise across allspecific interest areas (business, politics,science, and so on) to ensure thatreporting on these topics is at theexclusive cutting edge. “The motto
I don’t think that the South African market has an insulated digital perspective.Local publishers haven’t felt the effect of market dilution that stems from increaseddigital activity
continued on page 3
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NEWSPAPER10•JULY/AUGUST 2008•
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NEWSPAPER10•PRINTED ON MONDI ENVIROTEXT 60
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A day in the life of a South African newspaper
Over the last few years, local townships and small towns have grown andevolved are viable markets for newspapers. The booming growth of shop-ping malls in the townships, for example, paved the way for free commu-nity newspapers in these regions. Meanwhile, the rising tabloids, such asthe
 Daily Sun
, are creating new readerships where previously there may nothave been any. The emerging market holds great potential. “Newspaperreadership in the emerging market (LSM 4-7) has ballooned over the pastsix years. The tabloid press, led by the
 Daily Sun
, is single-handedlyresponsible for bringing the masses into the newspaper readership fold. Asthis market continues to grow and change, new gaps and submarkets willemerge over time,” says Fergus Sampson, CEO: Emerging Markets, Media24.Consider, for example, that the
 Daily Sun
’s readership used to be a town-ship LSM market, but today, it captures upper LSM black readers. “Themiddle class will grow and spread. There is the notion that the suburbs andthe informal settlements will dissipate. But I believe that we will seegrowth in the townships and the suburbs,” says Francois Groepe, CEO,Media24.However, before this market can be served efficiently, says ChantelErfort, editor, Cape Community Newspapers, media owners need torealise that township and rural markets are not homogeneous and contentshould be diversified to tap into this.“Developing areas – and the developing world – are all experiencing anupswing in newspaper consumption, and there is potential for this tocontinue in township areas, but only if we discard our common perceptionsof what ‘typical township’ readers want. There is no typical,” says Erfort.Ferial Haffajee, editor,
 Mail & Guardian
, also believes that segmentationof these markets is better done along LSM lines, categorising them intoquality/tabloid or niche/mass newspapering. “I don’t buy into the townshipversus town/black and white models of newspapering because myexperience on the
 Mail & Guardian
has shown that there is more that unitesthan divides,” she says.And while there is still a lot of growth in metropolitan areas, newspaperswill grow in the developing markets in the coming months and createopportunities for previously untapped advertisers.Lucille van Niekerk, independent media consultant, believes that someregions of the country want more technology (cellphone and mobileadvertising, websites, and so on) and newspapers are in the perfect positionto drive news consumption via new media and technology platforms.“Newspapers need to do better; they need to observe readership trends andfind areas that are under-marketed. The farmers on the platteland, forexample, have been forgotten by the city media. There are opportunitieshere,” she says.
Emerging markets want newspapers
should be: if you miss us, you missout,” says Haffajee.Newspapers serving the nichemarkets (such as the gay market) areupping their game too. Gary de Klerk,editor of 
The Pink Tongue
, says theeconomic downturn should be a timewhen advertisers rethink where andhow they spend their money. “Now isthe time for the gay media toapproach clients affected by thedownturn, because although the gaycommunity also feels the economicpinch, it is a community that subscribesto a more luxurious lifestyle becauseof the disposable income factor thatstems from not having kids. Whenthere is a gay couple that pools itsincomes, you’re looking at anotherpotential market. The gay media needsto find a way to communicate this toadvertisers effectively,” he says.Black diamonds and unmarriedyuppies, for example, may also repre-sent viable niche markets. And, as duPlessis points out, the simple act of delivering to homes may be the keyfor newspapers looking to reachthese niches. The
 Daily Sun
recentlytook over the
Sunday Sun
, and duPlessis has high hopes for this paperbecause it is delivered to the homes of readers. “Home delivery is still a rev-olution in the townships. This meansthere are huge opportunities forbrands to do sampling campaigns viathe Sunday papers.”Look out for clever distributionsystems as newspapers seek out newways to become more easily accessi-ble to readers, especially in light of subscription losses. “We might seesubscriptions drop, but we expectstreet and agency sales to grow,” saysRheeder. Subscribers are a loyal mar-ket but innovations are being evolvedin street sales to grow this sector.The plus side of the downturn is thefact that it will shake out the industry’sweaker players. Experts believe we willsee consolidations and closures as aresult. But publishers will also bemore cautious as far as their invest-ments in new markets are concerned.Expect greater creativity in terms of what’s on offer to readers and advertis-ers. “There will be pressure on news-papers to sharpen up. So I don’t expectthat it will be business as usual, but thisgets the creative juices flowing andforces us to look for new opportuni-ties. The biggest threat to newspapersnow is complacency – we can’t affordit! Newspapers must see everything asa threat. The good news for newspa-pers is that readers are not readingnewspapers differently, in the way thatTV audiences are watching TVdifferently. But newspapers need to getto the reader directly whether onlineor via cellphones,” says Rheeder.Yet across the board, publishers areadamant that they will not compro-mise their products. While they willconsider creative innovations to theirprint products and advertising solu-tions, they will only consider thosethat build their brands, rather thancompromise the quality and integrityof their newspapers.“Newspapers need to deliver qual-ity readers to advertisers,” saysGroepe. The emphasis is firmly oncreating a future for newspapers thatare measurable. “There are manyother value-added ideas that willwork for newspapers,” says Sampson.“It is my view the purpose of value-added promotions is to encourageproduct sampling and ultimatelyrepeat consumption. The actual edi-torial product is the only and finalmeasure of success or failure. Noamount of value-added promotionswill ever replace the appeal of acredible, relevant and well-targetedpublication,” he says. What’s more,these value-added- initiatives shouldoccur in concert with a focus on theeditorial product offering. Du Plessissays that since newspapers remain theprimary window to the outside worldfor many South Africans, easily acces-sible, affordable and widely availablenewspapers are very well positionedto fulfil the need for information toguide everyday decision-making.Abroad, newspapers are facing seri-ous setbacks and losses. Locally, thenewspaper category is still vibrant. “Idon’t think newspapers are doomed.They need to change though, we allknow that. More analysis and lessnews, I suppose,” says Peter Bruce,editor,
 Business Day
.Experts believe that, until Internetpenetration is significantly higher,local newspapersare not threatenedby the pull of free news online. AsGeoff Cohen, General Manager:News24, says, SouthAfrica is an inter-esting case. “I think that the SouthAfrican market has been insulatedfrom a digital perspective. Local pub-lishers haven’t felt the full effect of market dilution that stems fromincreased digital activity.” Instead, thecirculation fluctuations are attributa-ble in large part to the economic con-ditions, though less so for emergingmarket newspapers. When the Internetdoes become a mass medium in SA,the pressure will be on newspapers toreach the top of the search enginerankings. And those newspapers thatare not investing in development of these digital platforms now, especiallyto grow their understanding of howusers interact with online content,may be left behind.
Gill RandallGill Randall
continued from page 1
Page 3 Girl:Page 3 Girl:
Gill Randall, joint MD,Newspaper AdvertisingBureau (NAB)
A recent study carried out by African Response and SAARF AMPS found thatthe average newspaper passes from the hands of the seller to a whole series of readers. The average township dweller will buy their newspaper from a streetvendor on their way to work; they read their paper while commuting or dur-ing their lunch break. Then it is passed from one colleague to the next untilthe original buyer leaves work and takes their paper home with them.The study found that the course of most newspapers is assisted by a link of different social groups and communities, and that many black South Africansare buying the newspaper, but are not buying all the newspapers they read.This demonstrates how readership has increased without a correspondingincrease in circulation figures.Plus, many newspapers end up serving functional purposes in the home.The study also found that varied content and hyper-local neighbourhoodnews drives an increase in readership (community newspapers have got thisright). “Relevance, relevance, relevance. One of the compliments which stoodout was that they are enjoying the community updates instead of the usualnational and international news, which is not as ‘close to home,” says AninaMaree, director, African Response.Likewise, newspapers have become more accessible through sales at taxiranks and stations. This convenience is also driving readership. “Marketersneed to focus on accessibility, relevance and variety. But keep in mind thatthere is no one magic recipe that works for all South African readers, we real-ly have such a diverse market. Marketers need to gain insight into the specif-ic target audience of their newspaper and not just readers in general. This willgo hand in hand with their distribution strategy. Our younger upwardlymobile markets move around and change address so home delivery may notwork as well for them as it would for the older and more settled reader forexample,” says Maree.
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