Eric Buskirk, MBA President & Founder, Verican, Inc.

Newspapers: Profiting from the convergence of web, email, 

mobile and print 

Eric Buskirk, MBA 

President & Founder, Verican, Inc.

Book Designer: Jayson He 

Author: Eric Buskirk, MBA 

Verican and the Verican logo are trademarks of Verican, Inc. in the USA and 

other countries. 

TRADEMARKS: Verican has attempted throughout this book to distinguish 

proprietary trademarks from descriptive terms by following the capitalization 

style used by other companies. 

The author and publisher have made their best efforts to prepare this book. The 

author and publisher make no representation or warranties of any kind with 

regard to the completeness or accuracy of the contents herein and accept no 

liability of any kind including but not limited to performance, merchantability, 

fitness for any particular purpose, or any losses or damages of any kind caused 

or alleged to be caused directly or indirectly from this book. 

Copyright © 2010 Verican, Inc., 588 Sutter Street #420, San Francisco, CA 

94102. World rights reserved. No part of this publication may be stored in a 

retrieval system, transmitted or reproduced in any way, including but not limited 

to photocopy, photograph, magnetic, digital, electronic or other record, without 

the prior agreement and written permission of the publisher. 

Version 1.01 – beta. Copyright 2010. Eric Buskirk 182

Dedicated To 

Don Bolles (July 10, 1928 – June 13, 1976), investigative reporter for the 

Arizona Republic murdered in Phoenix, Arizona by a car bomb planted in broad 

daylight. He had been investigating organized crime. John Harvey Adamson 

pleaded guilty to murdering him as a contract hit. 

Chauncey Wendell Bailey, Jr. (October 20, 1949 – August 2, 2007), editor-inchief 

of the Oakland Post, murdered in downtown Oakland, California and in 

broad daylight. Police referred to this as an assassination for the past and 

ongoing articles he wrote about a local Muslim bakery. 

My Mother 


Contents at a Glance 

PART I - DISCOVERING NEW HORIZONS......................................................................11 

CHAPTER 1 - INTRODUCTION................................................................................................... 12 

CHAPTER 2 - DEATH SPIRAL.................................................................................................... 14 

CHAPTER 3 - PROBLEM/OPPORTUNITY .................................................................................... 25 

PART II - INTEGRATING NEW WITH OLD MEDIA ..................................................... 34 

CHAPTER 4 - PRODUCTS .......................................................................................................... 35 

CHAPTER 5 - PLACE (ADVERTISING MARKET) ........................................................................ 56 

CHAPTER 6 - PRICING .............................................................................................................. 65 

CHAPTER 7 - PROMOTION........................................................................................................ 75 

PART III - ACTION............................................................................................................... 84 

CHAPTER 8 - SELLING.............................................................................................................. 85 

PART IV - MANAGING FOR SUCCESS.............................................................................100 

CHAPTER 9 - COMPETITION ................................................................................................... 101 

CHAPTER 10 - ADVERTISING INVENTORY.............................................................................. 125 

CHAPTER 11 - FINANCIALS.................................................................................................... 138 

CHAPTER 12 - VALUATION/EXIT STRATEGY ......................................................................... 149 

CHAPTER 13 - SUMMARY AND GETTING STARTED ................................................................ 157 

PART V - APPENDIXES ......................................................................................................163 

APPENDIX B - GLOSSARY/KEY TERMS.................................................................................. 164 

APPENDIX C - CLASSIFIEDS ................................................................................................... 166 

APPENDIX D - CIRCULATION ................................................................................................. 176 

APPENDIX E - CUSTOMER/SALES MANAGEMENT SYSTEMS .................................................. 176 

APPENDIX F - NEWSPAPER CONSULTANTS ............................................................................ 179 


Contents 

Dedicated To........................................................................................................... 3 

Contents at a Glance ............................................................................................... 4 

Contents................................................................................................................... 5 

Organization of This Book..................................................................................... 9 

How to Use This Book ........................................................................................... 9 

Free Downloadable Resources............................................................................... 9 

We Want to Hear From You ................................................................................... 10 

PART I - DISCOVERING NEW HORIZONS..........................................................11 

CHAPTER 1 - INTRODUCTION ....................................................................................... 12 

Opportunity............................................................................................................. 13 

CHAPTER 2 - DEATH SPIRAL ........................................................................................ 14 

Profitability Decline .............................................................................................. 14 

Impact of Profits Decline...................................................................................... 15 

Fixation with Print.................................................................................................. 17 

Charging for Online (and Increasingly Print) Content .......................................... 18 

Frenemies ............................................................................................................... 20 

Cutting Costs .......................................................................................................... 20 

Summary ................................................................................................................. 22 

CHAPTER 3 - PROBLEM/OPPORTUNITY ........................................................................ 25 

Watchdog of Government and Businesses .......................................................... 25 

Government Funding............................................................................................ 25 

Solution: Focus on One Revenue Driver ............................................................. 26 

Ideal Complete Local Advertising Solution......................................................... 26 

BCG Matrix of Newspaper Products ................................................................... 27 

Newspaper Product Growth ................................................................................. 27 

Non-Print Quality ................................................................................................. 28 

Increase Services to Advertisers ........................................................................... 28 

Prioritizing Expansion.......................................................................................... 29 

Changing the Newspaper Culture........................................................................ 30 

Small and Nimble = Profitable............................................................................. 31 

Summary ................................................................................................................ 31 

PART II - INTEGRATING NEW WITH OLD MEDIA ......................................... 34 

CHAPTER 4 - PRODUCTS............................................................................................... 35 

Newspaper Components ...................................................................................... 35 

Component: News/Editorial .........................................................................................35 

Component: Classifieds..................................................................................................35 

Component: Advertising, Including Business Listings................................................35 

Newspaper Platforms............................................................................................ 36 

Platform: Print ....................................................................................................... 36 

Print Frequency ................................................................................................................37 

Advantages of Print..........................................................................................................38 

Platform: Website .................................................................................................. 40 

Platform: Mobile/Wireless...................................................................................... 45 

Platform: Email Newsletter .................................................................................... 47 

Other Platforms and Components .......................................................................... 50 

Amazon’s Kindle..................................................................................................... 50 


Podcasting .............................................................................................................. 51 

Internet Personals................................................................................................... 52 

Restaurant Placemats ............................................................................................. 52 

Platform and Component Comparison ................................................................... 53 

Technologies........................................................................................................... 53 

Build vs. Buy.......................................................................................................... 53 

CHAPTER 5 - PLACE (ADVERTISING MARKET)............................................................. 56 

Total Market Opportunity .................................................................................... 56 

National and Regional Advertisers ...................................................................... 57 

Local Advertising Opportunity............................................................................. 57 

Local Advertising Market ..................................................................................... 60 

Convincing Local Advertisers............................................................................... 60 

Benefits of Advertising:......................................................................................... 60 

Leading Companies Advertise ............................................................................. 61 

Advertising Impact................................................................................................ 61 

Complete Advertising Solution ............................................................................... 62 

Summary ................................................................................................................. 63 

CHAPTER 6 - PRICING .................................................................................................. 65 

Non-Print Pricing.................................................................................................. 66 

Bundled/Packaged Programs ................................................................................. 66 

Building a Pricing Model...................................................................................... 68 

Package Pricing Example..................................................................................... 68 

Pricing to Market.................................................................................................... 71 

Term of Contract..................................................................................................... 73 

Summary ................................................................................................................. 73 

CHAPTER 7 - PROMOTION ............................................................................................ 75 

Advertorial.............................................................................................................. 77 

Local Businesses..................................................................................................... 79 

Local Branding from Local Businesses .................................................................. 79 

Advertiser Workshops ........................................................................................... 80 

Marketing Collateral - Media Kit/Brochure........................................................ 80 

Spec Ads................................................................................................................. 81 

Summary ................................................................................................................. 82 

PART III - ACTION ................................................................................................... 84 

CHAPTER 8 - SELLING.................................................................................................. 85 

Sales Team............................................................................................................. 85 

No Radical Changes to Sales Team..................................................................... 86 

Whales vs. Minnows.............................................................................................. 87 

Sales Expectations................................................................................................. 87 

Sales Team Roles and Responsibilities ............................................................... 87 

1. Inside sales (lead generator/appointment setting)......................................... 88 

2. Outside Sales Executive.................................................................................... 89 

3. Account Manager (optional)............................................................................. 91 

4. Business Category Specialists (optional)......................................................... 92 

Building a Sales Team .......................................................................................... 92 

Sales Improvement (focus on matrices): ............................................................. 94 

Sales is an Organization Wide Effort................................................................... 95 

Summary ................................................................................................................. 97 

PART IV - MANAGING FOR SUCCESS.................................................................100 

CHAPTER 9 - COMPETITION........................................................................................ 101 

Advertising Market.............................................................................................. 101 


Print Business Directory/Yellow Pages ................................................................ 102 

Junk (Direct) Mail ................................................................................................ 103 

Television/Cable ................................................................................................... 104 

Radio..................................................................................................................... 106 

Internet Giants...................................................................................................... 107 

Frenemies ............................................................................................................. 108 

Yahoo! Newspaper Consortium ......................................................................... 109 

APT From Yahoo! – Worse than Worthless to Newspapers............................. 110 

Yahoo! is a Competitor and They are Losing.................................................... 110 

Google .................................................................................................................. 111 

Google and Contextual Ads (aka click fraud) ................................................... 111 

Charge Google for Advertising........................................................................... 114 

Yelp ...................................................................................................................... 114 

Networked Websites ........................................................................................... 115 

Additional Internet Competitors ........................................................................ 116 

Facebook and Twitter ........................................................................................... 116 

Outdoor and Other ............................................................................................... 117 

Competing Publications........................................................................................ 117 

Advertising Agencies............................................................................................. 118 

Know Your Enemy .............................................................................................. 119 

Competitive Strategies .......................................................................................... 119 

Expansion Strategies............................................................................................. 120 

Summary ............................................................................................................... 121 

CHAPTER 10 - ADVERTISING INVENTORY .................................................................. 125 

Media Consumption Shift from Print to Print + Non-Print............................. 125 

Supply > Demand ............................................................................................... 126 

Measuring Advertising Inventory - Gross Impressions.................................... 127 

Website Inventory................................................................................................ 127 

Breaking News Process ...................................................................................... 128 

News from Local Business People..................................................................... 129 

Wire Services........................................................................................................ 129 

Forecasting Advertising Inventory..................................................................... 130 

Product/Market Diffusion.................................................................................. 131 

Selling Inventory.................................................................................................. 132 

Managing the Team............................................................................................ 133 

Summary .............................................................................................................. 134 

CHAPTER 11 - FINANCIALS ........................................................................................ 138 

Start with a Blank Sheet of Paper ....................................................................... 138 

Revenue Per Consumer....................................................................................... 138 

Key Revenue Drivers........................................................................................... 139 

Financials: Immediate Profit Impact................................................................. 140 

Maintaining Profit Growth ................................................................................. 142 

Cash/Risk Management ........................................................................................ 144 

Cost/Cash Savings Suggestions......................................................................... 144 

Employee Incentives ............................................................................................. 145 

Profit: Operating, Accounting and Economic .................................................. 145 

Summary .............................................................................................................. 147 

CHAPTER 12 - VALUATION/EXIT STRATEGY.............................................................. 149 

Company Valuation .............................................................................................. 149 

Newspaper and Newspaper Company Valuations ................................................ 150 

Your Startup Newspaper Valuation ...................................................................... 151 

Selling Your Newspaper ..................................................................................... 151 

Starting a Newspaper............................................................................................ 153 


Purchasing a Newspaper...................................................................................... 154 

Financing.............................................................................................................. 154 

Valuation of your Advertising Customer .............................................................. 155 

Summary ............................................................................................................... 155 

CHAPTER 13 - SUMMARY AND GETTING STARTED .................................................... 157 

Overall Vision....................................................................................................... 157 

Platforms and Components................................................................................... 157 

Pricing and Promotion ......................................................................................... 158 

Competition........................................................................................................... 158 

Market................................................................................................................... 158 

Focus .................................................................................................................... 158 

Immediate Action Plan.......................................................................................... 159 

Selling ................................................................................................................... 160 

Summary .............................................................................................................. 161 

Worksheet: Time Value of Money...................................................................... 162 

PART V - APPENDIXES ..........................................................................................163 

APPENDIX B - GLOSSARY/KEY TERMS ...................................................................... 164 

APPENDIX C - CLASSIFIEDS ....................................................................................... 166 

Print Classifieds................................................................................................... 166 

Internet Classifieds Display................................................................................ 168 

Internet Classifieds Order Entry ........................................................................ 170 

Additional Internet Classifieds Features: .......................................................... 173 

Pricing Classifieds............................................................................................... 174 

Classifieds Promotions........................................................................................ 174 

Special Section Recruitment............................................................................... 174 

Avoiding Fraud.................................................................................................... 174 

Classifieds Sales (Rather than Order Taking)................................................... 174 

Statewide & Regional Classifieds Networks ..................................................... 174 

Categories and Subcategories ............................................................................ 175 

APPENDIX D - CIRCULATION ..................................................................................... 176 

APPENDIX E - CUSTOMER/SALES MANAGEMENT SYSTEMS....................................... 176 

APPENDIX F - NEWSPAPER CONSULTANTS ................................................................ 179 

About the Author................................................................................................... 180 


Who Should Use This Book? 

This book targets newspaper executives and those aspiring to join the newspaper 

industry. The focus is first how a newspaper can survive in the digital age with 

the business model of the future. There are many books on sales, journalism and 

running a business. However, this is the first book to address the business side 

of running a profit-oriented publication that leverages the Internet, email and 

mobile/smartphones as a complementary platform to reach an audience with 

the same or similar components (news, weather, calendar, classifieds, local 

advertising, coupons, etc.) 

Organization of This Book 

This book has five parts. Each part describes a different stage in the 

transformation of and running a newspaper. Part I focuses on clearly identifying 

the problem and solution for the newspaper industry but, more importantly, the 

advertisers as well as the consumers (readers) of the newspaper. Part II is a plan 

to implement new products including pricing, promotion and placement of 

these products relative to print. Part III is the model of what newspaper 

employees will be doing day-to-day. Part IV focuses on managing the newspaper 

and includes financials, ideas for incentives, etc. Lastly, the appendix has 

information about newspaper components such as classifieds, as well as other 

reference materials. 

Each part and chapter builds on the foundation of the prior such that at the end 

the reader should be able to build a viable business plan. This plan should be a 

toolkit for working with all stakeholders: customers, employees, suppliers, 

investors, local government, etc. 

How to Use This Book 

To understand the way this book is compiled, you should understand a few 

conventions used. 

Tip/Note 

A tip or a note is a special piece of information, often related to an experience 

dealing with a specific situation. 

Caution 

Refer to a situation that may expose your publication to litigation or a significant 

threat by your competition. 

Free Downloadable Resources 

Please check http://www.verican.com/book/ to download files such as MS 

PowerPoint, Excel, and sample house advertisement files referenced in this 

book. 


We Want to Hear From You 

While I would like to take credit for the ideas in this book, it is really a 

compilation of what I have discovered from newspaper executives. Please email 

me with any ideas, case studies and helpful data. In particular, please contact me 

should you any errors or misrepresentations. My email address is 

ebuskirk@verican.com. 


Part I - Discovering New Horizons 

Part I addresses where the newspaper industry, how it got there and the 

problem that newspapers solve for society. 


Chapter 1 - Introduction 

"A Bible and a newspaper in every house, a good school in every district - all 

studied and appreciated as they merit - are the principal support of virtue, 

morality, and civil liberty." 

Benjamin Franklin 

“I need to go to the bank to get money, the post office to mail a package and 

MY newspaper to drop off a letter to the editor” (my emphasis added) is how 

the publisher of one of our customers described the relationship between the 

newspaper and a member of the community it serves. Aside, possibly, from the 

government, no other entity shares such a level of trust and loyalty. 

Unfortunately, by the time of the first release of this book (March 2010), the 

newspaper industry has significantly deteriorated and continues to do so at an 

accelerated rate. What happens if the newspaper industry disappears? The 

alternatives to newspapers are not very attractive: blogs from propeller heads at 

Yahoo!, Google and others in San Francisco. Craigslist does little for the 

community, in fact may actually harm the community with its thinly veiled 

classified ads promoting prostitution and other illicit activities. 

Throughout history, oppressive regimes typically go to great stakes to control 

the media, starting with newspapers. Only newspapers have a proven track 

record of serving communities small and large with investigative reporting and 

quality journalism as well as providing marketing services to advertisers. They 

are powerful lobbyists for the community and they are a check on the powers of 

government and big business. 

During more than eight years as a vendor to the newspaper industry, I have met 

thousands of newspaper executives from publications ranging in size from small 

one-person monthlies to some of the largest dailies in the world. I have visited 

executives in many parts of the world who own or manage alternatives, niche, 

community and metro publications. Some are free and others paid. Few others, 

including newspaper company executives, have had such a broad exposure to 

the industry. Normally I would say there is no silver bullet to fixing your 

business, but this time there is. My conclusion is that the success of a newspaper 

is in its ability to serve the advertising needs of the local businesses of the 

community. Consumers (readers or subscribers) are willing to pay little, if 

anything, for access to newspaper content. Advertisers, and especially local 

business advertisers, however, are willing to pay top dollar for access to local 

consumers. To succeed, newspapers must adjust their platform and sales 

techniques to serve these advertisers. 

There are numerous journalism books, many about investigative reporting of the 

misdeeds of powerful scoundrels; however, little information is available about 


the more exciting part of the day-to-day operations of actually running a 

newspaper. This is first book written on building a newspaper business by 

combining print with non-print – web, email and mobile. Inside you will find a 

roadmap of how newspaper executives should (and should not) run their 

business as the preferences of readers and advertisers rapidly shifts from print to 

non-print media. The format is similar to an abbreviated MBA (master of 

business administration) program for newspaper executives. Inside are relatively 

easy steps newspaper executives can implement to make incremental 

improvements. Several incremental improvements can add up to significant and 

sustainable change. Verican, the company I started in 2001, provides many of 

these solutions, as do other first-rate Internet newspaper suppliers such as 

TownNews, Linear Publishing, 1 Up, Shoom, Travidia, Print2Web, Presteligence, 

etc. We all have a stake in success of the industry. 

Publications that adapt to the changing world and reinvent themselves will soon 

grow, capture market share and enjoy the high profit margins achieved during 

the prior 400 years of the industry’s existence. 

Opportunity 

1. Within weeks create and implement a solid plan turn around your 

newspaper or magazine (magazine… aka, newspaper printed on quality 

paper) 

2. In more than 400 years there has never been a better time to start or 

purchase a newspaper 

3. Radio, local television broadcast and print yellow pages business will not 

survive unless they expand into a printed publication complemented by 

their original business 

Five years ago, the cost of creating or acquiring a newspaper was multiples of 

what it is now, and there was significantly more competition. If you are serious 

about starting a business that is on the brink of exploding, in the follow pages 

you will discover how it is possible for the smallest operation to converge web, 

email and mobile media into what can be a very promising and profitable 

enterprise. A sneak peak into your exit strategy will show you how a $100,000 

investment today could result in a $5m exit in four or five years. No problem if 

you do not have $100,000. Sweat equity may be good enough, if you are willing 

to give this endeavor 100% of your effort. 

Tip: First skim this book 

Prior to reaching this book, I recommend that you skim through each chapter so 

you can get the big picture. Then complete the worksheet at the end of the last 

chapter (Summary and Getting Started). You should be astounded at the profits 

of running a newspaper and even more at the gains in value you can create in a 

very short time. 


Chapter 2 - Death Spiral 

“Never give in, never give in, never; never; never; never - in nothing, great or 

small, large or petty - never give in except to convictions of honor and good 

sense Never give in. Never give in. Never, never, never, never -- in nothing, 

great or small, large or petty -- never give in, except to convictions of honor and 

good sense. Never yield to force. Never yield to the apparently overwhelming 

might of the enemy.” Winston Churchill – 1941. 

It is now January 2010 and the newspaper industry is in a death spiral. During 

this month alone, MediaNews Holding Company (the parent company of 

MediaNews Group) and Morris Communications, two of the ten largest U.S. 

newspaper companies, announced plans to file for bankruptcy protection. Many 

newspapers and newspaper companies have filed for bankruptcy and those that 

have not are well on the way. The only reason that more of the newspaper 

companies are not liquidated is because there are few, if any, buyers. 

Newspapers are suffering declines in nearly every aspect: loss of print readers 

and subscribers, loss of retail and national advertisers and a sharp decline of 

classified advertising. To mitigate this, most have made cuts in every aspect of 

their business – from the number of print pages, the size of the publication and 

possibly frequency. Consequently, substantial cuts to the newsroom have further 

diminished the publication. This is a viscous cycle: revenue drops so the 

newspaper reduces expenses. Additional revenue declines compel management 

to reduce expenses further leading to rapid deterioration of the industry. 

This chapter explores the current situation of the industry. We also explore what 

newspapers are doing that is not working, which is as important to know as what 

works. 

Profitability Decline 

The following table illustrates the leveraging effect of a modest (5%) decrease of 

the basic newspaper levers: readers, impressions per reader (or time spent per 

reader) and revenue per impression. The revenue per impression decrease is a 

consequence of advertisers having a perception that the quality of newspapers 

has deteriorated and that better alternatives are available. 


(Annual) Growth Year 1 Year 2 Year 3 Year 4 Year 5 

Impressions Per Reader -5% 46,000 43,700 41,515 39,439 37,467 

Avg Rev Per Impression -5% $ 0.0100 $ 0.0095 $ 0.0090 $ 0.0086 $ 0.0081 

Avg Rev Per Reader $ 460 $ 415 $ 375 $ 338 $ 305 

Number of Readers -5% 22,000 20,900 19,855 18,862 17,919 

Total Revenue $ 10,120,000 $ 8,676,635 $ 7,439,130 $ 6,378,124 $ 5,468,444 

Variable Costs (30%) 3,036,000 2,602,991 2,231,739 1,913,437 1,640,533 

Contribution Margin 7,084,000 6,073,645 5,207,391 4,464,687 3,827,911 

Fixed Costs * 3% 4,000,000 4,120,000 4,243,600 4,370,908 4,502,035 

EBITDA (Profit) $ 3,084,000 $ 1,953,645 $ 963,791 $ 93,779 $ (674,124) 

* Adjusted for 3% inflation 

Table 1 – Daily print decline accelerated by several levers 1 

Impact of Profits Decline 

The following graph illustrates each step of the decline of the newspaper 

industry. Nearly every newspaper and newspaper company is losing market 

share and experiencing a decline in revenue and profits. Consistently declining 

profits of any company will eventually lead to bankruptcy. 

$ Profits 

Figure 2 - Impact of decreasing profits over time 

A 

Profit Decline: 

A. Fail to meet equity expectations 

B. Fail to meet debt requirements 

C. Operating loss 

Time 

Point A represents when a newspaper fails to meet a return expected of your 

equity holders. In most cases, little will happen. This is particularly true of many 

newspaper companies because they have a dual-class shareholder structure 

(remember when this was important?) in which minority of investors have 

shares that represent a disproportionately large share of voting rights. Knight 

1 Based on internal estimate of a 10,000 daily newspaper with a 2.2 pass along ratio for a total 

readership of 22,000. Impressions per reader is the annual sum of all advertising. Average revenue 

per impression is based on an average of $10 per thousand impressions (year 1). Variable costs are 

the direct costs related to one additional advertising dollar. EBITDA – Earnings before interest, 

taxes, depreciation or amortization. 

Version 1.01 – beta. Copyright 2010. Eric Buskirk 182 

B 

C

Ridder had only one class of shares and was thus an exception, which is part of 

the reason they were liquidated while many of their peers were not. Of course, 

the newspaper industry is now in a state such that these protections have little 

value. 

Point B, failure to meet debt obligations, is where many newspapers and 

newspaper companies are now. Most, sometimes all, of the individual properties 

are cash flow positive and the newspaper company is turning an operating profit. 

However, the sum of this cash (less administrative expenses of the parent 

company) is insufficient to meet interest payments, or the newspaper company is 

unable to meet debt covenants and thus the parent company is in default or will 

soon be in default. Many newspapers and newspaper companies are mitigating 

this situation by negotiating with lenders informally through restructuring 

arrangements or informally through bankruptcy proceedings. The outcome has 

been shifting ownership to what have become accidental owners – large 

commercial banks. Unlike most restructurings, however, with newspapers it has 

been rare to see significant changes of management and strategy. Presumably, 

this is because the creditors are unable to come up with a better strategy and so 

they keep the same structure and management team. 

Point C is running an operating loss. Most newspapers and newspaper 

companies are heading in this direction because their profits are declining. When 

they reach this point and proceed to deplete reserves, they will shutdown unless 

they can secure perpetual cash. Investors and benevolent sources are unlikely to 

support these unsustainable entities, especially as losses actually increase over 

time. Moreover, at this point it is likely that the costs of shutting down 

operations will exceed that of a fire sale at an auction leaving the equity/debt 

holders with nothing. Considering the cost of severance and other expenses 

associated with shutting down, the property owners may even have to spend 

money just to cease operations. Therefore, it is now common for investors to 

walk away with little or nothing. 

The operating profits of many newspapers, especially large newspapers, are 

declining at an increasing rate. Unless this turns around, many publications will 

reach point C (operating loss) very quickly. 

No matter where the newspaper is on this scale, if profits are declining, they are 

heading for bankruptcy. Waiting is not an option. A new strategy must be 

defined and implemented. This plan must focus on increasing profits (or 

decreasing loses) and returning the newspaper to long-term profit growth. 

Note: Knight Ridder 

The first major casualty of the downturn was in November of 2005 when 

shareholders of Knight Ridder, America’s then second largest newspaper 

company, compelled management to split up and sell. Prior to this, they were on 

top of the world. To be in direct contact with the latest technologies, they 

moved their headquarters from Miami to San Jose, California, the heart of the 

“Silicon Valley.” They spent millions of dollars on various Internet initiatives. 


Such massive technology investments by Knight Ridder and most other major 

newspaper companies have resulted in little value for shareholders. In fact, many 

publishers that I have met blame some of their difficulties on loss of focus due 

to chasing various whims of their parent. They point to the relative success of 

publications that stayed focused on print, their core competency. 

What is Not Working 

It is just as important to understand what is not working as it is to know what is 

working. Following are some of the distractions newspaper executives are 

experiencing. 

Fixation with Print 

The print version of newspapers has been around for approximately 400 years. 

In fact, newspapers are one of the most mature products still available in largely 

the original state. Amongst the tens of thousands of print publications, it is fair 

to say that practically everything in print has been tried and probably many times 

so. 

Figure 3 - Benjamin Franklin's printing press (output has changed little in nearly 

300 years) 

Compared to the Internet and mobile, print is looking rather stale. From reader 

and advertiser’s perspective, the output of a press is little different than it was 

nearly 300 years ago when Benjamin Franklin published his newspaper. Today’s 

newspaper is still yesterday’s news. The only difference now is that there are 

color photographs and snappy graphics. However, many newspaper executives 

still focus on improvements to print. I am disheartened when I hear newspaper 

executives excitedly proclaim the solution to their problems is their new $10 


million (or $100 million) model XYZ, super-duper, turbo-charged pressroom 

with direct from-brain-to-plate technology. 

To this day I am still fascinated by these giant pressrooms and the massive 

amount of effort and coordination required to design, manufacture and deliver a 

new product EVERY DAY. This truly deserves the distinction as “the daily 

miracle.” Nevertheless, it is important to not let this respect and awe become a 

distraction to deploying and selling new products. 

For at least the next five years, some form of print is critical for the success of a 

newspaper. In most cases, print still represents more than 80% of a newspaper’s 

revenue. It also serves as a good alternative to direct mail, which represents 

approximately twice the market share of newspapers. Moreover, because 

newspaper copies often available in public places such as coffee shops, 

restaurants, stores, newsstands, news racks – nearly everywhere in the 

community – this brand has become ubiquitous in the paper’s distribution area. 

The print product can become a giant promotional product for all forms of 

media (print, Internet, email, mobile, etc.). To date, I have been unable to find 

examples of online-only newspapers that have captured a significant amount of 

local readership or advertising market share. Moreover, newspapers that drop 

print and switch exclusively to online publication usually see a steep decline in 

both advertising and web traffic. 

However, there is no reason that a company must print their own product. In 

many cases, it may be economically advisable to go as far as to sell or shut down 

your print facility so you can focus on what is most important: serving the 

advertiser and the reader. 

Charging for Online (and Increasingly Print) 

Content 

Charging for print also used to be more important and more feasible. In 

addition to the subscription price defraying some of the costs of running a 

newspaper, advertisers would pay more for each print impression in a paid 

product because the readership of a paid product is typically higher than a free 

product. Further, paid products have a higher pass along rate and the average 

reader is typically more affluent and thus more attractive. The Internet changes 

much of this. Tracking technologies provide accurate readership data and, aside 

from the one-time cost of the technology infrastructure plus the cost of creating 

content, the incremental cost of reaching consumers is nearly zero. Incremental 

revenue is offset only by the cost of sales and minimal administration, aside 

from the cost of selling advertising and a small amount of administration and is 

thus remarkably profitable. Much like print readers, Internet readers on average 

are more affluent; thus, advertisers are receiving an accurate accounting of 

impressions and the impressions are reaching the audience targeted. 


In the short-term, charging for online access to a digital version of the 

newspaper is probably okay for a paid daily with high market share. Charging for 

content may result in fewer lost print readers to what would be a “free” online 

alternative. In the medium term, charging for content exposes a newspaper to 

attack from free non-dailies (see possible scenario below). Note at the end of 

this chapter is a quote by Warren Buffett that emphasizes the need for 

newspapers to reach no less than 30% of households. 

Caution: Paid content scenario 

A large paid print daily newspaper switching to a paid online model could 

experience from the local competing free weekly (daily online): 

1. Free weekly promotes to readers and advertisers that they are free (and 

always have been), yet they have content that is more relevant than that of 

the daily (no wire content). 

2. Higher quality impressions since targeting a small, hyper-local audience 

(likely a subset of the large daily) 

3. Much like most of the businesses that advertise with them, they are locally 

owned (not by investors in big faraway places) 

4. Unlike the corporate-owned daily publication (if applicable), they are not 

greedy. The large daily publication, not satisfied with anything less than 30- 

40% profit margins (exorbitant in most industries), has cut news, size, 

quality, delivery, etc. And they have increased prices, including charging 

online users for reading something that basically costs nothing to distribute 

5. The weekly print publication will ultimately leverage better job prospects to 

poach the sales reps of the daily 

It is an easy sell and one that will likely resonate well with local business 

community and readers. Everyone likes the underdog. 

Zero Economic Profits 

Economic theory dictates that a competitive market forces economic profits to 

zero. The actual formula is Economic profit = Revenue – operating costs – cost 

of capital. For most newspapers, subscription revenue alone does not cover 

print production costs. Advertising revenue supplements subscription revenue 

to the point where total operating profits were extraordinarily high, upwards of 

40-50%, which is well above the 5% profit margin of a typical U.S. firm. 

Economists attribute this outsized profit to “natural monopoly” that newspapers 

enjoy in their local markets. 

“In economics, a natural monopoly occurs when, due to the economies of scale 

of a particular industry, the maximum efficiency of production and by 

distribution is realized through a single supplier, but in some cases inefficiency 

may take place.” 2 

2 Source: Wikipedia 


The logistics of setting up a paywall are also important to consider. This requires 

an ecommerce system, which requires integration with third party credit card 

and other payment systems. Furthermore, paywalls also requires a support team 

to handle refunds, customer complaints, etc. Preferably, this group is running 

24/7. We do not know of any firms that provide such a full-service solution nor 

do we expect that this will be a profitable venture for them or the newspapers. 

Nevertheless, long term - after a newspaper has significant market share (print, 

Internet and mobile) - a paid online (and paid print) model be strategic. A paid 

model (with high market share) creates for your readers and advertisers what 

economists refer to as “vendor lock in,” essentially a significant barrier to entry 

to the market. One way to ease the market into this model is to start with a 

“freemium” distribution model in which readers have free access to some news 

(but always to all advertising). The free content keeps the readers going to the 

newspaper’s website and email newsletter but seeing the paid content teases 

them into purchasing a subscription for access to premium content. This 

compelling model works either if the newspaper has a sufficient number of new 

products or if there are few alternatives for in-depth local content. It may take 

several years before a newspaper has the product suite and market share 

necessary to return to long-term dominance in the local market. 

Note: We always looking for a solution 

Charging for online content has several significant advantages: 

1. Is a source of revenue 

2. Charging for online content reduces the incentive of switching from print to 

what would be free online content 

3. Readers who subscribe to newspapers are almost certainly local and the fact 

that they are willing and able to pay typically makes them more attractive to 

advertisers, which should increase the revenue per impression. 

Finding the optimal balance between paid and free is a top priority of the author. 

Frenemies 

In the Silicon Valley “frenemies” is a term that describes entities that are both 

partners (friends) and competitors (enemies). Throughout history few such 

relationships succeed, indeed many have been colossal failures (see Chapter 9 – 

Competition). Google, Yahoo!, Monster and any site that gets between the 

newspaper and the reader or advertiser are dangerous to newspapers. 

Cutting Costs 

Most newspapers have long since cut out most waste in their operations and are 

now cutting into their core business. Page sizes and page counts have decreased, 

circulation is down, newsroom personnel and overhead costs are substantially 

lower than just a few years ago. Additional cost cuts would likely deteriorate 

future prospects, risking lower overall profitability and lost market share. 


Note: You get what you pay for 

Consider the following example for a $1m a year newspaper that is “saving” 

$1000 per month ($12,000 per year) by using a free website hosting company, 

skimping on marketing materials, training, etc. Should such excessive cost 

cutting result in a 1% reduction of the number of customers, revenue per 

customer and a 1% increase in costs, the cost “savings” would result in a net 

profit reduction by nearly $9,000. Your platforms (print, web and mobile) and 

sales & marketing materials are pretty much the only thing you have to advertise 

your newspaper (see Chapter 7 – Promotion). A small investment in quality goes 

a very long way. 

(Annual) High Cut Increase/ 

Quality Corners Decrease 

Customers 250 248 -1% 

Avg Annual Spend $4,000 $ 3,960 -1% 

Total Revenue $ 1,000,000 $ 980,100 

Expenses 850,000 853,475 1% 

Profit (without extra quality) 

1% of revenue investment in 

$ 150,000 $ 126,625 

products and marketing $ 10,000 $ 9,801 

Profits $ 140,000 $ 116,824 

Net Profit Change $ (23,176) 

* Based on 15% profit margin, 25% direct/variable costs + 

$600k fixed costs. 1% cost increase for labor, promotion, 

supplies, financing, etc. 

Table 4 - Profit impact of 1% investment in products & marketing 

I am a firm believer in setting a tight budget and watching it like a hawk. 

Management should set an example by minimizing waste (like turning off lights 

in unoccupied rooms, recycling copy paper, etc.), but when it comes to 

customer-facing products, promotion and selling, it is worth spending a few 

extra dollars. 

Note: Profits up, stock price down 

A top publicly traded newspaper company recently reported that their profits 

tripled, beating analysts’ expectations; however, their stock promptly dropped by 

10%. How could this happen? Their revenue declined more than expected. 

Moreover, the market expects revenues to continue to decline. Profits are much 

easier to manipulate than revenues. As pointed out earlier, if revenues continue 

to decline, profits will decline and the firm will go bankrupt. 

Further, a substantial increase in profits coinciding with a decrease in revenue 

raises serious questions such as why management waited to reduce inefficiencies 

and the impact these cuts may have on future profitability. 


Mindshare Loss vs. Advertising Revenue Decline 

The percentage of total newspaper advertising exposure has decreased far more 

than the percentage of total advertising dollars spent on this medium. In 

addition to declines in print circulation and advertising revenue, Internet traffic 

and revenue have declined while overall Internet traffic and advertising revenue 

has increased. Essentially, newspapers are losing market share on all fronts. 

Moreover, in addition to the 40%+ declines in print advertising revenue, 

newspapers as a whole are providing significantly less value per impression than 

they were just a few years ago. 

Note: Warren Buffett/Buffalo News 

Consider Warren Buffett’s observation during a meeting with the Buffalo News, 

a property owned by his investment company. “I know 

will do relatively well as long as a significant number of people read daily 

newspapers. It gets tough when you get below 30% of households, less 

important to the advertiser. There is a point at which you don’t deliver 

tonnage.” 3 Note that at 2.59 people per household 4, this would mean that 

market penetration below 78% (30% * 2.59) the value of the newspaper quickly 

loses relevance to the advertisers. Most daily newspapers have or will soon fall 

below this threshold. 

Note: Winner takes all 

Most people in the newspaper industry believe that there is a solution out there. 

When this is found what will happen? The answer is rather simple. Consider that 

many newspapers are part of groups many of which have or will soon file for 

bankruptcy. Essentially, they are shifting ownership to a small number of banks 

and private equity firms that had no intention of owning or operating any 

companies, especially complicated newspapers. Normally when there is a default, 

the creditors simply foreclose and sell off the asset to a healthier organization. In 

this case, though, all newspaper companies are struggling so there are no buyers. 

However, once a solution to the industry’s problems is a found, these accidental 

newspaper owners will have a very strong incentive to quickly dispose of their 

holdings. In fact, banks in particular are legally chartered to hold only debt, not 

equity. Thus legal and regulatory requirements place banks under especially 

significant pressure to divest themselves of their newspaper holdings. Consider 

also the economies of scale of owning a large number of newspaper properties. 

Scale reduces costs and creates pricing power. Newspaper ownership is much 

like a game of Monopoly. The leader has a significant advantage of their peers 

Summary 

The newspaper industry is in a rapid decline. All indications are that this will 

continue and there is a leveraged effect caused by a simultaneous decrease in 

3 

Strupp, Joe. “Buffalo, Buffett-style.” Editor & Publisher January, 2010: 6. 

4 

US Census Bureau. 2008. (accessed 28 Feb. 

2010). 


most revenue drivers: print circulation, number and size of pages, number of 

advertisers and average revenue per advertiser, classifieds (all categories) and 

Internet traffic and revenue. Furthermore, production and operating costs will 

likely increase. 

The following chapters define a path to turning around your newspaper. It can 

be rapidly implemented and at minimum cost and with minimum disruption. 


Worksheet 

For a humbling (but valuable) experience, use the following worksheet to plot 

where you think your print publication will be five years, which is not that far 

away. 

(Annual) Growth 

Impressions Per Reader % 

Five 

Years Ago Today 

Plus Five 

Years 

Avg Rev Per Impression % x _______ x _______ x _______ 

Avg Rev Per Reader 

Number of Readers % x _______ x _______ x _______ 

Total Revenue 

Variable Costs 

(?% of revenue) - _______ - _______ - _______ 

Contribution Margin 

Fixed Costs * % - _______ - _______ - _______ 

EBITDA (Profit) 

* Adjust for inflation 

(Annual) Growth Year 1 Year 2 Year 3 Year 4 Year 5 

Impressions Per Reader -5% 46,000 43,700 41,515 39,439 37,467 

Avg Rev Per Impression -5% $ 0.0100 $ 0.0095 $ 0.0090 $ 0.0086 $ 0.0081 

Avg Rev Per Reader $ 460 $ 415 $ 375 $ 338 $ 305 

Number of Readers -5% 22,000 20,900 19,855 18,862 17,919 

Total Revenue $ 10,120,000 $ 8,676,635 $ 7,439,130 $ 6,378,124 $ 5,468,444 

Variable Costs (30%) 3,036,000 2,602,991 2,231,739 1,913,437 1,640,533 

Contribution Margin 7,084,000 6,073,645 5,207,391 4,464,687 3,827,911 

Fixed Costs * 3% 4,000,000 4,120,000 4,243,600 4,370,908 4,502,035 

EBITDA (Profit) 

* Adjusted for 3% inflation 

$ 3,084,000 $ 1,953,645 $ 963,791 $ 93,779 $ (674,124) 


Chapter 3 - Problem/Opportunity 

“A pessimist sees the difficulty in every opportunity; an optimist sees the 

opportunity in every difficulty.” Winston Churchill 

A newspaper does not exist merely to create wealth for its employees or 

shareholders. Rather, a newspaper is a unique institution supported by readers 

and businesses as a means of getting relevant and reliable information about and 

to the local community or a specific niche. The community needs a trusted 

source of information about local events and they need the products and 

services provided by local businesses. Local businesses rely on newspapers as 

advocate of the community. In addition, local businesses consider newspapers a 

trusted provider of marketing and business advice and as a means to distribute 

their advertising messages. 

Watchdog of Government and Businesses 

“Were it left to me to decide whether we should have a government without 

newspapers or newspapers without a government, I should not hesitate for a 

moment to prefer the latter.” Thomas Jefferson (1743-1826), third president of 

the United States. 

Consumers and advertisers rely on newspapers to be watchdogs over the 

government and businesses, publicizing and thereby defending against 

unscrupulous people and practices. This is a critical part of the foundation of a 

free, democratic and market-driven society. 

Note: One newspaper’s influence 

A memorable experience I had while working in the industry was while having 

lunch with the publisher of a local newspaper. Several times people interrupted 

our meal to thank the publisher for helping out on a range of issues, from local 

non-profit causes, to advertising campaigns or, most memorably, for help with 

the local zoning board. It turns out that a local businessperson was having 

trouble getting approval for a construction project that most thought would 

clearly benefit the community. A small amount of attention from the newspaper 

ended years of delay, reams of paperwork and significant legal expenses. 

Government Funding 

As much as one might like to be part of the recent government largess, it is 

unlikely that newspapers will get funding and getting funding would certainly 

create an appearance of impropriety. Moreover, small businesses, your core 

advertiser base, are paying for this government waste and you can be sure they 

would hear about this, especially from your competitors. 


“The prospect of the U.S. government becoming directly involved in 

commercial journalism ought to be chilling for anyone who cares about freedom 

of speech. The Founding Fathers knew that the key to independence was to 

allow enterprises to prosper and serve as a counterweight to government power. 

It is precisely because newspapers make profits and do not depend on the 

government for their livelihood that they have the resources and wherewithal to 

hold the government accountable.” Rupert Murdoch 5 

Running a healthy, profitable newspaper business is the only means of 

maintaining your credibility and independence. Accepting or even pursuing 

government funding compromises this independence. 

Solution: Focus on One Revenue Driver 

Newspapers have three primary revenue drivers: 

1. Circulation (including single-copy sales and Internet sales) – revenues 

received directly from the consumer 

2. Classifieds – represents advertising that is typically time sensitive and is 

received from consumers and advertisers 

3. Retail/display advertising. Revenue primarily from non-consumer 

parties (companies and other organizations) 

Control and incremental revenue from circulation and classifieds is limited and 

typically correlated with the overall strength of the newspaper. Retail advertising 

is an underserved market. Products of competitors to newspapers (business 

directory/yellow pages, radio, TV, direct mail, etc.) provide rapidly diminishing 

returns. Retail/display advertising is the only place for the newspaper to focus. 

The following chapters focus on helping newspapers increase retail advertising 

market share and to increase the advertising spend of these businesses. 

Ideal Complete Local Advertising Solution 

Newspapers are in the unique situation of being able to “doing well while doing 

good.” Publications whose source of revenues are independent of the 

government and are not concentrated with a particular business or other special 

interest group is less likely to be biased. This virtuous relationship is less 

prevalent with the competitors to newspapers (radio, television, yellow pages 

providers, direct mail, outdoor, etc.), which typically have less credibility in the 

community than do newspapers. Moreover, these competitors are at a further 

disadvantage because they are usually lack a strong local presence (and especially 

local ownership). Further, newspaper competitors are often quite fragmented. 

For instance, there may be a dozen or more radio and television broadcast 

stations that cover a regional area encompassing many communities while a 

single local community typically has only one newspaper that is quite often the 

dominant advertising medium for that community. 

5 Murdoch, Rupert. “Journalism and Freedom – Government assistance is a greater threat to the 

press than any new technology.” Wall Street Journal 8 Dec. 2009 


In many cases, media that compete with the local newspaper do not have a 

structure that allow them to provide a multiplatform advertising solution that 

efficiently reaches a majority of the local population, with the right message (and 

often time-based messages). See Chapter 9 - Competition. 

The Internet provides a platform to converge print, audio and video in a timesensitive 

manner that allows consumers and advertisers (both big and small) to 

interact efficiently and effectively. Newspapers have a significant advantage over 

other media because they have the infrastructure to efficiently gather and 

distribute news and advertising that best serves the community. Providing 

organic content such as news and advertising attracts an audience. Additionally, 

third-party sources, which are often competitors such as search engines, or web 

portals, provide content (see Chapter 10 – Advertising Inventory). 

BCG Matrix of Newspaper Products 

The starting point for a newspaper to turnaround is to recognize where there 

products are in the product lifestyle and then update their product suite 

accordingly. The following matrix illustrates a typical newspaper’s product 

lifecycle: introduction, growth, maturity and decline. Note the gaping hole 

between paid daily print and non-print products (the size of the circle represents 

revenue). One newspaper executive half-jokingly referred to print as the “cash 

calf.” 

Figure 5 - Boston Consulting Group product matrix 

Newspaper Product Growth 

Consider the following diagram that illustrates how newspapers must offset a 

rapid decline in print revenue with a rapid increase in non-print revenue. 


Figure 6 - Newspaper product growth 

Internet 

Mobile 

Email newsletters 

Print circulation 

Print advertising 

(including classifieds) 

Non-Print Quality 

In addition, for many publications the non-print product quality non-print is 

significantly less than that of print. It is better not to have a product (such as a 

website or email newsletter) that is of lower quality than your core product. 

Build a great website or just have a simple (and high quality) landing page that 

provides basic information such as contact information about your publication. 

Marketing material should be clear and of the highest quality. 

Newspapers are media companies; thus, they must convince the advertisers that 

they can promote them well. However by having have sloppy (or no) media kits, 

price sheets, business cards, etc. many newspapers do a poor job at promoting 

themselves. Sales and marketing material is no place to cut corners. Get this 

right. Have an experienced consultant help with the overall offering, spend time 

on the design and send it out to a professional printer (not on your old black 

and white photocopier). Even if you have low-quality products, “fake it until you 

make it.” At least this way you can get the sale and related revenue to improve 

your products. 

The primary objective of your new products is to get readers to your brand 

every day or even multiple times per day. This is applicable to non-daily print 

publications, which have the opportunity to become daily publications through a 

combination of print, Internet, mobile and email newsletter platforms. Further, 

most newspaper readers are geographically targeted. Specifically, they should be 

local readers, which are the most relevant to your advertisers. See Chapter 5 – 

Place (Advertising Market). 

Increase Services to Advertisers 

Assuming that you have a platform that provides most advertising opportunities 

that local businesses could want, the next step is to provide to these small 

businesses desperately needed advertising and marketing services. The starting 

price for such consulting, graphic design and fulfillment services runs in the 

thousands of dollars per month – and this does not include the cost of the actual 

advertising. Small businesses represent the most underserved market. Their 


advertising budgets start at only a few hundred dollars and at the highest are 

only few thousand dollars. 

We recommend that you focus on the small business market segment by 

becoming a one-stop advertising solution or “one throat to choke” to use a 

popular expression amongst Silicon Valley technology companies. The 

convergence of print, Internet, email and mobile creates local newspapers’ 

biggest advantage – the ability to provide a comprehensive solution 

encompassing most advertising distribution. This is even more effective if your 

market is large enough to a category-specific sales structure. For instance, a 

newspaper real estate expert focuses only on advising (and selling to) real estate 

agents, brokers and mortgage companies while a food and beverage expert 

focuses on grocery stores, restaurants, coffee shops and bars. See Chapter 11 - 

Financials. 

Tip: Focus 

Focusing on one thing will solve your problems. We recommend focusing on 

the advertising needs of businesses in the community rather than focusing on 

the classifieds and readership needs of the overall population. Consider the 

following 20,000-population community with 500 active businesses: 

Local Readers Local Businesses 

20,000-community population. 

Readers are fickle. They jump around 

the Internet on a whim. They lack 

loyalty (won’t even pay for a print 

subscription provided at a bargain 

price) 

Paid content: 200 (approximately 1% 

of the 20,000 population) that are 

willing to pay a few dollars for 

Internet access. 7 

Table 1 - Easiest to focus on advertisers 

500 businesses are likely to be 

advertisers 6 

100 (80/20 rule: 20% represent 80% of 

advertising dollars) 

Give away free – focus on giving your 

advertisers maximum reach in the 

community. 

Prioritizing Expansion 

It is critical to prioritize your expansion. From the matrix below, consider first 

maximizing penetration with existing products into existing markets. Second, 

increase your product suite to serve the same markets. Third, go after new 

6 Internal estimates based on national average of 1.5 business that have employees for every 100 

people and an additional 1.0 businesses that do not have employees but are professionally run 

organizations (such as real estate agents, plumbers, accountants, etc.) Thus 2.5 per 100 people 

represent the likely market of advertisers. 

7 Based on experience we have had with newspapers 


markets (especially in surrounding communities). Avoid diversification, the 

fourth quadrant. Many newspaper companies have purchased unrelated 

companies, including web technology companies that have nothing to do with 

their core markets or business. Some may applaud these newspaper companies 

because they assume that newspapers will soon cease to exist and that these 

diversification efforts will ensure survival of the original entity. We recommend 

the exact opposite. Newspapers need to focus on their core competencies. 

Diversification is a waste of time, money and is a tremendous distraction. 

Moreover, it demonstrates to employees and other stakeholders that 

management lacks confidence in the core business. Follow Mark Twain’s advice: 

“Put all your eggs in one basket and then watch that basket!” 

MARKETS 

Existing 

New 

Figure 7 - Ansoff Matrix 

Existing 

Market 

Penetration 

(best) 

Market 

Development 

(3rd best) 

PRODUCTS 

New 

Product 

Development 

(2nd best) 

Diversification 

(avoid) 

Changing the Newspaper Culture 

Several newspaper executives pointed out that the culture of the industry must 

change in order for the industry to recover. Having given this considerable 

thought, I would argue the opposite. The culture of a newspaper (and the 

industry as a whole) will change when signs of success appear from the 

introduction and execution of a clear and sustainable business plan. Employees 

want to see something that makes sense and has tangible results. 

Following the business cycle, a majority of the time most organizations expand 

and then contract during economic downturns. They focus on revenue growth 

and expense reduction, respectively. This results in strong companies with 

overall long-term profit growth. Following an inordinate period of excessive 

profits experience by newspapers and the economy as a whole, newspapers are 

now experiencing a protracted period of decline. The current economic 

recession magnifies this creating a dangerous situation. Constant expense 

reduction schemes and apparently never-ending declines in circulation, 

classifieds and display advertising have exhausted most newspapers and the 

industry as a whole (newspaper associations, suppliers, investors, etc.) The 

culture of entitlement to an advertiser’s business has shifted to a defensive 

culture. 


Many newspaper executives are veterans of the industry, options outside the 

industry are rather bleak. Thus, self-preservation dominates the culture. Thus, 

while changing will be difficult, it is certainly possible – and must happen. 

Significant change must always come from the very top, then from management 

and finally the rank and file will follow along. 

Our prescription for this follows, but it will only truly happen with an 

acceleration of retail advertising sales. When your motivated and well-armed 

(and well-paid) sales team starts bringing in new business, everyone will take 

notice. The culture of the newspaper will quickly improve with signs of success 

from an enhanced and sustainable business model. Realization by management 

and employees that success is in their personal interest will further accelerate 

improvement. 

Small and Nimble = Profitable 

The landscape has quickly changed. Before the Internet, mobile and email and 

low-cost production technologies, delivering yesterday’s news could require 

dozens or even 100 or more employees and, in most cases, an expensive 

pressroom. Now, a one or two person team can create a daily newspaper with 

today’s news plus a weekly print edition – and this can be very profitable. 

Tip: Getting business, doing business 

While we have customers who run their entire organization alone (with a few 

stringers and contract help), we recommend a minimum two person team. In 

this model, one person can focus on getting the business (selling) while another 

focuses on doing the business (operations). An ideal compensation technique is 

to have one person contribute a majority of the financing and retain all or most 

equity, while the other receives a majority of the profits/dividends. The latter 

person, however, has little or no equity in the organization. This apparent 

partnership disparity works well because one party has a stake in short-term 

results influence, albeit the influence is revocable, while the other maintains 

ultimate control over the organization. As you will see in the last two chapters of 

this book, retaining equity can be far more lucrative than taking the profits. 

Summary 

Much of the industry’s problems result from a lack of focus. Newspaper 

executives have been chasing every idea imaginable. Disregarding unsuccessful 

ideas allows newspaper executives to focus on the one thing they need to do: sell 

advertising to local small businesses. 

The Internet, with only 15 years or so of history, is comparatively new. The 

business model, especially the advertising model, of the Internet has developed 

enough that we can leverage this model into a business plan that newspaper 

executives can execute on immediately. 


Furthermore, few consumers and business owners in the community want to see 

their local newspaper disappear; they simply want to access the news and other 

newspaper services using technologies that better fit their lifestyle. During these 

difficult times, newspapers should leverage their brand equity in their 

community as part of their turnaround plan. 

In particular, newspapers are especially important to local business owners 

whose options for promoting their products and services are typically limited to 

direct mail, yellow page directories and newspapers. Not only can newspapers 

fulfill the advertising needs, but they can also be trusted advisors to local 

businesses managers. 

Building and executing on this opportunity requires focus, which means that 

newspaper executives should resist the temptation to chase after unproven ideas. 

In Chapter 8 – Selling, you will see a focused, quantifiable sales strategy with 

matrices all the way down to the targeted daily number of sales phone calls and 

on-site visits. 


Worksheet 

Plot your newspaper products below. Use arrows to represent where each 

product is going. The size of the circle with a product represents the product’s 

significance (revenue/profits, strategic relevance, etc.) Use figure 5 as an 

example. 

Stars 

Cash Cows 

Figure 8 - BCG Matrix for your publication 

Question Marks 


Dogs

Part II - Integrating New With Old 

Media 

Part II is in a project plan format, though be sure to periodically review each 

component. Specifically, we follow the four Ps of marketing: products, place, 

pricing and promotion. It is very possible, indeed recommended, to implement 

all four chapters within a couple weeks. 


Chapter 4 - Products 

Normally a business proposal would be marketing oriented, that is to first 

evaluate and forecast the needs of a particular audience and the estimated price 

consumers are willing to pay for this solution. Then the company designs and 

builds the products to satisfy the market need. Products also need to fulfill the 

needs, primarily profits, of the entire value chain: originator, distribution channel 

(such as retail outlets), etc. Pricing, placement and promotion completes the 

product development model. Contrary to this approach, Part II flows best by 

first defining the products and then demonstrating how these products fulfill the 

market need. 

Expanding from one product to many products can be challenging, but it is 

possible and, frankly, for newspapers it must happen quickly. The primary 

platforms are print, web and mobile/wireless. Arguably, an email newsletter is 

also a platform, it has distinct value and advertising, however, it is more of a 

complimentary part of your website and, to some extent, mobile. Email 

newsletters are also branding tools that increase top-of-mind awareness. 

Platforms are comprised of components such as news/editorial, business 

directory and classifieds. 

Newspaper Components 

An easy way to understand this model is to recognize that all platforms (print, 

web and mobile) contain the same components: news/editorial, calendar, 

classifieds and business listings and other advertising. These were the same 

components from 200 years ago only now there are enhancements to the value 

offered (such as color, video, feedback/user generated content, etc.). 

Component: News/Editorial 

Clearly, this is a significant part of why readers pay for the newspaper. This also 

drives the traffic to an audience that advertisers want to reach. Interestingly, the 

structure of the content has changed little in the last 100 years: headline, subtitle 

(optional), story/text and one ore more photo/image. This component also 

includes weather and calendar. The Internet and mobile platforms provide a 

distinct opportunity to deliver weather real time. 

Component: Classifieds 

Classified advertisements are typically time-sensitive advertisements. They 

usually represent things that people want to sell or buy or they are placed by 

businesses that wish to hire employees. Readers (private parties) and businesses 

(commercial) place these ads. A detailed analysis of print, online and mobile 

classifieds placement and display can be found in Appendix A - Classifieds. 

Component: Advertising, Including Business Listings 


Creating branding, or top of mind awareness, of an organization’s, product or 

service is the primary objective of most advertising. Place this advertising 

throughout all platforms, preferably in locations that will provide the best value 

(real estate section for real estate agents, mortgage bankers, for instance). 

Internet, email and mobile technologies increase the value of advertising by 

increasing time sensitivity (such as a mid-morning delivering of a lunch special 

announcement on mobile and email newsletter platforms). 

Business listings have some branding benefits but function primarily to help 

readers that are searching for business based on an understood need (such as 

needing a plumber right away). A newspaper’s Internet business 

directory/yellow pages component competes directly with print yellow pages. In 

fact, with the technologies associated with the Internet and mobile, it is feasible 

for newspapers to displace the print yellow pages industry. 

Newspaper Platforms 

The components shared amongst various platforms are similar. In fact, 

intrinsically they have changed little during the last hundred years. The platforms 

are also quite straightforward. The following diagram may help illustrate how 

much of your content/components are shared amongst platforms, but there is 

also something unique about each platform, thus readers would want to visit 

more than one or preferably all platforms. Likewise, advertisers should recognize 

the value of a multi-platform advertising campaign as it does not matter where 

the viewer sees the advertisement. 

Figure 9 – Commonality and unique value of platforms and components 

Platform: Print 

I am amazed at how little print has changed during the last three hundred years. 

Granted, the process of creating print has improved significantly. In recent 

memory, it may have taken dozens or even hundreds of people to create even a 

small publication. However, the readers do not care about how much effort goes 

into a product or the efficiencies gained from new technologies. From their 

perspective, the print platform today is still yesterday’s news. In fact, from the 

perspective of readers and advertisers, the only improvements to print are color 

and photos (and photos starting appearing in newspapers more than 100 years 


ago). Print is certainly important and will be around for at least the next few 

years. Print creates credibility with readers and advertisers. 

Figure 10: Same for newspaper giants but 100 years later? 8 

Note: Angry sergeant 

One customer ran high-quality print advertisement featuring a proud, cleanshaven 

Marine. The newspaper management checked and rechecked everything, 

especially color features. Late in the day after printing and delivering more than 

30,000 copies of the advertisement, the Marine Corp sergeant in charge of the 

project burst into their office and went on a tirade about how his marines do not 

have bloodshot eyes. A small flaw in the colors did in fact create the appearance 

that their model marine had been out too late the night before. 

One of the many benefits of the Internet is that photos, stories and advertising 

can quickly and cost-effectively changed, solving one of the biggest problems 

with print. 

Print Frequency 

Maintain a paid print circulation model while it is profitable and strategic. 

Regardless, always maintain a daily or near daily online presence. At some point, 

home delivery of a daily paid publication will no longer be profitable. Then 

transition to paid five days per week (but at the same subscription rate). When 

this frequency is no longer profitable, then transition to three days per week and 

then finally to one or two days per week. When paid is no longer viable, then 

switch to free weekly or monthly but always with a daily online and mobile 

presence supplemented by a daily or twice daily email newsletter. This model 

8 New York Times, 15 Apr. 1912. 


enables your publication to maintain much of the same subscription revenue and, 

most importantly, the same monthly advertising commitment from local 

businesses. 

A weekly publication is ideal for the near future. In addition to serving news and 

advertising, this frequency specifically enables newspapers to salvage and 

possibly expand classifieds, which typically have a shelf life of one week. The last 

step is to decrease frequency to monthly or even quarterly (common with 

magazine-type publications). 

Note: Magazines are newspapers 

Many magazines are essentially a newspaper with a glossy cover. The content, 

advertising and the overall business model is remarkably similar to a newspaper. 

Indeed, several prominent magazines including The Economist refer to themselves 

as a “newspapers.” A magazine format can be an effective complement or even 

alternative to the common print publication. Seriously consider this when 

modifying your product mix. 

The reduction in print frequency should not be cause for alarm. Getting readers 

to your brand or products (print or non-print) every day or even multiple times 

each day is one of the primary objectives of this book. Properly implemented, 

this non-print advertising inventory can be far more valuable than print 

advertising revenue. Further, integrating print and non-print can make your 

brand sustainable long-term. In fact, Chapter 6 – Pricing demonstrates how your 

publication can actually increase advertising rates while the overall value of print 

decreases. 

Tip: Charging more, providing less 

Using the US Postal Service has not seemed to work well for many newspapers 

and advertisers. Traditionally newspapers have delivered yesterday’s news first 

thing in the morning, but with USPS yesterday’s news is not delivered until late 

afternoon or evening (and soon only five rather than six days per week). 

Moreover, delivery costs can be quite high and the increase of USPS prices has 

far exceeded inflation, by some estimates, inflation-adjusted prices have more 

than doubled. In addition, direct mail represents 22% of all advertising (see 

Chapter 9 – Competition). USPS by extension is a competitor, which is yet 

another reason to use alternative distribution channels. Stacks and racks seems 

to be better than mail (but of course only for non-paid). 

Advantages of Print 

Print has the following unique advantages over other media (also see Chapter 9 - 

Competition): 

1. Great at branding and helping advertisers find things they are not 

looking for 

2. Increases credibility with advertisers who are typically very familiar with 

the print platform but recognize that there is value in non-print. In 


particular, the printed copy is a valuable sales tool and thus increases the 

number of sales meetings (for instance by providing an opportunity for 

the salesperson to initiate a discussion with a perspective advertiser). 

Print also increases the close rate and the revenue per close. Indeed, 

during the early stages of business development we estimate that print 

comprises 75-90% of value of an advertising package (see Chapter 6 – 

Pricing). 

3. Print is an effective alternative to direct mail, which is approximately 

22% of all advertising (more than twice that of a typical newspaper). See 

Chapter 9 - Competition. 

4. Print is a free promotional tool for your entire brand (including nonprint). 

Place copies if your print publication in most high-traffic places 

to maximize advertising consumption as well as to create amongst local 

businesses awareness of your brand (print and non-print). 

Print is critical to the survival of newspapers. Publications that drop print 

typically experience a significant reduction in website traffic and advertising 

revenue. Furthermore, few online-only publications are successful. We predict 

that print will be around for a long time, even as a loss leader necessary to 

maximize the value non-print products. 

Note: Salvaging paid circulation revenue 

Shifting advertisers from print only to a combination of print and online is a 

primary objective. Properly implemented, this strategy will result in the 

advertising spend remaining constant, even increasing, while the print 

component decreases. 

Avoiding a decrease in circulation and revenue per subscriber is another 

objective. Newspapers benefit from the revenue generated by paid circulation. 

In addition, charging for access to printed content assures advertisers that their 

advertisements will be seen and readers that are willing to pay are more desirable. 

Thus, the revenue per impression for paid publications is typically significantly 

higher than that of non-paid publications. 

Note: Public notices 

Historically, newspapers that are lucky enough to be accredited have had a 

windfall from printing public notices at what are typically no-compete rates. 

Lately, this function has been under attack. Governments have pointed out that 

few people actually read these notices and that providing access to these via that 

web is more efficient. In fact, several businesses have sprung up supporting this 

model. Clearly providing these notices in print is their most profitable. 

Newspapers at risk of losing this print franchise should offer to provide these 

notices on their website, for a fee of course. 

Tip: Two front pages 

Many newspapers have switched from a broadsheet to a tabloid format. 

Customarily, newspapers have read from front to back, but in a tabloid format 


there is an option to have the newspaper read from front to center and then in 

reverse (by flipping the publication upside down) from back to center. This 

format is popular in Europe and it is gaining popularity in the U.S. The 

Bakersfield Californian is a notable example. They switched to this format 

following the recent downturn, which was especially severe in their part of 

California. 

This model provides an opportunity to have the reverse of your publications 

(back page) be the second front page, which could include classifieds and a few 

featured ads (such as the most and least expensive houses in town). Optionally 

include advertorial that emphasizes the value of advertising with your 

publication (including online and mobile). This sends a clear message to the 

readers and advertisers that classifieds is very important. 

Also, because the two-page center becomes the publication’s new back page and 

because these two pages are seen twice (once in each direction), the effective 

page exposures has increased by a factor of four plus the new second front page 

means that this simple change has increased your most valuable advertising 

space by a factor of five. 

One newspaper executive particularly likes this concept. He pointed out that 

freeloaders would often pickup the newspaper in retail stores, skim the back 

page, which is the sports section (and no advertising), and then return the 

publication to the shelf, thus depriving the newspaper of paid copy and 

advertising revenue. 

Keep in mind that the newsroom and focus groups of readers will almost 

certainly not like the two-front page model. However, the data we have seen 

indicates that this initial perception is mostly discomfort with change and that 

the readers will quickly adapt. A consolation to newsroom would be to remove 

or minimize the amount of advertising on the primary front page. 

The two front pages newspaper model is ideal for advertising-only shopper 

publications that want expand into the community publication market. To enter 

the market shoppers only need to enhance their offering with community news 

(featured on one of their now two front pages), while they can maintain the 

same distribution channel and similar branding. 

Note: Chinese arbitrage 

In Beijing, a popular mostly-advertising newspaper sells for 1 yuan (about $0.15 

USD). Recently, the circulation of this publication skyrocketed. It turns out that 

the publication grew to a point that the recycled value of the publication was 

greater than 1 yuan. Resourceful Chinese quickly exploited this arbitrage 

opportunity by purchasing stacks of the publications and then immediately 

delivering them to a recycling center making a tidy profit. 

Platform: Website 


Websites have been around for nearly two decades. Some newspapers and 

newspaper companies have invested and lost an enormous amount of money. 

The lost money and distraction have driven many newspapers and newspaper 

companies into bankruptcy. Right now, newspapers that have little or no web 

presence are the most successful because in most instances, their revenue and 

profits have declined less than their more ‘progressive’ counterparts have. To 

put it another way, the pioneers have arrows in their backs. 

This said, few argue that newspapers should not pursue the Internet and other 

non-print platforms. Indeed, even the staunchest print advocates see the 

majority profits coming from print for no more than five to ten years (hopefully 

enough time for them to retire). 

Tip: Copy the leaders with deep pockets 

There is no reason to spend a significant amount of money on the design and 

layout of your publication. Just imitate those who did spend a lot of money: 

New York Times, Wall Street Journal, USA Today, CNN, etc. All newspaper 

platforms and components should very clean and concise. Readers go there for 

the components described above. Advertisers do not want to be associated with 

poor design and clutter. You want to compel readers to go to your website daily 

or even multiple times per day; thus, refresh content frequently (preferably daily, 

even for weekly print publications). In fact, leaving content on your website for 

too long enables readers to get lazy on not check your website everyday. 

Some valuable website features include breaking/featured news (for the full 

breaking news process see Chapter 10 - Advertising Inventory). Make sure to 

clearly present components and especially be sure to take care of advertisers. We 

strongly recommend against having ad words on your website as this just clutters 

your website and it contributes to click fraud. Also, avoid all references to 

competition. This includes Google Ad Words, Google/Yahoo! search buttons, 

Monster, etc. See Chapter 9 - Competition. 

Tip: Video enhanced content 

The quality of video taken from cameras that cost only a couple hundred dollars 

is quite impressive. Even amateur video drive can create significant traffic, which 

is particularly. In fact, we project that without video newspapers will not have 

adequate traffic to meet advertisers’ demand (see Chapter 10 - Advertising 

Inventory). 

Video is also strategic because it positions with advertisers and readers your 

publication as alternative to the local television broadcast station. One tip on 

gaining video advertising for pre/post-roll commercials and business directory 

listings is to have advertisers give you the digital file of their professionally 

created television commercial. Typically, this content belongs to the advertiser 

who has unrestricted legal rights. Of course, there is no reason to provide the 


same courtesy to your competition. Ensure that any video advertising content 

that your staff creates is not compatible with the platforms of your competition. 

Convert video to a web-friendly format and make sure to embed it with pre, 

post and optionally mid-roll advertising ensuring maximum value for your 

customers. Local video ensures local targeting. When combined with an 

intensive advertising exposure, the revenue per impression should be very high. 

Keep in mind that video traffic can be hundreds even thousands of times more 

bandwidth intensive than web pages. Thus, serve video and other large files 

from a CDN (content delivery network), a global network comprised of 

hundreds or thousands of servers. These systems stream video by serving the 

files simultaneously from multiple servers that are close to the viewer. A 

properly functioning CDN will deliver video significantly faster than through 

alternatives while also reducing the load on your CMS (content management 

system). 

Note: PDF of newspaper 

Many newspapers place a PDF representing a digital replica of the newspaper on 

their website. By charging even a nominal amount for access, newspapers 

sometimes can count these subscribers in their circulation figures. In some cases, 

they can count someone who subscribes to print and online as two subscribers, 

essentially double counting subscribers. This may be a good strategy to mask 

print circulation declines, but we do not think this is the means to long-term 

success. PDFs render slowly on websites. They are horrible on mobile web 

browsers and they may not render at all on email newsletters or in mobile 

applications (such as iPhones). Unlike with well-designed and produced banner 

and video advertising, we have never heard advertisers getting excited about 

PDFs. 

Tip: Website classifieds order entry and display 

Classified ads are great way to enhance all of your platforms. While Internet 

classifieds, namely from craigslist, have significantly damaged newspapers, new 

technologies provide a valuable opportunity to increase classifieds revenue and 

overall community reach. Compared with traditional methods (telephone, walk 

in, etc.), a well designed and promoted Internet based classifieds order entry 

system increases the number of print ads received, substantially increases the 

revenue per ad and substantially decreases the cost of processing these ads. 

Unlike with print, the incremental cost of classifieds on the web is practically 

zero. This said you do not want to have the web cannibalize your print classified 

ads. There are distinct advantages of print classifieds. It is worth considering 

proving very low-cost or even free classified ads on your website because this 

generates some of the most valuable banner advertising inventory on the 

Internet – a targeted audience that is local and looking at vehicles (as in the 

image below). In addition, the free online ads approach works well at upselling 

to print classified advertisements. For a comprehensive analysis of this topic, see 

Appendix C – Classifieds. 


Figure 11 - Print classifieds order entry and Internet classifieds display 

Tip: Targeted banner ads 

Identify and quantify the traffic and advertising opportunity of each major 

business category: real estate, transportation, employment, food and beverage, 

etc. Then in your banner-advertising server create zones around each of these 

categories and apply these zones across related components on all platforms. 

This maximizes the value created for your advertiser and it creates a better 

impression for your readers since the advertising is relevant to the content. 

Business Directory/Internet Yellow Pages 

The print business directory/yellow pages industry is collapsing (see Chapter 9 - 

Competition). There is an opportunity for newspapers to sweep this market. 

Google has capitalized on the search aspect of this industry, becoming in only a 

few years a company worth more than $100 billion. Since most of what we do 

and spend is with local businesses (see Chapter 5 - Place (Advertising Market)), a 

well-created and maintained business directory should create more value for 

your advertisers than spending money on Google or print business directory 

publications. Displacing the revenue-generating model of Google in your 

community is quite feasible. 

A business directory is one of the easiest components to add to your website. 

Businesses value this, especially considering that more than 50% of businesses 

do not have a website. We recommend that you keep the functionality simple: 


company description, contact information, hours of operation, map, menu (for 

restaurants), pictures and (optionally and preferably at an extra charge) video. 

Figure 12 - Example business directory listing 

Tip: Coupons and specials 

All platforms (print, web, mobile and email newsletters) provide unique 

opportunities for coupons and discounts. A coupon section of your business 

directory makes organizing and maintaining this easy. 

Caution: In a famous US Supreme Court case related to branding and 

trademarks, Justices ruled that “yellow pages” is a generic name and is thus not 

entitled to trademark protection. However, this is not the case in some countries 

including the United Kingdom. Check with your legal council to minimize the 

risk of intellectual property infringement. 

Caution: Comments next to editorial are a great way to get the community 

involved in local events (and it drives traffic); however, comments next to 

business listings will likely result in many problems. In addition to pranksters 

and SPAM posters making a mess of your website, unscrupulous business 

people will leave positive comments about their business and negative 

comments about their competitors. Refereeing this will be time consuming and 

may cause you to compromise journalistic integrity. If a business wants to look 

good on your website, then they should advertise. If a person in the community 

has something negative to say about a business, they should write a letter to the 

editor. 


Platform: Mobile/Wireless 

In three to five years, the mobile platform will be more valuable to newspapers 

than will be the Internet (prediction by the author). Mobile applications create a 

tremendous opportunity for newspapers. These devices enable the user to carry 

with them an up-to-date version of the entire newspaper. The experience 

viewing content on mobile applications is fast and it is better than viewing 

content on a traditional WAP (wireless application protocol) because there is no 

browser; thus, the reader does not see the clutter common to many websites. 

Viewing web pages on a mobile device, which is a fraction of the size of a typical 

computer monitor, amplifies this clutter. 

Mobile Applications (Apple’s iPhone/iTouch and Android) 

Apple has gathered the attention of many publishers with the iPhone and future 

iPad tablet. As of November 2009, there are more than 140,000 iPhone 

applications and there are approximately 30 million iPhone or iTouch devices in 

the US. We estimate that approximately about 8% of the US population owns 

and iPhone or iTouch and this will likely continue to increase. 

Note: Personal experience with mobile applications 

For more than ten years, I religiously read the print version of Wall Street 

Journal. Typically, I would read this publication in the morning, during lunch or 

dinner and I would always catch up on any unread portions at the end of the 

week. During the last few years, I was outside of the US a majority of the time 

and so I could not keep up with the printed copies. Since I spend most of my 

working (indeed waking) hours working on computers and the Internet, I found 

reading the Internet version of the Journal unappealing. This was not relaxing 

like reading the print version. However, once I got the mobile application 

version on my iPhone I was hooked. Before getting out of bed, I would read a 

few stories. During breakfast, lunch and dinner and anytime I had a free 

moment I would catch up on reading. There is no question that the print version 

of the publication is easier on the eyes; however, it is nowhere nearly as 

convenient as the mobile version. 

This experience convinced me to create a development team specifically for 

mobile applications platforms. Our preliminary results are overwhelmingly 

positive: the mobile applications platform rapidly penetrates the targeted market. 

Further, readers prefer this model as do advertisers who are starting to see local 

residents redeem virtual coupons on their phone. 

One noteworthy example of the success of the mobile applications platform 

(specifically an iPhone application) is a newspaper in the northern part of the 

San Francisco Bay Area. They heavily promoted their iPhone application and 

loaded it with content including coupons and other discounts. Of a 30,000 

person total market, with approximately 8% penetration or 2400 iPhone/iTouch 

users, within six weeks they had 350 downloads, or approximately 15% market 

share. It is likely that this application has the highest usage of all mobile 

applications in this market. 


Note: 12-year-old making dining decisions 

One of our customers said that his 12-year-old son has an iPhone, which he 

would use to find coupons for dinner. At the end of each month, his son would 

tally up the savings, net this against his mobile telephone bill for payment. Smart 

kid! 

Figure 13 - Smartphone leader 

Note: WAP and SMS/text messaging 

Your website should be 100% WAP compatible. Unfortunately, readers have do 

not spend a significant amount of time browsing the Internet on their mobile 

phones. The Internet is cluttered, does not format well for small mobile screens, 

it is slow and the results can be unpredictable. Mobile applications resolve this 

issue. 

SMS/text messaging is also an unsuitable platform for disseminating news and 

advertising. It is very expensive to send and receive message and, with messages 

limited to only 140 characters, there is little room for content and advertising. 

To give you an idea of just how small this, the following breaking news message 

is exactly 140 characters: 

[Mrs. Jones's cat stuck in a tree. Fire department dispatched. 

Sponsored by the California Humane Society. www.welikepets.com. 415-555- 

1212.] – note that this does not even have the required unsubscribe information. 

The administration is another headache with SMS. A process must be created to 

capture and manage mobile phone numbers and to provide features and support 

to ensure that users can unsubscribe. In fact, we have found that many user 

unsubscribe to SMS services after the novelty of this service wears off, especially 

if they have been awaken by messages such as at odd hours or while taking a nap 


during normal daylight hours. 

Platform: Email Newsletter 

Email newsletters enable newspapers to fabricate a completely new product with 

a distinct advertising opportunity that also drives a significant amount of traffic 

to all platforms (website and mobile as well as the print platform by ensuring top 

of mind awareness). The edition should be comprised of news with photos (but 

teasers only – just the first couple of sentences) and other content such as 

calendar, weather, classifieds and, of course, advertising. Preferably, the 

advertising is time-sensitive, such as a lunch or dinner discount coupon that is 

valid that day only. 

To build their subscription base, add the email address of everyone they can find, 

and possibly use scraping tools to harvest email addresses from the websites of 

businesses in their community. As quickly as possible, subscribe to the email 

newsletter all business owners in the community (see Inside Sales Section of 

Chapter 8 - Selling). Use website promotions and specials offers such as 

drawings to obtain additional subscribers. Integrating registration for website 

and classifieds access also helps to increase market penetration. However, the 

best way to build a subscription database is to have a great product – just like 

your print newspaper. 

Weekly print publications should send out a daily email newsletter, even if they 

do not have new stories. Spreading out the week’s stories with 2-5 per email 

newsletter is adequate as long as the advertising changes frequently, preferably 

daily. In particular, having a daily blowout special is the single best way to 

maximize performance (view and click through rates). Suddenly, a weekly 

newspaper is now a daily newspaper: daily online edition with a daily email 

newsletter, supplemented with a weekly print publication. This is the perfect 

opportunity for small newspapers. 

Tip: Morning and evening newspaper 

After several months of sending out a morning email newsletter, one customer 

sent a survey to all recipients. The results were overwhelmingly positive and they 

gave us insight into additional opportunities. One finding was that more than 

65% of respondents wanted two or more email newsletters each day. When 

thinking back that only a few years ago, many communities had a morning 

newspaper and an evening newspaper, this sounded reasonable. When we 

implemented the second email newsletter (the morning newsletter is delivered 

around 4:00 or 5:00 am and the evening newsletter is delivered around 2pm), we 

found that the evening newsletter performed better, that is had a higher view 

and click through rate, than the morning newsletter. The biggest surprise was 

that when we implemented the second email newsletter that the performance of 

the morning newsletter actually increased. This supports our theory that 

newspapers also need top of mind awareness. Frequently getting any of your 

products in front of your readers will increase the value of all of your products. 


Emailed or telephone exploratory surveys are excellent product management 

and marketing management tools. This is particularly important when 

introducing new products or when entering new markets. 

Tip: Classifieds integration 

Integrating your email newsletter with classifieds is a no-brainer. Automatically 

add to your email newsletter advertisers who place a classifieds ad. Likewise, 

prompt users who view classifieds (and other web content) to register and add 

them to the email newsletter list. At the top of the first email, have a friendly 

message welcoming them to this FREE product and reminding them of key 

value points – such as coupons, breaking news, etc. and always allow them an 

opportunity to unsubscribe, thus meeting US federal CAN-SPAM requirements 

as well as the more stringent requirements of the major email service providers. 

Customizable classifieds is a very helpful and popular feature. Email newsletter 

subscribers can customize classifieds categories by keyword(s). For instance, 

entering key word “mercedes” and “automobiles” from the combo box will 

return all related ads from this category. Ditto for “nurse” and the 

“employment” combo box selection. 

Figure 14 - Sample email edition with reporting (right panel) 

Note: Better than Google and Yahoo! 


A professionally designed and implemented email newsletter will substantially 

increase traffic. For some of our weekly customers (with daily email newsletters), 

traffic has increase by more than three fold. Many customers have also pointed 

out that referrals from the email newsletter quickly exceed those created from 

major search engines. This is encouraging as this product may enable 

newspapers to reduce their dependence for traffic from search engine providers, 

which are often accused of not paying for the newspaper content they use and 

profit from. 

Tip: Blowout daily specials 

Blowout specials for lunch, dinner, entertainment, etc. are the best way to build 

a loyal (possibly addicted) email newsletter subscriber following. Of course, you 

need to make this work for the advertiser too. A great way to do this is to ask 

the advertiser which day of the week is the slowest and then suggest a blowout 

special, such as BOGO (buy one get one free), but it is good for that day only 

(as opposed to the weekend when they are usually busy). The direct costs of 

most restaurants is less than 30% so offering a 50% discount one day of the 

week will still increase their profits. More importantly, however, this strategy will 

entice people in the community to try the restaurant. 

A small discount, such as 10% off, will only marginally increase traffic and may 

not enable the business to reach critical mass. However, a strategy based on a 

blowout discount that packs the establishment but only one day per week (or 

month) creates the perception that it is a popular place to eat, thus increasing 

traffic on non-discount days. Further, the negative feelings caused by missing a 

discount may entice your readers to check when delivery of specials is expected. 

Caution: Critical email newsletter feature 

All email newsletters (and preferably website content) should have dual 

authorization security. With this feature, two people are required to send email 

blasts on behalf of the publication. One person can create an email newsletter, 

but they cannot send the newsletter. Another user with a separate login ID must 

log in to complete the transaction. Without this feature, a disgruntled employee 

could send unauthorized email newsletters, damaging the newspaper and 

creating litigation exposure. 

Note: Email newsletter potential 

During an SNPA (Southern Newspaper Publishers Association) meeting held in 

the middle of 2009, the publisher of a small rural Alabama publication stated 

that they earned $185k from their email newsletter during the prior year. When 

asked how, he simply stated that he “made it a priority of the publisher.” 


Other Platforms and Components 

Figure 15 - New York Times on the Apple iPad 

Amazon’s Kindle 

Figure 16 - Amazon's Kindle 


Apple’s iPad and Amazon’s Kindle have the potential of changing the means by 

which we consume the news. The technologies are still new; in fact, the iPad has 

yet to be released. One downside of the Kindle is that the entire newspaper has 

to be rendered in its entirety, which eliminates the opportunity for platformspecific 

or time sensitive advertising. Another significant downside is that 

Amazon and the wireless carriers collectively keep 2/3rds of the revenue, which 

only leaves 1/3 rd for the newspaper. 

Note: How many platforms should a newspaper support? 

As smart phones and tablet PCs are becoming more popular, the demand to 

deliver news to these device platforms is increasing. Plan a strategy to leverage 

your components (news, advertising and classifieds) and delivery it to these 

devices without re-inventing the wheel each time, especially with all the different 

screen sizes/devices. Ensure a good user experience. 

Your IT platform should be able to add new devices easily without additional 

work for the support staff or reporters. Although we suggest you to launch an 

app at a time, the IT platform should plan ensure it is compatible for other 

devices in the future. 

Note: Change in Consumption Behavior 

In the past, people would often read the newspaper in one or two sittings. With 

the Internet and mobile, it seems that the same content is consumed in small 

quantities throughout the day. 

Podcasting 

A Podcast is a simple recording of a piece of content that is published online. 

Like video, podcasting is a different way to deliver your news and advertising 

content. This platform takes advantage of the Internet to give your content 

broader distribution and make your publication more engaging to the public. To 

your readers and advertisers, podcasting also positions your publication as an 

alternative to radio. 

Readers can subscribe to podcasts and download the files in addition to seeing 

when a new podcast is available. Although making a podcast recording is easy, 

only a computer and microphone, production and publishing can be time 

consuming and it can be a distraction to your reporters and production team. 


Internet Personals 

Figure 17 - Newspaper-branded Internet personals 

Internet Personals have become much more popular as the stigma from finding 

dates online has worn off. In the past, newspapers often had a print section 

dedicated to personals. Owning and maintaining a “local newspaper” branded 

personal site is also possible and easy to do. The advantage is that all content 

would be local with the newspaper ability to retain advertisers that the big-name 

sites have taken away from newspapers. 

Discount Cards 

Discount cards are an efficient and effective way for businesses to attract local 

readers (and preferably discriminate against non-locals who would be unlikely to 

find a discount card or purchasing a discount card would not be cost effective). 

If possible, newspapers should always keep a number of ads spaces for 

businesses with coupons in all their properties and publish them regularly. It can 

be done every Sunday in print or every Tues/Thurs/Fri in your email newsletter. 

Coupons can increase the readership of the print edition, as well as your email 

newsletter and mobile editions. 

Restaurant Placemats 

Often restaurants will barter advertising space in exchange for advertisements on 

the placemats at their restaurant. This may seem silly as it is small money, but 

the advertising is good, there is a captive audience and this is competition to the 

newspaper. 

It may seem to be a bit silly to chase down ads on placements and other 

seemingly insignificant media, but the objective is to control local advertising 

supply and demand. In addition, these products can still be profitable. 


Platform and Component Comparison 

Media Unique Value Competitor 

Print TMC, circulars, physical 

Displaced 

Direct mail (22% of all 

samples 

advertising) 

Website Video, podcasting, realtime 

Radio, TV 

Email newsletter Breaking news, daily 

blow-out specials 

Direct mail, TV 

Business directory Video, coupons Print YP, search 

(Google, Yahoo) 

Mobile Real time, video TV, outdoor, magazines 

(while waiting) 

Table 2 - Competitor comparison 

Technologies 

The technology section was intentionally was placed at the end of the chapter 

because technology has a tendency distract and confuse. What is more important, 

SOAP, AJAX, Flash or getting new customers? The latter will pay your bills and 

motivate your staff. It is all about taking care of customers and growing 

revenues and profits. 

Note: Cloud Technologies 

There are several different types and definitions for technologies. The general 

concept is that someone else takes care of everything except exactly what you 

need. Google email, for instance, is a great product. You simply pay them for 

what you use (or accept their obnoxious Ad Words). 

One benefit of this is that it reduces complexity and the likelihood of massive 

failure such as your building burning down, taking with it your presses and your 

computer servers, which would include email, files and your website. 

Build vs. Buy 

Whether print or non-print products we are strong believers in outsourcing 

rather than producing the equipment and output internally. Building your 

products internally requires a large staff to both build and manage the project 

managers, analysts, programmers, testers, customer support, etc. It is a giant 

distraction from what should be a newspaper’s core competence: selling 

advertising. The code, servers, etc. have a tendency to “own” you rather than the 

other way around. Labor laws, severance costs and the psychological costs of 

letting employees go have a tendency to create an inflexible organization. 

Moreover, outside suppliers are held to a higher standard than are internal 

employees. 


It makes no more sense for a newspaper to create their own Internet and mobile 

products that it does for them to manufacture their own printing presses. In fact, 

given the lack of product maturity, the former can actually be more complicated 

than the latter – and certainly the stakes are higher. 

This said I am biased. I run a technology company. For the eight years prior to 

this, I was an information technology consultant to large companies so I see the 

world from the perspective of a supplier and consultant. 

Buying Tips: 

* A vendor that knows your industry will be far more effective than a vendor 

that has great technologies. Great programmers are easy to find. 

* Always avoid vendors that compete with you or could easily compete with you 

(such as Yahoo!, Google, Monster, etc. 

* Make sure to always keep access to your data and especially your brand. This 

reduces risk and switching costs. 


Worksheet: Product availability and quality 

Grade each of your components and platforms. Provide low grades if you are 

missing a platform or if it is low quality. Each platform and component, 

should be consistent quality (preferably grade ‘B’ or better). 

Components 

Components 

News/editorial 

Classifieds 

Business 

directory/ 

advertising 

Personals 

Average 

Platforms 

Print Web Mobile Email 

Newsletters 

Platforms 


Newsletters 


Average 

Average 

News/editorial A B- F C C+ 

Classifieds B C- F F C- 

Business 

directory/ 

advertising 

Personals 

C D F F D- 

n/a n/a n/a n/a n/a 

Average B C F D C- 

Table 3 - Example

Chapter 5 - Place (Advertising 

Market) 

We know that advertising works. Likely, at some point every large company has 

reduced their advertising budget one quarter only to see sales drop off the next. 

Small business people, however, often do not experience this because they are 

likely spending little or nothing on advertising. The complexities and expense 

related to working with an advertising agency can discourage (or bankrupt) most 

small businesses. Furthermore, to get the most value, one must evaluate 

numerous options: newspapers, radio, TV, business directories, direct mail, 

outdoor, Internet, etc. 

This chapter starts by helping newspapers quantify the size and composition of 

their advertising market, which is often significantly larger than people expect. 

Armed with this, management can set goals based on what is possible (rather 

than starting from their current situation). 

In addition, most of what we do is local, which is a market segment significantly 

underserved. Small business managers must recognize that advertising works; 

furthermore, the survival of their business likely depends on it. Then, the 

newspaper sales executive should help business managers calculate an 

advertising budget and measure results of their advertising expenditures. Lastly, 

small business managers should recognize that the complete advertising solution 

provided by the newspaper is the best place to spend all or most of their 

advertising budget. 

Total Market Opportunity 

Using the United States as an example, total advertising revenue in 2008 

represented approximately 2% of U.S. GDP or $288 billion. 9 There are 

approximately 300 million Americans, which means that annual advertising 

dollars spent average almost $1000 for every man, woman and child. The total 

addressable market (TAM) is the population of the areas that your products 

currently serve. Thus, if your TAM is 40,000, then the advertising opportunity in 

this market is approximately $40m (40,000 * $1000). Surprisingly, most 

newspaper executives are often unaware of the size of their market and 

especially the total advertising opportunity of their market. They often estimate 

that they control 20-30% of the total advertising market when the real number is 

often less than 10%. 

9 Advertising is approximately 2% of GDP. Galbi Think! 14 Sep. 2008 

(accessed 5 Jan 2010). $285Bn US Advertising 

Market (Source: Universal McCann, July 2008). In 2008, there were approximately 304m people 

(US Census Bureau). Thus, almost $1000 is spent on advertising for American. 


Recognizing that the market is large reduces the temptation for newspaper 

executives to expand until they have gained control of their primary market. 

Further, it marginalizes the excuse often given by sales executives that they have 

already closed all of the advertising deals that are possible. 

National and Regional Advertisers 

Most newspapers are not in a position to expend much effort pursuing national 

advertisers. Further, television and radio typically best served national and global 

advertisers because, unlike local advertisers, fewer of their impressions are 

wasted on non-buyers (namely businesses that are out too far from the 

consumer). See the Television section in Chapter 9 – Competition. 

National and regional advertisers typically prefer to advertise alongside local 

advertisers because association with small businesses creates a better impression 

and they recognize that local business people are most likely to do their due 

diligence when choosing local media. Thus, focus on the local advertisers -- the 

regional and national advertisers will come later. 

Local Advertising Opportunity 

We spend most of our lives and money within a few miles of home. Aside from 

direct mail, newspapers are the best at geographically targeting readers. Thus, 

they have the best opportunity to fulfill the advertising needs of local businesses. 

Moreover, the local market has fewer competitors and, by definition, it is closest 

to home. This makes your local market easier to defend than regional and 

national markets, which are dominated by a large number of national advertisers. 

Furthermore, readers who want to know about events in their community often 

perceive local advertising positively and they are genuinely interested in the 

success of local businesses. Remind advertisers of this when they venture out to 

non-local sources. 


Figure 18 - Most of what we do is local 10 

The map below represents an 8-mile radius from the center of communities with 

a local newspaper. As you can see, the area is quite small and defendable. 

Newspapers can exploit this by doing everything possible to lock in local 

advertisers in their community and so lock out competitors. 

10 Northcliffe Media, 19 Oct. 2007 . 

Other sources: DETR/ONS/Newspaper Society/The Future Foundation. (accessed 20 Feb 2010) 


Figure 19 - San Francisco/Sacramento area newspapers 11 

The local focus of most daily activities also marginalizes the value of search 

engines. People in your community should not be going to your site through a 

search engine referral, rather they should be in the habit of going there because 

you have the content and services that they want and there is enough new 

content to warrant visiting daily or even multiple times per day. Search engines 

can drive some traffic to your site, but most of this traffic is not local and is thus 

of little value to your advertisers. To emphasize this point, we have found that a 

daily (or twice daily) email newsletter can quickly become the #1 referrer to your 

website (better than Google, Yahoo, etc.). 

Tip: Avoid being everything to everyone 

It is better to provide a broad range products or services (advertising) to a small 

(local) audience than it is to provide a narrow range of products or services to a 

large (regional) audience. 

Tip: Lots of competition at the top 

11 Northern California, retrieved on 2 Mar 2010, from Google Maps 


The herds move toward the wealthy part of the market and markets with strong 

growth. California is a great example of a star market that has become unstable 

and is now dragging down several large media companies. 

Consider pursuing markets that are underserved. Even a market with a slowly 

declining population can be quite valuable, especially if the population starts to 

grow in the future. 

Local Advertising Market 

In addition to the overall advertising market being larger than most expect, we 

estimate that typical small businesses would benefit by increasing their 

advertising by two, possibly four fold. Furthermore, your primary competitors 

are disorganized and the value they are providing is quickly diminishing. 

Approximately 60% of advertising is for national brands, though most of what 

we do in our daily lives is local. If local advertising were to represent more like 

60% of total advertising, this would imply that your local advertising market 

would be approximately 50% higher. The difference is because most small 

businesses do not advertise enough. 

Figure 20 - Likely local advertising opportunity 12 

Convincing Local Advertisers 

We consistently hear that small business managers are not convinced that 

advertising is beneficial. First, remind them of the benefits of advertising (in fact, 

you may want to have these points in your media/sales kit – see Chapter 8 – 

Selling). 

Benefits of Advertising: 

1. More customers 

12 Internal estimate 

Small Business Advertising 

Expenditures 

Direct Mail - 28% Print YP - 7% 

Newspaper - 14% Under-advertising - 50% 


2. Increased frequency of existing customers 

3. Higher revenue per customer 

4. Lower costs because companies that advertise are perceived as healthy, 

growing companies and thus receive better terms from other 

stakeholders (employees, suppliers, investors, banks, etc.) 

5. Advertising also forces a business to focus on doing one thing well and 

building brand equity 

Leading Companies Advertise 

McDonalds is a world-renowned company. Throughout the world, their 

products and service are consistent. McDonalds uses a value-pricing model and 

their restaurants are well located in visible, high traffic areas with massive 

signage. Children are very familiar with their characters, toys, playgrounds, 

Happy Meals, etc. In spite all this, McDonalds still spends ~3-6% of sales on 

advertising (and this is after they receive significant discounts through global 

management and local advertising cooperatives) 13 

Yahoo! and Microsoft (even with near monopolies of operating system and 

office productivity software) spend a whopping 20% of revenues on 

advertising. 14 On the other hand, Walmart spends only around 0.4% of sales. 15 

With 11.3% of US retail market share 16, the reach their customers often enough 

that additional advertising may not bring much value. 

Advertising Impact 

Newspaper sales executives typically take a bottom up approach to selling 

advertising. They provide a demonstration of their advertising products and then 

proceed to get the business to make a purchase, working their way up. This has 

the effect of establishing in the mind of the business manager low advertising 

expectations, which is consistent with our premise that most small businesses 

spend on advertising only a fraction of what they should. 

A top-down approach is to start by helping the business owner identify and 

commit to an advertising budget and then convince them to shift from not 

advertising at all or using a piecemeal advertising approach to an effective and 

consistent advertising plan. The following is an advertising impact analysis of a 

modest advertising budget: 

13 Source: 2008 McDonalds SEC 10k. Sales, Advertising Budget, % of Revenue: 2008 $23.5b, 

$703.4m, 3.0%; 2007 $22.8b, $718.3m, 3.2%; 2006 $20.9b, $669.8m, 3.2%. An additional 1-5% of 

sales is spent by local restaurants on advertising (internal estimates). 

14 Associated Press, “Google sells ads, but won’t spend much on them.” 14 Oct. 2007. 

(accessed 27 Feb 2010) 

15 McKee, Steve. “What should you spend on advertising?” BusinessWeek. 10 Feb. 2009. 

http://www.businessweek.com/smallbiz/content/feb2009/sb20090210_165498.htm (accessed 20 

Feb. 2010) 

16 Kapner, Susanne. “Wal-Mart celebrates its growing market share.” Fortune 8 Jun. 2009. 

 

(accessed 27 Feb 2010) 


Low/No Advertising % 

(Monthly) 

Advertising Campaign Change 

Vistors served 1,340 1,367 2% 

Avg visits 2.50 2.55 2% 

Total meals served 3,350 3,485 

Avg spend/meal $ 15.00 $ 15.30 2% 

Total revenue 50,250 53,326 

Expenses * (45,062) (44,914) -2% 

Advertising expense - (1,600) 

EBITDA $ 5,189 $ 6,812 

* Advertising budget = 3% of revenues. Based on 25% 

variable/direct costs + $32,000 monthly fixed costs. Expense 

reduction as a percentage of total costs such as labor, supplies, 

financing, etc. Companies that advertise 

get better terms and are better valued in the community. 

Table 21 – Restaurant advertising budget 17 

As you can see, the impact of even a modest advertising budget can be quite 

significant. At the end of Chapter 12 – Valuation/Exit Strategy, we take this 

example a step further to demonstrate the impact this would have on the value 

of the restaurant. 

Tip: Break-even point 

Rather than trying to convince and advertiser that they will experience huge 

increases in revenues and profits, lower the perceived success threshold with a 

modest and simple break-even point. In the above example, for instance the 

advertiser would still breakeven with only a 1% increase in the various levers. 

Note: Cutting advertising budgets 

The fastest way to improve your bottom line today is to reduce your advertising 

budget. There is no doubt that many, possibly most small businesses and large 

corporations have tried this scheme. However, this has a negative impact on 

future profits so business people quickly realize that advertising is not a 

discretionary expense nor is it a luxury. 

Through marketing and sales, newspapers need to change the attitude of local 

businesses so that they accept the need for additional advertising and are willing 

to set a reasonable advertising budget (or sales/profits goal) and then work with 

your newspaper on the best way to spend it. 

Complete Advertising Solution 

Promote your newspaper as the least expensive and most effective way to 

advertise. Working with a marketing firm, ad agency or graphic design firm 

17 Internal estimates 


would cost thousands to tens of thousands of dollars per month – and this does 

not include the actual advertising costs. For decades, possibly centuries, 

newspapers have been local advertising experts. Make your newspaper the 

advertising experts so that your customers can focus on running their company. 

Unlike your newspaper, direct mail, print yellow pages, radio, TV, etc. have little 

or no Internet and mobile presence and thus no future as a long-term 

advertising strategy. Stay local. Stay with what works now and will work in the 

future. 

Tip: Ad agency and graphic design service fees 

Newspaper should charge an ad agency/graphic design fee unless the advertiser 

agrees to not use content you create with competitors. Of course, such exclusive 

arrangements must comply with local laws. 

Summary 

The advertising opportunity in your market is often much larger than you think 

because local advertisers typically spend far less on advertising than they should. 

Local newspapers can capitalize on this opportunity by focusing on their 

community to capture market share and increase the advertising base of local 

businesses. 


Worksheet – Size of your advertising market 

** 


Chapter 6 - Pricing 

Creating a pricing model is one of the most difficult tasks associated with 

running a company. The current pricing model that has evolved during the more 

than 400 years that print has existed needs to be supplemented with a simpler 

model that reflects a multiple-product business model that reflects the changes 

in media consumption (print decline compared with non-print growth). 

Focus the pricing on the advertiser’s ability and willingness to pay and 

marketplace alternatives (specifically, competition). Place more emphasis on the 

value provided to the advertiser and less on the newspaper’s internal costing 

structure and margin goals. Furthermore, keep everything very simple. The sales 

objective is have a high close rate, even if the revenue per close is low. Once a 

month the sales executive should return to the advertiser to check in and to 

attempt to increase the package level until the advertiser is spending 100% of 

their targeted advertising budget and all of the budget is spent with the 

newspaper (see Chapter 8 – Selling). 


Figure 22 - Complex rate cards confuse advertisers 

Figure 22, is a typical rate card. We have seen newspapers that have dozens or 

even a hundred or more such rate cards. This type of model attempts to price 

advertisements based on the amount of space allocated. Typically, the 

incremental cost of advertising decreases with larger ads as does the cost of each 

advertisement when running for a longer duration (or greater frequency – such 

as daily rather than one time per week). While this model may be perfectly 

reasonable and fair, it is very confusing to the advertiser and even the advertising 

sales executive. Confusion and lack of transparency will result in distraction and 

lost sales. I have personally been on sales calls where the advertiser is excited 

about making a purchase and then quickly loses interest when seeing the rate 

card. The sales executive was too busy calculating the cost of each permutation 

to recognize that the advertiser had lost interest. 

Lately, newspapers are changing quickly causing print-only advertising models to 

become obsolete. Circulation, frequency (days per week/month) and even the 

size of the newspaper must always be reflected in this pricing model. Further, 

word is quickly spreading that many newspapers are desperate and are thus 

accepting substantial discounts from ‘rack’ rates. 

Note Figure 24 – Advertiser’s value, the print portion of an advertisement 

purchase is declining over time. This illustrates why advertisers may be unwilling 

to make a long-term commitment to print-only advertisements, as they are 

rightly concerned about the diminishing value they will receive from their 

advertising spend. 

Non-Print Pricing 

Selling non-print separately is just as difficult. Many advertisers are mistrustful of 

the Internet, email and mobile advertising for many reasons. A primary reason is 

that they may not be regular users of the Internet, email or smart mobile phones. 

The technology is too new for them to have experienced much of a return. 

Furthermore, selling non-print and print separately can lead to an advertising 

campaign with inconsistent objectives, messaging, etc. The newspaper online 

and print teams may end up competing for the same advertiser’s business, 

essentially causing the newspaper to compete with itself. This will result in 

higher costs, less overall revenue and lost customers. 

While it may be difficult to lock advertisers into a long-term commitment for 

print advertising, it is unwise for the newspaper to attempt the same for nonprint 

advertisers as they will quickly be short-changed when the value provided 

by these media increase over time. For instance, it would be very difficult to 

convince a mobile advertiser that it is fair to triple the advertising rate – even if 

the value they are getting more than triples. 

Bundled/Packaged Programs 

Packaging print and non-print into a single and simple rate card is the only 

solution. The composition of an advertising bundle should reflect the changes in 


the consumption of media in your local community. Allocate advertising 

inventory to each package based on availability, value to the advertiser and your 

competitive position in each category. Flexible terms ensure that the 

composition of packages can be changed without violating your original 

agreement with the advertiser and to ensure that it will not be necessary to 

modify pricing with changes to each package. Preferably, you will not need to 

notify advertisers of minor changes to the composition of their package. You 

can also see from Figure 24 that, not only does the newspaper not have to adjust 

prices with changes in the composition of a package, but newspapers can 

periodically even increase prices to reflect the increase in value provided, 

inflation and the willingness of the advertiser to pay higher rates. 

Figure 23 - Packaged or bundled pricing 

Note: Advantages of package pricing 

1. Keep it simple: Package pricing is much easier to understand than 

pricing from a traditional rate card. This is especially applicable to nonprint 

advertising rates. 

2. Smoothes out seasonal, cyclical and sector fluctuations as well revenue 

variances from short and long months. 


3. It is much better for salespeople. Without the perpetual aspect of 

packages, every renewal is recognized as a “new sale.” This removes 

rewards for simple account management by forcing salespeople to 

increase revenue by acquiring new customers and by increasing the 

package level of existing customer. 

The objective is to get advertisers to commit to an advertising budget and 

maintain consistency and growth. This enables small business managers to focus 

on the non-marketing aspects of running their business. 

Figure 24 – Advertiser’s value/package composition over time 

Building a Pricing Model 

Start with a blank sheet of paper to price your products based on the willingness 

and sensitivity of each major customer category -- transportation, real estate, 

food & beverage, services, private party (classifieds), etc. 

The following two tables illustrate how to build and price your packages. 

Specifically, rate cards should be create for each category (real estate, food and 

beverage, transportation, retail, etc.) with 3-4 price points that should be 

acceptable to most businesses. Include upgrades and you can always revert to 

the traditional rate cards for specific requests. 

Package Pricing Example 

To put it all in perspective consider the following package pricing example for 

real estate starting with the advertising budget and value expected of typical 

customers in this category: 

Average 

Advertising Budget 

Part-time real estate agent $200 – 500 

Average full-time agent $400 – 1000 


Aggressive or top selling agent $800 – 2000 

Broker/property developer $1000 – 10,000+ 

Table 4 - Typical real estate advertiser budgets 

Keep in mind that the objective is to provide solutions for all or nearly all 

advertisers in your community. Otherwise, you create an opportunity for your 

competition. 

Based on the expected budget and your strength in the market, create a 

category-specific rate card. An example follows: 

Package Price 

Real estate mogul 

½ page branding ad in Saturday’s real estate section, 7x 

1/8th $1500 – 45% savings 

page ads, basic upsell listing in Internet/mobile 

YP/business directory (with priority placement), 20,000 

banner ad impressions 

Mansion 

¼ page branding ad in Saturday’s real estate section, 2x 

1/8 th page ads, basic upsell listing in Internet/mobile 

YP/business directory, 10,000 banner ad impressions 

Starter home 

¼ page branding ad in Saturday’s real estate section, 

basic upsell listing in Internet/mobile YP/business 

directory 

Condo 

Business card ad, basic upsell listing in Internet/mobile 

YP/business directory 

$850 – 40% savings 

$500 – 30% savings 

$250 – 25% savings 

Additional options: 

Video with business directory listing: $200 per month extra plus $300 for one 

hour with professional videographer. 

Coupons: $100 per month for up to three coupons. Extra charge for 

modifications. 

Package Discount: All advertisers that have been on a package for at least six 

consecutive months are entitled to a 10% discount on all advertising (packages 

not included) 

Discounts: 

10% discount valid through 6/30/2010 for all new advertisers that sign up for a 

package by 1/31/2010… (OR offer 12 th month for free.) 

Table 5 - Possible price points for real estate advertising packages 

Tip: Anchor pricing 

Notice how the highest-priced option is first. This is part of an anchoring 

strategy. The objective is to create a high price ‘anchor’ in their mind such that 

all other prices (and related values) are weighed accordingly. Armani uses this 


strategy at their retail outlets. When you walk into a store the first thing you see 

is a $2,000 suit (a rack suit nonetheless). Though you probably will not purchase 

the suit, you will feel great about walking out of there with a belt price at “only” 

$100. The best anchor can be found by helping the small business manager 

determine what they should budget for advertising and then reinforce this with 

credible examples of well-known companies that are also spending at this level 

(see Establishing an Advertising Budget, Part II -Chapter 5 - Place (Advertising 

Market)). There are no illusions or misrepresentations there. Small businesses 

should be spending more on advertising, likely a lot more. It is the responsibility 

and opportunity of the newspaper to help the businesses in their community. 

There are a few additional points about this table that are worth noting. First are 

the extra upsells offered (namely for video). Advertisers may have a higher, 

possibly much higher, advertising budget. Always ensure that your advertising 

products and inventory are adequate to fulfill the advertising needs of all your 

customers (see Chapter 10 - Advertising Inventory). Of course, also have your 

traditional print rate card handy so that your sales opportunities are unlimited. 

Another point is the 10% loyalty discount for long-term advertisers. Your 

benefit is that you get the consistency of the package cash flow and that you are 

giving a discount for products that probably should be discounted anyway 

(namely print if your circulation and/or page count has declined). 

Tip: Sense of urgency 

Make sure to create a sense of urgency, hence the temporary 10% discount but 

only if the advertiser makes a decision quickly. In the above example, the 

newspaper is weak in the real estate category - and the overall economy is weak. 

This temporary discount is a great way to reduce prices now but with an 

automatic price increase for a future date. Be sure to list the discount on a 

separate line item of each invoice so that the advertiser fully recognizes your 

generosity and will not be surprised when the discount expires and the price 

returns to normal. In addition, note that the term of this discount should be 

such that it will expire about the time that conditions will be more in your favor: 

your product and/or the economy for this category will have improved or you 

will have run your competition out of town. 

Most important is to have price points such that every serious businessperson 

with any advertising budget can make a decision on the spot, even if it is at a low 

price point. At these prices, a long sales cycle with multiple sales calls will kill 

your profits and demoralize your sales team. Price your packages to close the 

deal now and then upsell to a higher package with each subsequent sales visit. 

Tip: Blowout specials 

Legitimate/good discounts are content; they attract readers. To entice 

advertisers to provide significant discounts match the discount that an advertiser 

provides. For instance, if a restaurant advertiser places a 50% off coupon ad, 

then give them 50% off the cost of the advertisement. Of course, this must be a 


legitimate 50% discount redeemable with reasonable ease and few limitations. 

The objective is to leverage these coupons as a means of increasing readership. 

In addition, advise community businesses to avoid reducing prices during a bad 

economy. Doing so means that you must increase prices when the economy 

returns to normal (and likely your costs increase). A better way is to temporarily 

discount, including providing coupons or you can temporarily increase the value 

that you are providing but at no extra charge. 

Pricing to Market 

A discriminatory pricing model, or ‘pricing to market’ has less negative 

connotations, is a common and vital practice when building out your price 

points. Essentially, base your pricing model on the ability or willingness of your 

advertisers to pay (the economy of the category), the value your company 

provides to them and your relative strength in the market. This is exactly why 

the businessperson who purchased a last-minute non-stop ticket pays 

significantly more than the vacationing traveler who purchased a ticket with a 

connection several weeks or months in. In the scenario provided in Table 25, if 

you do not differentiate your prices, business will be lost in the real estate, food 

& beverages and, to a lesser extent, services categories. This business will be lost 

to your competition or it will fail to materialize because the price points are too 

high for the category. Moreover, your publication will experience a lost 

opportunity to increase profits in your strong category. The best model is to 

price slightly higher in your strong categories while discounting in your weak 

categories. 

Start with a with the pricing power category matrix below. Group advertisers 

into five to seven major categories based on type and especially based on 

competing niche products (such as an automobile trader magazine). Identify 

three or four columns that represent a cross section of the value your 

publication creates, the strength of your competition and the current economic 

impact of the targeted category. For each category, calculate the average of the 

columns (or weighted average if applicable). Reality should coincide with your 

overall sense of standing in each category: the value your newspaper provides as 

perceived by your advertisers to be above average (2.4/2.0), the overall economy 

is below average (1.4/2.0) and the strength of your newspapers relative to 

competitors is below average (1.6/2.0). In the example below, the situation of 

your publication is below average (1.8/2.0). An improved economy will help as 

will the continued weakening of your competitors (in all categories other than 

retail). 


Category Value NP 

provides 

Relative 

strength of 

competitor(s) 

Economic 

condition of 

the category 

Average 

Comments 

Real estate 2 1 1 1.3 Category is horrible and we have strong 

competition 

Transportation 3 1 2 2.0 We just launched a transportation 

module for web and mobile but so did 

the local automobile trader magazine 

Food & beverages 2 1 1 1.3 Depressed category and strong 

competition 

Retail 3 3 2 2.7 We provide great value, economy is 

average and we have no competition 

Services 2 1 2 1.7 Yellow pages directory is strong and 

aggressive 

Overall standing 2.4 1.4 1.6 1.8 Overall – below average conditions. 

Expect to have slightly lower prices 

Table 25 - Pricing power matrix for major categories 

Tip: Discriminating based on distance to advertiser 

If necessary, advertisers outside of your target area should get a discount to 

reflect the value you are providing relative to a distant competitor. Thus, if a 

publication in an adjoining town provides 100% value per impression while your 

publication only provides to this town 75% value, then your publication should 

be willing to charge 75% or less than what your competitor is charging in order 

to win the business. Circumstances such as pitting the advertiser against the 

competing publication, creating a defensive position, raiding your competitor’s 

territory or it is just plain profitable may justify charging even less (or more) than 

the value received by the advertiser. Of course, you will always want to take care 

of your local advertisers first and ensure that long-term you are not selling below 

your true cost of doing business. In addition, you want to ensure that your 

competitors do not reciprocate by raiding your territory. 

Inevitably, advertisers will share notes and rate cards. To minimize potential 

problems of pricing discrimination, just differentiate the composition and price 

points of each category. You can also make a discount temporary (for six to 12 

months, for instance) to reflect what may be a temporary economic situation or 

in anticipation of a competitor leaving the market. 

Tip: Revenue Sharing 

Successful revenue sharing models are uncommon. Administration is 

cumbersome and difficult to monitor. You really do not want to get too 

involved in the business of your advertisers. Revenue sharing also reduces the 

incentive for the advertiser to perform as the have less to lose if a promotion 


fails. We recommend avoiding revenue share agreements in favor of creating 

clear and quantifiable value for the advertiser and pricing accordingly. 

Barter with truly destitute advertisers. For instance, exchange the advertising for 

gift certificates, which are awarded as a promotion by your newspaper. The 

advertiser benefits by getting the advertising with no cash up front rather they 

are obligated to provide future services, possibly receiving additional cash along 

with the gift certificate. Another example is to give away gift certificates in a 

drawing to drive email newsletter circulation. The advertiser providing the gift 

certificates get exposure from the promotion. Be sure to discount the value by 

the expected redemption rate. $10,000 worth of gift certificates with an expected 

redemption rate of 40% should justify no more than $4,000 in advertising. 

Term of Contract 

Business directory/yellow pages providers typically require an annual contract 

with an expected renewal at the end of the term. An annual contract is required 

because this coincides with the life of the business directory. This, of course, is 

changing as many communities have as many as five business directories, which 

means that books only a few months old are often replaced with ‘new’ books 

from different providers. This racket is very frustrating and wasteful to local 

advertisers (see the business directory section of Chapter 9 - Competition). 

Newspapers have a unique advantage as they too can provide value in perpetuity, 

but because they can remove or change print, Internet and mobile 

advertisements within a few days an annual contract is not necessary. Thus, we 

recommend that newspapers provide this as a unique selling point when selling 

against business directory providers. Not requiring a long-term contract will 

shorten the sales cycle, increase the close rate and increase the revenue per sale. 

To fully capitalize on this opportunity we recommend the newspaper require a 

60-day cancellation notice because this discourages advertisers from reducing or 

canceling their advertising contract because of a brief downturn in business and 

it provides ample time for the newspaper management to address any problems 

before losing the advertiser. 

Summary 

Packages contracted in perpetuity are ideal for the newspaper because they 

reduce cash flow volatility and they simplify and increase accuracy of revenue 

forecasting. Moreover, re-pricing and re-selling the same advertiser every month 

or quarter is simply too expensive and distracting for your customer and sales 

team. The advertiser should be confident that they are treated fairly so they can 

focus on running their business. Your sale executives should focus on bringing 

in new advertisers and getting existing advertisers to increase to a higher-level 

package. 


Worksheet 

Evaluate your categories below. Refer to Table 5 - Possible price points for real 

estate advertising packages as an example. 

NP 

Category Value 

Real estate 

Transportation 

Food & beverages 

Retail 

Services 

Overall standing 

provides 

Relative 

strength of 

competitor(s) 

Economic 

condition of 

the category 

Average 

Comments 


Chapter 7 - Promotion 

The objective of promotion is to create as much enthusiasm and traffic around 

your products as possible while minimizing the attention given to your 

competitors. These promotion and cross-promotion strategies will help you 

quickly reach the tipping point where readers in your community are addicted to 

your brand; they must check one or more of your platforms every day or even 

multiple times per day. 

Tip: Keep calling yourself a “newspaper” 

There is no reason to spend time and effort rebranding your publication. Readers 

and advertisers recognize “newspaper,” even when the content is consumed on a 

non-print platform such as mobile or on your website. Indeed, we often hear 

statements like “I read my newspaper on the Internet.” The word “newspaper” is 

very credible and it differentiates your entity from Internet only websites, blogs, etc. 

While this is only semantics, any change may confuse your readers and advertisers 

and cause your perceived value to decline. 

Product Cross Promotion 

Promoting your products across all platforms is the most effective means of 

increasing traffic and building your overall brand. Furthermore, other than a 

small cost for creating the ads, it is free! 

Each platform and component should cross promote each integrate with the 

others and they should cross promote where possible while cannibalizing as little 

as possible. This intensifies the network effect of each product, increasing your 

newspaper’s overall value and increasing the value of each of the products so 

that the sum of the parts is greater than the whole. This network effect also 

substantially increases the barrier to entry for competitors. 

Figure 26 - Platform/component cross promotion 


Website cross promotes: 

Print 

- Unique print offering (circulars, samples, etc.) 

- Build branding so they subscribe/purchase 

- Print subscription offers 

Email newsletter 

- Promote with house banner ads 

- Force registration to build subscriber database 

- Promotes breaking news 

Business directory/Internet yellow pages 

- House banner ads 

- Banner ads direct traffic (if applicable) 

- Promotes coupon directory 

- Restaurant/business reviews 

Classifieds 


- Featured listings section 

Mobile 


- Same content, different platform – always present 

Email newsletter cross promotes: 

Print 

- Builds branding 

- Print subscription offer 

- Registrants become leads for telemarketing center (see note below) 

Website 

- Click throughs go to website 

- Premium content (if paid model) 



- Promotes coupon directory 

Classifieds 

- Featured listings section 

- Customized classifieds 

Mobile 

- Mobile-compatible format 

- House ads 

Business directory/Internet yellow pages cross promotes: 

Print 

- Service directory can be found in print 

Website 

- Drives traffic through website 


- Register for coupons 

Classifieds 

- Banner ads within each category (such as transportation for 


transportation classified ads) 

Mobile 


- Convenient for taking coupons to local businesses 

Classifieds cross promotes: 

Print 

- Format convenient to take with you 

Website 

- All traffic goes through website 



- House banner ads promoting each section 


- Register for customized classifieds 

Mobile 


Mobile: 

Print 

- Enhances brand awareness and unique benefit 

Website 

- More information, creates awareness 


- Banner ads direct traffic to service directory (if applicable) 


- Register for customized classifieds, breaking news, etc. 

Classifieds 


Print: 

Website 

- Supplementary information (video, archives, etc.) 


- Service directory refers to website for video ads 

- House print ads (targeting readers and businesses) 


- Register for customized classifieds and breaking news 

Classifieds 

- Refer to website for photos and to apply online (recruitment) 

Mobile 

- House ads 

Advertorial 

Mix in stories about each of your products. To minimize the negative effect 

from advertorial, only describe the functions and convenience of the product 

and be sure to mention your competitors. Limit self-promotion to a brief 

mention at the end of the story. 


Location, Location, Location 

Have your newspaper office in a high-traffic, highly visible area is a great way to 

gain extra exposure. The extra convenience will also help your community 

engage with your publication. Invite the public in to meet with journalists where 

they can tell their side of the story. This is great PR and it can be convenient for 

your sales and newsroom staff. This type of promotional opportunity is 

especially important because the newspaper has few non-newspaper advertising 

opportunities (see heading “Do not legitimize your competition” found at the 

end of this chapter). 

Figure 27 - Print business directory and newspaper kiosk in high-traffic location 

Figure 28 – The Apple brand is ubiquitous. The stores are a fun destination 

Have a kiosk in the local mall (possibly barter advertising for the space). Provide 

single-copy sales here or can give away complementary issues. It is a great place 

to sign up subscribers to print as well as help them with non-print, especially 

mobile phones. Moreover, there is extra visibility where newspapers want 

growth most – from young people and visibility with lots of shopping mall 

advertisers. 


Local Businesses 

Prioritize promoting your products and services to local businesses. They 

provide or with the rapid deterioration of circulation and classifieds revenue, will 

provide most of a newspaper’s revenue. Consider also that local business 

managers are the most receptive to your message, as they are the direct 

beneficiaries of advertising as well as the related support that newspapers 

provide to the community. 

Reaching this audience is not particularly difficult or expensive because the 

number of businesses is a sliver of the number of people in the community. 18 

Consider that a good pre-sales person/telemarketer can make 50-100 phone 

calls per day, meaning that each business can receive a phone call and a 

personalized 3-4 weeks. Of course, initially this data will need either to be 

purchased or entered by a temporary employee or an intern, but you can see that 

a database of local businesses can be built quickly and easily maintained. See 

Chapter 8 - Selling. Avoid the temptation to reach these businesses with direct 

mail, even if it is marginally effective. This would legitimize the competition (See 

end of this chapter and Chapter 9 -Competition). 

Local Branding from Local Businesses 

Figure 29 - Yelp window decals 

Yelp, Zagat Survey, chambers of commerce, Visa/MC/Amex all have their 

stickers plastered on the windows of local businesses. Take advantage of this 

free advertising opportunity. Stickers only cost a few cents, so make sure that 

your salespeople are fully armed. While they are at it, give them a razorblade so 

they can remove the stickers of competitor’s (with permission of the business 

owner of course). One idea is to have stickers with yournewspaper.com and a 

picture of a mobile phone. There is no need to bring attention to print your 

website since everyone knows you have these platforms. Mobile is new and cool! 

Tip: Do not legitimize the competition 

Avoid temptation to promote your brand on media products that do not belong 

to your newspaper (such as billboards, direct mail, radio, etc.). This gives your 

18 By multiplying the population by 0.025, you can find the approximate number of potential 

advertisers (1.5% of the population for companies with one or more employees plus 1.0% that do 

not have employees but are likely serious business people). A 20,000 person community, for 

instance, there would be approximately 500 businesses (20,000 * 0.025). 


competition credibility and revenue to compete with you. Remind your 

advertisers that the product mix of your newspaper represents all worthwhile 

advertising platforms. 

Stop promoting competitors, especially Google. Journalists seem to gush over 

the littlest things that Google does, or even considers. Only a few weeks ago, for 

only installing a few solar panels journalists gave Google press as if they were 

saving the world. Journalists seem to write this to show how cool nonnewspapers 

are, or they are simply overstretched and just reprint any press 

releases Google submits. Free PR for Google and other competitors should end. 

If they want exposure, they should do something noteworthy or they should buy 

advertisements. 

Newspapers only have a few opportunities for self-promotion: 

1. All platforms and components (including PR) 

2. Business publications and newsletters to local businesses 

3. Newspaper storefront and kiosks in high-traffic areas (such as malls) 

4. Stickers on store windows 

5. Advertising workshops for businesses 

Advertiser Workshops 

At an advertising workshop, you invite local business owners to a venue (hotel, 

restaurant, etc.) to hear a 2-4 hour presentation on a topic of interest and 

preferably from an expert on the topic. Tax and financial planning, human 

resources and selling topics are of interest to many small business owners. 

Advertising and Internet advertising are particularly popular and they certainly 

are related to the interests of your newspaper. Real estate agents in particular can 

be attracted by having the newspaper sponsor a training specialist who can 

provide continuing education credits. Advertising can typically be included in the 

curriculum. Of course, the newspaper’s advertising programs should be 

emphasized. This could be provided for free or for a small fee in exchange for 

the goodwill and an infomercial opportunity. 

Another simple approach is to schedule free coffee and doughnuts one day each 

month, possibly in coordination with the local chamber of commerce. Your 

agenda is clear to all so there is no reason to turn this into a direct selling 

opportunity. Sales should take place one-on-one in the comfort of your 

advertiser’s office. 

Advertiser workshops an effective and efficient means of creating awareness and 

further developing leads while also providing account management for existing 

customers. 

Marketing Collateral - Media Kit/Brochure 

Having an attractive, professional media kit is very important. Its purpose is to 

promote your product to your advertisers, who typically represent a very small 

percent of the population of your market, but they represent majority of your 


evenues and likely all of you near-term growth. Have an outside agency create 

or finalize your media kit and make sure the printing is top quality. 

Remember that this media kit is targeting your advertisers, not your readers. 

Thus, the kit must focus on things that resonate with your advertisers. 

We recommend an eight page professionally printed media kit with the 

following components: 

Cover: Your masthead with a picture or graphic of something local 

(Pages 2 & 3 are where your readers will spend most of their time, while 

listening to a brief, in-person sales presentation). 

Page 2: Three or four brief selling points about your newspaper. Focus on 

benefits not features and keep it short and simple: 

* 20,000 locally delivered print copies (~44,000 readership) reaching people you 

care about most 

* Online and mobile distribution to ensure the broadest and most frequent 

possible reach 

* Locally owned and operated to ensure that you are getting the best support; 

* There could also be a map of your general and extended coverage area and a 

brief testimonial from a local businessperson 

Pages 4&5: Brief product description with key selling features 

Pages 6&7: Final product descriptions and competitor comparison or brief bio 

of publisher/owner 

Page 8: Back cover with address and phone number 

Public Service Advertising 

Certainly much of what the newspaper provides is public service. Reports on 

missing people and fugitives are great content. 

Figure 30 - Public service ad from Valassis products 

Spec Ads 

Having spec ads or, customized sales presentations, created in advance of a sales 

presentation is very valuable. These tools increase the probability of a sale, 

increase the average revenue per sales and they substantially shortens the sales 

cycle. It also removes a potential source of busy work caused by having 

salespeople run around for follow up meetings (or emails and phone calls) with 

customers that they have already closed. In addition, it reinforces that the 

customer is important enough to warrant making an investment to customize 

the presentation and that the sales executive is there for business… Right now! 

A package of spec ads should encompass your entire product suite - print, 

banner ads, business directory, email newsletter, mobile advertising, etc. (see 

example below). They should take no more than one hour to create at a cost of 


$15-20 by your design staff or through a contract design firm. The objective is 

not to attempt to create perfect ads, rather just to help the advertiser visualize 

what an advertising campaign for their business would look like. Indeed, having 

a few flaws can actually be beneficial. Should the advertiser point out a flaw, the 

sale will likely be consummated as the attention will shift to fixing the 

advertisement. 

Figure 31 - Spec ads in advance of meetings is a no brainer 

Summary 

When planning and executing your promotional campaign, keep in mind the 

following: 

1. Brand: solid and consistent quality of all products. Benefits of high 

quality far exceed the costs. It is better to cut costs through reducing 

circulation or frequency. 

2. Pricing: premium, to reflect the quality that you are providing. 

3. Promotional materials: make the best first impression. Sample 

brochure layout, package rate card examples, etc. are available at 

www.verican.com/book/. Costs of a high quality brochure is not high 

(for instance, 200 copies of an 8-page, 8.5x11 full-color, high-quality 

brochure costs

Exercise 

Use the following table to evaluate your promotion and cross promotion of each 

platform and component. 

Components 

News/editorial 

Classifieds 

Business 

directory/ 

advertising 

Personals 

Overall brand 

Platforms 


Newsletters 


Part III - Action 

At this point, you should have an enhanced and integrated suite of platforms 

and components along with pricing and promotional material. Now it is time to 

consider what your staff will do day-to-day. Sell. The primary business drivers of 

a newspaper are the same as those of any business: the number of sales calls per 

day (preferably 10-20), the close rate and the revenue per close. When you have 

mastered this, all other parts of running your organization will come together. 


Chapter 8 - Selling 

“Nothing happens until a sale is made”, Thomas Watson, founder IBM 

As mentioned earlier, there are two sides to any organization: getting the 

business and doing the business. Here we will focus on the former. In fact, 

newspapers are one of the most mature industries in the world, even with new 

non-print technologies. From an advertiser’s perspective, what the newspaper is 

offering is nearly identical (but certainly more interesting). Thus, the sales 

function is by far the most important. The journalism and operations side of the 

business is crowded with unemployed and underpaid people who are eager to 

work for a newspaper, especially if it is growing. 

Sales should be rather straightforward. Products, pricing, promotion and the 

selling process should be well defined so that the salespeople follow a similar 

process. The business is now 100% about the numbers: how big is the market 

(potential advertising dollars and number of advertisers), how to best serve this 

market (number of inside/outside salespeople) and sales matrices (calls and 

meetings per day, close rate and revenue per close). This is a simple model. 

Sales Team 

Outside 

Sales 

Figure 32 - Ideal sales team 

Inside 

Sales 

Outside 

Sales 

Account 

Managers 

Structure your sales team as follows: 

Outside 

Sales 

1. Inside sales: Telephone-based sales calls. Their objective is to identify 

accounts and decision makers, create awareness and set appointments 

for outside sales (but not close deals). 

2. Outside sales: These are your most valuable people. From early 

morning until late afternoon outside sales executives should be attending 


appointments created by inside sales and knocking on doors during any 

additional time. They should get the most attention in the organization 

and likely the best pay. 

3. Account manager (optional): These people take care of customers 

after they the sale. Their focus is to ensure that the sales executives do 

not get distracted from making sales calls. 

4. Business category specialists (optional): These experts understand a 

category (such as real estate) and act as advisors to their constituents. 

Another way to put this is inside and outside salespeople are the ‘hunters’ – they 

are getting business while account managers and business category specialists are 

the ‘gatherers’. They nurture the accounts, keeping sales focused on hunting. 

Figure 33 - Same sales model but more products 

No Radical Changes to Sales Team 

We strongly recommend that newspapers not tear apart the sales organization 

and especially not replace the grey hairs with a bunch of young whipper 

snappers. The mature salespeople are likely your best salespeople. They have the 

experience and the credibility to best serve local business owners, who are likely 

in the similar age range. Mature sales executives can also use their experience to 

better serve young business owners, who typically need solid business advice. 

The key is to ensure that your products, pricing and promotion are clear enough 

to be understood by non-technical salespeople and customers who only need to 

know the benefits of the newspaper’s offering. As you can see from the 

products chapter, there really is nothing technical about these products. In fact, 

non-print products likely require less technology than print products; yet good 

salespeople would never distract advertisers with the intricacies of print 

technologies such as color grade, computer to plate, automated stackers, etc. 

Note: No tech = great salesperson 

One newspaper manager I met complained about a salesperson that absolutely 

refused to do anything with technology. He did not use a computer and did not 


even use email. Further, he had everyone else in the office scrambling to take 

care of his paperwork, building ads, invoicing customers, etc., which frustrated 

much of the staff. However, he also was the best salesperson by far. He would 

average 10 to 20 sales meeting per day, including many walk-ins, far more than 

other the salespeople do. I explained to this manager that this was the perfect 

salesperson. He focused. Thus, not only did he increase sales by making more 

sales calls, but also the added experience from the larger number of calls 

increased his close rate and the revenue per close. 

The premise of building your business is to organize your team around these 

types of salespeople. 

Whales vs. Minnows 

Before delving into the details of the sales process, consider the current market. 

Either the whales (large advertisers) have been caught or they are advertising 

with regional sources such as television, which like provide them better value 

because these sources are limited to the large advertising model rather than 

serving only one community (see Chapter 9 -Competition). This only leaves the 

minnows. 

Minnows, however, are attractive, possibly more so than whales. Minnows are 

underserved, especially now that print business directories are rapidly declining 

and the cost of direct mail is increasing, and it is not cost effective for your 

competition to pursue. Small advertisers are typically more reliable and 

consistent and they are easier to upgrade to more expensive packages. 

We recommend “whale watching while fishing.” Salespeople should be 

accountable for weekly, even daily results. Good salespeople should be 

optimistic about catching the “whales,” but they should be accountable for daily 

meetings and results. 

Sales Expectations 

The following table illustrates how quickly revenue can increase from having one 

good salesperson focused on small advertisers. Your sales executive should have a 

large number of meetings per day, a reasonable close rate (remember there is little 

competition) and even a modest revenue per close adds up very quickly. 

Monthly 

Meetings (avg 8 out of 15-20 appointments 

& walk-ins including upsells to existing advertisers) 160 

Average close rate (meetings only) 25% 

New sales or upsells 40 

Average revenue per sale (annual ~$200/month) 2,500 

Annual revenue increase (one month selling) 

Table 6 - Expectations from selling minnows 

$ 100,000 

Sales Team Roles and Responsibilities 

Below are details about the role of each sales team member. 


1. Inside sales (lead generator/appointment setting) 

Inside salespeople focus on calling businesses. Their objective is to gather and 

organize leads, identify the decision maker(s) and set appointments for outside 

salespeople, especially for meetings where a walk-in would not be possible. 

Approximately one time per month, inside salesperson should call the top 1000 

businesses in their territory (the entire community if there is only one inside 

sales executive). At 50 to 100 calls per day and good inside salesperson can make 

1000 to 2000 calls per month, setting 8-12 appointments per day. Each business 

in the community should receive a phone call and an email every month. 

Outside sales (next section) should spend 5-15 minutes each month with every 

advertiser and visit most businesses in the community no less than once per 

quarter. 

Inside sales process: 

1. Qualify prospect (already advertising, where, how much?) 

2. Example of initial telephone call: “This is from the 

…. 

3. Identify the decision maker 

4. We have some exciting new products to better serve the businesses in the 

community. Can I email some information to you? Also, we have an 

email newsletter with breaking news that provides a daily or twice daily 

update of what’s going on in . It’s free. Would you like for me 

to add you to this list? (if ‘no’ or unsure, then tell them they can unsubscribe 

anytime) 

5. Also, we have a new mobile advertising platform specifically designed to 

serve the community. Do you have an iPhone, Blackberry or other Internetenabled 

phone? (if iPhone suggest that they download the newspaper 

application). If not, “as you know, many people in the community, especially 

kids and young adults, have advanced phones. Our products are all mobile 

compatible so you can be assured that we are helping you reach this 

audience 

6. Do you mind if we add you to our business community email list so that you 

can stay in touch with what’s going on in the community (if applicable, 

mention that this is built with support from the chamber of 

commerce) 

7. Great. If it’s okay, one of our sales reps can drop off information when he’s 

in the area next. Will you have 15 minutes (time #1 or time #2)? 

Next step: update your CRM (customer/sales relationship management system) 

and send information (such as yellow pages directories or direct mail 

advertisement) to outsourced spec ad design firm to be created overnight (see 

spec ads section in Chapter 7 - Promotion). 

Tip: For the first couple months have an intern or temp help with data 

entry 


During the first few months, your inside salesperson may get too busy entering 

data to meet call targets (and their compensation target). Have an intern, temp 

or a junior sales/marketing person can assist with initial data entry. This way 

your internal salesperson can stay focused on calls. 

In addition, buy a good telephone headset for your inside salespeople. Very 

good wireless models can be purchased for approximately $200, an investment 

that will quickly pay off with higher productivity and higher moral. 

Tip: Lead generation 

Have everyone in the organization gather competing advertisements from 

business directories, direct mail, etc. These are great sources for leads as they are 

already advertisers and they are likely wasting their money on an alternative 

advertising source. 

Figure 34 - Business directories are a valuable source of leads 

Tip: Inside sales should not sell 

Inside salespeople should specifically not attempt to close deals over the 

telephone. Closing a sale over the telephone degrades the newspaper by 

anchoring in the mind of the advertiser that this is a cheap product with a low 

price point. Compared to a telephone-based sale, an in-person sales call will have 

a higher close rate and higher revenue per close. This is a much more 

professional approach. 

However, inside salespeople should find and call all organizations that place 

employment ads with your competitors. They should sell a comparable 

advertisement in your publication and set an appointment for a sales executive 

to visit. 

2. Outside Sales Executive 

The focus of the entire newspaper should be on the sales effort, and by 

extension, on the sales executive. Hire the best, give them the necessary tools 

and support, and keep them in front of prospects and clients (not in the office 

making phone calls or filing reports). Your inside salesperson should setup 3-6 

scheduled appointments per day and have spec ads ready for these appointments. 

Including pre-scheduled appointments, good sales executives should have 10-20 

meetings (including walk-ins) per day. 


Outside Sales Executive Expectations (daily) 

2-5 pre-set appointments 

+ 10-20 drop-ins 

= 10-20 in-person sales calls each day 

Table 7 - Sales executives should have a lot of meetings 

Tip: Be prepared 

Follow the Boy Scout motto by being prepared with the following: 

• High quality sales material/media kit (see Chapter 7 - Promotion) 

• Price sheets customized for each business category (restaurants, services, real 

estate, transportation, etc.) 

• Print rate cards for one-offs 

• Custom sales presentations (spec ads) ready (current ads if existing customer) 

• Keep list of prospects and key contact names (know these before each 

appointment). ID what they should be spending and what they are spending 

with you and your competitors 

Also: 

• Dress for success. Wear a suit and tie – you are there for business 

• Skip golf, lunch/dinner appointments, most networking… Much more can 

be accomplished when you have the prospect’s undivided attention 

• Leave the computer at the office. It is a huge. They slow everything down 

and end up costing sales. It is better to have a good media kit with backup 

information printed and organized in a binder. In the rare exception that 

something needs be viewed on the computer, just used the customer’s 

computer 

• If you are going to bring a technology gadget, then bring an iPhone. They 

are cool, fast and great for impromptu presentations. Your point gets across 

quickly: this is the technology used by the children and grandchildren of 

your customer. They use this are using to find out what is going on in the 

community (see Chapter 4 -Products) 

• Bring current copies of all print publications… Give away copies 

• Keep track of accounts and contacts to plan for next steps and to give to 

your inside sales people 

Outside Sales Executive Process: 

• No telephone calls. Doing business in person is 5 times more effective than 

by telephone. Do not be afraid to be turned away. Keep in mind that it is 

more difficult for a prospect to turn your sales executives away in person 

that it is to turn them away on the telephone 

Typical Day 

• Print spec ads at end of prior day or in the morning from your home printer 

(color ink/laser printers are not very expensive). Avoid the temptation to go 

to office in the morning. This is where colleagues, your boss and other time 

burglars congregate. 


• First on-site meeting is preferably a pre-scheduled appointment for no later 

than 9am, which ensures that the sales executive gets out of the house. Have 

a second appointment at 1pm to make sure the sales executive is back in 

meetings immediately following lunch. 

• Then walk to other businesses in the same building or surrounding area… 

all until your next scheduled appointment 

• Get updates for appointments and changes from pre-sales (by telephone text 

message and your CRM application – if you have a smart phone). 

• Keep track of the disposition of sales calls, which can be given to presales 

when you drop off your orders at the end of each day 

Sales Presentation 

• Keep it short (10-15 minutes). Their time (and the time of your salespeople) 

is valuable. If you cannot adequately describe a solution in a few minutes, 

then you do not understand the opportunity or your marketing materials are 

inadequate. 

• Move right to close (price sheet with 3-4 price points see Chapter 6 -Pricing) 

• Show top down advertising budget with pricing. See Chapter 5 -Place 

(Advertising Market) 

• Have spec ads (see Chapter 7 -Promotion) ready. Be sure to have a pen and 

paper so you can make changes on the spot. This tool helps you close more 

sales and reduce the sales cycle to a single office visit. Fulfill all new orders 

within 24-48 hours. The objective is to CLOSE the deal and do so during 

the first sales office visit. This size of the order is less important than getting 

the customer to commit to a comprehensive advertising solution that will 

run perpetually. You can always go back in a month to upsell to the next 

package level. To increase the close rate and minimize the sales cycle, allow 

the advertiser to cancel anytime. 

• Close 25-50%... preferably on the first call. A lengthy sales process is too 

expensive 

Tip: Monthly office visits 

Every month the outside sales executives should drop in for a quick check on 

their advertisers. In addition to ensuring advertiser satisfaction, the sales 

executive should attempt to upgrade the advertiser to a higher package until the 

advertiser has shifted 100% of its advertising budget to the newspaper and they 

have reached a reasonable advertising budget. See Calculating an Advertising 

Budget section of Chapter 5 - Place (Advertising Market). 

In addition, sales executives should not be afraid to pressure a businessperson to 

make a decision. Advertising is necessary for a successful business. Your 

newspaper is doing them a service that provides them a positive return on their 

investment. Without good advertising, they may go out of business. 

3. Account Manager (optional) 


If your newspaper is large enough, then an account manager is helpful to take 

care of paperwork and all of the follow up work necessary to take care of 

customers and, most importantly, to keep the sale executives busy bringing in 

new business. 

A great way to motivate an account manager is to provide incentives based on 

increased annual revenue, customer retention, etc. 

Tip: Publisher/Ad Director 

The publisher and ad director should call all customers no less than once a quarter. 

Preferably, they will stop by to see these business people (or at least the top 20%). Exposure 

to the top and candid feedback is critical. 

4. Business Category Specialists (optional) 

To really lock in businesses, hire or contract a specialist for each category (real 

estate, transportation, food and beverages, etc.) This person will act as an 

advisor to businesspeople in their category and will provide consulting to those 

in the category as a whole. Category-specific seminars and other get-togethers 

are a great way to bring your advertisers together and create goodwill. If they are 

an independent consultant, then they may work with your publication by 

providing this service at little or no cost as it is a means for them to generate 

billable consulting business. 

Tip: Sales trainers and contract sales teams 

Periodically bringing in outside talent is a great idea. They should have new ideas for 

improvement and they should motivate your staff resulting in more customers, 

higher revenue per customer, lower costs, better employee moral (lower turnover), 

etc. We strongly recommend bringing in a consultant when you have a management 

change or when you need a new salesperson trained. 

Building a sustainable sales team of newspaper employees is critical. This team can 

be supplemented with a contract sales team that arrives periodically to boost sales. A 

great time to bring them is a few months before the major print YP team comes to 

town. 

Engage a sales army to blitz their advertisers. 

Advantage of Outsourcing: 

- Focused… Must have tangible results in order to get repeat business 

- Held to a higher standard (expectations are higher for consultant and sales 

team) 

- Deemed to be more credible by staff than in-house 

- Tangible investment in the sales team 

- Better availability and flexibility 

- Often lower TCO (total cost of ownership), more flexible, higher ROI 

Building a Sales Team 


Small Medium 

Community Community 

Community size 20,000 100,000 

Businesses 2.5% 2.5% 

Total businesses 500 2,500 

Start with top 20% 

Then go to 80% 

100 500 

# Sales executives 1 

3 

Pre/post sales support 

Table 8 - Sales team calculation 

1 

2 

This table should give you an idea of the composition of your sales team. For 

larger teams, territories can be created either geographically or preferably by 

category specialty as this helps to better serve your advertisers. 

Each person should be accountable – and should be able to measure results: 

Advertising inventory – assign matrix to each person/department: 

Marketing – average visitors per day 

Sales total revenue & revenue per impression 

Editorial average time on site (per visitor per day) & page views per visitor 

In the above example, the sales team is directly accountable for their territory (or 

preferably category). Only sales is calling on customers. Print operations, 

technology people and even the newsroom become product managers. This 

approach makes everyone in the organization accountable for revenue and 

profits. 

“Trust but verify”, demand daily call sheets and weekly meetings + win/loss 

reports. Create goal alignment and dependencies between pre-sales, sales and, if 

applicable, account management. Critical to manage the process… results will 

follow. 

Tip: Sales starts at the (very) top 

Sales should start at the top. This is especially true when launching new products 

in a rapidly changing market and environment. Your salespeople will always give 

you the same story – everything is okay, I am in touch with all of our customers, 

there are no advertising dollars available, it is the economy 19, etc. They want 

their base and bonus. They will not rock the boat. It is up to the 

publisher/owner to lead the way. 

Imagine the impact to a newspaper if the CEO of a giant newspaper company 

were to show up and, instead of chatting over coffee or taking a tour of the 

facilities, the first thing he does is go on sales calls with the publisher. Nothing 

could possibly turn around the organization faster. 

19 

Note as of March 2010 advertising is still approximately 2% of GDP and thus total advertising is 

only down about 5% 


Note: Personal sales experience 

Many of these ideas I have personally experienced. I started Verican with my 

own savings around the middle of 2001 – just before 9/11 and then Enron and 

a general economic collapse in the San Francisco Bay Area, where my office was 

located. Many sales people came and went until I found that I just needed to go 

out on my own and shill. The results were extraordinary. Sales increased, moral 

improved and everything just seemed to come together. 

Then we shifted our focus to serving newspapers, primarily with our Internetbased 

classifieds order entry system. The product is great, business was going 

very well and then classifieds took a complete dive (especially in California and 

Arizona, where most of our customers are located). Most of our revenue is 

commission based, thus what has turned to a 50-90% decline in classifieds to 

our customers has hit us just as hard. In fact, I found that the other disadvantage 

of serving a declining market is that customers have a tendency to look 

elsewhere for solutions causing us to lose customers or major classifieds 

categories such as recruitment. We nearly always get these back, but not without 

losing revenue and time. 

To respond to this, I let go much of our sales staff (they were not selling anyway) 

and I started to do most of the selling myself. This hands on experienced helped 

me determine that we needed to broaden our product offering and go down 

market. Our customer base is still newspapers; however, rather than focusing on 

large newspapers we now focus on small to medium-sized. Personally getting in 

front of customers was the only way I could have discovered this. 

There are other benefits of spending more time away from the office: 

determining that there is a need for this book and I found that I had to delegate 

more responsibilities to managers as well as focus more time on PR and 

marketing. 

Sales Improvement (focus on matrices): 

Once you start focus on the matrices, a lot starts to happen. One is you find that it 

is very valuable for you, the owner or manager of the newspaper, to start selling. 

You will always be the best salesperson. You will also likely find that a marginally 

better salesperson is usually well worth the extra cost. 

Suggestions: 

Increase # of appointments: 

Use appointment setter 

People focused on sales (note business directory/YP sales model) 

Have robust product mix 

Promote your products 

Increase close rate: 


Focus: sales exec only presents and closes 

Trained & business savvy sales executive 

Set stage for meeting (pre-sales qualifies account, identifies decision maker and 

creates awareness) 

Excellent promotional materials 

Quality & consistent products 

Personalized sales kit (spec ads) 

Bundled/package pricing 

Increase Revenue Per Account: 

High quality products 

Trained sales executive 

Return for upsell to next package 

Increase prices annually (based on value-added and competitive position) 

(Over) Paying Your Salespeople 

Do not worry if your top sales executive is the highest paid person in the 

organization. Paying high performers very well sends a strong message to the 

organization. Sales is #1. Further, this acts as an incentive to other sales people 

and can be used as a recruiting tool. Note: owner will get payoff many times 

over with wealth creation (see Chapter 13 -Summary and Getting Started). 

Tip: Print business book directory sales people 

Hire from business directory/yellow pages companies. These salespeople are 

aggressive, well trained and they are keenly aware of the value of measuring the 

numbers: # of sales calls, close rate and average revenue per close. They go to 

presentations with the intent of closing deals. Given the collapse of the print 

business directory market, they are also likely to be underpaid or unemployed. 

Sales is an Organization Wide Effort 

Circulation and classifieds revenue growth will not happen in the near future so 

retail sales should be the focus rather than just an afterthought. Newspaper 

salespeople are notorious for being “order takers.” The future is to have an 

aggressive sales team (much like business directory companies have). Rally the 

entire organization around sales. Make sure that your salespeople are the best 

paid, get the best perquisites and are the center of attention. Keeping your sales 

team staffed and fresh should be a priority. 

Every quarter, replace the bottom 10-20% performers with people who are 

willing to work hard – and will be rewarded accordingly. To ensure that this is 

the focus, consider positive/negative reinforcement for the entire organization. 

If sales is missing targets, reduce or eliminate the bonuses of all employees is. 

Should sales positions go unfilled for an extended period, consider 1-4 days per 

month furloughs for all non-sales employees. What use are employees if there 

are no orders to be filled? Cutting bonuses and hours will send a clear message 

to employees. Be sure to do so early as it is too late to wait for unfilled sales 

positions (and unsold orders) to affect profits. 


Tip: Maximize sales visibility 

Use your phone system and call reports gather key matrices that are updated on 

a daily or weekly basis and prominently displayed. 1. targeted number of calls per 

day 2. actual number, close rate (# of appointments close), etc. 

Measure deliverables (per person) 

50-100 calls per day 

8-12 appointments 

To best organize: presales can keep track of sales executives plans for the day 

(part of community: northeast, southwest, etc.) This will minimize the total 

travel time and increase the number of presentations per day. 

Caution: Technology team selling 

Having one team selling print and another team selling Internet ads to the same 

customer does not make sense. I often hear from our customers that the 

advertisers want one sales rep and a coordinated advertising campaign. 

Moreover, with the real (or perceived) decrease in value of print, it is difficult to 

sell a long-term contract. On the other hand, with the increase in value from 

non-print it is not in the best interest of the newspaper to sell a long-term 

contract for that medium. Presenting a single face to the advertiser with a 

bundled solution is the perfect answer (see Chapter 6 - Pricing). 

Having your programmers out selling advertising does not make sense either. 

However, we frequently see this. Salespeople sell. Tech guys (especially those 

responsible for products) should be product managers who are held accountable 

for the advertising inventory their products create. More specifically, they should 

be accountable for the revenue and profits their products generate, but they 

should leverage the sales team to accomplish this. This way they focus on having 

great products that serve a clearly definable and quantifiable purpose. 

To get products out the door, product managers need to also ensure that there 

are adequate promotional materials. In addition, they should ensure that pricing 

is consistent within the market and that it is understandable to both the 

advertiser and the sales executives alike. Position your products so that they take 

revenue away from competitors and cannibalize as little as possible from their 

own existing products. Most importantly, your product managers should ensure 

that salespeople are fully trained, motivated and properly incentivized to sell the 

products. 

For instance, a business directory technology/product manager should collect 

information about the advertisers in the print yellow pages books, estimate the 

ad spending on those ads, and present this as an opportunity to the relevant 

sales executives. During product launches and with new sales executives, the 

product manager should participate in but not lead the sales call. There should 

only be one face to the customer… the sales executive’s. 


Note: Do not call legislation 

According the U.S. Federal Communications, phone calls can be made legally to 

those with whom a business relationship has been established. Such a relationship 

exists if the consumer has “made an inquiry, application, purchase, or transaction 

regarding products or services offered by the person or entity involved”. This 

relationship is in effect for 18 months after your last business transaction or three 

months after your last inquiry or application.” Thus, consumers who place a 

classified ad through your website or who register for your email newsletter should 

get a thank-you call and an offer for an introductory print subscription offer. 

Laws vary by state. Verify with your legal counsel. 

Caution: Self-service display ad building 

Having advertisers go to your website to create and place an ad without human 

interaction is certainly an enticing concept. Theoretically, you will gain more 

customers while having to pay little in sales commissions and graphic design 

costs. Self-service advertising placement works great for classifieds where some 

of our newspaper customers have experienced revenue per ad that is more than 

40 to 60% higher than those received through a call center (see Appendix - 

Classifieds). However, I have never heard of a self-service display ad system 

generating much value for newspapers. 

Business people are too busy running their company to go to a website to price 

and build an advertisement. Moreover, it alienates advertisers who either want to 

build an ad with their own software or in a size that is not supported by the 

cookie-cutter specifications of the newspaper software. Further, this is a difficult 

model building a packaged and discriminatory pricing model (see Chapter 6 - 

Pricing). Moreover, such an arrangement may actually cheapen your publication 

by setting artificially low pricing/value expectations of advertisers which could 

be better managed by having an on-site visit from a professional advertising 

consultant (sales executive). 

At least one newspaper group that I know of pressures their advertisers to 

electronically upload a camera-ready ad separately for both a “flight check” (to 

be sure the uploaded ad is received properly) and then upload it again as part of 

a lengthy form to actually place the ad. Furthermore, the newspaper expects the 

advertiser to send an email to let the sales rep know the ad is coming at which 

point the customer may be asked to drop off a check. If the advertiser does not 

have an ad created, they are pressured to fill out another on-line form and 

upload logos, etc. While this may seem efficient to the newspaper, what exactly 

in this scenario is the ad rep doing to foster the business relationship? What 

about the lost opportunity for upsells? What about the expertise the sales rep 

should be providing to the advertiser about ad content that works? 

Summary 

The only way to for sustainable profitability is through increased sales. To 

achieve this, you must create an A-level sales team from your best employees 


and by hiring the best available talent. The costs will be justified by the extra 

revenue. 

It takes an experienced and persistent sales executive to win advertising business. 

They need to meet with the business owner to understand their client’s needs 

and then tailor a solution to fulfill these needs. Newspapers need to break the 

“order taking” culture and follow the model that works… KNOCKING ON A 

LOT OF DOORS. Avoid giving your salespeople and staff another distraction 

and excuse. 


Worksheet 

Use the following table to measure the performance of your sales team. Post this 

chart in a visible location. 

Week 1 Week 2 Week 3 Week 4 

Sales Executive #1: 

# of meetings 

Avg close rate 

# of sales 

___________ ___________ ___________ ___________ 

Avg rev/sale 

Total rev 

increase 

___________ ___________ ___________ ___________ 


# of meetings 


# of sales 

___________ ___________ ___________ ___________ 

Avg rev/sale 

Total rev 

increase 

___________ ___________ ___________ ___________ 


# of meetings 


# of sales 

___________ ___________ ___________ ___________ 

Avg rev/sale 

Total rev 

increase 

___________ ___________ ___________ ___________ 

Company Average 

# of meetings 


# of sales 

___________ ___________ ___________ ___________ 

Avg rev/sale 

Total rev 

increase 

___________ ___________ ___________ ___________ 


Part IV - Managing For Success 

This part rounds out the textbook by providing ideas and examples of how to 

efficiently run your organization. 


Chapter 9 - Competition 

At the beginning of the 20 th Century, newspapers were the dominate source of 

media. When radio was introduced, it was perceived as a major threat to 

newspapers. While newspapers could only report yesterday’s news today, radio 

could disseminate news instantly – and with sound, including voice personalities. 

Of course, newspapers did not go out of business, in fact their sales continued 

to increase, but newspapers did give up market share. Television was introduced 

in the late 1940s. A source of real-time news with video would certainly mean 

the death of newspapers, right? Not this time either. However, newspapers again 

lost market share (and a significant portion at that). 

Until recently, most newspapers experienced revenue and profit growth and 

were unaware that they were losing market share. Growing market share is 

critical. In many cases, it is okay to be in a declining market as long as you grow 

market share. This is an indicator that you are stronger than your competitors 

are. Now newspapers must take all possible actions to ensure that market share 

is not lost. 

The Internet and mobile creates a convergence opportunity. The winner will be 

the media that is the most efficient at selling and disseminating advertising and 

other content. This requires most efficient sales strategy and staff to capture the 

highest market share of advertisers while minimizing TAC (traffic acquisition 

costs). Compared to competitors, newspapers are clear winners. 

This chapter reviews major competitors to newspapers, products the newspaper 

can sell as alternatives to those offered by competitors and how the competitor 

may react to this threat. 

Advertising Market 

Note in this chart the overall composition of your advertising market. In the US, 

annual advertising expenditures are almost $1000 for the average man, woman 

and child. This enormous amount of money represents approximately 2% of 

GDP. The 14% advertising market share that newspapers have is the sum of all 

newspapers (local, alternative, regional, national, etc.). Thus, the market share of 

your newspaper may be less than 10%, less than half the market share of junk 

mail… that is direct mail. This and print business directory/yellow pages are the 

most vulnerable competitors relative to the strengths of your newspaper. 

Nevertheless, newspapers have the opportunity to sweep the local market of all 

competitors. 


Newspapers 

14% 

Other 

21% 

Internet 

4% 

Magazines 

5% 

Figure 35- Advertising Market 20 

YP 

5% 

Radio 

6% 

TV/Cable 

23% 

Direct Mail 

22% 

Print Business Directory/Yellow Pages 

Figure 36 – Where is the value? 

Print business directory/yellow pages are probably the single easiest competitors 

to displace. Few people use the “book” for much more than supporting the 

wobbly end of the couch. Simply put, most people go online to get that 

information (or they will use your mobile product – see Chapter 4 - Products. 

Not only is the value of the phone declining quickly, but also there are often 

more books in a market. This is a result of telephone deregulation in the 1980s 

many media entities have created their own telephone books. With upwards of 

five or more telephone directories, many markets are saturated. 

Business directory tactics are simple. Each book times their sales calls and 

launch dates to be a few months after the prior book’s release. They call or 

canvas the advertisers with a simple message: the annual contract that the 

advertiser purchased just a few months ago is worthless because when new 

business directory books arrive most people use these to replace the old books. 

It is easy to imagine why these advertisers are furious. Their “annual” business 

directory advertising purchase only receives a few months value – and even less 

so with fewer people actually using these books. 

20 $285Bn US Advertising Market (Source: Universal McCann, July 2008) equals approximately 

$1,000 per American or $100m for a 100k population community. 


The newspaper’s advantage is simple. Your business directory is part of an 

advertising and marketing campaign. There are not time constraints; advertising 

can be updated dynamically. Compared to print, a newspaper’s business 

directory listing includes more features such as photos, videos, maps, restaurant 

menus, etc. Your product works on mobile and is part of an integrated and 

comprehensive advertising solution. Because changes can be made anytime, the 

newspaper’s business directory never becomes obsolete. While it is true that 

print books have websites, these sites typically have very little traffic because 

they only offer one service. Consider how often people go to the print business 

directory’s website compared to how often go (or should go) to your website or 

mobile product? 

R.H. Donnelly filed for bankruptcy reorganization during 2009 and many of the 

others are shutting down or drastically changing their business models. Print 

obsolescence has hit them much sooner and harder than it has hit newspaper 

print (but let this be a warning). 

Tip: Poaching business directory advertisers and employees 

Have your inside salesperson go through each telephone book and call every 

advertiser (see Chapter 8 - Selling) at least once a month. Track the major 

phonebook release dates and during the two or three months preceding the 

release of the each book go after their advertisers ruthlessly. Arm your sales 

people with competitive information and a cancellation form. If you can get a 

large number of cancellations, it is possible that the print business directory 

salespeople will skip your market entirely. If they do not, then they should find 

that your small business customers to be well informed about how worthless the 

print book is. 

While you run the print business directory providers out of your market be sure 

to hire their best salespeople. They have a great training program. Their 

salespeople thrive on selling to small advertisers and they are not afraid to knock 

on doors. 

Expected countermeasures: Minimal (for regional and national players). They 

will likely just move on to more attractive markets. 

Junk (Direct) Mail 

It is six o’clock in the evening, you have a handful of groceries, your hungry kids 

are crying and your last stop of the day is at the mailbox. The last thing you are 

thinking about is looking at advertising (which is mixed in with overdue bill 

notices)… Of course, this “junk” mail is headed straight for the trash. Compare 

this with the newspaper that is read while relaxing Sunday morning or during a 

quiet breakfast, lunch or a coffee break. Readers are in an entirely different state 

of mind. It is easy to see that newspaper advertising is a much more effective 


than direct mail. The figures below demonstrate how newspaper advertising can 

also be much more efficient: 

Direct 

Mail 

Cost per impression $1.00 

% Actually viewed 20% 

Effective cost per $5.00 

impression 

Table 9 - Direct mail vs. newspapers 21 

Marriage 

Mail 

$0.05 

10% 

$0.50 

Newspaper 

$0.024 

60% 

$.040 

Compared with newspapers, marriage mail is effectively 10 times more 

expensive while direct mail can be more than 100 times more expensive. Print 

publications, especially TMC print publications (or near TMC – stacks and 

racks), are very effective alternatives to direct mail. The newspaper essentially 

becomes a wrapper that ensures that the advertising is actually seen. Moreover, 

your email newsletter is another direct competitor to junk mail. 

Unless your local businesses love licking those tasty stamps and envelopes, 

displacing direct mail should be an easy win for the newspaper. 

Expected countermeasures: Minimal. Valassis and other marriage mail 

providers may put up some resistance; however, they are national companies 

that will likely move on to more attractive markets. The U.S. Postal Service will 

just go to Congress for another bailout or rate increase (note that in spite of 

increases in communication, processing and transportation efficiencies, increases 

in postage rates have far exceeded inflation). 

Television/Cable 

“I think a newspaper should be provocative, stir 'em up, but you can't do that on 

television. It's just not on.” Rupert Murdoch 

During the past few decades, television has captured significant market share 

(and mindshare). Newspapers capture only minutes of attention per day - only a 

fraction of the more than four hours the average American spends on television 

each day. 

Television advertising is very expensive and has a high entry point. Furthermore, 

television typically has regional reach of approximately 75 miles from the 

transmission station 22. In Chapter 5 - Place (Advertising Market) you can see 

that most entertainment is consumed and other purchases are made within an 

21 

Internal estimates Direct mail: 1/3 page ad @ $24 effective cost per 1000 impression ($50 actual 

revenue per impression with a 2.1 pass along rate $50/2.1 = $24 effective cost per impression). 

Marriage mail: Total of 30 items, each at $0.03 per unit. 

22 

The Museum of Broadcast Television, . 


eight-mile radius of home. The map below illustrates how for most local 

advertisers, more than 90% of television advertising impressions are wasted on 

people outside of advertiser’s market. 23 However, this is certainly changing now 

that cable companies can target advertising often down postal codes and even to 

a neighborhood. 

Figure 37 – Coverage of San Francisco/Sacramento area newspaper compared with 

one (of 19) television broadcast station 24 

The following table is a list of major television broadcast stations serving the 

area in the map above. As you can see, this source is very fragmented. Television 

advertising is highly commoditized and is primarily limited to national and 

regional advertising. 

The rapid adoption of DVR (digital video recording) devices such as Tivo is 

changing the television landscape because they enable viewers to fast forward 

through commercials. However, these devices also encourage more television 

consumption. 

23 

Television signal has 75 mile radius, thus covering approximately 18,000 square miles (pi * 

radius 2 = 3.14*75 2 ). 

24 

Northern California, retrieved on 2 Mar 2010, from Google Maps 


Area Served Call Signs 

Fresno KVPT, KFTV-DT, KSEE, KMPH-TV, KFSN-TV, 

KGMC, KGPE, KNXT, KNSO, KAIL, KFRE-TV, 

KTFF-DT 

Modesto KBSV 

Sacramento KCRA-TV, KVIE, KXTV, KOVR, KUVS-TV, KSPX- 

TV, KMAX-TV, KTXL, KQCA, KTFK-TV, KSBW 

Salinas/Monterey KSBW, KQET, KCBA, KION-TV, KSMS-TV 

San Francisco KTVU, KRON-TV, KPIX-TV, KGO-TV, KQED, 

KNTV, KDTV-DT, KOFY-TV, KTSF, KMTP-TV, 

KICU-TV, KCNS, KTNC-TV, KBCW, KSTS, 

KCSM-TV, KKPX-TV, KFSF-DT, KTLN-TV, KTEH 

Table 38 – San Francisco/Sacramento area television stations (19 total) 25 

Because the Internet makes obtaining, producing and distributing video easy and 

cost effective, it is possible to attack television sources directly. Pre, mid and 

post-roll advertising is easy to include with videos on your website. Moreover, 

your business directory listings should have videos of local businesses. 

Creating professional video created is not complicated. A typical community has 

dozens of videographers who can produce a video message for a business owner 

at a reasonable cost. In addition, television advertisers will typically have a digital 

file of the advertisers created for them. Typically, these video commercials are 

the property of the advertiser and thus can be used without restrictions. 

Tip: Anti-television PR campaign 

The average American spends more than four hours per day watching television. This mind 

numbing (literally) amount of time could be spend many better ways such as interacting with 

family, colleagues, neighbors, learning, exercising, working, reading a book and reading about 

local events (in your newspaper, of course). Newspapers could start a community service 

advertising and PR campaign to get people off the boob tube. 

Expected countermeasures: Minimal. Will likely just move on to more 

attractive markets. 

Radio 

Radio, much like television stations, covers a large area and thus does not serve 

local advertisers well. In addition, radio is even more fragmented than television 

stations. In California, for instance, there are more than 900 radio stations 26. 

25 

Source: Wikipedia, 

(accessed 2 Mar 2010) 

26 

Source: Wikipedia, 

(accessed 2 Mar 2010) 


Like print business directories/yellow pages, radio is obsolete. Podcasting, 

mobile and the Internet are quickly becoming attractive alternatives. Clear 

Channel, the largest radio station holding company, is expected to file for 

bankruptcy. A typical market is saturated with radio stations, dozens in some 

communities. Radio (and television) lacks a web presence, a clear transition for 

current advertisers to include new media. In addition, there are too many 

competitors, and they are not local. Moreover, they are under attack by satellite 

radio and podcasting (see Podcasting section in Chapter 4 -Products). 

I recently met with the VP of sales for a local radio station with the typical pitch 

we have with that they can easily transform print adverting into banner, Internet 

yellow page and mobile advertising. It was readily apparent that this would not 

work. Radio advertising is an entirely different media; their website traffic is so 

low that the cost of selling and building the advertising is likely less than its 

intrinsic value of selling and creating the advertisements. 

Note: Radio and yellow pages on billboards 

Radio stations often advertise on billboards. One media executive pointed out to me the 

reason for this is not to reach consumers (they just channel surf), rather these ads are place 

to reach the advertisers. 

Expected countermeasures: Minimal. Will likely just move on to more 

attractive markets or shutdown as this is business is not capital intensive. 

Tip: Future for local television, radio or business directory providers 

Any media source that does not have a print publication should consider starting a weekly or 

monthly publication (with a daily online version of course). The business model is not 

difficult and it makes for a clear transition from traditional only to converged traditional and 

new media. 

Internet Giants 

Yahoo!, Google, Zillow, Trulia, Oodle, etc. have been going after newspapers’ 

readers and advertisers for years. Many have attempted to initially take market 

share from newspapers via a direct sales force but are now pursuing advertisers 

by leveraging a distribution and sales channels of newspapers. This of course is 

temporary. After they have captured the innovators and early adopters and 

positioned themselves as a viable media source, expect them to attack with a 

direct sales model. This reminds me of the Silicon Valley tech saying, “Beware of 

geeks bearing gifts.” 


Figure 39 - Are they really friends? 27 

Nothing is more valuable in the attempt to reach a local audience than local 

content and access to local advertisers. National advertising is mostly an 

annoyance and it is not particularly profitable which is why global media 

companies are eager to “partner” with you. As you can see from the table below, 

local advertising has a positive feedback and it is substantially more profitable. 

Newspaper/Local Internet Giants 

Revenue per 1000 $10 (range: $8-20) $1 (range: $.50 – 

impressions 

$5) 

Cost of sales $1 $.50 

Gross Profit 

(CPMs)/margin 

$9 (90%) $.50 - Avg (50%) 

Reader impact Positive Negative 

Table 10 - Local/national advertising comparison 

Frenemies 

This is a Silicon Valley term that describes entities that are both partners/friends 

and competitors/enemies. One of the most famous examples is when IBM 

contracted Microsoft to create an operating system for its new line of PCs. A 

more recent example is when the once mighty Yahoo! partnered with what was 

the then small and insignificant Google for search. Microsoft and Google clearly 

won while their partners were pretty much left hanging in the lurch. In fact, both 

IBM and Yahoo! suffered serious performance declines to the extent that both 

have nearly ceased to exist (the latter was almost purchased). 

It is interesting that craigslist, Google, Yahoo!, Oodle, Yelp, etc., most of which 

are attempting a ‘frenemy’ partnership, are from the Silicon Valley. While this is 

certainly a hotbed of innovation and technology, San Francisco has also been 

the source of some very misguided products and ideas. The verdict is already in 

27 1 st -Art-Gallery. http://www.1st-art-gallery.com/Giovanni-Domenico-Tiepolo/The-Procession-Of- 

The-Trojan-Horse-In-Troy-1773.html (accessed 5 Mar. 2010) 


for Yahoo!, only time will tell what will happen to Google (which is still a onetrick 

pony). 

In the history of business ‘frenemy’ relationships rarely work long-term. One 

side or the other will get the upper hand and, either intentionally or 

unintentionally, exploit the situation. This is particularly true of the large, 

publicly-traded online entities. They are under constant pressure to perform in 

order to meet quarterly performance expectations (which we have seen many of 

them miss lately). In particular, be very wary of partnerships that require or even 

enable your readers to use your service by going anywhere other than 

www.yournewspaper.com. They are circumventing the brand that you have 

expended significant resources to create and protect. Even more so, avoid any 

relationship that enables partners to go directly to your advertisers or that in any 

way legitimizes these competitors. 

Yahoo! Newspaper Consortium 

Yahoo! provides quality products and services that I use everyday. While they 

may be popular with users, they are not good for newspapers. The Yahoo! 

Newspaper Consortium, currently comprised of several hundred newspapers, is 

damaging and dangerous to newspapers. Through content sharing, search 

referral, jobs and personals this ‘frenemy’ relationship is the most damaging 

because it shifts from newspapers to Yahoo! Newspapers are giving Yahoo! 

credibility and awareness. 

Effect of the Yahoo! Newspaper Consortium 

1. Newspaper directs their readers and advertisers to Yahoo! HotJobs 

(announced sale to Monster in February 2010) in exchange for a share of the 

revenue for what will likely only be the first order. From this point forward, 

readers and advertisers will likely circumvent the newspaper and go directly 

to HotJobs. 

2. Newspaper places a search textbox on their website. As a publisher, they 

share in the pay-per-click revenue generated. This free advertising further 

brands an enemy while generating little revenue. 

3. APT from Yahoo! (formerly AMP): geographical/demographical targeting 

solution. Essentially, newspapers use Yahoo’s ad serving system to serve ads. 

The claim is that through geo/demographical targeting the advertisers will 

be receive higher value. In exchange, the newspapers do most or all of the 

selling for which they sacrifice upwards of 50% of the revenue. Yahoo! 

throws newspapers a bone in the form of low-CPM national advertising, 

which is already saturating readers. This further legitimizes Yahoo! and 

encourages advertisers to circumvent newspapers and go directly to Yahoo! 

4. By providing content and a brand that is of interest primarily only to a local 

audience, newspapers already have a targeted audience. Demographic 

targeting is confusing and provides little added benefit. By advertising with 

the local newspaper, for instance, a local business gains from more 

advertisers and higher revenue per sales, and it benefits from additional 


anding to reach other stakeholders such as employees, investors/creditors, 

suppliers, government regulators, etc. 28 

APT From Yahoo! – Worse than Worthless to Newspapers 

This is a quote from Yahoo!’s promotional material 29, “Unlike legacy platforms, 

APT from Yahoo! is built from the ground up, empowering all of us - publishers, 

advertisers, agencies, ad networks, partners and developers - to drive the right 

business results. It’s also built on an open marketplace, enabling connections to 

others, flexible cross-selling, and pricing transparency.” 

The “connections to others, flexible cross-selling…” is of little use to the 

newspaper. They should own their market and guard it jealously. Wait to raid 

your neighbor’s market until you are ready to take it over. 

“Pricing transparency” is bad for newspapers. This will drive your revenue down 

to the lowest common denominator. Rather, newspapers should price to market: 

discounts where weaker and a premium where stronger. For instance, if you own 

95% of your real estate advertising market and 25% of the transportation market, 

discount the latter to beat the competition. Subsidize these discounts with higher 

prices where stronger until competition threatens this franchise and then 

discount or create value-added accordingly (and only while necessary). 

Yahoo! is a Competitor and They are Losing 

Yahoo!’s stock is off more than 85% 30. Their greed and hubris in negotiating to 

be taken over by Microsoft is cited in what many considers this centuries biggest 

lost deal. At Yahoo! turnover is high and moral is down. They have enough of 

their own problems to work through. These guys are not going not get 

newspapers out of this rut. 

28 “The Newspaper Consortium needed a way to reach a wider audience…”, Yahoo marketing 

materials (nc_casestudy.pdf) (accessed 20 Dec. 2009) 

29 http://apt.yahoo.com/apt_overview.php (accessed 20 Dec 2009). 

30 Yahoo!’s stock price $15.81 – 4 Mar. 2010. 


Figure 40 - Typical Yahoo! web page with Associated Press (newspaper) content. 

Sadly, the advertisement fits the context of the story 

Note: Why newspapers join the Yahoo! Consortium 

A recent Deutche Bank conference by Dean Singleton, CEO of MediaNews 

Group, helps to illustrate why newspapers join the Yahoo! Consortium. He 

noted that circulation, revenues and profits were all declining, “… but we have 

the Yahoo! Newspaper Consortium...” This is the same for all newspaper groups. 

Yahoo! is one of the only things to provide hope. 

Google 

Just as with Yahoo!, I use Google frequently. They have great products. 

However, just like Yahoo! relationships with Google will create little value for a 

newspaper and will likely further diminish the newspaper’s brand (to the benefit 

of Google). 

Getting search traffic from Google and other search engines is not as important 

as may seem. As you saw in Chapter 4 -Products, your products, especially your 

email newsletter, can generate more traffic than search. Most traffic should be 

organic, that is originating from viewers directly accessing your site or through 

referrals from your other products. Visitors referred to your website from search 

engines are likely to be from outside of your target market and are thus of little 

value or no value to your advertisers. Useful locally focused products and 

content are more valuable to your advertisers. 

Google and Contextual Ads (aka click fraud) 


Contextual ads clutter your website. Moreover, it is unlikely that these 

advertisers are getting value from such pages since most click throughs are 

accidental or are a part of a scheme to defraud the advertiser. There is extensive 

research on click fraud. Most perpetrators use contextual ads from Google on 

published pages to skim money from advertisers. Google has been accused 

many times of perpetuating click fraud and has recently settled several related 

lawsuits. 

Sponsored keywords next to search results are a brilliant and useful service; 

however, keywords in published pages are nothing less than click fraud. The 

next two figures illustrate the lack of value these “contextual” ads are. If you are 

not convinced, try a dozen or so searches and you will likely see that there is 

little or no value created for these naïve advertisers. If Google were serious 

about stopping click fraud, they would have advertisers explicitly opt in to 

having keywords on publisher pages and they would subject themselves to a 

revenue audit from a credible third party (a service provided by all top 

accounting firms). 

Figure 41 - Click fraud from Google 


Figure 42 - Valuable ads on right, Google click fraud on far right 

The results of the published pages click fraud ruse are remarkable. Not only 

does Google get free PR/advertising, but also it is largely responsible for Google 

capturing significant market share, nearly 5 to 10% of Internet, radio, TV/cable, 

business directory/yellow pages, direct mail, newspapers and outdoor 

COMBINED 31. Of all the advertising that we are bombarded with each day 

does it really seem that keywords next to search results plus those little annoying 

(and usually completely unrelated) keywords that embedded in web pages are 

really worth nearly 1/10 th of an advertising market that has developed during the 

last 400 years? 

Having a Yahoo! or Google search box next to your content provides credibility 

to these competitors. Most content management systems provide website search 

capabilities that are more than adequate. Most of the search traffic generated by 

Yahoo! and Google is from out of your area and is thus of little or no value to 

your (mostly local) advertisers. Readers in your community should not find your 

products because they are searching Google; rather they should do so because 

31 $288b annual advertising spent in the US. Kelsey Group/Universal McCann, 2008. Google’s 

2009 Q3 revenue was $5.9b, or $23.6b (annualized). Google’s market cap is $189b or 8.3x trailing 

12 months revenues (Wall Street Journal, 12/18/2009). Note that Google’s revenue is precommission. 

One could argue that it should be a significantly lower post-commission figure. 


they are addicted to your branded services (print, web, email newsletters and/or 

mobile). See Chapter 4 -Products. 

Charge Google for Advertising 

Google is truly a leach traditional and non-traditional media. They spend almost 

on advertising focusing instead on leveraging publishers, many of which are 

traditional media, to provide free PR by publishing articles and by providing free 

exposure to the Google brand on the publisher’s website. Google’s marketing 

department is a PR machine. Microsoft and Yahoo!, on the other hand, spend 

approximately 20% of their revenue on advertising. 

Avoid the temptation to publish Google’s “free” press releases and other stories 

about how wonderful these competitors are (while maintaining journalistic 

integrity, of course). I am surprised at the frequency of articles written extolling 

craigslist and other competitors while denouncing the publication that provides 

a paycheck to these journalists. This especially includes AP, which is supposed 

to be acting in the best interest of newspapers, their owners. If your newsroom 

complains about the interference, then insist that they provide equal coverage 

(and praise) to other competitors such as radio, TV, business directories, direct 

mail, etc. Remind your journalists that other businesses actually pay for this 

advertising. 

From a revenue standpoint, Google is a one-trick pony. They derive more than 

95% of their revenue from search and much of this is from published pages (see 

click fraud above). Google has made many attempts to broaden their revenue 

base most notoriously for newspapers, Google Base, a failed initiative to take 

classifieds business from newspapers. Through the acquisition of DoubleClick 

and AdMob, Google now has an advertising network (though one that is mostly 

remnant advertising). 

Be very careful of Google. Of all ‘frenemies’ they are the most dangerous: they 

have the most to gain from betrayal and have indeed betrayed nearly all of their 

partners – Yahoo!, mobile carriers and device makers, newspapers, radio, 

MySpace, etc. Google is trying to be everything to everyone (while promising to 

“do no evil”). They are also notoriously stingy when it comes to paying for 

advertising from the media sources on which they depend. Newspapers have 

little to gain from a Google relationship. Having their brand on your website 

(Google, YouTube, etc.) gives them traffic and credibility with your readers and 

advertisers. 

Yelp 

Keep a close eye on Yelp, an Internet business directory provider that is popular 

in many metro areas. They could do to newspapers’ retail advertisers what 

craigslist has done to classifieds. In San Francisco, Los Angeles and other big 

cities Yelp has a big following. Their stickers are on the windows of many 

businesses. Yelp’s biggest weakness is their high customer acquisition cost. 


However, upwards of $300 – 1,000 per month per advertiser, it may be feasible 

for them to assemble a local advertising team. 32 Your hyper-local, locally owned 

and operated one-stop advertising solution is a superior alternative. Especially 

emphasize to your business advertisers your Internet business directory 

component. 

Google is in talks to acquire Yelp 33. This should further reinforce the position 

that Google is a competitor to newspapers. 

Figure 43 - Yelp stickers are on the windows of a majority of San Francisco retail 

businesses 

Networked Websites 

A popular newspaper fad involves national websites working with local 

newspapers to help generate traffic and advertisers. This is a great business 

model for the national website provider; they get free traffic, advertisers and, 

most importantly, credibility. Such relationships are particularly popular for jobs 

(CareerBuilder, Yahoo!/HotJobs, Monster.com, etc.), real estate (Zillow, 

ZipRealty, etc.) and Cars (Cars.com). Local.com and ReachLocal want your 

emerging yellow pages/business directory market while Match.com and 

eHarmony want your personals. 

The business model is simple. An employment-advertising giant, for instance, 

partners with a local newspaper. By leveraging this newspaper’s credibility and 

traffic, they get local employers and readers comfortable with the national 

website of the frenemy, sucking away readers, advertisers and credibility from 

the local newspaper. Their strategy is to maintain this relationship until the local 

newspaper goes bust. Then this “frenemy” keeps your readers, advertisers and 

possibly your best salespeople. 

32 

Yelp website. (accessed 15 Dec. 2009) 

33 

Reuters, 18 Dec 2009. 


A great way to see if a partner is really a friend is to call their sales office and act 

as if you are a confused advertiser (such as an employer) trying to place an ad at 

the newspaper. Most likely, you will find that the salesperson is eager to take 

your order directly, completely circumventing the newspaper. Another indicator 

can be found by comparing the advertisers of the giant websites to those found 

in the newspaper servicing the same community. Most of the job listings with 

the giants are from national recruiting firms while the local newspaper still has 

the best listings: local jobs placed directly by local companies. 

Additional Internet Competitors 

As you can see below, there are many Internet vultures circling above. Most 

derive a majority of their revenue from advertising, which means that they will 

be going after your advertisers. Your strategy should be to provide them zero 

PR while aggressively pursuing your local advertisers, especially if they advertise 

with a competitor. 

Figure 44 - Newspaper competitors 

Facebook and Twitter 

Much like Google, Yahoo! and your other competitors, Facebook and Twitter 

depend on PR to generate credibility and traffic. Their business models are also 

advertising based, which means that you can be certain they are or will soon be 

going after your advertisers. Once again, radio silence for free promotion 

(including having them on your website) and attack as soon as they win any of 

your advertisers. 


Outdoor and Other 

Much to the benefit of society (and newspapers), billboard advertising has been 

banned or severely limited along many highways and roads. A strong argument 

against outdoor advertising in public places is that it violates a person’s right to 

be left alone. Many of these outdoor advertisements are so sleazy that they only 

a generation ago they would have been restricted to adult magazines. Most other 

advertising is different in that consumption is voluntary. No one makes people 

turn on a television, radio or open a newspaper; they are 100% voluntary. Thus, 

these forms of media are on a stronger footing because they do not violate our 

right to be left alone. 

Clearly, you want to pursue outdoor advertisers, but it may also be a socially 

beneficial goal to encourage legislation that bans this clutter and involuntary 

intrusion in your life and the life of children. 

Competing Publications 

The riskiest battle is with another newspaper, especially if share the same market. 

Ideally, this publication will have regional coverage (while you have local 

coverage) so that they can simply move on to a less competitive market. 

Certainly, you want to battle from a position of strength so ensure that you are 

well prepared. 

Weaknesses: 

* If your publication is locally owned, but your competitor’s publication is not, 

be sure to emphasize this. You have a lot of “skin in the game” to ensure the 

success of the advertisers and the community. This is a great way to poach local 

advertisers that are also locally owned businesses. Moreover, chains have been 

notorious for charging more (higher print subscription and advertising rates) 

while providing less (declined circulation, smaller newspapers and less local 

news). To further this argument point out that they are doing to maintain profit 

margins that peaked at upwards of 50%. 

* Should your publisher also be the owner (and ideally the VP of sales), you are 

in a great position. Your counterpart at the competing publication is certainly 

junior to you and is likely disinterested or inexperienced with businesses and has 

no skin in the game. Make sure that every business in your community knows 

this. 

* Your competitor moves to paid (online) content. Your argument here is that 

your competitor is more interested in salvaging their likely exorbitant 

subscription and advertising rates rather than maximizing the benefit to the 

advertiser and the community. 

* As the profits of these competitors continue to erode, allow them to succumb 

to a slow death. This is when you are ready to move in and take their advertisers 

and best salespeople. Hiring them will be easy because your company will be 

strong – with growing profits – and you can pay well. 

Tip: Chambers of commerce 


Work with your chamber of commerce to develop a business-focused print and 

email newsletter campaign. Delivers information important to local businesses and 

combine it with advertising that targets these businesses. Manage this through your 

CRM (see Appendix E - Customer/Sales Management Systems). 

By having your newspaper offer this service to chamber members, you can increase 

your revenue while keeping the chamber as a trusted partner rather than a 

competitor. 

Advertising Agencies 

Yes. To some extent, advertising agencies are also competitors. Their job is to 

represent the best interests of your advertisers. They will often send business to 

your competitors. Clearly, you want to maintain positive relationships with ad 

agencies, but it is important to remember their role is to act on behalf of your 

customer. The overhead of working with an agency may significantly cut into the 

advertising budget; however, by providing an honest and valuable offering, your 

customers may be better off skipping the ad agency. 

Targeted Low 

barrier to 

entry 

Newspaper Competitors 

Direct mail 

TV/Cable 

Radio 

Magazines 

Hyper 

Local 

Internet 

Giants 

Business 

Directories 

Newspaper platforms and components 

- Print (paid) 

- Print (free 

TMC) 

- Website 

- Email 

Newsletter 

- Business 

Directory 

- Mobile 

Table 11 - Competitor comparison 

Time 

Sensitive 


ROI

Know Your Enemy 

“If you know the enemy and know yourself, you need not fear the result of a 

hundred battles. If you know yourself but not the enemy, for every victory 

gained you will also suffer a defeat. If you know neither the enemy nor yourself, 

you will succumb in every battle.” Sun Tzu, The Art of War. Chapter III. 

Before engaging in a battle to capture a market, it is critical to understand your 

competitors. Due to the nature of media/advertising, this is rather simple. By 

their nature, the products of your competitors are readily available. Thus, 

estimating advertising dollars spent with your competitors is just a matter of 

getting a rate card and running through simple arithmetic. 

Tip: Use CRM to track competitors 

Your top competitors should have a section in your CRM (see Appendix E - 

Customer/Sales Management Systems). Have your inside salesperson 

periodically update your CRM with the estimated annual advertising spend for 

advertisers in your community. From this, you can run reports that list each 

advertiser and the corresponding advertising spending at each of your top 

competitors. The sum of this report should match the estimated annual revenue 

for each of your competitors. A period-over-period P&L can be derived once 

you combine this revenue estimate with a cost estimate. Competitor’s financial 

information should be updated frequently. You should also have a “war room” 

that is loaded with competitor’s information. Have the advertisements of each of 

your competitors posted on the wall for your sales staff to see. This is vital 

information that does not take much time to acquire. Your sales staff should be 

able to recite important information about your competitors and have a clear 

understanding of your newspaper’s relative strengths. 

Tip: Choose your battles 

“When you surround an army, leave an outlet free. This does not mean that the 

enemy is allowed to escape. The object is to make him believe that there is a 

road to safety, and thus prevent his fighting with the courage of despair.” Sun 

Tzu, The Art of War, Ch. VII. 

The battle for advertising should be fought on all fronts while a priority is placed 

on competing with print yellow pages and direct mail. They are weak, 

fragmented and disorganized and your products are far superior. Fight a 

protracted but subtle war with competing local publications until you have been 

sufficiently strengthened and they weakened. Then you only need to poach their 

last few advertisers. 

Competitive Strategies 

With the convergence of print, sound, video and real-time access on the web, 

the winner would be the entity that can best exploit all these communications 

areas. The winner will be the entity that can most efficiently generate quality 


(local) traffic, thus generating advertising inventory, and has the ability to sell the 

advertising inventory to the most profitable advertisers (small, local businesses). 

The approach provided should result in vendor lock-in - “In economics, vendor 

lock-in, also known as proprietary lock-in, or customer lock-in, makes a 

customer dependent on a vendor for products and services, unable to use 

another vendor without substantial switching costs. Lock-in costs which create 

barriers to market entry may result in antitrust action against a monopoly.” – 

Source Wikipedia. 

Remember to never legitimize your competition. Avoid using direct mail, 

radio/TV, billboards, etc. – even if the short term ROI is positive. The 

newspaper owns everything that works. 

Expansion Strategies 

When considering expansion, first consider that you should not lose focus on 

your home market. Ensure that you have this market locked down before 

considering moving into other markets. We like the ‘hub and spoke’ model, 

perfected by Walmart. In this model, Walmart would open a distribution center 

and then build stores in surrounding communities. Each store would be within a 

few hours drive of the distribution center ensuring that a driver could retrieve a 

load drive to the destination store, unload and return to base all in the same day. 

This simplified logistics and operations, minimized travel costs (no hotel and 

overtime costs). The geographic proximity ensures a cost advantage over rivals 

that would need to replicate this strategy in order to compete. 

A similar arrangement for a newspaper cluster would be to start with a regional 

headquarters in a moderate to large-sized market and then penetrate surrounding 

communities with appropriately sized publications. The hub can be a 

concentration of talent and capital (such as a printing facility). Sales and news 

staff could work at a small remote office, from home or from the regional 

headquarters. 


Figure 45- Geographical expansion strategy 

In the example above, all publications are within a 1-hour drive of the regional 

headquarters. Thus, including a maximum of a 2-hour return journey, an 

employee could always accomplish at least six hours of work but can shift from 

one subsidiary to another with little effort. This also enables the newspaper to 

easily concentrate staff where needed to either capture or protect market share. 

The hyper-local model works well in this situation. Brand each publication by 

the community such as “Any Town Gazette” and possibly with a sub-brand of 

the parent/regional group. However, there is a strong argument not to include 

the sub-brand as this may diminish the perception of local ownership and news. 

Towns without a local publication or that are poorly served by the large, typically 

foreign owned, publication should be pursued first (see Chapter 9 - 

Competition). Next, should be to acquire or partner with publications that may 

be competition, but wait to do so until you can negotiate from a position of 

strength. 

Note: Stuck in the middle 

It may not be as bad as it looks if a dominant player (as in the image above) surrounds your 

newspaper. Assuming that your publication has strong market penetration and good 

products in your community, it is probably better for the dominant player to takeover 

untapped territory further afield rather than to take you on directly. The costs of going headto-head 

are high and it creates the perception that they are trying to monopolize the market, 

which may cause concern with their customers, readers, suppliers and regulators. Moreover, 

your publication may find white knight in a competing newspaper company. 

Summary 

You are not in business to enrich your competitors. For nearly a century, they 

have been taking market share and would just as well see you go out of business. 


It is critical to be aware of and plan for battle with all of your competitors. Local 

newspapers should capitalize on their significant advantages: local sales team, 

local content, local ownership and management, nearly free local advertising 

traffic, etc. We have found that few online-only publications or print 

publications succeed if they entirely cease printing. Print ads credibility for 

readers and advertisers. 

The right strategy, execution and focus on capturing market share (and thus 

taking out competitors) will allow newspapers to once again enjoy a ‘natural 

monopoly’. 


Worksheet 

Advertising Market 

Market size 

Avg ad/person 

Total market 

# of 

advertisers 

20,000 

$1000 

$20m 

500 

Competitor’s market share 

TV/Cable $5m 

Radio $1 

Magazines $0.5 

Internet Giants $2m 

Business 

Directories 

$1m 

My 

Market 

5-Year 

Projection 

Competitor A $2m 

Competitor B 

Competitor C 



- Print (free 

TMC) 

- Website 

- Email 

Newsletter 

- Business 

Directory 

- Mobile 

Evaluate your competitive situation below 

Targeted Low 

barrier to 

entry 

Newspaper Competitors 

Direct mail 

TV/Cable 

Radio 

Magazines 

Internet Giants 

Business 

Hyper 

Local 

Time 

Sensitive 


ROI

Directories 

Competitor A 

Competitor B 

Competitor C 



- Print (free 

TMC) 

- Website 

- Email 

Newsletter 

- Business 

Directory 

- Mobile 


Chapter 10 - Advertising Inventory 

“The most truthful part of a newspaper is the advertisements.” Thomas 

Jefferson 

We know there is significant demand for news. Though newspaper readership 

has consistently declined, demand for news consumption continues to increase. 

In fact, as early as 1970, almost 78% of adults read a daily newspaper – 

approximately 75% of young adults (18 – 34 years old) ready a daily newspaper 34. 

Demand for media has increased dramatically and will continue to increase 

further. The average American consumes more than four hours of just television. 

Media consumption will continue to increase due to the following factors: 

increase in quality, supply, a significant decrease in distribution costs and rapid 

penetration of new platforms (Internet, email. Mobile, etc.). 

Media Consumption Shift from Print to Print + Non-Print 

While media consumption is increasing, it is rapidly shifting to non-print 

platforms. This should not be cause for alarm. Newspapers simply need to 

increase their product mix to accommodate this shift. They need to leverage the 

combination of print, web, email, mobile, etc. to regain that readership. 

Specifically, newspapers need to regain daily readership from their community. 

The chart below illustrates how non-print growth can more than offset 

advertising inventory lost to print. Further, these are revenue figures. The 

profitability of a marginal non-print dollar is far greater than that of print 

(marginal profits are the profits of one incremental dollar of revenue less costs. 

This is after fixed costs). 

34 Newspaper Association of America. Daily Newspaper Trends – Age (1967 – 1997). Average 

weekday readership. (accessed 1 Mar. 2010) 


Advertising Inventor y ($ millions) 

$2.0m 

$1.5m 

$1.0m 

$0.5m 

$0.0m 

Year 1 Year 2 Year 3 Year 4 

Mobile 0.025 0.075 0.125 0.175 

Business Directory 0.05 0.1 0.15 0.2 

Email 0.025 0.075 0.125 0.75 

Web 0.1 0.15 0.2 0.25 

Print 0.8 0.7 0.6 0.5 

Figure 12 - Advertising inventory shifting from print to non-print 

Supply > Demand 

To keep things simple, imagine there are two sides of your business: 1. create 

advertising inventory (supply) and 2. create demand (promote and sell the 

inventory). 

The objective is to sell as much advertising as possible (that is create demand) 

and then fulfill this demand with advertising inventory (supply) – and do so in 

that order. Note that local advertising is content, especially when your 

advertisers offer specials, coupons, great advertising (especially video), etc. This 

advertising demand actually increases your advertising inventory supply. 

Newspapers should always ensure that they are creating more supply than is 

needed to fulfill local demand. Sell excess supply to regional and national 

advertisers. 

$2.5 

$2.0 

$1.5 

$1.0 

$0.5 

$0.0 

Advertising Inventory Supply/Demand 

Year 1 Year 2 Year 3 Year 4 Year 5 

Supply Demand 

Figure 46 - Advertising supply should exceed demand 


Tip: When advertising demand exceeds supply 

Should you be so lucky to have your ambitious sales force outsell your advertising supply, 

just increase the number of advertisements per page. This is only is a temporary solution, of 

course. Creating additional supply is not difficult or expensive. This may be a great 

opportunity to expand your newsroom. 

Measuring Advertising Inventory - Gross Impressions 

Traffic reports should always be daily. Remember, you have a daily newspaper 

(even if you only have a weekly print). People consume media throughout the 

day. Not too long ago there were morning and evening newspapers that were 

read by a vast majority of the community every day. Set a goal to get people 

hooked on your media every day. 

To keep things simple, commoditize your advertising inventory. While each 

platform has different advantages, print, web, email and mobile advertising are 

quite similar. As you probably know, advertising agencies and buyers standardize 

advertising across all platforms (including newspapers, radio, television, etc.). 

Your advertising inventory is the sum of all impressions created multiplied by 

the weighted average potential revenue per impression. This should be easy to 

estimate the total advertising market. This can be accomplished two ways: 

1. Total amount of exposure time per media and 

2. Estimated dollars associated with these exposures 

Note: Inventory measurement standardization 

eCPM – Effective Cost Per Mille – or cost per thousand (m, mille, is Latin for 

thousand) is a means of standardizing advertising rates, thus clarifying the blur 

amongst CPC (cost per click), CPA (cost per action), etc. To find the eCPM 

simply standardize the effective cost for every thousand page impressions. CPC 

and CTR (click through rate) to eCPM = CTR *CPC * 1000 

For instance, if you have a 10% click through rate and pay $0.50 per click 

through, then for every thousand page impressions you would have 100 click 

throughs at a cost of $0.50 each or $50 eCPM. All else equal, an offer of less 

than $50 CPM (with no performance payment) is a better deal for the advertiser. 

Increasing Advertising Inventory Supply 

A majority of this book is devoted to creating demand (promotion and selling). 

By following this model, you will likely (and hopefully) sell more than what you 

created. Numerous journalism books are available and there are hundreds of 

years of experience with print; thus, we focus on creating non-print advertising 

inventory (while ensuring that it can be integrated with print). Following are 

simple and low-cost ideas. 

Website Inventory 


Building Non-Print Inventory 

Non-print advertising inventory can be created the same as in pre- 

Internet/mobile days. Always be sure to leverage the content of your 

competitors first as this is the least expensive and not doing so will leave your 

readers searching for alternatives (namely your competition). 

Tip: Leverage the Internet for news updates 

Get breaking news from the website of your competitors. If a story breaks on 

the website of a competitor, write your own article with added information that 

your newsroom may have. Of course, provide proper credit should you not be 

able to find an original source for the content of the article. 

We also recommend tools such as Google Alerts and www.urlywarning.net for 

immediate notification of important changes. 

Figure 47 - Free website change detection program 

Breaking News Process 

Print is no longer an effective medium for breaking news. The evening editions 

previously broke news, but their numbers and readership have decreased 

significantly. Regardless, breaking news delivery would still lag by at least a few 

hours. New technologies enable newspapers to break news within minutes. This is 

the basic process: 

1. Identify the breaking story through your news staff, the website of your 

competitor, etc. 

a. If the story is from your competitor, see if you can find an original 

source (no sense in unnecessarily giving them credit) 

b. If it is your story, then start the breaking news with something like 

“first reported by .” Inevitably, your 

competition will copy so this ensures that you receive credit for 

originating/breaking the story. Video is especially valuable since 

competitors cannot copy this as they could content that is written. 

2. Update your website, but wait to publish the story until you send out the 

breaking news alert (next) otherwise competitors that are scanning your 


website may scoop you (see Figure 47 - Free website change detection 

program). 

3. Immediately send an email newsletter and mobile breaking news. Include a 

photo and reference to video (if possible). Only deliver the first few 

sentences of the story to ensure that the readers click through to see the 

entire story on your website, including photos and video. Including a link 

for the top advertiser of the day is a nice touch, especially when there is a 

lunch/dinner special that is valid only for the day. 

We have seen many non-daily print publications scoop the print daily, radio and 

television stations by hours, even days by leveraging this process. The readers love it. 

Breaking news click through rates often exceed 75%. This is an intricate part of 

getting readers in our community addicted to your brand. 

We recommend that newspapers build up to five or more breaking news items every 

week. Monitor the click through rates as a determinant of what your readers’ 

interests. It is surprising to see how easy it is to engage your audience with what may 

seem like trivial news. 

News from Local Business People 

Many newspapers will have local experts write up a column for which they get credit 

as the author and a mention of their organization. CPAs, lawyers, doctors, business 

experts, trainers, real estate agents and religious leaders are all people who may be 

eager to write content in exchange for the PR. Exchanging PR for advertising is a 

breach of editorial independence; nevertheless, these people should certainly receive 

a visit from your sales staff. 

Wire Services 

Global wire services can certainly help newspapers increase advertising inventory. 

However, we recommend not relying on them because our data show that the 

view and click through rates are very low. We suspect that readers are getting 

breaking news from CNN and AP (but unfortunately, the latter is on Yahoo! 

and Google websites). 

Intrinsically, newspapers can easily beat Yahoo! and Google because they can 

generate much higher CPMs from local advertisers. Furthermore, the perceived 

quality of local advertising is much greater than that of national advertisers. See 

Chapter 9 - Competition, Yahoo! section. They have mostly low quality 

advertising from mortgage companies, sleazy dating services, etc. 

Tip: Real Estate Agents Locking out Competition 

We often hear that real estate agents and brokers attempt to restrict competition by refusing 

to do business with publications that allow advertisements from private parties (aka FSBOs - 

for sale by owners). A great way to get around this is to present to these local real estate 

agents an opinion letter from the attorney of your newspaper association. It should state that 

a practices may run afoul of antitrust law, thus creating civil, and possibly criminal, exposure 

for the newspaper and the agents or brokers. 

Tip: My Yahoo! and iGoogle portals 


As you see, we think that Yahoo! and Google provide little value for newspapers 

and in fact are actually damaging to them. Much of the traffic to Yahoo! (and 

increasingly to Google) is through portal functionality, which newspapers have 

an opportunity to displace. Essentially, a portal is a customizable collection of 

information components such as news headlines, weather, stock listings, etc. 

Most of these components are built on RSS or some other type of widget (web 

gadget) technology and are open standard and readily available. It is conceivable 

for newspapers to turn their home page into a customizable web portal and thus 

enable users to get all or most of the portal functionality offered by Yahoo! and 

Google. This would generate significant traffic and credibility while displacing a 

competitor. 

Search Engine Marketing (SEM) 

Search engine marketing is a form of Internet marketing that seeks to promote 

websites by increasing their visibility in search engine result pages (SERPs) 

through the use of paid placement, contextual advertising, and paid inclusion. 

Source: Wikipedia 

Search engine optimization (SEO), on the other hand, is the process of 

improving the volume or quality of traffic to a web site from search engines via 

"natural" or un-paid ("organic" or "algorithmic") search results as opposed to 

search engine marketing (SEM) which deals with paid inclusion. Typically, the 

earlier (or higher) a site appears in the search results list, the more visitors it will 

receive from the search engine. SEO may target different kinds of search, 

including image search, local search, video search and industry-specific vertical 

search engines. This gives a website web presence. Source: Wikipedia. 

Anything other than basic optimization of your website is likely a waste of time 

and money. People in your community should know where to go. Not many 

people should come or go… Focus on local first. 

Tip: Shoppers and advertising-only publications 

Do not worry if you currently have no editorial. The probability of success of a 100% retail 

advertising publication that adds editorial is much higher than a publication that depends 

largely readers (via circulation and classifieds). The reason is very simple. The business model 

around the former is built on doing one thing – serving local businesses (that is selling). 

By evolving to become a more community-centric and involved publication, your loyal 

advertisers and other businesses in the community will appreciate the service you provide. 

Forecasting Advertising Inventory 

Newspapers have a lot going for them. In addition to having the “feet on the 

street” to serve local advertisers, they also have a natural cluster effect 35. 

35 “The cluster effect is the effect of buyers and sellers of a particular good or service congregating 

in a certain place and hence inducing other buyers and sellers to relocate there as well.” – Source: 

Wikipedia (accessed 5 Dec. 2009) 


Moreover, by staying local, newspapers can quickly reach critical mass. That is, 

the newspaper can reach the point where most of their target market of readers 

and advertisers are aware of the newspaper and use it enough of the time to 

have a natural momentum. 

Stay focused on serving the advertisers until you reach this point. Then consider 

charging for content (which will create an even greater dependence from your 

community). 

Product/Market Diffusion 

The following illustrated how markets and product adoption starts slowly, first 

with innovators and early adopters, and then accelerates before tapering off. 

Mobile applications, for instance. have demonstrated very high product 

penetration, upwards of 20% within a few months. Above average intelligence 

phones such as Blackberry/RIM and the Palm Treo introduced this opportunity 

and then Apple’s iPhone swept the market with a truly “smart” phone. In only a 

few years, Apple captured nearly 8% market share, an incredible feat. Refer to 

the product diffusion curve below. Capturing the innovators (2.5% of the total 

market) too above average and smart phone technology more than a decade. 

Then in one year, Apple captured almost half of the innovator segment, which 

means that smart phones should capture the other ½ of innovators. The early 

and late majority segments represent should be captured in about two years each 

(four years total) meaning that within five years 84% of Americans will have a 

smart phone. Hopefully, Android, Microsoft, etc. will also gain traction so there 

is competition. 

Figure 48 - Market/product diffusion curve 


Population/market size 100,000 

Early Early Late 

Innovators Adopters Majority Majority 

(Years 1-4) (2010/11) (2012/13) (2014/15) 

M arket share 2.5% 13.5% 34.0% 34.0% 

Total market share 2.5% 16.0% 50.0% 84.0% 

Daily visitors 2,500 16,000 50,000 84,000 

Pg views/visitor 6.0 9.0 12.0 15.0 

Total page views 15,000 144,000 600,000 1,260,000 

Rev/page view $ 0.04 $ 0.05 $ 0.05 $ 0.06 

Daily revenue $ 600 $ 7,200 $ 30,000 $ 75,600 

Annu alized ($m) $ 0.2 $ 2.6 $ 11.0 $ 27.6 

Total Market ($m) $ 100.0 $ 100.0 $ 100.0 $ 100.0 

M arket share 0.2% 2.6% 11.0% 27.6% 

Avg minutes per day 3.0 4.5 6.0 

7.5 

* Note: Avg American watches more than 4 hours of television per day. Page 

view = 30 seconds. 

Table 49 - Newspaper platform product/market diffusion 

From the table above, you can see that this represents an incredible opportunity for 

newspapers. It has take newspapers more than 10 years to capture the innovators, 

but with the right platforms and components as well as attractive pricing and 

promotion, it is possible for newspapers to capture the next three segments in as 

little as one year each. Applying what are reasonable advertising rates (that should be 

high with local advertisers), you can see that a newspaper can quickly capture market 

share. Not convinced? This opportunity will certainly not go to print business 

directories, television, radio or direct mail. Nor will it go to Yahoo! or Google – 

unless the newspaper gives it to them. 

Since the 1930’s, newspaper’s market share has progressively eroded. This was slow 

because the penetration of radio, television and other forms of media were rather 

slow. With the rapid adoption of the Internet (especially high speed broadband) and 

email, and an especially rapid adoption of smart mobile devices, newspapers can be 

the winners 

Selling Inventory 

It is important always to have enough advertising inventory to far exceed local 

demands. This inventory can then be sold to regional and then national (likely 

remnant) advertisers. The chart below illustrates a more conservative outlook for 

newspapers. Moreover, it quantifies the media consumption shift from print to 

non-print platforms. Most importantly, you can see how by only capturing a few 

minutes mindshare from the average community member each day your 

publication can do well. 


Year 1 - Market Size 20,000 

Print Website Mobile Net 

Avg daily penetration 50% 30% 2% 82% 

Daily visitors (A) 10,000 6,000 400 16,400 

Avg pages/visit 40.0 

6.0 

5.0 

26.7 

Avg ad rev/page $ 0.040 $ 0.050 $ 0.040 $ 0.044 

Avg ad rev/visitor $ 1.60 $ 0.30 $ 0.20 $ 1.17 

Avg paid by visitor $ 0.30 $ - $ - 

$ 0.18 

Avg rev/visitor (B) $ 1.90 $ 0.30 $ 0.20 $ 1.27 

Total rev (A*B) 19,000 

1,800 

80 

20,880 

Annualized $ 6,935,000 $ 657,000 $ 29,200 $ 7,621,200 




Daily visitors (A) 9,000 -10% 7,200 20% 800 100% 17,000 

Avg pages/visit 36.0 -10% 10.5 75% 12.5 150% 24.1 

Avg ad rev/page $ 0.038 -5% $ 0.070 40% $ 0.060 50% $ 0.053 


Avg paid by visitor $ 0.30 0% $ - 0% $ - 0% $ 0.16 



5,292 

600 

20,904 

Annualized $ 5,479,380 $ 1,931,580 $ 219,000 $ 7,629,960 

Net Change -21% 194% 650% 0% 




Daily visitors (A) 8,100 -10% 7,560 5% 1,600 100% 17,260 

Avg pages/visit 32.4 -10% 12.6 20% 15.0 20% 22.1 

Avg ad rev/page $ 0.036 -5% $ 0.077 10% $ 0.072 20% $ 0.057 


Avg paid by visitor $ 0.30 0% $ - 0% $ - 0% $ 0.14 



7,335 

1,728 

20,967 

Annualized $ 4,344,991 $ 2,677,170 $ 630,720 $ 7,652,881 

Net Change -21% 39% 188% 0% 

Table 50 - Shift from print to print + non-print 

Note in the above example that the revenue growth of a daily maybe zero. 

Frankly, this may actually be good considering that print is declining rapidly. 

Further, the profitability of non-print is much higher than print so the overall 

profit margins may increase. Just consider this a conservative forecast. 

Managing the Team 

Next, we address how to get your entire team on board, and especially how to make 

your non-sales employees accountable to the overall goals of the company (increase 

revenue and profits). A wise saying, “if you can’t measure it, you can’t manage it.” 


Sales Team 

Revenue 

($ millions) 

Website 

(general) 

Email 

Newsletter 

Product Management Team 

Business 

Directory 

Classifieds 

(inc Banners) 

Food & Beverages $ 0.20 $ 0.20 $ 0.20 $ - 0.60 

Transportation $ 0.20 $ 0.15 $ 0.15 $ 0.15 0.65 

Real Estate $ 0.20 $ 0.10 $ 0.10 $ 0.20 0.60 

Misc Retail $ 0.20 $ 0.15 $ 0.25 $ 0.10 0.70 

Services & Other $ 0.20 $ 0.10 $ 0.30 $ 0.10 0.70 

Recruitment $ - $ - $ 0.10 $ 0.15 0.25 

Total Revenue $ 1.00 $ 0.70 $ 1.10 $ 0.70 3.50 

Table 51 - Sale/product management for mid-sized publications 

Total 

Internet Print 

$ 1.00 

$ 1.40 

$ 1.10 

$ 1.40 

$ 1.20 

$ 1.00 

$ 7.10 

In the above example, the sales team is directly accountable for their territory (or 

preferably category). Only your salespeople are calling on customers. Everyone 

else (print operations, technology people and even the newsroom) become de 

facto product managers, accountable for generating advertising inventory. This 

model is identical to that used by product companies such as Unilever, Procter 

& Gamble, etc. Until now, newspapers had only one product so this was not 

applicable. 

Results should be measurable and employees and managers should be 

accountable: 

Advertising inventory – assign matrix to each person/department: 

Marketing – average visitors per day 

Sales total revenue & revenue per impression 

Editorial average time on site (per visitor per day) & page views per visitor 


Total 

Revenue 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 1.60 

$ 2.05 

$ 1.70 

$ 2.10 

$ 1.90 

$ 1.25 

$ 10.60 

As you can see, the columns and rows add up to the newspaper’s revenue target. 

Take this a step further by adding profits and market share. This is the best 

model for closely aligning the goals of the various functions in your organization. 

Please see additional reports at the end of this chapter. Just as a reminder, free 

access to all reports and spreadsheets can be found at 

http://www.verican.com/book/. 

Summary 

Managing your advertising inventory is important, especially since it is likely that 

you will run low on inventory. Just a few years ago, creating advertising 

inventory was very expensive, but this has changed with the Internet and 

because most media have neglected local business (minnows).

Newspaper Advertising Report (Summarized)

Your Newspaper Advertising Inventory Report 

Email Newsletter Value Added 

Description 

Company 

Assumption 

Population Growth 1.0% 

Circulation 20,000 

Daily Online Visitors 4,000 

Online Visitor Growth 10.0% 

Total Email Newsletter Subcribers 5,000 

Email Subcriber Growth 100% 

Rev per Email/Page View (US$ for 8 ads/email sent) $ 0.050 

Rev per Email/Page View Annual Growth 50.0% 

Email Click Through Rate 10.0% 

Page Views Per Visitor 3.4 

Page Views Per Visitor Annual Growth 10.0% 

Ref Growth Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 

Your Newspaper Market 

Community Size A 1% 100,000 100,083 100,167 100,250 100,334 

Circulation B 20,000 20,000 20,000 20,000 20,000 

Daily Online Visitors C 10% 4,000 4,003 4,007 4,010 4,013 

% of Comm. Subscribing to Print Version D=B/A 20.0% 20.0% 20.0% 20.0% 19.9% 

% of Community Visiting Site Monthly E=C/A 4.0% 4.0% 4.0% 4.0% 4.0% 

Email Newsletter Product Revenues 

Total Email Newsletter Subscribers 100% 5,000 

Email Ad Space 

Frequency (monthly) D 30 30 30 30 30 

Total Emails Sent E=C*D 150,000 162,006 174,974 188,979 204,106 

Rev Per Email - 4 ads (US$) F 50% 0.050 0.052 0.054 0.056 0.059 

Email Revenue (US$) G=E*F 7,500 8,431 9,478 10,654 11,977 

Online Traffic Generated from Email Newsletter 

Email Click Through Rate H 10% 10.0% 10.1% 10.2% 10.3% 10.3% 

Visitors Per Month I=E*H 15,000 16,335 17,789 19,372 21,097 

Page Views Per Visitor J 10% 3.4 3.4 3.5 3.5 3.5 

Total Page Views K=I*J 51,000 56,000 61,491 67,519 74,139 

Rev per Page View - 4 ads (US$) L 50% 0.050 0.052 0.054 0.056 0.059 

Increased Online Revenue (US$) M=K*L 2,550 2,914 3,331 3,807 4,350 

Total Revenue (US$) N=M+G 10,050 11,345 12,808 14,461 16,327 

Expenses 

Hosting + SG&A (30%) O 4,020 4,538 5,123 5,784 6,531 

EBIT (US$) P=N-O 6,030 6,807 7,685 8,676 9,796 

Net Profit Margin 60% 60% 60% 60% 60% 

5,400 

5,832 

6,299 

6,804

Your Newspaper Advertising Inventory Report 

Email Newsletter Value Added 

Description 

Company 

Assumption 

Population Growth 1.0% 

Circulation 20,000 

Daily Online Visitors 4,000 

Online Visitor Growth 10.0% 

Total Email Newsletter Subcribers 5,000 

Email Subcriber Growth 100% 

Rev per Email/Page View (US$ for 8 ads/email sent) $ 0.050 

Rev per Email/Page View Annual Growth 50.0% 

Email Click Through Rate 10.0% 

Page Views Per Visitor 3.4 

Page Views Per Visitor Annual Growth 10.0% 

Ref Growth Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 

Your Newspaper Market 

Community Size A 1% 100,000 100,083 100,167 100,250 100,334 

Circulation B 20,000 20,000 20,000 20,000 20,000 

Daily Online Visitors C 10% 4,000 4,003 4,007 4,010 4,013 

% of Comm. Subscribing to Print Version D=B/A 20.0% 20.0% 20.0% 20.0% 19.9% 

% of Community Visiting Site Monthly E=C/A 4.0% 4.0% 4.0% 4.0% 4.0% 

Email Newsletter Product Revenues 

Total Email Newsletter Subscribers 100% 5,000 

Email Ad Space 

Frequency (monthly) D 30 30 30 30 30 

Total Emails Sent E=C*D 150,000 162,006 174,974 188,979 204,106 

Rev Per Email - 4 ads (US$) F 50% 0.050 0.052 0.054 0.056 0.059 

Email Revenue (US$) G=E*F 7,500 8,431 9,478 10,654 11,977 

Online Traffic Generated from Email Newsletter 

Email Click Through Rate H 10% 10.0% 10.1% 10.2% 10.3% 10.3% 

Visitors Per Month I=E*H 15,000 16,335 17,789 19,372 21,097 

Page Views Per Visitor J 10% 3.4 3.4 3.5 3.5 3.5 

Total Page Views K=I*J 51,000 56,000 61,491 67,519 74,139 

Rev per Page View - 4 ads (US$) L 50% 0.050 0.052 0.054 0.056 0.059 

Increased Online Revenue (US$) M=K*L 2,550 2,914 3,331 3,807 4,350 

Total Revenue (US$) N=M+G 10,050 11,345 12,808 14,461 16,327 

Expenses 

Hosting + SG&A (30%) O 4,020 4,538 5,123 5,784 6,531 

EBIT (US$) P=N-O 6,030 6,807 7,685 8,676 9,796 

Net Profit Margin 60% 60% 60% 60% 60% 

Copyright 2009, Eric Buskirk, Page 137 of 182 

5,400 

5,832 

6,299 

6,804

Chapter 11 - Financials 

Your newspaper’s focus should always be on the financials – and especially increasing 

profits. Set a profit margin target that is consistent with the industry (or likely where 

the industry is going). The 30-45% margins that newspapers experienced until the last 

few years were the result of the natural monopoly they developed in the community. 

These margins will return, but not until after the upcoming growth stage. 

Until recently, running a daily newspaper required a very expensive pressroom, which 

can run into the hundreds of millions of dollars, along with the ongoing costs of 

operating the press, running a newsroom, maintaining sales and distribution channels, 

etc. Entry costs were very high. Thus, most markets could not support more than one 

daily newspaper. The Internet has changed all of this. Now a daily newspaper (daily 

online, mobile and email plus a weekly or monthly print publication) can be run with as 

few as 1/100 th the number of people and 1/100 th of the startup costs. 

During the short term, newspapers should focus on staying profitable, even if only 

modestly. Most businesses run at profit margins of only 5% or so; thus, newspapers 

should be grateful if once 30% profit margins drop to only 10-15. Long term, profits 

will increase with sales growth. As your products become stars and cash cows, profits 

will increase with price increases and pulling back on sales and marketing related 

expenses. 

Start with a Blank Sheet of Paper 

Whether your newspaper is two or 200 years old, a valuable activity is to start with a 

blank sheet of paper and write out what your company looks like now and what you 

think it will look like in one, two, five and ten years. The key is to start simple. Just 

focus on the high-level revenue/cost drivers and then work your way backward into 

the details. 

We prefer to start with a ‘top-down’ approach, which helps you first determine what is 

possible. Then work backward to on an execution plan. For instance, in Chapter 5 - 

Place (Advertising Market) we found that including advertising, promotions, etc. the 

market potential is around $1000 for every man, woman and child. Thus, a 20,000population 

community has at least $20m adverting potential. We also found that typical 

small businesses should be spending 2x to 4x more than they are currently spending. 

Your local market is probably much larger than your staff may think. 

Revenue Per Consumer 

The revenue really comes from consumers. Customers (those who pay you, namely 

advertisers) are paying you to help make them successful by serving these consumers. 

The following graph illustrates the multiplier effect of A. increasing the number of 

consumers and B. increasing revenue per consumer. A*B = C (total newspaper 

revenue). The rate of growth should increase as your newspaper reaches the point of 

maximum market penetration at which time revenue growth will continue to increase, 

Copyright 2009, Eric Buskirk, Page 138 of 182

ut the rate of increase will decline. This inflection point is a good opportunity to scale 

back on your sales and marketing expenses as this product will have risen from a star 

to become a cash cow. 

Figure 52 - Revenue per consumer multiplier effect 

Key Revenue Drivers 

The following chart demonstrates the key revenue drivers of a newspaper. An 

explanation of these drivers follows: 

Last Year This Year Year 2 Year 3 Year 4 

Circul ation (paid daily) 

# Subscribers 10,000 -10% 9,000 -10% 8,100 -10% 7,290 -10% 6,561 

Avg rev/subscriber $ 120 10% $ 132 0% $ 132 0% $ 132 0% $ 132 

Classifieds 

$ 1,200,000 -1% $ 1,188,000 -10% $ 1,069,200 -10% $ 962,280 -10% $ 866,052 

# Ads 20,000 -20% 16,000 0% 16,000 0% 16,000 0% 16,000 

Avg rev/ad $ 50 -15% $ 43 -15% $ 36 -15% $ 31 -15% $ 26 

Retail 

$ 1,000,000 -32% $ 680,000 -15% $ 578,000 -15% $ 491,300 -15% $ 417,605 

# Advertisers 200 -10% 180 25% 225 25% 281 25% 352 

Avg rev/advertiser $ 4,000 -10% $ 3,600 20% $ 4,320 15% $ 4,968 15% $ 5,713 

$ 800,000 -19% $ 648,000 50% $ 972,000 44% $ 1,397,250 44% $ 2,008,547 

To tal Revenue $ 3,000,000 -16% $ 2,516,000 4% $ 2,619,200 9% $ 2,850,830 15% $ 3,292,204 

Table 13 - Newspaper key revenue drivers 

Circulation (print – paid dailies): The quality of newspapers has declined substantially 

as newspapers cut their newsroom and replace this with feeds from wire services, 

decrease the number of pages and decrease the size of the pages. Concurrently, many 

newspapers are increasing the price of a subscription, essentially charging more while 

providing less. This will certainly result in a decline of print circulation, which will 

create downward pressure on the rates retail advertisers will be willing to pay. Likely, 

mounting print losses will be countered addition product degradation caused by 

additional cuts, including to the print frequency. The print newspaper will stabilize as a 

weekly (or possibly monthly) print product (with a daily online, mobile and email 


edition). The key is to manage this print decline to ensure that circulation 

revenues/profits are maximized with little or no damage to retail advertisers. 

Classifieds: Revenue drivers, the number of ads and revenue per ad, have both 

decreased substantially. The multiplier effect has resulted in the plummeting of total 

classifieds revenue. California is a bellwether state for classifieds and newspapers in 

general. California publications were hardest hit by Craigslist (and other Internet 

classifieds alternatives include Oodle, Monster, Yahoo!, Google, etc.) and California 

was disproportionately hit with the 2009/2010 recession. Many of these newspapers 

have reported classifieds revenue declines upwards of 90% - and overall revenue 

declines exceeding 50%. While California has been hit particularly hard, all newspapers 

around the world will be significantly impacted. 

Retail advertising: While Wall Street seems to have recovered, Main Street is still 

suffering. Revenue in this category is also down. However, retail advertising is the only 

category where newspapers can focus their attention. Newspapers have the greatest 

control over this revenue driver. From another perspective, imagine you are the 

circulation manager. Everyday you think about how to increase circulation, but every 

attempt will likely result in a minimal impact. The cost/benefit analysis is easy: cost of 

the circulation campaign, estimated number of new subscribers generated and the 

estimated churn. Thus, one can quickly conclude that the number of print subscribers 

and the total circulation will inevitably decrease. Classifieds is in a similar situation, 

albeit more can be done to minimize the decline and possibly institute a modest 

turnaround (see Appendix C - Classifieds). 

Amongst circulation, classifieds and retail advertising, only retail advertising is the 

source of significant and controllable revenue growth. Furthermore, this revenue driver 

is ideal because the sale is not complex and there is an immediate and measurable 

benefit. The publisher, ad director and sales staff can institute immediate changes 

simply by each going out on 10-20 sales calls tomorrow. 

Tip: Avoid decreasing revenue per customer 

You have spent years building your company and now you are faced with significant 

downward pricing pressure. It is okay to reduce prices, just ensure that you maintain 

the same revenue per customer (and subscriber for that matter). The same strategy 

applies to print subscribers. To maintain the same circulation revenue per subscriber, 

offer incentives such as online access, coupons, discount cards, etc. Posting all print 

classified ads on your website is a way to increase the value provided to these 

advertisers without decreasing prices. 

Most important is to keep your retail advertisers at the same or greater monthly spend 

rate. Accomplish this by blending print, online and mobile/smart phone in special (see 

Chapter 6 - Pricing). 

Financials: Immediate Profit Impact 


(Annual) 

1. Increase 2. Increase # of 

Revenue: 

Before Prices 

Customers 

Avg Rev/Cust $ 4,000 +10% $ 4,400 $ 4,400 

# Customers 250 

250 +10% 275 

Expenses: 

$ 1,000,000 $ 1,100,000 $ 1,210,000 

Direct/variable 35% 350,000 

385,000 

423,500 

Fixed costs 500,000 

500,000 

500,000 

Profit $ 150,000 $ 215,000 $ 286,500 

Profit Increase: 

Table 14 - Immediate profit impact 

43% 91% 

The table above illustrates how newspapers can nearly double profits by merely 

increasing prices and the number of customers by only 10%. To increase prices by 

10% do the following: 

1. New products: needed so you have a credible story with legitimate value 

added. For 10% (or more) extra, the new advertising package should includes a 

business directory listing (as well as other space on your website), a listing on 

one or more of your email newsletters and it should include mobile advertising 

both with banner ads and with your business. 

2. Media/sales kit: Ensure that you have a very attractive, better yet flawless, 

media kit. This reinforces your offering. Your salespeople should be fully 

trained on this offering and how to explain the features and, more importantly, 

the benefits of the new media offering. To ensure that you have buy-in from 

your sales team, make the revenue from the price increase commissionable or 

part of their bonus. A 10% price increase should result in a 10% commission 

(or more) commission increase. To retain customers and become enthusiastic 

about selling, they need to be motivated. 

3. Manage exceptions: Should advertisers complain, provide a clear explanation 

of how the benefits of the new advertising products far exceed the costs and 

point out the value that the newspaper provides to the local community 

(especially compared to alternative forms of advertising such as radio, TV, 

print business directories, direct mail, etc.). Point out that increase is only a 

small percentage of what should be the advertiser’s budget. See Chapter 5 - 

Place (Advertising Market). Appease particularly vocal advertisers with a 

discount that eliminates or reduces the increase but only for the first couple of 

months while they wait to see the results of the new products. 

Next institute a plan to increase the number of advertisers by 10%: 

1. Buy in from sales: Since a new advertiser drive is rolled out with your new 

products and media kit/sales campaign, it should be well received by your 

salespeople (who just had their commissions increased by 10% by the price 

increase implemented above). 

2. Increase customer base: With your new products, sales team should be able 

to increase the customer base. This example illustrated an only 10% increase. 

Focus on print business directory and direct mail advertisers since your 

newspaper now has competing products that are more effective and efficient 

and that reflect technology trends toward the Internet, email and mobile. 


Thus, as you can see from above a 10% increase in prices and a 10% increase in the 

customer base results in profits nearly doubling. This will have a tremendous effect on 

moral as employees can see that they are working for a successful company. Since 

success breeds success, the next step is to increase your sales team to maximize 

penetration of the local advertising base. Following this, the newspaper should use the 

same business model to raid the territory of publications in adjacent communities. 

Maintaining Profit Growth 

Now that your publication is on a path to success, focus on profit growth using these 

three levers (see table below): 

1. Increase number of customers 

2. Upsell existing customers to a higher package – that is, demonstrate the value 

of the advertising campaign and how their advertisers are typically advertising 

well below where they should and that the newspaper is the best place for all 

advertising dollars. 

3. The prices of packages should increase to reflect the increase in value (based 

on allocation of your advertising inventory) and market conditions such that 

you can increase revenue per impression. As the market share of your 

publication increases, pricing power will increase. 

Consider the following illustration that reflects the impact of only a 10% increase in 

each lever: 

(Annual) Year 1 Year 2 Year 3 Year 4 Year 5 

Average Package Price $5,000 10% $5,500 10% $6,050 10% $6,655 10% $7,321 

Average Package Level 1.00 10% 1.10 10% 1.21 10% 1.33 10% 1.46 

Average Rev/Customer $5,000 $6,050 $7,321 $8,858 $10,718 

# of Customers 200 10% 220 10% 242 10% 266 10% 293 

Total Advertising 

Expenses: 

$1,000,000 $1,331,000 $1,771,561 $2,357,948 $3,138,428 

Variable (35%) $350,000 $465,850 $620,046 $825,282 $1,098,450 

Fixed 500,000 

500,000 

500,000 

500,000 

500,000 

Profit (before taxes) $150,000 $365,150 $651,515 $1,032,666 $1,539,978 

143% 78% 59% 49% 

Table 15 - Small increase of many levers, substantial results 

As you can see, this approach increases your revenues and, more importantly, it 

significantly increases your profits. Of course, this table is overly simplified. Add 

additional detail as necessary. The importance of this is to identify your revenue levers 

and focus on increasing each of them and doing so consistently with the goal of 

consistently increasing profits. 

Breakeven point (Not Going Broke) 

Identifying and quickly reaching a breakeven point is the first part of your primary goal 

of not going broke. All costs are either fixed or variable. Variable, or direct, costs 

change proportionately with the increase (or decrease) in revenue. Fixed percentage 

sales commissions are a good example of a variable cost. Other variable costs include 

costs of processing orders, cost of graphic design for advertising, the cost of printing 

additional pages to accommodate more advertising, etc. Fixed costs, on the other hand, 

are costs that do not change with a change in revenue. The cost of owning a press as 


well as the costs of printing only one publication each day would be considered fixed. 

Other fixed costs include the cost of your building, including basic maintenance such 

as heating/air conditioning, property taxes, security, etc. For the most part, the costs of 

your newsroom are fixed as are salaries of your management team (typically including 

benefits but not including commissions and bonuses). Interest is a cost that is pseudofixed 

cost. 

The most important part of not going broke is to have a clear understanding of your 

cash flow and especially your break-even point. Take all steps to stay above this point 

(that is to stay profitable). Consider the following table: 

Newspaper A Newspaper B 

Revenue $1,000,000 100% $1,000,000 100% 

Variable costs 350,000 35% 550,000 55% 

Contribution margin 650,000 65% 450,000 45% 

Fixed costs 500,000 300,000 

Profit $150,000 $150,000 

Breakeven point $769,231 $666,667 

Table 16 - High/low fixed costs comparison 

For Newspaper A, contribution margin, or the margin of revenue that contributes to 

fixed costs and profits, is 65%. Thus, for every $1 increase in revenue, $0.65 goes 

toward profits. The breakeven point of Newspaper A is $769,231 (fixed 

costs/contribution margin %). Thus, a higher than 23% revenue decline will result in 

this newspaper losing money. Newspaper B has the same revenue and profit such that 

revenue could decline by 33% before this publication would start losing money. Thus, 

Newspaper B is certainly in a better position to weather the storms that the industry is 

currently going through, but newspaper A can do better with significant increases in 

revenue. However, newspaper B is more nimble. 

As revenues increase, fixed costs have a tendency to increase. Newspapers expand their 

newsroom, build larger (often grander) facilities, increase employee compensation, etc. 

Lately, we have seen the opposite happen where, out of necessity to survive, fixed 

costs are decreasing. Newsrooms are shrinking; excess office space is sold, leases are 

not renewed or it is sublet; printing is outsourced, base pay is being cut and even 

furloughs are being enacted. Filing for bankruptcy reorganization is the ultimate means 

of reducing fixed costs. Under this program, management can renegotiate contracts 

and other obligations that often encompass fixed costs. Newspapers can walk away 

from printing facilities (and their enormous overhead) and, most importantly, debts 

can be renegotiated with lenders. According to economics theory, all costs are variable 

in the long run. 

Note: Better – high or low fixed costs? 

Is it better to have high fixed costs with the benefit of higher gross margins or to have 

low fixed costs but countered with a lower gross margin? ‘It depends’, of course. With 

the current revenue declines that newspapers have been experiencing and the 

uncertainty about the future, few newspaper executives would prefer to have high fixed 


costs. Long term, assuming that your publication can consistently increase profits and 

manage revenue fluctuations, increasing fixed expenses in order to increase your 

contribution margin percentage makes sense because increases in revenue will yield 

higher profits. Taking on debt for expansion or acquisitions may also be justified, 

especially if interest rates are low, which essentially has a lower fixed cost (or lower 

cost of capital). Of course, time horizon must far enough to mitigate increases in the 

cost of debt due to inflation. Historically, interest rates have been quite high. It is 

possible that we will experience high interest rates in the near future. 

Until there is more certainty about the outlook of the industry and the economy it is 

probably best to minimize fixed costs and stay lean and nimble. 

Cash/Risk Management 

Be careful of providing credit terms. The cost of capital for a newspaper has never 

been higher. Get paid quickly, preferably in advance, even if you have to provide a 

discount or pay credit card fees. Charge late fees. Avoid paying sales commissions or 

bonuses until cash has been received. Be aggressive about writing down aged 

receivables so you do not distort your P&L/cash flow position. High-risk customers 

will be most willing to do business with you but carefully consider the cost of 

collection and the risk of loss. Preemptively weed out the deadbeat customers with 

aggressive credit terms. If a customer cannot pay within 30 days or so, then they will 

probably be a headache for you later. 

Cost/Cash Savings Suggestions 

• Emphasize non-print (Internet, email and mobile). These platforms provide very 

high incremental profits and very flexible 

• Pay for performance 

• Pursue user-generated content (such as having local businesspeople write stories 

but not advertorials) 

• Streamline and focus on sales: Minimize per-visit costs by having more visits with 

the same cost base 

• Jettison your pressroom, expensive buildings, etc. 

• Ditch most memberships (cost per sale of schmoozing is typically much higher 

than high-volume sales meetings plan) 

• Avoid long and expensive client outings, even meals. They take too long, are 

distracting and eliminate a “sense of urgency” 

• Get paid quickly. National advertisers demand payment terms upwards of 90 to 

120 days. They are running their company on your cash. Furthermore, your 

newspaper is absorbing additional default risk. While there may be little you can do 

to mitigate this risk, you do not need to extend comparable terms to your local 

advertisers. Most are unaware that these terms are available. Many will even pay in 

advance of services rendered. It may be better to provide a small discount for 

immediate payment. This is certainly a better choice than carrying risky receivables. 


• Pay commissions when cash is received. Of course, it is best to let your receivables 

clerk take care of most dunning, but salespeople should be dispatched to collect 

when necessary. 

Tip: Extending terms 

With respect to financing, newspapers have several distinct advantages: they can meet the customers 

in person to get a sense of their character, collection costs are lower and they have alternatives for 

collection (such as bartering for distressed debt). Newspapers can leverage this advantage by 

extending credit in order to get a sale – and likely discounting less. 

Also, pay sales executives their commission only upon receipt of payment and only if the sales 

executive is still employed with your publication. By placing part of the burden for extending debt 

and collection on the salesperson there is sense of obligation on the salesperson and they certainly 

want to stay with your newspaper so they can collect their commissions. 

Employee Incentives 

Incentivize everyone in the organization to create what is most important: profits. 

Commission/ 

Bonus 

Matrix 

Outside sales 70-100% New customers/revenue growth 

Inside sales 30%+ Revenue growth 

Management 50% Excess profits 

Everyone else 10-30% Excess profits 

* % of their targeted total compensation 

Table 17 - Employee incentives 

Manage by Objectives (and accountability) 

The publisher should have control over the entire process. Communicate the status 

with daily or weekly advertising inventory reports with comparisons to targets. “If you 

cannot measure it, you cannot manage it.” 

1. Share revenue/profitability data with employees, especially during bad times 

2. Tie compensation to individual and company performance 

3. When the time comes, use excess profits for expansion (which will keep others from 

thinking that you are making too much money). Goal: short-term survival, mediumterm 

capture local market share, long-term expansion and high margins 

Profit: Operating, Accounting and Economic 

The table below illustrates the different types of profits. Operating profits is similar to 

net cash flow (though often does not include capitalization of costs or recognizing 

depreciation or amortization of these costs). An accounting profit takes into account 

costs today for which there is a future benefit. Note that a company can have an 

accounting profit but be cash flow negative – and possibly forced in bankruptcy. An 

economic profit accounts for the cost of capital and opportunity costs (for instance 

when you the owner do not pay yourself a market wage). 


Missed Target Stretch 

# Customers 250 10% 275 20% 300 

Avg. rev/customer $ 4,000 10% $ 4,400 20% $ 4,800 

Total revenue $ 1,000,000 $ 1,210,000 $ 1,440,000 

Direct/variable costs 35% 350,000 423,500 504,000 

Contribution margin 650,000 786,500 936,000 

Fixed costs/overhead 500,000 500,000 500,000 

EBIT 150,000 286,500 436,000 

Interest 100,000 100,000 100,000 

EBT 50,000 186,500 336,000 

Cost of capital 100,000 100,000 100,000 

Economic profits $ (50,000) $ 86,500 $ 236,000 

Bonus pool 50% $ - $ 43,250 $ 118,000 

Table 18 - Bonus pool after all costs 

In the long run, it is best to pay bonuses after accounting for all costs (including 

economic costs). Pay yourself a reasonable wage, but do not worry about paying out a 

significant portion of the profits. Your gain is in the equity – as you will see in 

subsequent chapters. 

Tip: Managing knowledge workers 

Little has been accomplished during the past 10 years. Inflation and adjusted for risk, 

the stock market is significantly down. In spite of (or because of) technologies from 

the 90s, we are really not much better off. I attribute this to noise caused by the 

Internet and the gigantic distraction and waste of time it has imposed on employees 

and management. 

In pre-Internet days, one would go to the office for an eight-hour day and remain 

relatively uninterrupted (other than from the annoying co-worker who must boast 

about little Jonny’s amazing achievement of the day). Today, however, workers are 

barraged with distractions from chat, email, social networks, news updates, etc. Their 

workspace is infected with what in pre-Internet times would be comparable to spread 

across their desk newspapers, magazines, books and a Nintendo, while a telephone is 

glued to one ear making personal telephone calls, leaving only a small portion of their 

time and attention for actual work. Such distractions reduce the time to focus on the 

project or task at hand from a couple of hours to only a few minutes. In fact, the 

temptation to check news, email, etc. can even keep your employees being able to 

focus at all. 

Most employees are not dishonest; rather many are just addicted to the Internet. The 

best solution that we have found is to place in the break room a few computers that 

are for personal use and then insist that personal computer use be limited to these 

workstations. The employee’s office workstation is for business use only. Have 

employees remove all chat, email and any personal applications. To audit, check in 

(preferably unannounced), review their work plan and then take over their keyboard 

and mouse to compare work at hand with what you see on their computer. It only 

takes a few minutes to review the documents they are working on, each tab of the 

browsers they have open, any chat sessions (make sure they remove non-employees 


from company chat), check web browser history and even check their email for 

personal accounts or personal use of company email. You may be surprised to find the 

employees that seem to be hard at work are actually doing anything but work. They 

may even be looking for another job or actually working on another job while on your 

payroll. We know of no other way to remove the gigantic distraction that has infected 

many workplaces. 

The same should also apply to you and your management. The newsroom has a 

genuine need for real-time content from the Internet; however, most management 

should be either selling or working on strategic projects. Some of the best 

entrepreneurs and businesspeople I know completely avoid the Internet during the 

workday (and even during non-work time). A common reason is that if there is 

something important, their staff will let them know. 

Summary 

The financial structure of a newspaper needs to be updated to reflect multiple products. 

Emphasize profit increases and incentivize employees to deliver what is best for the 

company. 


Worksheet: 

1. Break even 

2. Immediate impact 


Chapter 12 - Valuation/Exit Strategy 

Now that you have put considerable resources into building your business, it is 

time reap the full benefit. The objective in profit-oriented business is not actually to 

maximize profits; rather it is to maximize shareholder wealth. If you are not a 

significant shareholder, stock options are a means of gaining value from the 

increase in company value that you help create. 

There is significant data about the value of newspapers. Over the years, there have 

been thousands of newspaper transactions for billions of dollars with more than a 

hundred acquirers. Lately, few transactions have taken place, but this is mostly 

because of the poor performance of the industry. Your publication can be different. 

Company Valuation 

The chart below is a representative of complex valuation formulas such as risk 

adjusted net present value of future cash flows. Real valuations include additional 

considerations such as risk-adjusted rates of return, expected growth and 

profitability, strategic significance, ancillary value created by the acquirer, etc. 

Further, adjust for tangible assets: cash, marketable securities and accounts 

receivable less short and long-term debt. Nevertheless, using a table like this is a 

great starting point to valuing your business. We especially like it because of the 

simplicity of estimating values. It keeps the clutter and noise out of what could be 

complex formulas, which would distract from the most important message: high 

revenue growth and high profit margins significantly increase the value of your 

company. 

Valuation Matrix 

EBITDA 

(Profit) 

Margin 

Revenue Multiplier 

50% 2.5x 3.3x 4.0x 4.8x 5.6x 6.3x 7.1x 7.9x 8.7x 9.4x 10.2x 

45% 2.3 2.9 3.6 4.3 5.0 5.7 6.4 7.1 7.8 8.5 9.2 

40% 2.0 2.6 3.2 3.8 4.5 5.1 5.7 6.3 6.9 7.5 8.2 

35% 1.8 2.3 2.8 3.4 3.9 4.4 5.0 5.5 6.1 6.6 7.1 

30% 1.5 2.0 2.4 2.9 3.3 3.8 4.3 4.7 5.2 5.7 6.1 

25% 1.3 1.6 2.0 2.4 2.8 3.2 3.6 3.9 4.3 4.7 5.1 

20% 1.0 1.3 1.6 1.9 2.2 2.5 2.8 3.2 3.5 3.8 4.1 

15% 0.8 1.0 1.2 1.4 1.7 1.9 2.1 2.4 2.6 2.8 3.1 

10% 0.5 0.7 0.8 1.0 1.1 1.3 1.4 1.6 1.7 1.9 2.0 

5% 0.3 0.3 0.4 0.5 0.6 0.6 0.7 0.8 0.9 0.9 1.0 

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 

Revenue Growth 

Table 53 - Common valuation table 


The cells represent revenue multipliers. Valuing a company based on revenue rather than 

profits is often preferred because revenues, unlike profits, are less volatile and not as easy 

to manipulate. This is particularly true with smaller, high-growth companies. The left 

column is EBITDA (earnings before interest, taxes, depreciation and amortization), 

essentially free cash flow before taxes and capital costs (interest). 

To determine the value of a company simply find the appropriate revenue multiplier and 

multiply this by the current revenue. For instance, if your company’s profit margin is 25% 

and your revenue growth is 50%, then use 5.1 as a multiplier. Thus, if your revenue is $1 

million, then the value of your company is somewhere around $1m * 5.1 = $5.1m. 

Consider another example of two companies with the same revenue but one is failing while 

the other is succeeding. The successful company is worth twenty times more than the 

failing company. 

Failing/Stagnant Succeeding 

Profit margin 5% 35% 

Revenue growth 5% 40% 

Revenue multiplier 0.3 6.1 

Revenue $1m $1m 

Valuation $300,000 $6,100,000 

Table 19 - Company comparison 

Newspaper and Newspaper Company Valuations 

The same applies to newspapers, in fact. The chart below coincides with many historical 

newspaper transactions and it is consistent with the value of publicly traded newspaper 

companies (enterprise value = market cap plus expected value of debt). Businesses that 

have declining revenue and declining profits are not worth much. In fact, the value may 

actually be less than zero as there could be shutdown costs such as severances, taxes, etc. – 

as is reflected in the current value of newspapers and newspaper companies. However, 

only modest revenue growth and profit margins have a dramatic affect on the value of the 

company, not to mention the moral of the organization. 

Profit 

Growth 

Multiplier 

Revenue 

Valuation 

Newspaper 

Valuation 

1992 2000 2008/2009 Year +1 Year +2 Year +3 

NonNonNonNonNonNon- 

Print print Print print Print print Print print Print print Print print 

30% -% 30% -% 10% 10% 10% 50% 10% 50% 10% 50% 

10% -% 10% -% 0% 10% 0% 50% 0% 50% 0% 50% 

2.4 - 2.4 - 0.4 .8 0.4 6.0 0.4 6.0 0.4 8.0 

$8.0 $0 $10.0 $0 $8.0 $0.5 $7.0 $1.0 $7.0 $1.5 $7.0 $2.2 

$19.2 $0 $24.0 $0 $3.2 $0.4 $2.8 $6.0 $2.8 $9.0 $2.8 $17.6 

$19.2m $24.0m $3.6m $8.8m $11.8m $20.4m 

Table 20 - Newspaper valuation example 36 

36 By 2012 newspaper increases advertising market share by approximately 1% (percentage point). 

Revenue multiplier for print = 0.3 to 0.5 and Internet = 5 to 10x, Internet revenue is worth 10 to 20x print. 

Source: Various examples collected from Lehman Brothers 2008 Newspaper Fact Book. Revenues are 

estimates based on top-down (market share). Assumes zero growth in 2009 Internet advertising revenue 


Your Startup Newspaper Valuation 

The following chart illustrates how a newspaper that you start or a low-revenue 

newspaper that you purchase could become very valuable. The key to success is having 

the right business model with the right story - stay or get profitable and focus on 

revenue growth. 


# of Advertisers 67 105 143 200 

Avg. Rev/Advertiser $ 3,000 $ 3,800 $ 4,200 $ 5,000 

Total Revenue 201,000 399,000 600,600 1,000,000 

Direct/Variable Costs 55% 110,550 219,450 330,330 550,000 

Contribution Margin 90,450 179,550 270,270 450,000 

Fixed/Overhead 200,000 200,000 200,000 200,000 

Profit (EBITDA) $ (109,550) $ (20,450) $ 70,270 $ 250,000 

Profit Margin -55% -5% 12% 25% 

Revenue Growth 99% 51% 67% 

Revenue Multiplier 1.0 1.0 2.5 

5.0 

Valuation 

(Multiplier * Revenue) $ 201,000 $ 399,000 $ 1,501,500 $ 5,000,000 

Table 21 - Creating a $5m newspaper 

Selling Your Newspaper 

Currently there is an abundant supply of newspapers and few buyers. Further, many 

newspaper companies are in receivership from the banks and other institutions that 

lent them money. This may be discouraging if you want to sell; however, even modest 

revenue growth and modest profits far exceed the current industry norm. There are 

dozens of newspaper companies and private equity firms that would be eager to 

purchase your publication to demonstrate to their low-performing properties what is 

possible. A bidding war could ensue for your publications as competitors fight to win 

while depriving the competition of your publication. 

For instance, consider the value your publication would be to McClatchy, a publicly 

traded newspaper company. Like most newspaper companies, their revenue and profits 

are declining and show no sign of improvement. In fact, they have come very close to 

filing for bankruptcy. Thus, their revenue multiplier is less than 1/10 th of what it was a 

few years ago; their investors have lost more than $8b in value. Only a minor effect of 

purchasing a successful newspaper like yours could have an effect that would create 

hundreds of millions, possibly billions of dollars in value for investors and help secure 

jobs for company management as well as their more than 10,000 employees. 

2005 2009/2010 

Stock price $74 $5.45 

Shares outstanding 84m 84m 


Market capitalization $6.2b $460m 

Debt 37 3.0b 440m 

Valuation (enterprise value) $9.2b $900m 

Revenue $1.2b $1.2b 

Revenue multiplier 7.7 0.75 

Table 22 - McClatchy valuation 

On the other hand, there are distinct advantages of not having your newspaper be part 

of a larger group. As the owner of the newspaper, you will have better success with 

advertisers, most of whom are fellow entrepreneurs. 

Tip: Investment banker/broker 

The money spent on an investment banker or broker is well spent. A good banker will 

get you a better price and better terms than you will get by brokering the deal yourself. 

They should also keep the legal costs down and will get you to a rapid solution while 

allowing you to stay focused on running your company, thus maximizing its value. A 

good investment banker will shop your publication to likely suitors and will get a value 

based on your value to the acquirer (see McClatchy example above). 

A word of caution about investment bankers: to them you are a one-time sale; they 

have a strong incentive to maintain a positive relationship with acquirers with whom 

they may do many transactions. Furthermore, they typically make most, possibly all, of 

their money only if a transaction happens. Thus, they want the sale to happen quickly 

otherwise, they will receive little or no compensation. Consider the following: an 

investment banker that charges 3% will make $150,000 for completing a $5m deal. 

However, by working extra hard, waiting several months and taking a gamble that the 

deal may fall through, they may be able to make a $5.5m sale. While this is almost 

$500,000 extra for you, it is only $15,000 (or 10%) more for your investment banker. 

Note: Timing is everything 

One newspaper entrepreneur I know started and ran newspaper in a resort town. For 

more than five years his business floundered – revenues grew slowly and his 

publication barely broke even. This drastically changed when he hired as a sales 

executive a retired advertising agency executive who had moved to the area and 

become bored. Sales and profits increased significantly and his new sales executive 

pushed him very hard to improve the product. 

One day he said that the sales executive did not show up for work, which was very 

unusual as he was a very reliable employee. The second day that his star sales executive 

did not show up and did not answer telephone calls the publisher went over to his to 

see if there was a problem. Through the window, he could see that the sales executive 

was lying on the ground having died from what was later determined to be a heart 

37 In 2009, McClatchy made an offer for outstanding debt that amounted to approximately $0.22 per dollar 

($0.60 cash plus $0.16 reissued debt). Thus, for this purpose McClatchy’s $2b in debt is valued at $440m 

($2b * .22). 


attack. The silver lining to the story is that a few weeks later he sold his newspaper for 

top dollar. 

Starting a Newspaper 

Never in 400 years of the history of newspapers has there been a better time to start or 

purchase a newspaper. There is an unlimited supply of newspapers for sale, many are 

closing down and many are starting. The capital required to start and run a daily 

newspaper (daily online, email and mobile + weekly or monthly print) newspaper is 

likely less than 1/100 th of what it was just a couple decades ago when a daily 

newspaper required tens even hundreds of millions of dollars for a pressroom and 

related equipment as well as hundreds or even a thousand or more employees. 

Previously, newspapers were very large operations with high barriers to entry. 

Figure 54: Linotype machines created cast type for newspaper printing. Newspapers often 

had several such machines, which required a team of operators and technicians. 

It is not difficult to update your daily online/mobile edition and create a quality weekly 

or monthly print edition. We have customers with only a few employees or even only 

one owner/operator that run daily online newspapers with mobile, daily email 

newsletters, etc. Technology advances have created an enormous opportunity for 

fledging entrepreneurs. 


In fact, a February 2010 New York Times article pointed out that Palo Alto, California 

has three free weekly publications 38 - and this is for a city with a population of only 

60,000 that also has two large of the largest metro daily publications in the US as well 

as several alternative publications. In case you do not know, Palo Alto is the base of 

numerous venture capital firms and the origin of many Internet companies such as 

Google, Yahoo!, etc. It is the center of the “Silicon Valley.” In this article they also 

pointed out that Knight Ridder had purchased a small cluster of these publications for 

$25m – only 10 years from their founding. 

Purchasing a Newspaper 

There is no better time than now to purchase a newspaper. Valuations are the lowest in 

history. Many newspapers are selling for almost nothing just so the owner can 

eliminate the potential liability. Holding companies consider newspapers to be a drag 

on performance. Further, many newspaper companies are divesting themselves of their 

smaller publications so they can focus on the larger publications, which are often in 

significant distress. Thus, profitable properties, often located on valuable real estate, 

are trading for as little as 1/10 th of what they were just a few years ago. 

Financing 

It is quite possible to start a newspaper $100,000 – or even far less for those who are 

resourceful and willing to put in a lot of sweat equity. A great way to raise money is to 

start with non-print (website, mobile, email newsletters, etc.), then to raise money for a 

print run, pre-sell the advertising to local businesses for the year and at a discount. 

Many businesses want a local publication because they are disgruntled with large daily 

newspaper. Combine a few pre-paid accounts with seed money from a few angels and 

possibly a small bank loan or credit card debt and you could be up and running very 

quickly. 

Tip: Using stock as a tool to hire and retain key employees 

Getting employees excited about your new publication may be difficult if you cannot 

pay well up front. However, a bit of creating financing could resolve this. It is best to 

pay generous commissions and bonuses to employees rather than to give away equity 

(which is where you will get your big payoff). Nevertheless, one easy way to give 

employees a bit of the equity is to carve out part of the company’s stock in the form of 

stock options, say 10-20%. Use a low strike price, maybe $1m. Then provide the 

employees stock options that vest over a period of time (five years with a one-year cliff 

is popular). A key employee with a 5% stock option stake could earn $200,000 if the 

company sells at $5m. 39 

Note: Newspaper companies selling newspapers 

38 

Helft, Miguel. “In a country of monopoly newspapers, Palo Alto is awash in competition.” The New 

York Times. 26 Feb. 2010. http://www.nytimes.com/2010/02/28/us/28sfnewspaper.html?pagewanted=1 

(accessed 4 Mar. 2010) 

39 

$5m selling price minus $1m strike price = $4m. 5% of $4m = $200,000. Check with your accountant or 

attorney. 


Newspaper companies can sell a publication in distress to a fledging entrepreneur by 

financing with a modest down payment with the balance in securitized debt. The new 

owner keeps 100% of the equity. Receiving a market rate in full and with interest is the 

objective, of course. Should the new owner default, then foreclose (possibly forcing the 

property into bankruptcy), fix up and resell. Implemented properly this should be an 

arms-length sale, which means you can immediately book the capital gain. 

Valuation of your Advertising Customer 

Now that you understand the basic concepts of valuations, the following is an 

interesting means of taking this same concept to your advertisers. Refer back to Figure 

13 – Restaurant Advertising Budget in Chapter 5 – Place (Advertising Market). There 

you find the impact on revenues and earnings of spending 2% of revenue on 

advertising. The impact this has on the valuation of the restaurant (or any business, for 

that matter) is remarkable. The estimated value of your advertiser’s company has 

increased from $422,000 to more than $700,000, a $278,000 or 67% increase. If you 

feel uneasy about pressuring business people to spend more on advertising, this should 

help you sleep better at night. 

REFER TO 

Low/No Advertising 

FIGURE 13 

Advertising Campaign 

Monthly revenue $ 50,250 $ 53,326 

Revenue (annual) $ 603,000 $ 639,912 

EBITDA/profit % 10.3% 12.8% 

Growth * 5.0% 11.4% 

Revenue multiplier ** 0.7 1.1 

Company valuation ** $ 422,100 $ 703,903 

* Assumed 5% annual growth without advertising 

** From Figure 30 - Valuation table 

*** Revenue x revenue multiplier 

Table 55 - Valuation of advertising customer 

Summary 

There has never been a better time to start or purchase a newspaper. The startup and 

capital costs are low and creative financing is well within reach of resourceful 

entrepreneurs. Moreover, owning a newspaper has a unique advantage in that it is one 

of the most liquid business investments available. There are dozens of newspaper 

companies and holding companies that will pay a significant amount of money for 

successful properties. 


Worksheet 

Complete the following to forecast the value of your newspaper: 


# of Advertisers 67 105 

143 

200 

Avg. Rev/Advertiser $ 3,000 $ 3,800 $ 4,200 $ 5,000 

Total Revenue 201,000 399,000 600,600 1,000,000 

Direct/Variable Costs 55% 110,550 219,450 330,330 550,000 

Contribution Margin 90,450 179,550 270,270 450,000 

Fixed/Overhead 200,000 200,000 200,000 200,000 

Profit (EBITDA) $ (109,550) $ (20,450) $ 70,270 $ 250,000 

Profit Margin -55% -5% 12% 25% 

Revenue Growth 99% 51% 67% 

Revenue Multiplier 1.0 1.0 

2.5 

5.0 

Valuation 

(Multiplier * Revenue) $ 201,000 $ 399,000 $ 1,501,500 $ 

5,000,000 


Chapter 13 - Summary and Getting 

Started 

Getting started is likely easier than you may think. Start with a clear plan and 

communicate this plan to your management team and employees. By executing 

according to this plan your publication will turn around within a matter of a few weeks. 

You and your team will sleep better at night and you will be able to enjoy the benefits 

of success. As you can see at the end of this chapter, the $5 million (or more) pot of 

gold at the end of this rainbow is attainable. 

The following is a summary of each major phase: 

Overall Vision 

Your newspaper is a valuable entity for credible news and a source of effective 

advertising as well as marketing solutions for local businesses. Your content (including 

advertising) is built on a model that targets local readers and entices, possibly compels, 

them to visit your entity at least one time per day. 

Platforms and Components 

Platforms 

Print 

Clarify the current and plan for your print products. A forecast is important because 

circulation will decline along with the willingness for readers to pay for the printed 

copy. The distribution area of your print publication will likely contract, especially if it 

is beyond your core market. Further, while you will continue to be a daily 

online/mobile publication, it will likely be necessary to reduce print frequency. 

Nevertheless, in the near future we do not advise reducing print frequency to less than 

monthly (but preferably weekly). 

Web 

This is the platform of the present and the future. It is efficient and effective and 

provides significant growth opportunities as well as alternatives to your competition - 

print yellow pages, radio, television, direct mail, etc. 

Mobile/Wireless 

Soon this will be the platform of choice for your readers and advertisers. With current 

technologies (namely mobile phone applications of which the Apple iPhone 

dominates), it is possible to have the entire newspaper with you at all times. Rather 

than reading the newspaper in one or two settings, readers will consume the newspaper 

throughout the day. Advertising, especially coupons, discounts such as lunch and 

dinner specials, are very convenient and can even be time sensitive (such as good for 

that day only). Mobile will propel newspapers into a new and long-lasting era of 

growth. 

Email Newsletters 

While we do not formally classify this as a platform, it is worth mentioning because of 


the value it has created for web and mobile platforms and because it is a valuable 

advertising medium. 

Components 

News/Editorial 

This component also includes calendar, weather and personals. Little will change with 

news coverage except that it will likely contain video and will have podcasts as an 

optional distribution channel. Comments, ratings and other user-generated input will 

enhance the news. This and user/traffic data will help the newsroom identify the 

desired content of the community and the optimal method and timing of delivery. 

Classifieds 

With Internet and photo-enhanced classifieds delivered on web, mobile and yes print, 

the volume of classifieds will far exceed the pre-Internet era. Print classifieds revenue 

will likely plateau; however, web and mobile classifieds provides substantial and highly 

targeted growth opportunities. Classifieds traffic is some of the most valuable space for 

banner advertisements; thus in a few years it is possible that the overall value of 

classifieds will exceed pre-Internet days. 

Business Directory 

The print yellow page market is collapsing and search engines only partially fill this 

vacuum. The technologies and convenience of a multiplatform offering provide a 

unique opportunity for newspapers to sweep this market. 

Table 23 - Recommended newspaper platforms and components 

Pricing and Promotion 

Several companies can deploy all of the above platforms and components within just a 

few weeks. Enhanced your pricing model to include packaged-based pricing and back 

this with a professionally created and printed media kit. 

Competition 

Stop promoting Google, Yahoo!, Monster, etc. They are your competition not your 

friends. 

Market 

Even markets with a declining population, the local advertising opportunity is big, 

growing and significantly underserved. Further, your competition is in serious trouble. 

Focus 

Removing distractions is critical to building your business. If possible, outsource your 

printing (possibly even shutting down your print facility… It is a sunk cost). At all 

costs, avoid distractions and the expense of building technologies. While technologies 

are interesting and important to your business, it is a colossal distraction. The effects of 

this distraction ripple throughout your organization as you and your staff waste time 

studying, discussing and analyzing these technologies rather than spending time selling. 

Circulation and classifieds revenue are important but not your focus. If applicable, 

delegate this to your managers and limit the time spent on this by you and your staff to 

a few minutes during your weekly meetings. Aside from a few improvements, the only 

way to improve these functions is by increasing your retail-advertising base. This 


expansion will make it necessary to expand your newsroom. Circulation and classifieds 

improvement will follow. 

Immediate Action Plan 

Stop the Hemorrhaging 

Eliminate any unnecessary positions (especially those who are not in sales or 

accountable to sales). Keep close track of cash. If possible, personally sign all checks. 

End non-sales-related bonuses, perquisites, etc. If you must file for bankruptcy 

reorganization, do so early. This is particularly advantageous for privately owned 

publications because you will likely keep 100% of your entity, which is far more 

valuable than any assets that could be lost. Salvage your cash and create a workout plan 

that your creditors (as well as employees) are be comfortable with. If executed properly, 

this may actually be favorable to creditors. 

Tip: Recommended reading 

“Profits Aren’t Everything, They’re the Only Thing: No-Nonsense Rules from the 

Ultimate Contrarian and Small Business Guru”, by George Cloutier. This is a good 

book on turning around a small business, especially one that is privately or family 

owned. 

First Few Weeks 

Everything about your newspaper – product, marketing, materials, business cards, etc. 

– should reflect quality and frugality but not cheapness. 

Retail-advertising sales is your primary profit driver. Now it is time to execute on your 

plan. First, eliminate any costs and reassign any resources that are not core to this 

focus. Closely evaluate expenditures not focused on this direction. This may include 

eliminating position. Ideally, affected employees can be retrained to fit in your new 

model. They may make good sales executives or sales assistants. The best plan follows: 

Plan for First Week 

Monday/Tuesday 

a) Final layoff (if necessary) 40. 

b) Rally the troops! Present/sell your new business plan to remaining employees (see 

sample presentation slides at http://www.verican.com/book/). Management should 

have a clear presentation of where the company is headed, how it will get there and 

how everyone will benefit by helping it get there. This is a great time to rollout new 

products (new website, mobile, etc.) Update your organization chart to reflect the 

focus on retail sales. Employees should receive basic training so they can immediately 

start on their new assignments. 

40 Monday is a much better day for layoffs than is Friday. Letting people go on Friday results in all 

employees (including those who were not let go) spending the weekend worrying. Monday afternoon is 


Wednesday 

Inside sales starts on 50-100 phone calls building your database, creating awareness 

and setting appointments (8-15 per day). 

Outside sales should have 4-8 prescheduled appointments each day plus walk-ins for 

a total of 10-20 customer-facing meetings per day (see Chapter 8 - Selling). 

Thursday 

Report results. Celebrate the small accomplishments such as achieving call/meeting 

targets (even if no sales have closed). Make sure that everyone knows that retail sales is 

the top priority. This is where there is the best opportunity for advancement. 

Friday 

More sales. Get the numbers on the board. If the call/meeting targets have been met, 

then take everyone out for happy hour. This is a new company. 

Saturday/Sunday 

Check email, update marketing materials and plan for the next week 

Following Monday 

With new products, announce a 10-20% price increase for existing customers. This 

should be supported with a media kit that clearly defines the benefits that the 

advertiser is receiving from print + non-print (online banner ads, business 

directory/Internet yellow pages, email newsletter, mobile, etc.) By this time, the sales 

executives should be comfortable explaining to customers the features and benefits of 

your new products such that no advertisers will be lost. 

Table 24- Near-term schedule 

Selling 

The business model for selling is simple. This example is worth repeating: 

Per Day 

Meetings (7-9 out of 15-20 appointments 

& walk-ins) 8 

Average close rate (meetings only) 25% 

New sales or upsells 2 

Average revenue per sale (annual ~$200/month) 2,500 

Annual revenue increase (one day selling) $ 5,000 

Table 25 - Daily call/revenue target 

Consider each component. Removing distractions and having good support (including 

an inside salesperson) will increase the number of meetings per day. The right pricing 

model, media kit and spec ads will also increase your close rate and the revenue per sale. 

Periodic (preferably monthly) upsell until your local business are spending an adequate 

amount on advertising, 100% of which is with your organization. Use this model as 

you expand by hiring salespeople and sales support. You, the publisher or owner, will 

always have the most meetings, the highest close rate and the highest revenue per close. 

best because the employee can begin looking for a job the very next day. Likewise, concerns of the 

employees who are retained can be addressed immediately – especially if a plan for improvement is 

immediately implemented. 


Now consider from the Valuations section in Chapter 12 - Valuation/Exit Strategy that 

a high growth, high profit margin company is worth five or more times revenues. This 

means that the approximately $5000 in new revenues gained from each day of selling is 

worth $25,000 in company value to you and your investors (in addition to the 

accumulation of profits and the valuation impact to existing revenues). That is more 

than $3000 per hour of your time. Spending only 20 hours per week will net you $6 

million per year, which is more than most doctors, lawyers and CEOs make. Are you 

thinking of spending tomorrow golfing? Is it worth $25,000? 1.5 hours of email and 

Internet surfing each week costs about $25,000. Starting work 30 minutes earlier and 

finishing 30 minutes later is worth $3000 each day. The time burglars are in your office. 

Avoid them by going directly from home to your first sales meeting in the morning, 

followed by a few more meetings will probably gain you another $3000 each day and it 

will demonstrate to your organization the importance of selling. 

Note: Difference of private ownership 

Private ownership, the foundation of capitalism, is the best way to unlock the true potential of a 

person. The results above would not happen from an employee of a government/SOE (state owned 

enterprise) or a private company. It is amazing to see how people that once thought they were not 

good at sales or that selling is beneath them suddenly become sales experts. 

In addition, suppliers are attracted to company owners as they have the most to gain personally 

from a value proposition. Likewise, owner/employees have the most to gain from providing the 

most value for their customers. 

Summary 

Rather than recapping the remainder of this guide, I will stop right here to emphasize 

the importance of selling. “Nothing happens until a sales is made”, “revenue cures all 

ills.” This is as applicable now as it was centuries ago. If you follow this model, it is 

entirely possible that in a few years you will be comfortably in your new beach house, 

ski cabin, mansion, etc. arguing with your spouse over whether your children should go 

to Stanford, Harvard or Princeton. 


Worksheet: Time Value of Money 

To determine the value of your time selling, follow the steps in the worksheet below. 

The first column is an example. The valuation multiplier can be found in Chapter 12 - 

Valuation/Exit Strategy. 

Impact of one year of selling Example 

Meetings (7-9 out of 15-20 appointments 

& walk-ins) 8 

Average close rate (meetings only & adjusted 

for attrition) 25% X 

New sales or upsells per day 

Average revenue per sale (annual @ 

2 

~$200/month) $ 2,500 X 

Annual revenue increase (one day selling) $ 5,000 

# Days committed to selling (~240 working 

days per year) 144 

Expected annual revenue increase from one 

person selling $ 720,000 

Value to owners/investors 

Revenue multiplier (Chapter 13 - Valuation/ 

Exit Strategy - valuation chart. Example 

assumes 50% growth, 25% profit margin) 5.0 

Net annual increase in company value $ 3,600,000 

Time value of money 

Annual # of hours selling (days selling * 8 hours 

per day. Example: 144 days * 8 hours) 

Value of each hour you spend selling 

1,152 ÷ 

(example: $3,600,000/1,152) $ 3,125 $ 

Copyright 2009, Eric Buskirk, Page 162 of 182 

X 

X 

Your 

Goal

Part V - Appendixes 


Appendix B - Glossary/Key Terms 

Ad Network 

Ad Server 

Affiliate Program 

Below/Above the Scroll 

Banner Ads 

Internet Advertising Bureau Main Standards: 

Skyscraper 

Branding Banners – click thru is no objective 

CAGR – Compounded annual growth rate. The annual growth rate adjusted for 

compounding. For instance, a 1% monthly increase would equal 12.68% annual 

(CAGR = (1+i)^n or (1+.01)^12). 

Click thru rate (CTR) 

Cumulative Unique Monthly Audience (CUME) 

Demographics 

EBITDA – Earnings before interest, depreciation and amortization. Very close to cash 

flows and is often used interchangeably with “profits.” 

Geotargeting 

Gross Impressions/CPM 

Pay Per Click (PPC) 

Pay Per Inclusion (PPI) 

Psychographics 

Remnant advertising: 

Run of Network (RON) 

Run of Print (ROP) 


Run of Site (ROS) 

Tracking Pixel 

Unique Visitors 


Appendix C - Classifieds 

During the hundreds of years that classified advertising has existed, the objective has 

remained constant: connecting buyer and sellers of goods and services. This is as much 

the same for selling a car is it is for providing employment. The rise of Internet 

classifieds sites, most notably craigslist.com, has had a significant impact on 

newspapers. Verican started working with newspapers in 2002 by providing an online 

classifieds order entry solution. We experienced this first had with our customers in 

California, many of whom have lost upwards of 90% of their classifieds revenue. This 

is quite unfortunate, but there is a cascading effect in that not only do newspapers lose 

the very profitable classifieds revenues, but they also lost print pages, which have 

always been attractive to display advertisers. The transportation section of the 

classifieds is very popular with automobile dealerships, for instance. Also, classifieds is 

popular with readers who will often skim through the classifieds section as they read 

the newspaper. 

Value of Classifieds 

1. Source of high-profit margin revenue (previously was upwards of 50% of a 

community newspaper’s revenue) 

2. Creates valuable advertising inventory revenue for display advertisers 

3. Popular with readers, many of whom consider it to be the primary reason for 

reading the newspaper 

The Internet increases the effectiveness of classifieds by increasing the space that you 

have to describe your product or service (after reading many very lengthy ads I have 

found that this certainly has a negative side effect); it allows easy access to photos, 

video and interaction; and it provides extensive searching capabilities. Thus, Internet 

classified advertising has been very popular. Placing classified ads that run online is a 

no-brainer 

Print Classifieds 

There are significant advantages to running classified ads online and in print. Namely, 

print is an 

excellent medium for reaching people who are not looking for something. Most people 

visit Internet classified advertising sites less than once per month and they typically 

have a specific goal when they go there – such as to find employment. However, many 

people will skim through the classifieds section of their community paper daily or at 


least once a week and they may do so with only a general idea in mind such as to check 

houses and cars for sale and to see if there are any interesting jobs in the area. 

Consider an employee who has been working at a local company for many years and, 

for the most part, is loyal to the company. It is unlikely that this person will be 

searching the Internet for jobs; however, he may briefly skim through the employment 

section and find that the new company in town has an open position of interest. The 

loyal, long-term employee may be more attractive and more difficult to reach than an 

active employment seeker. Moreover, employment ads placed in print often have 

identifying information such as the company name and logo prominently displayed. 

This sends a strong message to the community (including employees of the company) 

that they are hiring and thus they are a great company to work for. This is the best 

PR/advertising a company can get. Classifieds managers and sales representatives 

should be emphasizing this in their marketing material. 

Note: Value of employment advertising 

1. Reaches broader audience than online only ads 

2. Effective means of reaching people who are employed – and likely content 

with their current situation 

3. Sends a positive message to the community and to their current employees: 

“we’re hiring so we must be a good company” 

Another improvement to your classifieds section is to include photo ads (in print and 

online). Photos make the classifieds section much more attractive and thus they attract 

more readers (and hopefully display advertisers). Most online order entry systems 

include an option for attaching a photo to the classified advertisement. We recommend 

that your publication impose an extra charge for including a photo in print (but not for 

online-only photos). However, as an extra value-added you may want to occasionally 

place photos in print for free in order to make the current edition of your publication 

more attractive. The advertiser will certainly appreciate the free upgrade. 


Internet Classifieds Display 

As mentioned above, integrating print and Internet classifieds has some strategic 

advantages. In particular is the ability to include photos with the advertisements. From 

usability studies and research, we have found that indicated that advertisers and readers 

show a strong preference for classified ads when photo ads are mixed in. 

Implementing photos into your classified ads is relatively easy and should be a top 

priority. We have found that allowing up to five photos to go in the online version of 

the classified ad and, for a fee, the option for one photo to upsell to print is the 

optimal solution for newspapers. 

We also recommend that classified ads are sorted so that the photo ads are on top. 

This makes a great impression on the reader and acts as an extra incentive for classified 

advertisers to include photos with their advertisements. Eight classified ads per page 

seems to be the number of ads that maximizes the number of page views per visit, the 

time spent per page (we've seen approximately 45 seconds per average page view) and 

the number of skyscraper ads (three on the right side - plus leaderboard and rectangle 

ads). 

The classifieds liners section of your website should also allow you to embed a digital 

image of the original print advertisement in line with the classifieds. This way display 

advertisers, your most valuable advertisers, will be provided the best possible exposure. 


Figure 56 – Classifieds Liners Display 

Other popular features include the ability for readers to store classifieds “Add to My 

Favorites”, email to a friend and a blind email box to email to the seller (see Figure 56). 

Banner advertising next to Internet classifieds liners display advertising is probably the 

best place on the Internet to advertise. An advertiser is reaching a local audience, when 

the reader is thinking about something specific such as cars in the transportation 

category. This should generate higher revenue per impression than any other place on 

the Internet. 

In addition to the traffic to your website, which can be sold as banner ads, there are a 

couple options for getting paid for displaying classified ads online: make the online an 

upsell option or include all ads online as a value-added feature and factor this into your 

pricing model (and product promotion). We’ve found the latter is far better as charging 

extra for the upsell is cumbersome for your salespeople, your classifieds front end 

systems and it often results in few ads actually upsold and thus few classified ads on 

your website. It also significantly increases the complexity of having free (online only) 

classified ads as well as ads in mobile/smartphones. The value-added price increase 

could be very low for some categories (such as garage sales) and high for others (such 

as employment). See the pricing section below for suggestions. 

Tip: Keep it simple 

• Photo ads are easy for advertisers and simple to implement and administer. 

They improve your website and print and can be used as an upsell or as a 

value-added feature to bring more traffic (as well as more classifieds and 

display advertising) to your newspaper. 

• To ensure fast download speeds, especially for mobile phones, a thumbnail 

(low resolution) of the photo should be display in the list view and details view 

with the high-resolution photo available by clicking within the details section 

of the classified ads. 

• In the classifieds liners list view, display the lesser of five lines or 90% of the 

complete advertisement. This forces the reader to click through to see the 

entire ad and thus generates more traffic. 

• Integrate classifieds with your email newsletter so that when an advertiser 

clicks to view the full detail of the classified ad (or they want to read all of a 


news story), they are prompted to register. When the register, they should also 

be able to customize the ads that are included on their email newsletter. See 

Email Newsletter section in Chapter 4 - Products. 

• Video ads, on the other hand, are complex and difficult to administer. They 

take up a lot of space, which can cause headaches for the advertiser when 

uploading, for the reader when downloading and for administering. Also, to 

ensure that all content is legal and meets the quality guidelines of the 

publication, each video must be viewed in its entirety by a newspaper 

representative. All of this is for a classified ad, which typically has a shelf life of 

no more than a few weeks. If a picture is worth a thousand words, then not 

much else is left for video. The opportunity for video with commercial 

advertisers is different. Video with classifieds and banner ads can be integrated 

with your business directory. 

• If you choose to integrated free online-only ads, then use every opportunity to 

upsell to print (or other revenue-generating features including an option for a 

trial print subscription). Free online only ads can also act as filler should the 

number of print classifieds pages fall below your minimum threshold. 

Displaying your classified ads online is a great way to create more value for your print 

classified advertisers (which should result in an increase in the number of ads and the 

revenue per ad) and it should also increase traffic to your website. 

Mobile Classifieds 

With the introduction of the iPhone by Apple, the applications for smartphones is 

exploding (see the Mobile section of Chapter 4 -Products). Mobile phones provide 

extra convenience by making your classifieds (and entire newspaper) portable. Like 

pretty much everything, we recommend keeping this model simple: all classified ads 

(and photo ads) that are online should be available in the same or a similar form on 

mobile. Classified ads order entry doesn’t work well in mobile/smartphones because it 

is too cumbersome for an advertiser to view options and enter the advertisement. User 

log-ins and security for credit card processing further complicates the process. We 

recommend classifieds order entry be limited to your website. 

Internet Classifieds Order Entry 


Having a good online classifieds order entry system is one of the best Internet assets 

that a newspaper can have. 

Key Benefits of Online Classifieds Order Entry: 

1. More ads 

2. Higher revenue per ad 

3. Lower processing costs 

Our customers have found that they receive more ads due to 24/7 availability, online convenience, 

the ability to place the ad in privacy (such as at the office when the boss is within hearing distance) 

and automated renewal reminder via email. 

Large and small newspapers find that the revenue per ad of a properly designed and wellconfigured 

order entry system should between 40 and 60% higher per classified ad 

than comparable ads place through the telephone call center. The reason for this is 

quite simple: the Internet places the advertiser in control, can provide many upsell 

features that would be unwieldy to explain on the telephone and the Internet makes 

photo ads and ad builders possible. 

The processing costs per ad are typically much lower for ads place through the Internet. 

Consider that a classifieds representative paid $13 per hour plus approximately 50% 

overhead (benefits, taxes, hiring/firing costs, supervision, computers, etc.) equals 

approximately $20 per hour or $160 per day. Should they average 32 ads per day, the 

processing cost per ad is $5 – and this is for a classified advertisement that would be 

40-60% higher if place through your website. We have found that the time to process a 

paid classified ad via the website can range from less than one minute to no more than 

around four minutes. Thus, the same 32 ads can take anywhere from 32 minutes to 128 

minutes costing the newspaper no more than $1.33 per ad. Furthermore, classifieds 

representatives can typically process the online advertisements during down time 

(when the phone is not ringing or when they are on hold), thus there may actually be 

zero incremental labor costs of receiving ads through your website. 

Key Internet Classifieds Order Entry Features: 

1. Multiple ads per order: Forcing advertisers to place multiple orders for 

multiple ads frustrates your best (commercial) advertisers and also increases 

your transaction costs since you must pay the credit card merchant service 

provider for each transaction (plus a percentage of the total transaction). 

2. Credit card/PayPal processing: Classifieds are small transactions. The costs 

of creating an invoice plus the cost of collections and non-payment will quickly 

eliminate your profits. Further, credit card processing helps reduce fraud (see 

below). 

3. Photo ads are a very popular feature for both advertisers and readers. It makes 

all of your products (including print) more visibly appealing. The photos are 

really images, which means that business advertisers should be able to include 

their logo… they love this feature. 

4. Live Internet chat support: This feature enables advertisers to access a 

customer support representative during the transaction process. The customer 


support representative can immediately fix the problem (by suggesting using 

another browser or alternative payment method, for instance), thus ensuring 

that 100% of your orders are completed and 100% of your customers are 

satisfied. Imagine spending 20 minutes creating and configuring an 

advertisement only to have a technical problem result in the advertisement not 

going through. Nearly every advertiser would abandon the process in 

frustrating – and will likely never come back. Those that do call the support 

(assuming this is during normal business hours) will reach a classifieds 

representative that will not know how to address the situation. Live chat 

support solves all of these problems. It even provides the browser and 

operating system information of the person who inquires to help in the 

replication of the problem. With many web browser options (Internet Explore, 

Firefox, Google Chrome, Safari, Netscape Communicator, etc.) and operating 

systems there are thousands of possibly browser/operating system 

permutations, which results in the need for constant and instant feedback 

should there be a problem. Not including live chat support could kill classifieds 

- the best part of your Internet business. 

Figure 57 - Live Chat Support 

5. Cross selling into other publications: This is where an advertiser can check 

off to have the classified ad run in multiple publications. This is a great feature 

if you have a cluster of publications (including weeklies and dailies) or if you 

have a relationship with other publications in the region. We’re finding 

upwards of a 25% pickup rate when this feature is implemented correctly. One 

tip: don’t try to complicate the process with a commission scheme. Just let the 

revenue stay with the recipient of the advertisement. The other party records 

the order as no revenue. The extra accounting costs of managing this 

otherwise would wipe out your profits. This has the added benefit of creating 

an incentive to cross sell as many ads because the incremental revenue is 100% 


profits (less commission). Even the recipient that receives more unpaid ads 

benefits by the increasing in classified ads (which provides more display 

advertising space). 

6. 

7. 

8. Ad Builders: Advertisers like the extra help provided by ad builders and the 

size of the ads can increase by as much as 400%. 

9. Print subscription upsell (if applicable). Providing an option to purchase a 

print subscription should be in every classifieds order entry system. It is 

convenient (and impulsive) to purchase a subscription for home, the office or 

as a gift. Providing an introductory offer will increase the pickup rate. We’re 

finding that approximately 5% of orders result in a print subscription upsell 

when this is offered. 

10. Upsells such as borders, bold heading, underlining, attention getters, 

photos/images, etc. 

11. One step pricing: Requiring the advertiser to go through multiple screens just 

to get a price and then backtrack to see what difference is price for adding or 

removing features will frustrate your advertiser, likely resulting in lost orders 

and lower revenue per ad. Keep all cross sell and upsell features on a single 

screen. 

12. Email receipt and renewal reminder a few days before the ad expires and make 

it easy to extend the ad (including making enhancements) 

Additional Internet Classifieds Features: 

Subcategories: Pricing options should be at the category level (see pricing section 

below). Subcategories should be listed as under the category unless for the subcategory 

there is a price or options available differ in which case the subcategories should be 

grouped with categories that provide consistent prices and options. 


Start Date should default to the next available date and then list a dozen or so possible 

insertion dates. The next available date should automatically increment based on the 

deadlines of your publication. 

Duration is a key upsell. List the duration along with price discounts for running an 

advertisement for a longer period of time. 

Tip: KIS 

Keep it simple. The technology and user experience of craigslist is as rudimentary as it gets 

yet they have taken a huge amount of business from newspapers. Avoid the bells and 

whistles as they unnecessarily confuse the advertiser and they make it difficult to integrate 

with your backend advertising processes (especially your ten year old classifieds processing 

system). All features should have a clear purpose – the most important of which is 

increasing ad revenue. 

Pricing Classifieds 

Print vs. online 

Online vs. call center placement 

Classifieds Promotions 

… 

Special Section Recruitment 

… 

Avoiding Fraud 

… 

Classifieds Sales (Rather than Order Taking) 

… 

Statewide & Regional Classifieds Networks 

… 


Categories and Subcategories 


Appendix D - Circulation 

… Total addressable market for daily views… that’s the new circulation model 

Appendix E - Customer/Sales 

Management Systems 

Central and secure repository for your most valuable data. 

Sales people don’t leave with your customer base (or at least they leave behind a copy) 

Fixed and measurable activities and processes 

Accountability and clarity 

Integrated sales, marketing and (optionally) operations and financial forecasting. 

Basic Implementation 

Configure to include ad spending estimates for your top competitors 

Load with accounts, contacts, estimated ad spend, targeted ad budget, etc. 

Setup digital media kits to be automatically emailed to businesses. TIP: Work with 

chamber of commerce. Create and distribute their newsletter (include advertisers 

targeting local businesses of course). Coordinate with local business journal print 

publication (if you own it) 

Execute: Pre-sales – call, enter data (get temp or intern for initial data entry as to keep 

your salespeople focused on sales calls). 

Email info and record calls (appears on call/activity report) 

Maintain: Information/opportunities, tasks, meetings, etc. 

Non-sales: Use features to manage documents, cases, bugs, projects, etc. This is an 

integrated tool 

Integrate with iPhone, Blackberry, calendar system, etc. 


Entire system should launch in weeks not months (especially for small/medium 

newspapers) 

What it won’t do: 

Make you money or sell for you. That requires salespeople who are focused. This is 

only a tool 

Manage your readership database – that is a separate system with a different objective. 

This is to manage your advertisers (which is where you are making your money). 

Expected Usage: 

Pre-sales Heavy 

Sales Executives Light to moderate 

Management Moderate 

Operations Light 

Must have: 

• All advertisers in the community 

• All ad spending (updated frequently) 

• Critical report: advertising spending from top advertisers. (quarter over 

quarter)… very important to see if competitor’s revenue/profits are decreasing 

or increasing 


Media By Entity

Appendix F - Newspaper Consultants 

Consulting Giants: Any of the largest consulting companies can give you a certified 

white paper showing that it’s not your fault. The market is deteriorating, the economy 

is bad, no one else is any better, etc. But of course things will soon get better (after we 

reforecast our earnings estimates). This may be what you need to take to your board to 

keep your job (and maybe even your bonus), but it probably won’t have much of an 

impact on turning around your company. 

To truly make your business better you should hire a firm that specializes in 

newspapers (possibly also ventures to other local media such as radio, TV, etc.). They 

will know your market and that of your competitors and they should be able to quickly 

build a strategy, plan and help you execute. Tie subsequent projects on attaining quick 

and quantifiable results.

About the Author 

My background in newspapers began when I was twelve years old. This is when I 

started the “Mesa Review,” a weekly newspaper in Mesa, Arizona – a suburb of 

Phoenix and my hometown. I discovered this opportunity while reading about other 

kids who had started a newspaper. Back then, it seemed that creating a newspaper was 

a rather easy business model: simply copy (plagiarize) news from the Mesa Tribune, 

throw in a puzzle or two and some classifieds. To finance the operation, I walked the 

business districts selling advertising door-to-door to local businesses (where I would 

typically drop off publications thus making them advertisers and distribution points). 

Initially, my grandmother printed on her mimeograph machine my 4-page 8½x11 

weekly. Later, I bartered with a local printer to print my publication in exchange for a 

quarter-page ad. A local banker sent me over to see a Max Jennings, a friend of his and 

the editor of the Mesa Tribune (the competition). Max wrote up a story about me and 

put my picture on the front page of the local section of the newspaper. This was one 

of the proudest days of my life – and the start of my love for newspapers and business 

(and it was also great for business). 

For several years after this, I delivered newspapers for the Mesa Tribune and later I 

had a second newspaper route with the Arizona Republic, the dominate (and much 

heavier) newspaper. At the time, delivering for the competition was frowned upon, but 

we newspaper boys were smart enough to keep our mouths shut. By delivering two 

newspapers to the same route one could essentially earn twice as much while only 

doing about one and a half times as much work. Additional money could be earned 

from selling subscriptions door-to-door. I was often the top sales person because I 

would knock on the most doors and I wouldn’t take no for an answer (until the door 

was slammed in my face). I was also very consistent and reliable. At 4:45 every 

morning, I was out by the side of the street inserting fliers, folding, rubber banding and 

packaging newspapers so that every newspaper was delivered by 6:30am, our deadline. 

Back then, newspapers needed to be delivered every day. There were no weekends or 

holidays off. We were never too sick to deliver the newspapers or to collect from the 

subscribers. Should one be unable to deliver, it was our responsibility to find a 

substitute and notify our district manager. It is too bad that legal and liability 

considerations have eliminated this opportunity for young kids. This opportunity 

engrained in me the importance of responsibility and customer service and I became 

interested in what was going on in the community and world. 

Following their September 2009 bankruptcy filing, Freedom Communications 

announced that they will shutdown the East Valley Tribune (formerly the Mesa 

Tribune). A year prior to this, two of their journalists were awarded a Pulitzer prize, 

but in a sad irony they were laid off a few weeks before the announcement. 

Later in life, I moved on to other opportunities, which mostly focused on financial and 

other business systems implementations for large corporations. My education is in 

finance and I have an MBA. I believe the free press is critical for society and the only 

way to have a truly independent press is through a profit-motivated structure. 


During the summer of 2001, the dot-com bubble burst and the economy went into a 

recession. This was a perfect time for me to leave information systems consulting and 

use the money I squirreled away to start Verican (originally named “Mission Critical 

24/7”), a company focused on providing database monitoring and support for San 

Francisco Bay Area companies. Very quickly, I found that the market for such services 

evaporated with the recession as it seemed that there were few systems 

implementations and the few technology workers who still had a job also took on the 

database administration work. Thus, we started doing whatever we could get paid for. 

This included building an ecommerce system for a school friend who had a business. 

At a chamber of commerce event, a newspaper sales manager approached me about a 

project. He needed a sales management and an Internet-based classifieds order entry 

system. While we had already built the sales system, we found it too complicated and 

cost prohibitive for this newspaper; however, modifying our Internet ecommerce 

system for classifieds turned out to work quite well. 

From this point, I changed the name of the company to Verican and started to get 

additional customers through word of mouth and then we hired a salesperson. Quickly 

I fell back in love with newspapers and decided that rather than offering our 

technologies to any business that was willing to pay us, we should focus on providing 

technologies only to the newspaper industry. We now focus 100% of our time on 

understanding the newspaper industry and building our products and services around 

helping them reinvent themselves. 

By providing the Internet platform that is where the newspapers are going, I have been 

fortunate by being able to work on the fringes of the newspaper. Thus, I have not been 

forced into the day-to-day operations of running a newspaper, which are complicated 

and increasingly distracting, as the newspaper still needs to go out, though with fewer 

people and resources to do it. 

During 2007 and 2008, our business started to decline, reflecting the decline in 

newspaper classifieds revenue. Most of our revenue came from a revenue share 

arrangement we had with newspapers and the majority of our customers are in 

California and Arizona, which has been particularly hard hit by this recession. 

Classifieds revenue at many of these publications has declined by anywhere from 50% 

to upwards of 95%. This has been coupled with a decline in display ad advertising and 

in many cases they have even seen their Internet revenue (and traffic) decline. It is 

quite awful to see what has happened to these newspapers and their owners and 

managers, many of whom I consider to be friends. 

The 60%+ decline we experienced in revenue per customer compelled me to 

shutdown our San Francisco sales office and for me to focus on getting new customers 

and new product out to our customers. Thus, I now spend nearly 100% of my time on 

the road working with newspaper executives. Thus, far I have met with more than a 

thousand executives from newspapers of various sizes and types: large dailies, small 

weeklies, alternatives, magazines. I have also met with executives from newspaper 

associations, other suppliers, consultants, etc. 


My most recent trip lasted more than four months. During this time, I traveled to 

Canada, Ireland, the UK and more than 20 U.S. states. The mileage added on my rental 

cars exceeded 24,000 road miles, which coincidentally is the circumference of the earth 

(the rental car company was not amused). I also flew a comparable distance. 

- Eric Buskirk

Eric Buskirk, MBA President & Founder, Verican, Inc.

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