Special Report: HK Newspapers

Anyone who thinks newspapers are dying as a medium should take a look at the Hong Kong market. While it has always been well served by newspapers, with the Chinese dailies, of which Apple Daily and Oriental Daily are the biggest circulating, with English language stalwarts such as South China Morning Post (SCMP) and The Standard, and the international business papers such the Wall Street Journal Asia (WSJA) and Financial Times (FT) vying for newsstand space, the market has never been stronger, according to industry experts.

The major players have been tripping over themselves to improve their offerings to both

advertisers and readers with new editorial initiatives, free tabloid editions, redesigns, spin-offs into conferences, glossy supplements and more interactive web sites.

Readership of newspapers is a healthy 75% of the population, according to Nielsen's

Media Index, which surveys 5,000 people in Hong Kong aged 12-64 each year on their

daily media consumption and product and service consumption over 20 categories.

WHO'S READING WHAT?

Over the past five years it has remained steady with 75-77% of the Hong Kong population reading a newspaper regularly, says Nielsen Media Research's media director

Helen Pemberton.

"Overall consumers and readers of newspapers in Hong Kong now have more

choice of news sources whether it is online, hard copy, free or paid and that gives more

choice to marketers and advertisers too, so it's a very positive story for the newspaper

industry in Hong Kong," says Pemberton.

While only 5% are reading English-language newspapers, the biggest shift has been the

impact of the free newspapers, with one in five people now reading a free newspaper, a

trend started with the launch of Metro in April 2002 and continued with the 2005 launch of Sing Tao, New Corp's Headline Daily and Shih Wing-ching's am730.

In 2005, only 8% of the HK population were reading a free newspaper, a figure that has

since gone up to 19% in 2006, according to the Nielsen figures.

When the second two dailies launched the traditional paid newspaper publishing groups

were fearful the free sheets would cannibalise the paid newspaper market, but it has grown the entire market universe instead.

"That trend hasn't actually happened because the paid newspapers are still read

frequently by the Hong Kong population and the free newspapers have found a niche day

part where people are on the way to work in the morning," says Pemberton.

The top categories advertising in newspapers in Hong Kong are travel companies and

real estate companies which together outlaid HK$3.4billion (US$435m) in 2006, according to Nielsen figures.

WHO'S BUYING WHAT?

The top 20 big spenders in the newspaper advertising market include property agencies,

finance and banking companies, travel companies and supermarket chain, confirms

Peter Kuo, chief executive of Metro Hong Kong, which has carved out its niche targeting

the morning commuter.

"Metro has the sole distribution right in the mass transit railway system, a system which serves over 1.5 million passengers daily. Moreover, Metro controls its distribution hours between 6-9 am weekdays. These arrangements help deliver Metro to quality readers who are commuting to work in the morning, a group of quality readers hard to reach by traditional newspapers," says Kuo.

Kuo admits that as the first free paper, Metro had teething problems.

As the first tabloid in the market, advertisers were initially reluctant to embrace the size, but within a year it was widely accepted.

Better than expected demand also meant supply problems, something it solved through market segmentation, launching its online portal to serve the school sectors.

The booming stock market is contributing to the increased interest in newspapers, says Elsie Cheung, director of display advertising at the SCMP. With a readership split of 60% males and 40% females, the English language broadsheet attracts a good proportion of Chinese readers, who tend to have business decision making authority.

The free newspapers haven't had an impact on the SCMP, says Cheung.

"We are serving a very niche market in Hong Kong. Our readers are well educated, high income, business decision makers, so these people are less likely to be price conscious and would like to obtain their news from a reliable source of information.

So with the credibility and the long standing history of our paper we are not being affected by the free dailies," she says.

However, she sees an impact on the Chinese dailies, especially the market leaders, which she says are hurting on their bottom lines because of price cutting resulting in the

thinning of margins.

But big local paid for language papers enjoy impressive market share, for instance the Apple Daily and the Oriental Daily are still the top two newspapers in Hong Kong with Oriental Daily enjoying a 28.4% readership and Apple Daily at 24.1% readership, according to Synovate.

The main advertisers in the SCMP are the luxury fashion brands, for example, Louis Vuitton and Gucci, the luxury jewellery brands, private banking and overseas properties with advertising up 10% in 2006 over the previous year.

The FT also enjoys its fair share of luxury brands. Its top advertisers in Asia include travel and tourism clients including Cathay Pacific, banks and financial institutions

including Barclays, Deutsche Bank and Mizuho as well as luxury advertisers like Shanghai Tang, Panerai and La Perla.

While it breaks its readership down globally and regionally, rather than by each market, audience research in Asia shows readers go to the FT for the global news and insights it

garners from its network of over 500 journalists and readers typically read an additional local newspaper for national/local news.

The FT's overall advertising revenues were up 9% as of February 2007, according to Su-Mei Thompson, managing director, Asia-Pacific for the Financial Times, who says

that around 70-80% of the FT's advertisers are global corporations running campaigns across more than two of the four editions and on FT.com.

"The consistent quality and content of the FT across our products gives marketers' confidence that they're reaching the targeted elite audiences they seek globally or

through each regional edition," she says.

"The FT also has the flexibility to cater to specific advertisers' objectives through customized solutions, ranging from organising bespoke events to developing special reports such as the Asia Insight series-the glossy standalone magazine focusing on a particular topic and more tailored distribution."

While the soothsayers are predicting that newspapers will suffer thanks to people migrating online, Thompson says the story in Asia is more positive where both the print and online readership is increasing significantly.

Its circulation in the region has grown by almost 40% since launch in September 2003 with a circulation of 40,104, according to ABC figures for April-September 2006.

"Newspaper readership is actually rising in Asian markets such as China and India," she says.

Wall Street Journal (WSJA) Asia marketing director Olivier Legrand agrees, saying the region is having a pretty good time when it comes to print media with China, India, Hong

Kong and Singapore all doing well.

Based on its most recent (2007) subscriber research the WSJ's readership is 78% Asian,

with a gender split of 79% males and 21% females with an average age of 46. The Hong Kong circulation is 13,000 of the 80,000 copies sold globally with a total readership of

371,000, according to ABC numbers.

Targeting business readers the people the WSJA reaches are high level professionals and business leaders. The paper's top advertisers so far this year include Deutsch Bank,

Intel, DHL, Morgan Stanley, and Hong Kong specific advertisers such as Cathay Pacific, The Peninsular and the Hyatt.

"Advertising revenue for the first quarter is very good. Last year the first quarter was quite slow and this year we have increased the budget over last year so it looks like a very

good start to the year and the first six months in terms of our forecast is also very good," says Legrand.

The WSJA has been working hard to stay relevant. In October 2005 the paper was reformatted into a compact format and subscribers were offered a combined print and

online offer. The initiative was supported by a considerable outdoor and event campaign here to introduce the new format. WSJ.com is the largest paid subscriber site in the world.

"We have the biggest number of journalists for foreign media in China, so we have them reporting for the different editions of the paper including Asia, Europe and the US, and they all contribute to the print and the online edition. On top of this we have another team of journalists that only write for online, so online is an aggregation of a lot of our content coming from the different bureaus from around the world plus some specific writing for the medium," says Legrand.

Several years ago it launched a web site in Chinese which has 285,000 registered users

within China.

"The local language web site is definitely an important component of our strategy online.

What we also did is we relaunched our mobile application and our WSJ.com web site to

make it a friendly web site to use on Blackberries as well as Windows Mobile," says

Legrand.

"We try to give our readers as many ways to access the information - it could be

reading the print paper in the morning then going online for updates or getting it on their

Blackberry. With the launch of Windows Vista there is a cool gadget that allows subscribers of WSJ.com to have our news on their desktop 24/7."

It is also taking a more flexible approach to advertisers.

ADVERTISERS' NEED SPEED

"Advertising in newspapers in the past was quite difficult because the format

was very strict, the lead time was quite long...what we are trying to do now is

be more flexible," says Legrand.

Part of this is offering advertisers the chance to buy country specific campaigns

along with supplements such as the Weekend Journal, which is published on glossy paper

on the fourth Friday on every month, which gives another option to the luxury brands.

Flexibility is great, but the biggest challenge for any traditional media owner, says

Synovate media director Asia-Pacific, Craig Harvey, is how to execute their platform onto a digital platform.

"Research shows that online is not cannibalizing the hard copy, not among affluent

people, they are still reading the hard copy, however the online edition is bringing in new

readers, they are more likely to be younger readers who are digital natives by default

compared to us people of a certain age who are digital immigrants," says Harvey.

While he acknowledges there is a general sentiment that hard copy is declining, he sees

it as less about the decline of print and more about the platform shifting.

"People still want to know about opinion and read analysis, the question for the future

is where they get that information from and in what format. Do they buy their daily newspaper?

Do they sign up for a newsletter? Do they get an SMS alert, do they go to the online

portal or online edition," he says.

To better understand this, from July Synovate introduces PAX Digital, a digital audience

measurement which will probe into the digital media consumption and lifestyles of affluent consumers and top business decision makers in Europe and Asia-Pacific.

"A lot of the media owners also understand that online allows them to have a new advertising stream, because previously they had the hard copy and that was it, now they have the hard copy and the online version so they are opening up a whole new revenue stream for themselves," Harvey says.

Most brands still favour print over digital at this stage of media evolution, says

Thompson referring to last year's "Power of Print" survey by the Society of Publishers

in Asia showed that print remains a very effective medium for advertising.

NOT MUTUALLY EXCLUSIVE

According to the results, consumers exposed to a print campaign were 102% more likely,

more than twice as likely, to name a brand as ‘top of mind' within its category. While ‘top of mind' advertising recall was 84% higher among those exposed to a print  campaign than for those exposed to the campaign only through other media.

Thompson expects the balance to shift in the years to come - though more through the integration of online as part of an effective campaign mix rather than migration to the

web.

"Print and online are not mutually exclusive and the combination provides a high-impact, effective platform for brands. At the FT we work with clients to create custom solutions tapping into the strengths of both the newspaper and FT.com," she says.

The recently upgraded search engine for FT.com delivers significantly higher business

contextual links and provides a professional level research and monitoring tool along with news highlights for Blackberry and PDAs and more interactive features such as reader Q&A and questions with experts.

This interactivity is key. SCMP established its online presence a decade ago but is gearing up to launch its revamped website with the introduction of more interactive features and mobile technology capabilities.

THE MAKEOVER

One of newspaper's key selling points is a high level of reader engagement, says Pemberton, with many readers having an affinity or a loyalty to their newspaper of choice and the advertising tends to be less intrusive compared to some of the online advertising.

"People tend to have a sense of ownership with their newspaper, they like to feel ‘it reads for me' and I think the tangible attributes of holding a newspaper create that greater sense of involvement with both the editorial and the advertiser," says Pemberton, who has noticed lots of innovation on the newspaper front with publications investing in re-designs to remain competitive.

"They want to make it as modern looking and as easy to navigate as possible. We all

get annoyed when we pick up newspapers and get the print on our fingers, a lot of newspapers have invested in different coating or paper stock and visually they just want to make sure they are competing with the best of them in the market," says Pemberton.

SCMP is one of the major Hong Kong English language newspaper that recently revamped its layout.

"We want our readers to be more engaged and for reading our paper to be more enjoyable by making it more visually appealing," says Cheung. This includes having clear sections,

using larger pictures and more graphics to illustrate stories.

After reader research found readers definitely want and value news but they have less and less time to find the information they seek, the new-look FT was unveiled globally on April 23.

But as Thompson says, it all comes down to the quality and relevance of the content.

No amount of re-designing will retain readers and lure new ones if the content doesn't

remain consistent.

"The FT's core strength is its award-winning content. The news, analysis and commentary about Asia-Pacific and the wider world will remain of the same high quality as before, whether the topic is business, economics or politics. And it is our judgment of what are the most important global and regional stories which continues to draw readers from the global business community," concludes Thompson.