Better read than dead

While few people would deny the challenging future faced by the newspapers industry, newspapers in Hong Kong continue to surprise.

Nielsen Media Research shows total advertising spend for newspapers in 2007 hit $18.6 billion, a 6% jump on the previous year, with newspapers taking a healthy 36% of the overall advertising pie, second only to TV. Readership of newspapers is now at 80%.

So what’s driving these strong figures? Helen Pemberton, executive director of Media Service at The Nielsen Company, says readership of newspapers in Hong Kong is being driven largely by the free-circulating titles.

“One of the reasons for this is more people are reading two, three or four newspapers a day. Three years ago, almost two-thirds of the Hong Kong population was only reading one newspaper a day,” Pemberton says.

However there’s no denying that newspapers face some major challenges. Aside from emerging digital technologies, a big challenge is recapturing younger readers.

The Global View

The view from the global stage over the next 12 months is mixed. Rupert Murdoch, chief executive of News Corporation, arguably the largest newspaper publisher in the world, has warned of a mixed economic conditions in the coming year.

Profits from News Corp's newspaper division this year rose by US$114 million to $767 million as the newly acquired Dow Jones provided an initial contribution of US$24m.

According to the PricewaterhouseCoopers Global Entertainment & Media Outlook 2008 – 2012, the global newspaper sector in 2007 posted its slowest growth in the past five years, climbing just 0.1%. The report that a 6.7% drop in the United States newspaper sector was a major factor.

Heading into 2008, PWC says weakening economies of North America will continue to see a decline in print advertising in 2008. But the free-circulating newspapers across Asia will see a boost in print advertising.

PWC says digital and online developments will continue to take advertising dollars away from the printed product.

“Newspapers are losing readers and advertising to other entertainment opportunities on the internet. A portion of that shift will be recaptured by newspapers through their web sites and other distribution channels,” the report states.

Digital advertising is expected to add another US$13 billion and raise overall advertising growth to 2.9% globally. In Asia, PWC data shows average growth rates of around 4% each year until 20014.

News for free

Hong Kong’s thriving newspaper market is driven largely by the four free-circulating titles, Metro Daily, Headline Daily, AM730 and the SAR’s only free-circulating English-language newspaper, The Standard.

In September last year, Sing Tao, owner of Headline Daily and The Standard, took the bold step of moving The Standard to free circulation model. The move, triggered by changes to the information disclosure requirements of the Hong Kong stock exchange, proved to be a good one.

In less than one year The Standard’s circulation has jumped from around 40,000 copies to an audited circulation of 224,128 copies each day, claiming a readership of 479,000.

Ivan Tong, chief editor, The Standard, says the move to a free paper has been positive with the newspaper evolving into a powerful, influential medium in Hong Kong with a diverse audience and a broad reach.

“In Hong Kong, reading of newspapers is a long-established habit. The personal and intimate relationship between readers and their favorite newspapers is something no other media can replace,” Tong says.

To cap of these changes, in mid-July The Standard relaunched its free website (thestandard.com.hk) to include up to 100 breaking news stories a day and is hoping to attract bolster the number of Chinese-language readers.

Tong adds The Standard is now attracting more advertising from the investment banking sector, which he says now represents its main category of advertising, followed by education institutions.

Pemberton dismisses the notion that the free papers are less valued because they are given away, saying they attract a mass-market audience from the difficult to reach students to professionals on their way to work.

“The majority of the distribution of free newspapers is at the MTR stations and it basically captures a day part that would typically be dead time for people in terms of information,” she says.

Good reading Habits

Newspapers offer a guaranteed daily audience of engaged readers, says Shawn Hiltz, director of marketing, Asia for The Wall Street Journal Asia. The paper’s average net circulation in Hong Kong throughout 2007 was 80,393 copies, according to HKABC.

“Newspapers are a morning essential for business people who need to know what has happened overnight. And, because newspapers are often read early in the morning, readers are less encumbered by the day’s distractions. Unlike periodicals, daily newspapers offer date-specific advertising adjacencies, making them an ideal medium for communicating timely messages such as announcements,” Hiltz says.

“Most people read the same newspaper every day, creating a very strong relationship between reader and publication. This connection makes advertising the newspaper more effective and more influential than other media.”

Hiltz refers to the 2008 Business Elite: Asia Survey, which found that readers are more likely to keep or make copies of what they read in newspapers than any other medium, and they are also more likely to quote what they have read in newspapers in discussions or presentations.

Jocelyn Cripps, Asia-Pacific marketing director for The Financial Times, refers to the 2006 Power of Print survey by the Society of Publishers in Asia, which showed consumers exposed to a print campaign were more than twice as likely to name a brand as ‘top of mind’ within its category.

Cripps says its strategy is to be platform-neutral, so the value proposition offered is integrated across the newspaper, FT.com and mobile platforms to reach elite business readers. The newspaper boasts a circulation of 40,000 in Asia.

“The FT newspaper is the foundation and main source of our regional and global advertising revenues.

“Luxury brands prefer a glossy environment like our ‘How to Spend It’ stand-alone supplement that accompanies the FT Weekend about once a month,” Cripps says.

“At the same time, technology has given the newspaper the opportunity to present FT news content in more dynamic ways with videos, podcasts and interactive graphics.”

In July, the FT launched an exclusive Chinese fashion and lifestyle management monthly magazine and the FT Mini Player, a video player embedded in news and feature articles on FT.com to give users easier access to high quality video content.

“The popularity of online videos have led to a significant increase in interest from advertisers and high profile partnerships have been secured with clients as diverse as IBM, Bulgari, DHL and Vestas over the last six months,” Cripps says.

The International Herald Tribune (IHT), the global edition of the New York Times, caters to a highly discerning, quality readership that thinly slices across the top of a high profile, global news consumer in the English language.

The Asia-Pacific edition has seen circulation volume and revenue as well as advertising revenue up year-on-year for the past three years, says Randy Weddle, Asia Pacific managing director of the IHT. He adds that news today is a 24-hour operation and the website must contain refreshed around the clock news, even if it is a local newspaper.

The website operates a digital edition around the clock with newsroom operations in North America, Europe and Asia, helping deliver a profitable web operation, says Weddle, who considers it old thinking to believe that online and offline are separate.

“The issue is to be a content provider and to provide the content in whichever platform the reader/viewer wants to consume it. It becomes an issue of brand trust. If the reader or viewer trusts your brand, they will seek it out in whichever platform suits their own desire,” he says.

Elaine Chow, chief marketing officer of the Chinese-language daily, Apple Daily, published by Next Media since 1995, says she can’t speak for all newspapers, but the Apple Daily’s value as an advertising medium comes from its influence in terms of political and social issues and reach of quality readers.

Apple Daily’s average net circulation of 309,261 in 2007, up 1% on 2006, according to Hong Kong’s ABC. Chow admits that it’s a tough time to be in the newspaper industry with the cost of paper going sky high this year, coupled with questions on how to ride the digital tidal wave.

“We have been putting lots of resources into exploring and expanding our digital arm, launching Apple Action News and more new digital content is coming,” Chow says.

Leslie Fong, senior executive vice president of marketing for Singapore Press Holdings, agrees that it is becoming increasingly tough to be in the newspaper industry. He describes the media scene today as “very crowded” and advertisers are also becoming increasingly demanding and conscious of their return-on-investment.

Additionally, competitors are resorting to heavy, perhaps even cutthroat, discounting to win market share. This is dangerous as a discounting war can only lead to destruction of value and losers all round.”

The Wall Street Journal, acquired by News Corporation, is investing while others in the industry are retrenching making the outlook robust, according to Hiltz. The WSJ is one of the few papers to have chased a paid subscription model for its website. This has strategy has emerged as a money spinner with the company announcing an 88% jump in online subscriptions.

"That the newspaper sector is changing is clear," Murdoch stated at the company’s recent annual results teleconference.

“But companies willing to invest in new forms of delivery, which have a commitment to quality, will prosper.”

Several expanding offerings have been launched to complement the daily newspaper including weekend features on lifestyle issues in Weekend Journal Asia, included free in every Friday’s paper.

Catering to calls from advertisers for a glossy, luxury environment, September will see the launch of WSJ. magazine, a new global magazine free for subscribers in Asia. Hiltz has seen a steady increase in demand for innovative advertising opportunities as clients and agencies seek to disrupt conventional advertising and get noticed.

For example, HP ran an upside down t-shape advert featuring a filing cabinet with files popping out and Allianz booked a checkerboard spread across a DPS on the Global Business Briefs page.

The South China Morning Post, with a circulation of 106,054 copies in 2007, a decrease of 2.4% on the year before, also finds the four-colour full-page ad the most popular format.

However, advertorials and new advertising formats are also being taken up by clients, says Elsie Cheung, director of display advertising for SCMP, with increasing demand for integrated packages, especially when advertisers are planning big launch campaigns.

Tong reports high demand from premium advertisers for front covers of The Standard, for special supplements, magazines and tailor-made creative format advertising. For example, on 29 April, Jaguar took out the front cover to promote the launch of its XF model.

Engaging young readers

One of the biggest challenges newspapers face globally is attracting younger readers and newspaper publishers have been investing in initiatives to get younger readers hooked.

SPH reaches out to primary and secondary school students with sections in both English and Chinese, such as Thumbs Up, Friday Weekly, In, and Little Red Dot. It has also revamped the content of some sections, to appeal to a younger audience. Then there’s newspaper in education programmes, media clubs for students and STOMP, launched to reach out to young readers and steer them back to print.

The Wall Street Journal Asia has its Future Leadership Program, where business and finance students at universities across Asia receive the paper each business day during the academic year.

Across Asia the FT works with educational institutions including the National University of Singapore, Korea University and CEIBS in Shanghai to co-host events and offer special subscription opportunities to MBA students and professors. It also has online games such as FT Predict, where users play with fictional FT dollars to take part in a trading market. Likewise, the IHT organised a debate tournament in Hong Kong, where to participate, students had to read the paper.

While the future will certainly throw up a myriad of challenges to the newspaper industry and publishers will continue to innovate their products.

As Murdoch told analysts at the company’s full-year earnings announcement, newspapers will be with us for a long, long time.

“Newspapers will continue to supply information to their public and communities, but it will be available in every way across every platform.”