How print media can leverage digitalization

March 23, 2015 18:49
Hong Kong's print media has a bigger slice of the advertising market than digital media. Photo: Bloomberg

Print media is at a critical stage when its business models need to be re-examined and adjusted amid the rise of digital media, evolving advertising models and changing reader behavior.

One needs to ponder if print media will lose its edge in the digital age -- and if not, how it should modify its business models to embrace a brave new world of technology.

Hong Kong has over 4.4 million Facebook users, more than half of the city’s population, according to a report from market research firm TNS last year. The explosive power of social media brings excitement as well as challenges to print media.

While social media allows print media to engage its readers and amplify messaging in ways previously thought impossible, these social platforms generate an enormous amount of free content and a range of digital advertising alternatives, which could hurt newspapers' subscription and advertising revenues.

Should print media be afraid of the future in the digital age?

Statistics suggest online media have yet to overtake paid print media among local audiences. According to research last year by the Chinese University of Hong Kong's Centre for Communication and Public Opinion Survey, 63.1 percent of respondents read paid newspapers, compared to 56.5 percent who read news from the Internet.

That said, the boom in online media, which mostly publishes free content, marks growing competition with paid newspapers for readers' time and attention. Given readers' limited time, the longer time they spent on online media reveals a threat to print media.

Hong Kong Economic Times, which takes pride in being rated as Hong Kong’s most credible Chinese newspaper in another CUHK survey last year, has approximately 99,000 followers on Facebook.

The House News, a former Chinese news portal founded in 2012, has more than 275,000 followers even though the portal was closed since last July. The closure of The House News also indicates that high traffic does not guarantee success in monetization.

Many publications are aware of the threat and are willing to catch up with the competition in online space.

A research piece entitled "New media – a game changing challenge for Hong Kong newspapers" by the Hong Kong Trade Development Council interviewed a local major newspaper which had made an investment of US$15 million to develop and expand its website.

As a result of the investment, the publication had increased its readership by roughly 50 percent including overseas readers. Nevertheless, as its online subscription pricing was much lower compared to the print version pricing, growth in readership did not guarantee revenue growth.

Take the South China Morning Post, for example: its retail price is HK$9, three times more than its daily online subscription (HK$21 per week). Although online subscription does not involve printing costs, the profit margin per subscription is still lower than print.

On top of subscription problems, advertising in newspapers is at risk of being overtaken by other digital advertising offerings in the market. Pricing is one thing; traceable return on investment is another.

For instance, the minimum daily budget for any ad set on Facebook is only US$1 and the platform allows a wide spectrum of filtering options ranging from geo-targeting to demographic segmentation and personal interest.

While most publications charge advertisers based on cost-per-impression (CPM) model, social media platforms use cost-per-click model (CPC). While the former highlights exposure, the latter emphasizes audience response, which is widely considered as a better indicator of the ad effectiveness than ad impression.

So, is print media losing its edge in the digital age?

"Content is king," as the saying goes. It applies to both subscription and advertising. A dominant free content provider might overtake newspapers as a source of information, but the proven success of some international media indicates that readers are willing to pay for high-quality content.

Financial Times, for instance, is regarded as the pioneer of metered charging model, which allows registered users to have access to certain number of articles for free before requiring paid subscription.

According to FT's 2014 results cited by The Guardian, the model helped FT achieve a print and digital circulation of 720,000, and two thirds of its readers have digital subscriptions, a 21 percent year-on-year rise.

Meanwhile, advertisers have started looking into shifting from traditional advertising to content marketing. Some may think that digital media has an edge as its content is sharable and engaging.

It could be true but there is also room for traditional media to stand out from other digital advertising alternatives by leveraging their thought leadership, the capacity to shape an audience's thinking and to influence opinions.

Advertorial, sometimes known as sponsored content, appears the most common way to achieve that. Although it existed before the digital age, online and social media unlock tremendous possibilities to make newspapers' advertising offerings more creative, engaging and "out-of-the-box" than other digital advertising alternatives such as web banners on search engines and social media platforms.

Monetizing print media's online content need not be advertorial. Take The Economist for example: The publication runs regular online debates, which allows audiences to vote and comment, and some of these debates have a sponsor.

In this case, the publication retains its editorial independence and the advertiser benefits from brand association and being seen as an advocate, who supports intellectual dialogue around defining issues.

The question remains: should print media be afraid?

According to statistics from media-monitoring agency admanGo cited by South China Morning Post, Hong Kong’s total ad spending had reached HK$49.9 billion in 2014, a 16 percent increase compared with the year before.

And traditional media outlets -- including television, newspapers, magazines, outdoor billboards and display -- accounted for 90 percent. The figure gives a good reason for traditional media including print to stay positive.

After all, digitalization is a long winding road but there should be no fear for forward-lookers. High quality content with the right business model will pay off in the end.

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an independent contributor and consultant