News

News Corp to roll out paywalls across regional titles by Christmas as Eales eyes SME ad dollars

News Corp will be looking to introduce a freemium paywall model to its regional publications before Christmas, News Corp metro and regional publishing boss Damian Eales has said.

The implementation of a paywall will look to replicate the company’s metro success at a regional level and is reflective of industry views that consumers are becoming increasingly comfortable paying for content.

Eales

“As we moved on that journey from a free, to metered, and then to a freemium model, we learned more and more about what people were willing to pay for,” Eales told Mumbrella.

“We are doing a better job every day of defining what articles someone is not prepared to pay for versus articles that they are, and locking it accordingly.”

Eales cited the Townsville Bulletin as an example where a regional paywall would work, saying he was “very excited” at the prospects of applying its learnings of its metro titles to its regional titles.

“In Townsville, 40% of the population reads our newspaper at least once a week; digitally it’s about 70%, and at the moment all the content is free,” he said. “Everything that’s in the paper is online so it’s no wonder the circulation decline [at the Bulletin] has been faster than in other markets. And we are not making a dollar from digital subscriptions.”Bulletin

That will change with the introduction of the freemium paywall, Eales insisted, adding that desire for local news has proven to be a “valuable” driver of subscriptions as consumers seek access to the locked content.

“If you want local news you come to us,” he claimed. “We have more journalists than any other news provider in Townsville.”

News Corp is looking to beef up its regional operations with the purchase of APN News & Media’s Australian Regional Media division.

The deal, which is subject to approval from the ACCC, will see News Corp come into ownership of the ARM paywall which offers readers access to the regional masthead as well as unrestricted digital access to News Corp’s The Courier-Mail, membership to The Courier-Mail’s +Rewards program, digital subscription access to Fox Sports’ online website and three months access to Presto Entertainment, half-owned by News Corp backed Foxtel.

Eales said some of News Corp’s metro newspapers now make more money from digital subscriptions than digital advertising.

“That said, I think there is an opportunity to do a better job of making more money on digital advertising, as well as growing digital subscriptions,” he said.

It means as Eales celebrates his first anniversary as MD for News Corp’s metro and regional operation, a role which saw the former marketing director handed sales, marketing and financial responsibility for 17 mastheads, he must now switch his focus from consumers to advertisers in a bid to lift the media firm’s ad sales revenue.

After “three solid years” driving customer revenue, Eales said his attention must now turn to advertising sales which, like at many publishing firms, has continued to decline.

The first year of his role – along with the two previous years as chief marketing director – was dedicated to a “consumer revenue growth story” for the metro titles, something he said that “hasn’t happened for some time”.

But he acknowledged the emphasis now needs to shift towards shoring up and growing advertising revenue.

“We have built momentum with consumer revenue, which is terrific, but we don’t have momentum on the ad sales side,” he said. “That’s where I have got to turn my attention.”

Eales said some of News Corp’s publications were generating more revenue from consumers than advertisers with The Australian “already there” and the Herald Sun “heading in that direction”.

The Australian

“We have put a lot of effort into growing consumer revenue and we’ve now changed the curve on that. Some of that change has come about because advertising revenue has declined, and that is now our job [to lift ad sales].”

The consumer focus has helped stem the fall of metro circulation over the past two years, he said, with the rate of decline slowing from 11% to 6% this financial year.

“Next year we are confident that will halve again; certainly that is our aspiration,” Eales said, adding that a number of initiatives have underpinned efforts to shore up its print business.

Among those initiatives – or “tent poles”, as Eales described them – have been promotions, such as the David Attenborough DVD and ANZAC Coin offer, a tactic ditched under Kim Williams but reinstated and championed by Eales. He has previously attributed sales promotions as a key reason for stemming the decline of print circulation.Sunday Telegraph Anzac coin offer

Four further promotions have been locked in for the 2016/17 financial year, the first of which will run in August in a partnership between News Corp and Marvel comics.

Eales, who told Mumbrella last year it was important for newspapers to add value – “I don’t think the newspaper has ever been just about news” – said: “We think it will be a big collectable. It will no doubt spark a new generation of comic book readers. The Marvel franchise is so powerful and we think it will be very successful.”

Promotions, once a cost centre for News Corp, have become a healthy profit centre, he said.

“We have also done a lot of work on distribution,” Eales continued. “As an industry we have been pretty lazy in terms of ensuring that we have the right product in the right place at the right time so we are now applying more of a retail/FMCG supply chain approach to ensuring that happens.

“We are also working with different channel partners, be it supermarkets or petrol and convenience stores, to create bundle options, be it bundling The Australian and a metro paper, or a coffee and a newspaper. So we are working with partners to create a reason to pick up the paper.

“As a result, circulation decline has basically halved in the last two years, and we think it will halve again.”

He admitted that, along with many publishers, News also “got rid of a lot of free copies that were propping up our numbers”.

“They have now washed out of the system,” he said.

Eales, who, in a digital era, makes no secret of his love of the printed form, said News Corp’s strategy differs markedly from that of Fairfax, which believes it is “inevitable” that the company will eventually close its weekday metro mastheads.

Hywood:

Greg Hywood described the closure of weekday titles as “inevitable”

Such a view, articulated by Fairfax chief executive Greg Hywood during a speech in May, is known to have irritated media executives who believe such negative talk has a deleterious effect on the industry and unsettled media buyers and CMOs.

“It’s just not in our thinking to go down that path,” Eales said. “In fact, it’s quite the opposite. The discussions I am having about the metro papers is how do we add value to the content. I can’t reveal much more at the moment but we are looking to invest in the printed product.

“We still sell 1.2m newspapers every day of the week and have an audience of 4m people every Sunday. That’s the equivalent of the AFL Grand Final on Channel Seven once a year. We get that every Sunday.

“The core print business is strong and stabilising.

“There’s a few other interesting statistics that give me a lot of faith, moving forward. One is that we are still acquiring younger readers. Maybe not at the level we used to, but we have as many people under-35 reading our printed papers as we do over 65s.”

He described it as a “fallacy” that only older generations buy and read newspapers.

The former Myer, David Jones and Westpac marketer said digital subscriptions were growing at a “healthy pace”, rising around 30% this financial year. Growth is expected to slow next year but is still forecast to rise more than 20%.

“The number of fully paid digital subscribers we are acquiring is far exceeding the ones we are losing in print,” Eales claimed.

“In our business we now talk about total paid audience as a key metric. If you add the total number of newspapers sold and the number of digital subscriptions in place on a daily basis we are in growth this year. It’s small growth but it’s growth, and it’s the first time we have seen growth in a long time.

“The other good news throughout all of this is that we have been increasing prices, of both newspapers and subscriptions. We have more consumers paying more money for more content.

“The outcome of all this is consumer revenue growth in the metros this year and we think next year it will be about two and half times that rate of growth. We are starting to get a hockey stick effect.”

Three years ago, only half of New Corp’s print and digital subscriptions were making money, Eales added.

Today that stands at 94%, he said, citing a “very disciplined” approach to pricing, ensuring readers are on the right package and cross-selling.

Eales plans to target SMEs in particular in his quest to drive advertising.

He is putting his faith in News Xtend, a digital marketing “extension package” business launched in 2014 which targets the small and mid-size end of town.

newsxtend logo

Eales described News Extend as a “shining light”.

“We spend a lot of time thinking about CMOs of big companies but the reality is the majority of spend with us comes directly from clients at the SME level in the market so we need to spend more time getting those companies to grow their business,” he said.

He said the intention is to demonstrate to SMEs how News Corp can “earn the right” to act as their marketing officer and offer a complete mix of ad solutions.

“Interestingly, when you create that relationship we think it’s no coincidence that an advertiser spends 30% more on print, and that’s because they are going to a one-stop shop,” Eales said.

He declined to reveal News Xtend figures, only claiming it was performing “fantastically well”.

“I see it as one of my biggest growth opportunities in the next financial year. I am putting a lot of my personal energy against it and see it as the best example in our business of how we can earn the right to all of the customers’ business and become their marketing solutions sales force.

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