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Brand Winners... And Losers: P&G and Newspapers
Brand Winners… | And Losers |
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The Marketing Doctor says:
Winner: P&G
Loser: Newspapers
This week’s brand winner and loser:
The Winner:
Procter & Gamble, a longtime favorite of The Marketing Doctor, is this week’s winner for two reasons.
First, in tough times they just earned more money than the majority of analysts expected (quarterly earnings came out this past week).
Second, they are terrific proof that marketing —far from being superficial and after-the-fact— can be at the center of a successful business model. That’s right… Marketing is a foundation to build a business on.
P&G was started in 1837 and made a lot of its money in the 19th century from its candle business. Needless to say, if that had that been their only business, then P&G would not exist today…
But ultimately P&G is a marketing company —a company that owns, develops and innovates many brands, and it was this company that responded to the shift away from candles by mastering new markets as they emerged. (By 1920, they were out of the candle business and inventing the “soap” opera for radio —an incredibly inventive and effective way of promoting P&G products to mass audiences the world had never been able to reach before.) Here’s their history —a fascinating read about a company that today has revenues of almost 75 billion dollars annually and spends 2.5 billion in advertising in the United States.
P&G knows that the current market will be tough for some time, but their products span the gamut from high- to low-price. (P&G has its own discount brands for those consumers who are going to belt-tighten down from more expensive items.)
P&G’s products are always built with marketing in mind… A creative idea is always market-tested, and if it fails that test then it doesn’t become a product. End of story.
Now for this week’s loser: an entire industry that has never really had marketing in mind and could learn a whole lot from P&G…
The Loser:
Newspapers. I had to pick an entire industry because like arctic glaciers, this bunch is collapsing faster than anyone predicted.
The Christian Science Monitor is ending its existence as a printed newspaper and going exclusively online. Elsewhere, New Jersey’s Star-Ledger is cutting 40 percent of its staff.
What is going on?
Basically, ad revenues are falling for newspapers on the print side, and growth in online ads isn’t making up for it because no one can seem to sell online ads for the same amount of money that they could sell print ads.
As a result, many of these newspapers find themselves in the strange spot of having more readers than ever (online) but making less money. Read the NY Times take on the situation here.
From a marketing point of view, I think we’re seeing a re-alignment in ad spending that might very well make two media (television and print publications) unprofitable businesses (or much less profitable businesses).
In other words, every so often something changes in the marketplace that translates to a radical shift in what a business considers valuable as far as advertising is concerned and what a business will pay for it. I’m a longtime proponent of the value-for-my-money advertiser crowd. Advertising should generate sales. Period.
Television and newspapers are both suffering from the same thing: too much choice, ease of access and questions about the value of the kind of advertising they do (thanks in part to the more targeted advertising models introduced by the Internet).
Fact is, you can have a top quality product, even a hugely valuable cultural product like great journalism and it can be a poor driver of sales.
In my opinion, newspapers were able to get away with ignoring their Target Markets for years. In the beginning (i.e., the 19th century), the most successful newspapers were called “penny dreadfuls” and they knew what their Target Market craved (lurid news stories) and delivered it at a cheap price.
Over time, newspapers evolved into what we have today (pretty large and all over the place in terms of content and approach); and to a certain extent many readers bought them not to read but out of a kind of obligation, a sense that somehow they ought to have a newspaper around.
This dynamic is changing fast, and as a result circulation is dropping. Add to that that online advertising can’t generate the same kind of money that print advertisements did and you’ve got trouble. See this story for how digital ad sales are struggling.
I don’t really see what newspapers can do to become marketing winners other than to focus increasingly on their Target Markets needs. I think you’re seeing this online in the way that newspapers are bringing their readers into commenting on pieces and doing social networking via the site (for example, I’m over at IncBizNet.com syndicating this blog and participating with users of that site an, offshoot of Inc.com).
But will this save the big, traditional newspaper (whether national or regional)? I don’t think so.
What we’ll probably end up with is fewer newspapers both online and in print, smaller newspapers (in length and number of staff) and a greater emphasis on content that is highly targeted to readers’ tastes and when/where these readers read.
If there is a newspaper future, it will be one driven by smart marketers such as urban newspapers Metro and AM, which can be read in less than thirty minutes (the average subway commute), are highly targeted to the city dweller, are given away for free and can still charge good rates for their advertisements.
And remember, it’s always easier when you keep marketing and branding in mind.
TODAY'S TANTILLO TAKEAWAY -
It doesn’t matter how noble your mission: if you don’t satisfy the needs of your Target Market in a way that also contributes to your bottom line, your marketing model will fail.
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5/4/2009 7:36 AM
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