John Reardon on Print versus Web
Posted by rick jamison on February 3rd, 2010
John Reardon is president of the RTC Group, a publishing company serving the embedded electronics marketplace. He brought an interesting perspective to the Comment thread prompted by my interview with John Donovan earlier this year where we explored some of the tensions between traditional publishing and new media.
RTC print publications achieved positive revenue growth in 2009—a year that was not kind to traditional magazine publishers. So when John weighed into the “New Media v. Print” part of the conversation, I wanted to hear more. He obliged as follows:
Life has an increased value through the art of socialization. RTC has been addressing the concept of creating and supporting communities from our inception over 20 years ago. People speak of the virtual nature of the Web, and then they debate the merits of Facebook and Twitter as if they have forgotten or never knew how to network. RTC does it all—we have Facebook accounts, we Tweet, we have electronic distribution of our publications, and we have an expansive presence on the Web—but none of it has the marketing power of distributing a monthly print publication.
This industry created a suicide pact when they tasked their sales people to go out and sell the concept that print was dead and that they—the advertiser—should redirect their marketing dollars to the Web. This coupled with the over investment and under performance of the Web, led companies like Penton and Reed to compromise shareholder equity. The whole time this was occurring, publishers saw the downturn of their print advertisers as further sign that the end was looming—not the fact that marketing budgets were being slashed, not the fact that they had fired a majority of the staff, and not the fact that their selling the Web as an alternative was an easy out for a marketing professional.
That brings us to today.
We have an audience that chooses print over electronic 15 to 1; we have advertisers who are willing to pay tenfold more for print than Web; and we have authors looking to have their editorial contributions featured in print first at the exclusion of the Web.
The Web side continues to be a bigger and bigger investment, which continues to grow faster than revenue. The decreased revenue, reflecting less than 15 percent of a media company’s revenue, shows further dissatisfaction from marketing professionals. We have recently terminated Editors-turned-marketing-professionals who had hoped they could induce a company to spend a little money based on their academic credentials to make their house payment.
The Web has been a financial disaster for media companies—whether you’ve invested in TechOnline or are a shareholder at Reed, Penton, PennWell or UBS, you know what I am talking about. It is hard after the billions of dollars spent to admit the error, but like late night talk shows—sooner or later we have to stop drinking the Kool-Aid.
Let’s be realistic—the Web is here to stay and offers itself up as a great PR vehicle. It’s a great place to support the drive of marketing through the offering of further, more complete information. But it is not a primary marketing tool, it doesn’t have a clear business model, and it hasn’t proven itself in building shareholder equity as a medium for marketing.
So if you are sitting at home believing that you have the next great idea for an industry Web site, ask yourself how many sites you are aware of that make money, and how many of those make money because they’re supported by print?
As a consumer of technology-focused news, or a marketer seeking to communicate with niche audiences, or a journalist adapting to a rapidly changing landscape—what do you think?
RSS
I agree with some of what John says, but not with his analysis or conclusions.
Yes, the margins suck on web ads, and putting all your eggs in any one basket is always a mistake—particularly one where everyone is still trying to figure out a business plan that works. Some publishers did indeed move resources too quickly from print to online and got burned in the process. Whenever there’s a major change underway—whether powered by the steam engine, the printing press or the Internet—plenty of early innovators get burned; but the ones who get it right become the dominant players in the next phase.
Far from some ‘suicide pact’ concocted by misguided marketing minions, these publishers were reacting to customer demand that they get on the web band wagon. Some have done it better than others, and yes, no one is making as much money as they did with print—nor, quite possibly, will they ever. Print publishers can rant all they like—and as well they might—but there’s a major shift under way in the publishing industry and for better or for worse the old days aren’t coming back.
I don’t know where John found an “an audience that chooses print over electronic 15 to 1”—it’s certainly not among engineers, who have long done most of their reading online (v. Reed’s “Mind of the Engineer” studies). If you want to reach an engineering audience, you do it online. Vendors know this, which is why a major semiconductor company—for whom John’s company and mine just submitted FY11 media proposals—insisted in their RFP that “The ratio [of] Print vs. Online advertising should be approximately 1:15…new and exciting media exposure [is] preferred over a standard full-page print ad.”
I just got back from DesignCon, where I interviewed a dozen semiconductor companies. All but one of them are shifting the bulk of their ad budgets from print to online. Four have gone online only—and these are companies with revenues of +/- $1B dollars whose stocks are going up. Far from trashing their shareholder value, by making reining in their huge ad budgets while still increasing sales they’ve delivered value for money. That’s what’s driving the move to online advertising, not some marketing clique punch drunk on Kool Aid. Unfortunately the ones who suffer in all this are traditional publishers. We all love print, it’s just not cost effective any more.
The other thing that’s driving the move from print to online is accountability. Everyone I talked to about online ads cited “measurable results” as the biggest attraction of online ads. They know how many people see their ad, how many people click through to their site and, if offered some incentive like a white paper or video tutorial, they can capture detailed lead information for sales follow-up. You can then feed this information to the sales staff and get a good handle on return on investment (ROI), which makes online ad budgets a lot easier to sell to management than print ones, especially in a down economy.
None of this is possible in print. How many people actually saw and responded to your $5,000 four-color, full-page ad? It’s beautiful and compelling, but was it effective? You can look at ABC-audited circulation figures and hope for the best, but how many of those magazines just wind up unread in huge piles like the ones that surround my desk? There’s no way to know. Not to be too unkind, but the ones clinging to print ads are the ones really drinking the Kool Aid.
The final attraction of online vs. print for my sources is video. According to Alexa, YouTube is the fourth biggest Internet site. Everyone I talked with either has a company YouTube channel or they’re hosting their own videos—and lots of them. Four have their own in-house studios and videographers on staff. Vendor-produced webcasts are rampant, and video application notes are becoming very popular. It’s not print, but it’s a sexy new communication channel where some traditional publishers are actually making money.
To traditional publishers—like my good friends at the RTC Group—I suggest that we’ve crossed the chasm in electronic publishing. Some big mistakes have been made, and we can learn from them. Now we’re on the ascending side of the bell curve, and companies who can find innovative ways to convey marketing messages for their clients will prosper. They’ll have to be innovative, since we’re charting new territory here for which we don’t have a map. But these are exciting times, and ones in which innovation will be rewarded.
I was involved with a company that had major print publications and saw what happened when they decided to move heavily to the Web without thinking through the implications and effects of their actions. The results were disastrous. It was almost like a panic reaction that said, “We have to get onto the Web or die.” The result was that millions of dollars were invested in Web presence and a host of print editors were additionally tasked with providing daily content for the Web site. The result was the wholesale shoveling of unevaluated copy into the insatiable maw of the Web
Editors who had been accustomed to considering and shaping copy with a consideration for the needs of their readers as well as their advertisers were under pressure to keep the Web site fed no matter what. In addition, the company shifted its resources in terms of budgets and its own marketing message to a Web focus to the detriment of the print publications without a clear concept of what they wanted to accomplish or were practically able to do. The Web didn’t kill these publications—the management did.
John Donovan makes the point that many companies are more comfortable with Web-based advertising because they can reliably count the leads that are generated. To some extent he has a point. You can count the leads, but how do you know how many of them actually result in sales? Even a click-through or a casual request for information counts as a lead. Big deal. Does this mean you must visit that company’s online ad before you even become interested or seek more information?
I am a print editor and not a marketing professional, but I have one question: With all the players out there clamoring for attention, what makes a Web user who is scrolling through a list of products from various companies pause and take a closer look at one or the other? The simple answer is branding. Something triggers that pause that can’t be quantified by a number of leads. There is a huge number of advertisements on the Web, but I think I could count on both hands the number that qualify as ads that are aimed at building brand awareness rather than just attracting passing attention. And that is the power of print in the technical trade press.
The combination of solid, focused, credibility-building technical information that positions a company as a leading expert in its field while also offering the reader information that is helpful in his/her job coupled with brand-building advertising works over time to produce much more qualified leads—the kinds of leads generated by publications such as those produced by the RTC Group. I think we are entering a period of re-evaluation in which the relative merits of the Web and print will be reassessed. Print is definitely not dead and the Web is here to stay. The skill required of today’s marketers is to realistically assess the merits of each and to allocate resources appropriately.
Very well said, Tom, and I agree with most of your points–including one key point: I too believe that print is a better medium for building brand awareness than the web, which is more effective for pushing products.
As I learned doing PR in China, you have to sell the company before you can sell its products. A fancy print ad will leave a more lasting impression than a quick glance at a website leaderboard banner, though a click-through there will quickly land you in that company’s “sales funnel.” Once a reader is well inclined toward your company, they’re inclined to be well inclined toward your products–though engineers are a pretty skeptical lot.
Converting leads into sales is the job of the sales staff, and after they receive any lead they should be on it like white on rice. They track how many leads from a particular site lead to sales, and the marketing team can quickly adjust the medium or the message in response. In the case of print you have to finance an expensive Baxter Readership Survey to see how effective your ad was a couple of months ago. You still don’t know if it generated any sales, though hopefully it generated some awareness and good will.
As for editorial horror stories, both of us have been involved in them and probably most people reading this blog are aware of them. You’re right, it wasn’t the web but bad management decisions that killed most defunct publications (I’ll give John a pass on that one since he inherited a publication with shrinking market share). What we need now is good management decisions on how to live with the web and how to come up with a product mix–of print, web and multimedia–that will work going forward.
As someone once said, I don’t have the answer but I admire the problem.
Who lives on Fantasy Island?
As I listen to John Donovan’s argument, he always seems to leave out the most import facts. John talks about the re-appropriation of budget to online; this isn’t going to Web pages like his, it is going to the ever increasing costs of supporting the corporate site. Think about it for second: You have a marketing budget that supports payroll, partner programs, national events, print, the corporate website and any pet projects of the CEO. This year they cut the budget by 20%. Marketing budgets have little or no discretionary spending this year. It is not a trade from print to web; it is a greater spending on the corporate site.
John goes on to talk about the use of U-tube for corporate videos, which reminds me of the VHS cassettes that I used to get at trade shows that I never watched. U-tube is a wonderful site for entertainment, but like the limited success of Podcasts in marketing, I wouldn’t bet my company’s future on it. (Whatever happened to Podcasts)?
In my comments, I mentioned that for every 15 print subscriptions, we only get 1 electronic request. This is an internal number. As we have both web and print, the statistic would seem to be more relevant.
John D talks about the quantification of leads of the web. If you think that “click through”, “page views” and “Google stats” are anymore quantifiable then mailing to a qualified list, you’re kidding yourself. John talks about white papers and vendor sponsored content, but the moment you put a “gate” up to capture the lead the volume goes down to a trickle.
These are internal numbers to RTC, but might be of interest:
The production costs of a Webcast are greater then the cost of a conference at a Marriott class hotel.
The cost of audience generation for a webcast is the same as for a regional one day conference.
RTC magazines generate 10 times the amount of revenue as our Web in display advertising.
Payroll costs are nearly the same.
RTC events are 80 percent of our lead distribution, with magazines and web near equal. (We quantify this through our RTLD system).
At a minimum we have a 90% (plus) drop in traffic to sites requiring registration.
Printed invitations generate 10 times the return than e-mail. This simple fact is highly important when dealing with a small sphere of people in a specific geographic region.
So as RTC looks at Tweets, RSS feeds, Webcasts, virtual trade shows, emails, Facebook, Myspace, Linkedin, Plaxo, Message Boards, micro sites, jigsaw, portals, E-letters, podcasts, blogs, share this, U-tube, or any derivative thereof – we’ll continue to focus on those that are supported by more than talk. Today and in the foreseeable future, the GDP of print is approximately $400 million in technology space – and this is where we will focus. The number for the web is a little more difficult to state, but removing search and list rentals from the equation, I’d be surprised if it reaches $40 million.
While continuing to deny that the publishing world is going through a basic change, John’s response continues to be that business plan for online publishing sucks. No argument there. My point is that it’s time to get beyond denial and grapple with the future, since there’s no going back. No amount of railing about how misguided this all is is going to change that.
The online business plans to date don’t work for publishers, but vendors don’t have that problem; they continue to shift resources from print to online—and not just to support expensive web teams. That cost is included in Marcom departmental budgets and not in ad budgets. The rate of change would be faster if there weren’t so many outlets to choose from and the move from simple print choices to highly targeted, “long tail” marketing weren’t so challenging. The dollars aren’t there yet, but the momentum definitely is. Google makes billions every month from simple text ads, with every tech vendor you can name bidding on Google AdWords.
Both of us are selecting facts to make a case; both of us make valid points. John states a few inconvenient truths with which I agree to some extent:
1. “The production costs of a Webcast are greater then the cost of a conference at a Marriott class hotel.” That may be. But it’s also why vendors I’ve talked with are taking that business in-house. They’re increasingly doing their own multi-city conferences, too, having discovered that it’s cheaper to overwork their staff than to farm this out.
2. “RTC magazines generate 10 times the amount of revenue as our Web in display advertising.” No doubt, since print ads typically cost 10 times what web ads cost. Thus the conundrum that I keep trying to get John to address.
3. “In my comments, I mentioned that for every 15 print subscriptions, we only get 1 electronic request.” Not surprising, since print subscriptions are now so hard to come by, with fewer every day. Digital editions are everywhere. You don’t think that’s a trend?
4. “RTC events are 80 percent of our lead distribution, with magazines and web near equal.” This is another kettle of fish. Anyone who takes the time to spend a day across town or across the country at a show is definitely a hot prospect, though not necessarily for your product. Even moreso is someone who clicks through from your ad for an ultra-low power FGPA. It’s pure speculation on our part where either person is in the sales cycle or how many of such leads convert into sales; the sales teams know, and they dictate to the marketing teams where to shift their resources. Since the RTC Group does so many shows, I’m hardly surprised at their results.
5. “At a minimum we have a 90% (plus) drop in traffic to sites requiring registration.” Also not surprising, but I’m talking not about sites but premium material. Vendors have considerable success collecting leads when someone downloads a hot white paper, which is why they’re so popular with engineers, vendors and online publishers alike.
6. “Printed invitations generate 10 times the return than e-mail. This simple fact is highly important when dealing with a small sphere of people in a specific geographic region. “ Also probably true. I’m more impressed when someone sends me a nicely printed invitation than when they send me a nicely printed email. This is one time when “if you pay more, you get more.” I continue to question that with print ads.
It’s hard to generalize from RTC’s experience, since they managed to make money last year while other publishers were cutting staff to avoid Chapter 11. They’ve focused a lot more on print than say UBM or Reed, and in the short term that clearly makes sense. I don’t think that’s a sustainable strategy in the long run, since I think print will find a niche and stay there. We’ll see who’s right.
John’s current customer base likes print, and who doesn’t? But as I mentioned before, every vendor I talked with at DesignCon is moving heavily from print to online advertising, with many going online only. These won’t be customers for John’s magazines, who will see a shrinking client base. You can continue to sell print as a premium product at a premium price, but fewer vendors will be willing to pay for it. The demand for “measurable results” was a drumbeat I heard from all the ad people I visited in the Valley, and you only get that from online ads.
None of this spells the “death of print”, but to my mind it certainly points to the “dearth of print” going forward.
OMG
I love the conversation that characterizes the saying “if things were different, they wouldn’t be this way”. Clients of RTC spend more money for print because it is better. You can discuss this until your blue in the face – smart money is on print and print continues to out pace web. If you want to invert the argument that web makes more gross margin and consequently is the better choice, I would refer to the old adage “one percent of something is better then 100% of nothing”.
We all have hopes that the web will create an environment where smaller numbers with higher margins equal a higher net profit. The problem we have is that the costs associated with web are outpacing the revenue. So to answer John D’s question about the lower costs equating to a better return – so far that is a wish. The average web page will cost a company upwards of $150,000 a year to support, amplify that by the complexity of a commercial web page and you could print a lot of magazines.
So as we hear the news that Penton, a leader in investing in the Web filed Chapter 11, are we not seeing some cause and effect? Can’t we look at the accumulated debt of Penton, nearly $240 million, as a yet another indication of “if wishes were horse, beggars would ride”.
Check out this chart of disillusionment from Gartner.
http://www.readwriteweb.com/start/2010/02/corporate-blogging.php
I don’t know John, what we seem to have here is a failure to communicate.
The costs you quote to support a corporate web site are probably true—and irrelevant. That comes out of the Marcom budget, not the advertising budget, which is increasingly going to online media outlets. And Daya’s amusing graphic notwithstanding, corporate blogs are also irrelevant to the debate. They aren’t going to replace print mags, and they don’t soak up the ad budget anyway.
The ad money’s going to online magazines and online versions of print outlets—the digital versions of the New York Times, the Wall Street Journal, EDN and EE Times. The fact that the latter group is hard pressed to make as much money as they did with print is the conundrum that we’re all facing going forward—even eventually the RTC Group, though you’ve dodged the bullet so far with an emphasis on print and a lot of lucrative small events. We clearly differ about how bright the future is for print, and with things as up in the air as they currently are, only time will tell who’s right.
Having granted repeatedly that you can’t make as much from online ads as you can from print ones, let’s look at a few ways publishers may be able to survive in an online environment. I propose that the Huffington Post (www.huffingtonpost.com) is the template for future newspapers. It contains a wide range of syndicated columnists, blogs and news stories with moderated comments. The 16th most trafficked site in the U.S., its columnists get paid a pittance, the bloggers nothing, and it runs on a skeleton staff in the single digits. Supported solely by ads, the HuffPost has enough critical mass of content that it has attracted a huge following, which enables it to charge good money for ads. The HuffPost is apparently doing so well that they were planning an IPO before the market went South. Now if we could only use sex to sell chips, this would be relevant to trade mags.
Another approach is charging for content, which is a sticky wicket since everyone online is used to getting something for nothing—and if you start charging there are plenty of other free media outlets where readers can go. The Wall Street Journal gets away with this, since their readers are mostly businessmen who can expense the cost anyway. The New York Times tried it and backed off. But now the Times and all of Rupert Murdoch’s outlets are avoiding the “pay wall” approach and going to “metered access”, where you can read 30-40 articles per month before you’re required to subscribe. They figure this will only apply to the top 10-15% of their readers, who are so loyal that they’ll pay to continue their habit. The Financial Times started this approach and claims to have 150 other news outlets interested in following their lead.
To get readers to pay for content—a cash flow to supplement ads—you’d better have outstanding, exclusive content, and it had better be cheap, to be compensated for by volume. That’s a high bar to clear for established media outlets and an impossibly high one for blogs. At some point online readers are going to have to start paying for content, but this cash flow will probably become the domain of the Big Dogs.
So what’s a blogger to do? Sponsorships. A number of companies—as yet not a large number—have been watching the disaggregation of tech media and decided to help support some of the divergent efforts to find a new direction. Companies such as Mentor Graphics, Synopsys, Virage Logic, Actel, eSilicon and others are sponsoring blogs by Ed Sperling, Rich Wallace, Kenton Williston, yours truly and other ex-print journalists. This is “enlightened self interest,” helping to keep some trusted media channels open and hoping that they succeed. This parachute isn’t available for traditional media, but those independents among us certainly thank our sponsors for their support.
So what’s the answer for traditional media? Diversify your cash flows. Print has been a great cash cow, but that milk is starting to look pretty pricey. There’s always been more money in shows than in publishing—beef up that side, contract it for large vendors (John is all over this). Develop multimedia microsites for mid-size vendors. Package some of your expertise into marketing consulting services; this is what the big PR companies do, and you have the advantage of being able to offer outlets, too. You’re not just a publisher, you’re a media company; offer a wide range of innovative communications media and push them in new directions.
The future belongs to the innovative. In the words of the 20th century philosopher Robert Allen Zimmerman, “He not busy being born is busy dyin’.”
I ask this.
There is a printed magazine sitting on a table in a Doctors office.
It sits there for 1, 2, 3, 6 months, maybe even a year. The printed ADS for one magazine have reached how many people? A very large number that can not be determined. We’re only talking one magazine. We are not debating how many called or how many ordered because that’s not what this is about.
The flip side.
One ad. One email. How many did it reach? ONE. One, maybe! What was the shelf life of that one ad? Seconds.
Gee. What is the more effective form of advertising? Print. Hands down.
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