Creativity rises as ad sales drop

Lauren Richards is spending a lot more lunch hours out of the office these days. 'I haven't been able to have lunch for a couple of years,' she laughs. It's not because Richards, VP and national media director for Toronto-based Cossette Media, has suddenly turned more social. Rather, Richards is responding to the newspaper ad sales reps hammering on her door.
'Uncertain,' 'hesitant' and 'wait-and-see' are how media buyers and the VPs of ad sales at Canada's papers are describing the current ad sales
climate.

Lauren Richards is spending a lot more lunch hours out of the office these days. ‘I haven’t been able to have lunch for a couple of years,’ she laughs. It’s not because Richards, VP and national media director for Toronto-based Cossette Media, has suddenly turned more social. Rather, Richards is responding to the newspaper ad sales reps hammering on her door.

‘Uncertain,’ ‘hesitant’ and ‘wait-and-see’ are how media buyers and the VPs of ad sales at Canada’s papers are describing the current ad sales

climate.

‘It’s not good. They’re fighting over every dollar,’ says Darryl Nicholson, VP, media director for Toronto-based Ammirati Puris. ‘It’s interesting because there was so much excitement about newspapers for a while. But it was almost too much. It was fine when the economy was fuelling, but now many of these companies are thinking: ‘We projected all of this based on a certain amount of ad revenue and that’s not happening.’ A lot of people are going to have some trouble over the next little while.’

Last year saw a buoyant economy, but the combination of a looming recession and the U.S. terrorist attacks sent newspaper ad sales plummeting by roughly 10% in September. The only upside is that as the industry inches towards Christmas, a newspaper boom time, that figure seems to be settling in at a slightly better 5% drop.

‘Clearly the impact of Sept. 11 was that a lot of people put ads on hold and made decisions to postpone them,’ says Phillip Crawley, publisher and CEO of the Globe and Mail. ‘It’s largely that people just want time to assess the state of the market before they commit their dollars.’

Already the fallout of those lost revenues is ravaging the market. It started in late September, when CanWest laid off more than 130 staffers at the National Post. Last month Quebecor eliminated 125 jobs, with the Toronto Sun losing a hefty 10% of its employees and Sun Media’s FYI free commuter pub landing in the trash. About a week after that, Bell Globemedia, which counts CTV and the Globe and Mail among its holdings, posted a $52-million loss, partly due to declining ad sales.

Before Sept. 11, sales were already flatter than last year, thanks to the slow dissolve of sectors such as technology. Crawley points to the fact that in 2000, the Globe and Mail had approximately $7 million worth of business from companies that are now non-existent due to bankruptcy, acquisitions or mergers, such as the union of booksellers Chapters and Indigo.

‘Certainly in the month leading to September, it was obvious to us that it was the beginning of a slowdown,’ says Robert Attala, VP advertising sales and circulation for the Montreal Gazette.

While Ontario- and Quebec-based papers are feeling the economic pinch, for papers in Vancouver, it’s more like a slight jab.

‘We haven’t really had much of an economic up wave in B.C. for the last five or six years even, so maybe the trough isn’t as deep,’ says Kevin Bent, VP, advertising sales for the Vancouver-based Pacific Newspaper Group, which publishes both the Vancouver Sun and the Province.

And while Ontario-based papers are seeing some major spending shifts in categories ranging from financial services to travel, Bent says Pacific only sees a shift in one major category.

‘The obvious place where our business has been hit most has been in the careers and employment sector,’ he says. ‘With fewer jobs in the marketplace, particularly in the high tech sector, the growth that we saw in 2000 has basically reversed itself in 2001.’

Careers and employment are where many papers, including the Globe and Mail and the National Post, are taking the hardest hit. The other sector taking a beating this quarter is travel, an industry that was sent into a tailspin following Sept. 11. The financial services sector – especially mutual funds – is also softer, as is the high tech category.

‘Anything related to consumer confidence – careers, house sales – all those things seemed to [be in] some jeopardy, although the house resale numbers are fairly buoyant,’ says Doug Checkeris, managing partner of Toronto-based media buying company MBS. ‘The big question is what will retail do for Christmas? That’s hard to call.’

Indeed, many report that retail has scaled back on its newspaper ad spending, but not dramatically. ‘Advertisers are still spending money,’ says Carey Lewis, VP, media director for BBDO/OMD and PentaMark Media Group in Toronto. ‘But retail is a soft market and people aren’t spending as much on ads right now. Our clients are still optimistic, but we think that it’s probably not going to be an active market until next spring.’

If anything, say media buyers, retailers are likely to scale back large-scale Christmas media buys, replacing them with tactical buys designed to move product. ‘It may be that they’ll look at the reports on Monday and decide what they’re going to

do that week, and that’s the beauty

of newspaper,’ says Ammirati’s Nicholson.

Luckily, there are still some categories that newspaper can tap into as potential revenue boosters, including domestic travel. ‘The provinces are very active at getting Canadians to travel within their own country,’ says Carol Ann Kairns, VP, media at Montreal-based agency BCP. ‘I’m sure newspapers are going to see sales on that front.’

Other recession-proof sectors include food retailers and lotteries. And even though it’s a big ticket item, automotive will also likely be another revenue source. With weakened demand and low interest rates, newspapers expect at any minute to be welcoming tactical low-financing ads from auto makers.

Naturally, along with more door-knocking, newspapers are coming up with new strategies to woo advertisers.

‘It’s more important than ever to be able to come up with creative solutions for clients and make the best use of our assets,’ says David Swail, SVP and GM at Toronto-based National Post. ‘We are more aware than ever of the need for creativity, flexibility and out-of-the-box thinking. It’s what you always do in a [down] cycle. Part of the cycle means you just try harder and fight harder for the business.’ And while most remain mum on exact plans, citing competitive reasons, they do hint at more sponsored sections or ads that include a Web component.

To make itself more attractive

to advertisers, the Globe and Mail recently increased its colour capacity. The press upgrades also mean the paper can carry larger sections in the national edition as well.

‘It’s to offer advertisers more flexibility in their positions, more choices within the A and B sections, and to actually just increase the size of the section,’ says Crawley. ‘Previously the limit of the national Report on Business was 32 pages and we’re going to go to 40 pages over the next month or so.’ Advertisers who have taken advantage of this advanced colour capacity include Bell with its ‘go’ campaign, as well as financial services companies such as CIBC and TD Canada Trust, which recently launched a new branding campaign.

The other big opportunity is selling cross-media, although many point out that these multi-million dollar deals don’t happen overnight. While many were already in the works, some say there’s more thinking about such offerings as newspapers look for selling opportunities.

But as one buyer points out, there are still some kinks in the system when trying to put these deals together, especially on the part of Bell Globemedia, which owns the Globe and Mail, CTV and Web portal Sympatico.

‘I’ve been in meetings where literally they’ve introduced themselves in front of us from different divisions, such as the Globe and Sympatico,’ says Nicholson. ‘And then in the middle of the presentation, they turned off one laptop and turned on another one, and the presentations don’t look the same. They didn’t even get together downstairs in the lobby. And you’re sitting there just thinking ‘And you’re going to talk to me about seamless integration?”

Some have also pointed to the possibility that the two media congloms have tried to bolster ad sales within their organizations by directing that ads for media holdings be placed in sister outlets. For instance, one finds a lot more ads for Global stations in the National Post than in the Globe and Mail.

But Bell Globemedia, rather than issuing a formal directive, just seems to be avoiding the National Post, at least with its CTV and affiliate properties.

‘We’re not in the Post simply because it doesn’t have the market penetration in Toronto, so it’s not on our A-list,’ says Rick Lewchuk, SVP of program planning and promotions at Toronto-based CTV. ‘But we are using the local [CanWest] papers in other markets across the country.’ Lewchuk also points out that CTV advertises in what seems to be Canada’s largest neutral daily – the Toronto Star.

As for CanWest, Swail says he’s not aware of any directive to advertise CanWest properties first and foremost in its own publications. He adds that sister media advertising isn’t much of a revenue-bolstering tactic anyway.

‘We don’t kid ourselves that internal dollars are new, hard, cold cash coming into the company,’ he says. ‘We factor that in when we’re doing market share versus how our competitors are doing in a category. There’s a conscious effort not to be duped by the amount of space we all use in our own publications for our various properties.’

Looking ahead, newspapers say the future’s tough to predict, but most are counting on ad sales recovering in second quarter 2002.

‘I have to think that advertisers are going to be fairly aggressive as they come into Christmas,’ says Attala. ‘They’ll be cautious in how they execute their communications strategies but I’m still optimistic. We’re hoping for a rebound in the second half of the year but it’s going to be a difficult time, no doubt about it.’

‘The uncertainty will continue,’ adds MBS’s Checkeris. ‘It’s not necessarily doom and gloom, but I don’t see any really significant growth in demand. In some sectors there will be significant retracting, but it’s hard to call. And part of this will be governed by how the market moves in the next three to four months.’