Convergence at what cost?

When Conrad Black sold his holdings in Southam two years ago, he set a chain reaction in motion and for better or worse, 'convergence' swept from coast to coast in Canada.
But while the media owners have trumpeted the marketing benefits of a brave new converged world, it won't mean much unless marketers and media types buy in - and many are stubbornly playing wait-and-see until they see results.

When Conrad Black sold his holdings in Southam two years ago, he set a chain reaction in motion and for better or worse, ‘convergence’ swept from coast to coast in Canada.

But while the media owners have trumpeted the marketing benefits of a brave new converged world, it won’t mean much unless marketers and media types buy in – and many are stubbornly playing wait-and-see until they see results.

It all began with CanWest Global purchasing 28 Hollinger papers in 2000, completing the multi-billion-dollar transaction in 2001 when it took over the National Post. That same year, Osprey Media Group picked up 18 smaller Ontario dailies from Hollinger.

Bell Globemedia followed suit by purchasing the Globe and Mail, CTV and the Internet portal in 2000. Next came Quebecor’s shot at media consolidation, which, in October 2000, added Videotron and its subsidiary TVA to existing holdings Sun Media and the portal.

Very impressive holdings, but many buyers and planners, such as Rob Young, founding partner and SVP planning and research at Toronto-based HYPN, aren’t as impressed as the media companies themselves.

‘There was a promise – an elusive promise – that convergence was supposed to be more than bigger and better corporate acquisition,’ he says. ‘There was something else: it promised to lower costs, make the media buy more valuable, and profit was to increase too.

‘None of that has happened yet. Plus, there was the possibility of new technology emerging. But now it’s more like stitching together a sewing machine and a typewriter to create a Gatling gun.’

Young thinks it’s still too early to make the call on whether the converged media buys CanWest and Bell Globemedia are pushing actually deliver for marketers. And like many he’ll reserve his judgment until he’s presented with good, solid results that prove it.

‘What you hear is ‘that advertiser is doing it.’ You never hear the result – that exposure is up 25% – but you always hear about the signing,’ he says. ‘What does that mean? I haven’t heard any real success stories yet; maybe it’s too early.’

Until those results come in, media types such as Darryl Nicholson, who recently left Toronto’s Ammirati Puris to become VP of the media group at Universal McCann in New York, will continue to feel that such buys are more of a hot trend than a media solution.

‘To me, convergence is something that everyone jumps on the bandwagon for,’ he says. ‘My biggest beef is that it’s not addressing specific business problems. It isn’t for everyone. This one-stop shopping approach doesn’t always work.’

Strangely enough, Nicholson’s words are echoed in part by M2 Universal president Hugh Dow, who has helped define a new model for taking advantage of converged buys through his landmark ‘State of the Nation’ initiative with the National Post.

‘I don’t think this is for everybody,’ Dow agrees. ‘These are not campaigns for small-budget advertisers. This is an area that will be explored by a relatively small number of advertisers who have special strategic requirements. It could be perhaps a repositioning of a brand. It could be a change of name, or something big that could not be captured by conventional means.’

The two convergence projects Dow orchestrated did indeed involve clients with deep pockets and complex goals, namely RBC Group and General Motors’ Cadillac.

For the RBC Group campaign, M2 worked with CanWest to produce various polls on issues of national concern, such as the economy, health care and education. CanWest took the results and produced content for the National Post, Global Television, and magazines such as Saturday Night. The marketer didn’t have direct control over this content, but instead tied itself to the articles and shows through sponsorship messages and surrounding ads.

The ongoing General Motors initiative aims to position new Cadillac models through content supported by three pillars: leadership in technology, leadership in design and leadership in business. This initiative is leveraging Bell Globemedia assets such as the Globe and Mail, CTV, ROBTv and various Web sites.

‘You really have to think of these as integrated communication campaigns where the whole is greater than the sum of its parts,’ Dow says. ‘It has to be a crafted mix of media properties that support one another, using the same content theme in different ways to communicate with their different viewers, readers and listeners.’

Dow obviously believes that such initiatives work if they’re executed properly for the right clients, but more than that, he sees them giving the converged media houses an edge over their stand-alone brethren.

‘Convergence certainly represents a new revenue stream for the media owner and obviously for the newspaper industry,’ he says. ‘Not so much in terms of new money – but those media owners that have the best convergence process and know what they’re doing can steal share from their competitors. We know that for a fact, because we have been instrumental in that.’

Sounds like good news for newspapers – at least the larger ones – but what kind of impact do such initiatives have on the quality of the products themselves? Could a paper’s readership be turned off by marketer-sponsored content?

Dow doesn’t dismiss this concern, but rather points to how careful M2 was not to push it too far.

‘We are very aware of the importance of maintaining editorial integrity, and any attempt to cross over that line could well have diminished the value of what RBC was providing,’ he says. ‘We did know what questions were being asked in terms of the consumer poll, but did not have approval of the content of the newspapers, TV show or subsequent 90-second vignettes that were created.’

Beyond the question of whether sponsored content could compromise the editorial quality of newspapers is another quality-related issue that is perhaps not so easily addressed. This issue stems from the fact that many of Canada’s papers are now owned by media holding companies that know their stuff when it comes to business, but are still adjusting to both newspaper ownership and how to manage and promote cross-media holdings.

Events such as the recent public relations nightmare that saw CanWest management pitted against its own editorial teams over mandatory national editorials show that the Aspers don’t have ‘ink in their blood,’ says Nicholson. Reporters at papers such as the Montreal Gazette held their bylines to protest being forced to run the editorials from head office because they felt it limited their creative freedom.

‘Anything that dilutes the power of the brand hurts advertisers,’ Nicholson explains. ‘When you purchase a newspaper you purchase the brand, and the negative exposure that brand experienced is not a positive thing for advertisers.’

It’s not just media professionals who are concerned. Peter deVos, director, enterprise brand marketing for Telus in Vancouver, is also finding that consolidated ownership can influence a paper’s content in ways that may ultimately affect reach.

He offers up coverage of the recent departure of BCE chairman Jean Monty as an example. ‘The difference in reporting between the Bell-owned companies and the CanWest-owned companies was almost black and white,’ he says. ‘In the Bell-owned report, it was like it was the grand master stepping down – ‘Yeah, there are some problems, but he sure was good.’ The other guys were busy reporting ‘Telus is hot, Bell’s not.”

That kind of ‘ideologically-driven’ coverage can drive away certain readers, deVos says, and that affects the kinds of readers marketers can reach through a given paper.

‘If it’s going to become ideologically-driven,’ he says, ‘you wonder whether that’s going to shape what kind of market they’re going to deliver. Readers are going to say ‘I don’t like the way this paper presents the news,’ and they’ll do one of two things: They’ll either keep buying that paper, or stop buying that paper…. It’s not a huge secret that newspaper circulation has been shrinking.’

With files from Sharon Younger