Tuesday, March 03, 2009

Ever know anyone
who cut their way to success?
By John C. Peterson
The Peterson Group
"You can't count on revenue,
but you can make expense go away."

How many times have you heard or said the very same thing? Yes, it's Business 101, but we need to add a few footnotes when we talk about newspapers and shoppers.

First footnote: Publishers first need to think of their products in terms of what customers need not what they (publishers) are willing to invest. There are consequences, short and long term, for every cut you make. It's just like putting a chainsaw to a tree. It will never be the same when you're done.

Second footnote: What's that saying, "Remember who brought you to the dance?" Think about what made you do whatever it is you now feel you need to cut. If you mailed to a 100 percent of the households and said it was the right thing to do for your advertisers, what do you say when you only mail to 70 percent? "I was wrong; doing it 70 per cent right is good enough these days."

Here are two very important things to consider before you cut.
  • You're about to give up the best shot you had, are you sure you've done everything possible to grow revenue?
  • Advertisers have never needed you more. Did you have that conversation with them? Not the "you- should-buy-ads conversation," the conversation with the proof that businesses that remained aggressive advertisers in tough times became stronger.

In the old days the threat of competition kept a lot of companies on their toes (and honest). That's not the case anymore. Some publishers have seduced themselves into thinking they're immune and they're pushing to see just how much they can get away with. Not smart. Papers are a consumer product, how do they expect to remain successful taking things away from readers and advertisers?

Make no mistake; it has never been tougher for print and the reality is that some expenses do have to be cut. Do that, but be sure you've given sales efforts your best shot because this may be as good as it gets.

It also reminds me of something my father said often while teaching me about home repairs. Measure twice, cut once. The lesson here for publishers is that the opportunity and the appetite might not be there if you try to go back.

Publishers who have to cut need to be creative and protect their market position. Instead of cutting 3,000 home-delivered copies, try rack distribution first. You will still have those copies working for your advertisers and can still use the same circulation number. If you've done your job people will come looking for it. If you've done your job, that is.

Cutting expenses is emotional. Increasing revenue is hard work, especially when merchants are scared and money is tight.

But the case is there for advertising. Every study of economic strife since 1923 indicates those businesses which remained aggressive advertisers were stronger and more profitable on the other side. McGraw-Hill Research analyzed 600 companies from 1980-1985 finding that sales of companies that were aggressive recession advertisers rose 256% over those that were not. Study after study indicates the same thing.

(The McGraw-Hill graph makes a dramatic marketing piece,email me if you'd like a copy.)

Papers need to tell their story and make the case for advertising. Logical people generally make intelligent decisions based on good information. Advertising helps business, plain and simple. Sure there are no guarantees in advertising, but there are plenty if you don't advertise.
There's money out there and business to be had. The number one reason people don't advertise is because they were not asked. Work at it.

Small is the new big. If the account can only afford to spend $1,000 a year, find four other guys just like him. When all this is over, they just might have some real money down the road and remember that you were there in the lean days.

Invest. The word has fallen out of our vocabulary, so try to start using it more often.

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