Great Newspaper Myth No. 1

For a business that advertises itself as the seeker and bringer of truth, print journalism lives by a number of myths. Let's get right to the first one:

Myth No. 1: Advertising pays the bills at newspapers.

Truth: Only an idiot could believe this.

We know that because so many of them do, and they work at newspapers. And a lot of them own and run newspapers, too!

Oh, we've heard the argument, based pretty much on what seems obvious to those who work so hard at ignoring the obvious: Money comes in through the advertising department, the circulation department can't collect enough to support the paper, and the newsroom spends money but doesn't bring it in.

Gee, that makes sense -- if you have no idea how businesses really work. So, get out your crayons or pencils or whatever you take notes with and pay attention. You're about to learn something.

And we're going to talk strictly business, here. That's what will be so different: You're not going to hear all that "we have a duty and a mission" crap.

How refreshing! Can't wait to start? Here we go...

A newspaper makes whatever money it makes, regardless of whether it accepts advertising, based on its circulation. The greater the circulation, the greater the revenue.

So the challenge at any newspaper -- or any media enterprise, for that matter -- is to increase its exposure by as many people as possible within whatever demographic category it chooses (geographical, social, etc.)

OK, how does it do that? Well, it makes sense that at least circulation must be guaranteed -- that is, if somebody buys a subscription, they darn well better get a copy when they expect it, right? And, you're right; that's the circulation department's job.

But the circulation department operates under a set of restrictions. Although it can provide the delivery system that guarantees subscribers will get their copies, it has no say over the content of the paper, whether editorial or advertising. In effect, the circulation department sells someone else's product (but don't ever tell your circulation manager that -- not good politics.)

Another restriction is that with a range of competing news delivery systems to choose from (TV, radio, the Web, other print products), a subscription has to be priced to sell. If you decide to charge exactly what it costs to produce each paper -- and deliver a tidy profit -- your circulation is likely to take a serious drop. People just won't want to pay that much.

So the subscription or per-copy price is based on what the market will bear in terms of at least getting something back for printing and delivering all these papers to people flung all over your circulation area. But for the vast majority of newspapers, that leaves a huge financial gap.

Luckily, almost all papers have a way to deal with that. Because they can go to other businesses and merchants and say, "We deliver our paper weekly/daily/whenever to x number of people and we offer you space in it so you may advertise your wares."

Or services. Or whatnot. And they have rate cards that show these merchants what a bargain it is to buy space in the paper and advertise.

Sounds great, doesn't it? Boy, we thought we were in trouble and now we're saved! We've found someone who can pay the bills for us!

Right? No. Shake your head, because that's not right.
Just like with the circulation department, the advertising department operates under a set of restrictions. Just like the circulation department, they sell, essentially, someone else's product.

Well, hold on a minute. Whose product are these people selling, anyway?

Let's find out.

In every survey or discussion in which non-journalists are involved about newspapers, it's often easy to see the hierarchy of importance as far as readers are concerned:

First: News coverage

Second: Circulation

1,874th: Advertising

We might as well toss advertising off the list, because to be clear, readers do not care about it. At all.

Period.

Oh, they might get a bit upset if the grocery inserts aren't in the Wednesday paper, but otherwise, if the rest of the ads disappeared throughout the paper, most would hardly notice.

It's not that they hate advertising or anything like that. They just get enough from everywhere else. Newspapers are not filling any gaps in advertising. People see and hear it on TV. They hear in on the radio. They see and hear it on the Web. They get magazines chock full of it. They get it in the mail. They get it in their e-mail. They see billboards. People knock on their doors to advertise. In Wal-Mart, they have TV monitors staring down at you all the time that advertise. And that's just what we can think of, for now.

And because of that, advertising does not and cannot deliver circulation. That's why shoppers, which is what we call papers that are all advertising, have to be given away to achieve circulation. You can't get people to buy what is thrust upon them constantly at less cost or no cost at all.

And we've already seen that the circulation department doesn't really deliver circulation. Sure, a newspaper can't get the papers to wherever they need to get without it, but it is a delivery system first and a sales force second. And remember: They're selling something someone else makes.

The surveys -- and a little common sense -- tell us that readers are concerned, deeply and often passionately, about coverage. They have opinions about its quality and its quantity. And if the paper doesn't perform according to expectations, they can and will turn to other sources, especially ones that cost less.

But never will a reader stop and say, "Oh, but they have all the ads I like in this newspaper. So, I've changed my mind! The coverage sucks, but I've fallen in love with the advertising! I won't cancel my subscription! I won't!"
In fact, the sanity of any such person would thereby be called into question.

The advertising department sells space based on circulation (which translates to an elevated level of exposure) which, in turn, is based upon what readers care about -- the coverage delivered by the newsroom.

So the circulation department does not deliver circulation, and neither does the advertising department -- at least, not enough to keep the newspaper financially viable. The newsroom does, because it produces what subscribers pay for.

Therefore, the newsroom pays the bills.

Not the advertising department.

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