As Seen In Editor & Publisher
Reprinted with Permission May 1, 2000
NNN Run Boosts National Outlook
Ad network, no longer the 'vampire' at the door, wins over tough customers
By Joe NicholsonWhen Jack Grandcolas started making his first sales calls to potential advertising clients in 1994, shortly after the launch of the Newspaper National Network (NNN), he observed a lot of people responding with "wrinkled-up noses or crossed fingers," he recalls six years later. They acted, in fact, like they were "trying to keep the vampire away." Agency staffers scorned newspapers for the expense, or "because of the disparate national and local rates, and then the labor intensiveness of planning, placing, buying, and reconciling a newspaper program."
Yet Grandcolas, now NNN vice president/West Coast sales operations and national director of high-tech sales, kept at it, and now he finds few wearing garlic to keep the "vampire" away.
There has been so much good news about newspaper ad sales in recent years that there has been little attention paid to NNN's results. While industrywide national ad sales advanced a lusty 17.7% last year (to $6.7 billion), NNN's gross revenue climbed 65% (to $154.6 million). And this year, NNN's revenue jumped 43% by April 25 compared with the entire first four months last year.
To achieve those results, NNN signed up 40-plus new clients last year, including 3Com Corp., American Suzuki Motors, Aveda Cosmetics, Campbell Soup Co., Dell Computer Corp., Intel Corp., Mitsubishi Motors America, and Procter & Gamble Co.
The success is based on what NNN President and General Manager Nicholas Cannistraro Jr. describes as a "toehold" strategy." If we get a toehold in one agency and can demonstrate some success, the word gets out to the other accounts in that agency," explains Cannistraro.
Eddie Austin, vice president and associate media director at Los Angeles-based Asher and Partners, echoes Cannistraro's view. "The beauty of it," he explains, "is they do one invoice to the agency. In the past, if you were buying 100 newspapers, the agency would have to initiate invoices for that many papers."
On rare occasions, NNN will buy space in one or a few papers to help a client, but its strength lies in large buys. "On average, it's between 20 and 100 papers," says NNN's Grandcolas. "We have had many campaigns in excess of 200 papers."
NNN was set up by the newspaper industry six years ago to chase advertisers who had all but abandoned the medium, and it received an antitrust exemption from the U.S. Justice Department. Some smaller papers in the industry have contended that the organization has a big-paper focus and complained that its rate structure provides them with little or no profit. But you can't argue with success, and, lately, they have seen plenty of it.
READY TO GIVE UP ON NEWSPAPERS
Austin, 34, whose Suzuki account is handled by NNN, was one of the young ad agency staffers who was ready to give up on newspapers five years ago. He recalls that newspapers "didn't want to change. They seemed very static." Austin, who says his experiences with newspaper rep firms also have been "positive," recalls agency horror stories about dealing with newspapers.
"A lot of newspapers have a monopoly in some markets, and they hold a little bit of power and aren't afraid to wield it," he says.
The mandate for NNN, which operates under the auspices of the Newspaper Association of America, covers four categories: automotive; drugs and remedies, both over-the-counter and direct-to-consumer; packaged goods; and high-tech, including computer hardware, software, and dot-coms.
While the national advertising sector from time to time has witnessed upward spirals of individual categories, such as online ads, the NNN surge has come simultaneously across its sales categories, says Bob Watson, the NNN vice president for marketing and media who is a three-decade ad veteran.
When NNN was launched, Cannistraro says, "There was a sort of perception that we were an old medium and not effective, and I think we've gone a long way to change that." In fact, he is convinced the organization has "stimulated renewed interest" through the newspaper industry for pursuing national advertising, and "that in turn has stimulated the agencies and advertisers to take another look at newspapers."
The renewed appreciation of newspapers is rooted in the medium's power in an age of TV fragmentation and ad clutter. "Newspapers still provide extraordinary reach [among] adults," says Cannistraro. An advertiser can get that audience quickly "using newspapers in many markets ยค upwards of 50% of adults can be reached in one ad."
At the same time, TV's strength may have become a weakness as ad volume has created clutter, says Watson. While many advertisers have a renewed appreciation of newspapers, agencies accustomed to working with TV often continue to resist newsprint. "It's still a struggle," concedes Watson. Even among agencies that do appreciate newspapers, says Cannistraro, some fear that clients who demand "innovative and cutting-edge" ideas will react badly if an agency suggests a medium that is "considered old-fashioned."
Of course, a sale customarily begins with selling the medium, says Grandcolas, who notes NNN deals with advertisers that had given up on newspapers. Recognizing that more than 85% of its customers also advertise on TV, NNN tries to convince them that "we are a missing link in their media plan," he says.
After selling the medium, Grandcolas discusses newspaper selection. "We try to show the advertiser how to get an even coverage of anywhere from 30% to 40% of [each] market," he says. "An advertiser might pick certain markets that they need to penetrate or certain dealers they want to cover, and we help, through research, to identify which papers fulfill that need."
THE PRICE YOU PAY
One component of NNN's success -- and a source of dissatisfaction among some of its newspaper clients, particularly smaller papers – has been the sometimes-controversial pricing system. "It's lowering the rate to gain market share and frequency, bringing the [national] rate down closer to a retail level – to a competitive level with other media," says Grandcolas, who concedes that keeping all of NNN's newspaper clients happy remains "a concern."
Austin, the ad executive at Asher and Partners in Los Angeles, says he arranged when he was at a previous agency job for NNN to take over an auto campaign that involved 28 markets and 110 newspapers. NNN's price represented a discount that Austin estimates as 10% to 15%.
Even when advertisers return to newspapers, they don't necessarily stick. "National advertising always involves a reselling effort year after year," says Cannistraro, "unlike retail where an account becomes an annuity for the newspaper." Adds Watson: "This is not a cakewalk by any stretch of the imagination."
Reprinted by Reprint Services with permission from EDITOR & PUBLISHER COMPANY, May 1, 2000, pages 26, 27. For reorders call Reprint Services at 651.582.3800. For subscription information call 212.675.4380. Visit us at www.mediainfo.com