As Seen In PRESSTIME
January 2000
Thriving at Five
Success takes national sales to a new level
By Barbara Z. Gyles
Seven categories of advertisers, 12 months, $154 million in sales of national ads for U.S. dailies. Those are just some of the numbers that executives of the Newspaper National Network were weighing at year-end, reported Nicholas Cannistraro Jr., NNN president and general manager.
NNN’s 1999 revenue growth, 64 percent over 1998, exceeds even the blistering industrywide pace for newspaper national-ad expenditures. NAA research shows that for the first nine months of 1999, expenditures for national ads in newspapers increased 16.0 percent to $4.9 billion, compared with the same period in 1998. Retail-ad expenditures rose 3.0 percent to $14.8 billion, and classified-advertising expenditures rose 4.1 percent to $13.2 billion during that time.
While it can’t be attributed directly to NNN, recent national-ad hikes are no coincidence, says Cannistraro. Since 1994 when 23 large U.S. newspaper companies provided NAA with $65 million to form its 13-employee for-profit subsidiary, NNN has operated "like a pebble dropped in a calm pond," Cannistraro says. Targeting seven categories, advertisers that had virtually abandoned newspapers ¤ automotive, cosmetics and toiletries, drugs and remedies, food and household products, liquor and beverages, and small computers and software ¤ NNN racked up $30 million in its first year and forced newspaper executives to "listen more to advertisers and make appropriate changes in the way they do business."
Meanwhile, as television and magazine audiences continued to fragment, many advertisers began to rethink their media buys. NNN was there to offer a one-order, one-bill service and aid in selecting newspapers that can blanket target markets.
Highlights
NNN served 95 advertisers in 1999, up from 76 the preceding year. With a budget of $105 million, the network racked up some notable sales successes.
Among them:
- West Coast automotive sales of Asian imports. Expenditures in 1999 by these advertisers increased dramatically over those of 1998.
- Computers and software. Spending jumped by more than 60 percent over the previous year.
- Packaged goods. Made up of "a huge number of brands with relatively small budgets," packaged-goods buys are considerably more sales intensive than those in automotive or computer categories, where one order might bring in several million dollars, Cannistraro explains. Even though a company such as Procter & Gamble Co. has a large advertising budget, that money is divided into many brands. Increasing advertising for one brand often comes at the expense of another, he says. But NNN "is making headway" in its packaged-goods category. Having acquired a healthy share of the business makes newspapers "less vulnerable to the vagaries of marketing decisions."
In first-quarter 1999, newspapers received new business from Kraft-Maxwell House of White Plains, N.Y.; Procter & Gamble Co. of Cincinnati; and M&M Mars of McLean, Va., owner of Uncle Ben’s and Kal Kan brands. In addition, companies such as Weight Watchers of Woodbury, N.Y., Kellogg’s of Battle Creek, Mich., and Seagrams of New York City increased their newspaper ad schedules during the year.
Meanwhile, the pharmaceutical category produced a roller-coaster ride controlled largely by the U.S. Food & Drug Administration. Under pressure from drug companies to open the pharmaceutical-advertising category to television, the FDA offered guidelines last year that allowed broadcast ads to exclude the "small print" information that accompanies such print ads. Members of NAA and the Magazine Publishers Association in New York City sought redress for the print-advertising cause, and the FDA recently modified its guidelines to require that print and television ads reach the same-size audience.
Currently, pharmaceutical companies use magazines almost exclusively to deliver the details of their products, ignoring FDA’s requirements to provide print-audience reach comparable to that of TV. NAA is working to encourage the FDA to further clarify its guidance to allow advertisers to use newspapers more extensively to achieve the administration's objectives, and Cannistraro anticipates more rule changes.
Despite the ups and downs, NNN handled several successful pharmaceutical buys this year. By offering SmithKline Beecham of Philadelphia a list of newspapers that directly serve the 75-to-100 U.S. counties plagued by Lyme disease-inducing ticks, NNN helped sell Lymerix, a new Lyme disease vaccine, last spring. That sale included advertising for smaller-market papers such as the Baraboo (Wis.) News Republic.
NNN reps are making headway in the brand-intensive food world.
Growing Pains
Last spring, NNN changed service providers after original order-processor Publicitas Advertising in Stamford, Conn., elected to withdraw from the U.S. market. NNN considered buying the U.S. subsidiary, but opted instead to switch to the Complete Newspaper Network in Sacramento, a 46-employee subsidiary of the California Newspaper Publishers Association. This fall, a separate NAA for-profit subsidiary, the NICC, purchased CNN. Today, NICC West, as it is called, serves NNN clients.
The switch did not change terms of payment but reduced processing fees for client newspapers. An initial billing problem emerged because CNN "was not up to the magnitude and complexity of our business," says Cannistraro. He remains optimistic that such problems are behind him.
Other 1999 moves emphasize the value of African American and Hispanic consumers. Last spring, NNN forged a relationship with Amalgamated Publishers Inc. of New York City, the ad-sales arm for more than 200 African American dailies and weeklies. NNN also began a partnership with the Latino Print Network of Carlsbad, Calif., official sales coordinator for the National Association of Hispanic Publications. LPN, the largest ad-sales rep firm exclusively serving the Latino print market, represents more than 200 Hispanic newspapers and publications for a combined circulation of more than 6 million.
Since NNN's founding other one-order, one-bill newspaper ad-sales organizations have emerged or expanded, including Newspapers First of New York City, The Newspaper Network of Sacramento and Metropolitan Sunday Newspaper Inc. of New York City. NNN is careful not to get involved in bidding wars with competing groups that also increase business for the industry. If such an organization offers a client a rate lower than NNN's, "we try to withdraw," says Cannistraro.
NNN and these other organizations influence more than sales. "There's a finite universe of ad agencies that handle all national advertising," Cannistraro points out. "We've made calls on all of them, as have the others." Many one-order, one-bill suppliers offer advertisers the market-specific information that they demand. Cannistraro boasts that NNN's "missionary work" began this positive trend.
In NNN's fledgling years, poor color reproduction, a longtime industry problem, raised serious concerns among clients in the automotive category. The industry faced the problem directly, says Cannistraro, adding that "the color situation has improved dramatically." NNN participants helped NAA form a task force dedicated to improving newspaper color and renewed attention has opened the eyes of many newspaper executives to its importance.
Cannistraro’s goals for NNN are to "keep growing and keep doing what we're doing." NNN’s "partners," the media companies that have invested in the venture, now study whether electronic commerce represents a category that should be explored. Because many "dot.com" companies come and go, NNN sales reps tread carefully to get involved with the "legitimate" e-commerce businesses, he notes.
Despite NNN's success with national advertising, newspapers still get a tiny slice of the pie. The seven categories served by NNN currently spend approximately $24 billion on advertising each year. Newspapers, with all their recent success, see just 4 percent of that business.
"We're just scratching the surface," say Cannistraro. "But NNN has energized the industry about the possibilities."
This material was reprinted with the permission of the Newspaper Association of America. #264346 Reprinted by Reprint Management Services, (717) 399-1900, wwww.rmsreprints.com - sales@rmsreprints.com