Summary

For obvious reasons, news publishers have been diligently, and in some cases desperately, re-evaluating their business approach over the last decade.

Where the aim once was to maximize the value of individual transactions, now it is to maintain and maximize the long-term value of customer relationships. Instinct and intuition, once the main influencers of business decisions, are being replaced by data-analysis technology.

The traditional approach was to grow an audience – in print and/or online – and sell that audience to advertisers. The larger the audience numbers, the higher the ad rates. Thus “gaming” audience measurements became an end in itself.

The value of transactions with advertisers was maximized, but only by milking consumers for all they were worth. In many cases, the consumer was pushed to accept bundles of paper they did not want, view streams of meaningless photos on web pages, or worse.

Urgent need to develop relationships

Obviously, that is no way to treat someone if you are interested in maintaining a long-term, mutually beneficial relationship with them. And publishers urgently need to develop those relationships. It is no secret that print advertising revenue is falling – dramatically in some countries – and digital ad revenue is growing much too slowly to compensate for the drop.

So audiences must take center stage. In 2014, global newspaper circulation revenues exceeded advertising revenues for the first time this century, and the disparity grew in the following year, according to World Press Trends.

Keeping and growing audiences means treating them in a completely different way: finding out as much as possible about the people who comprise them (within legal and ethical bounds, of course) and giving each one what they need – even if some transactions sacrifice revenues in the short run.

The new KPI is long-term revenue per subscriber.

That’s where advances in data-collection and analysis technology, often lumped under the term “big data,” come in. As technology enables publishers to keep tabs on individual customers’ activities, a mass approach to statistics is giving way to what might be called a “granular” approach. Each customer or potential customer can be addressed as a unique entity – but can still be grouped with others with similar characteristics when it comes time to discern trends and formulate tactics.

In fact, it is possible to quantify almost every aspect of customers’ activities and chart interrelations among them. Such mind-boggling possibilities may give rise to the temptation to invest large sums in systems and specialists, to engage in big data for big data’s sake. As Xavier van Leeuwe of Netherlands-based NRC describes in the introduction to Chapter 1 of this report, such an engagement can easily become an expensive dead end.

Heed the human factors

This report is, among other things, a caveat: Technology is only a tool, and publishers should start by making better use of the data they already possess – and closely heed the human factors that can make all the difference.

Big data is indeed a potentially valuable tool, but “smart data” means putting that tool to use as part of a strategic approach that increases revenues.

Van Leeuwe, his NRC colleague Matthijs van de Peppel, and Matt Lindsay of Mather Economics have gathered extensive experience with smart data – and can point to substantial success. At NRC Handelsblad, they used analytics and other customer-relationship tools to turn readership decline into sustainable growth and point revenue development back in the right direction.

The three have decided to share their experiences and knowledge by writing a book, “How to Succeed in the Relationship Economy: Make Data Work for You, Empathise with Customers, Grow Valuable Relationships.” They generously agreed to let us publish excerpts from the book in this series of three reports. We and the entire WAN-IFRA community owe them a huge debt of gratitude. Thanks, guys!