Grant: How does eMarketer come up with the report findings and estimates?

Carol: We’re a research company in a way, but we don’t do primary research. What we do is aggregate data from the marketing, media, and advertising industry across the board. We literally look at thousands of data resources, and what I do is look at the specific data sources for the newspaper industry. I look at the methodologies and how they came up with their own numbers.

You could say eMarketer is the “reality check.” We look at everyone’s own numbers and say, here’s the reality.

Plus, we’re also doing our own research and interviews on the main companies in the newspaper industry. I’ve been looking at the quarter-over-quarter numbers for the newspaper industry for the last several years specifically for this report.

What are some of the challenges for newspapers to make the migration from print to online?

I think newspapers were a behind the curve and wanted to ignore new media for too a bit too long… there’s kind of a wide spectrum of media companies… there’s the old-line media companies that get it, and then there are those that have been late to the game who are now playing catch-up and trying to adapt their businesses to an online model.

You say in your report that new business models beyond advertising may be required for newspaper companies. What could you suggest as sustainable models a few years out?

We’re already seeing this, but we’re going to see an increase in the interactive products (including video), that appeal to the readership, especially the younger consumers. Older consumes are still loyal to their local newspaper, but the younger consumers are skipping past that and going right to online.

Publishers need to take their strength, which is their brand equity that they’ve built over time, and translate that to the online realm. They should create this trustworthy place where consumers can meet, discuss news, information; and that spells social media. They need to create blogs and social communities around their brand equity. When they provide a place for people to congregate, right behind that comes the advertisers, and maybe also advertising partners and content partners.

Behavioral targeting is going to be big, and customized content where you build your own newspaper. After all, who of us reads the entire newspaper, cover-to-cover, section-by-section?… You and I will build our own newspaper based on our own interests, and that will be digitally delivered to us.

Newspapers are now doing lots more video content. Do you see this video as having the potential to build much more monetization, especially with ad revenues?

Absolutely, yes. That dynamic video content on the website is going to foster user involvement, drive traffic to the site, and allows the media company to pull in the advertisers behind that. That’s is going to appeal to the younger readers if they appeal to the online brand. That video is going to pull them in and keep them.

Newspapers will continually need to develop tools and multimedia features. Today its online video. We’re not sure what the next step is, but you can bet its not going to stop there. Mobile versions of news websites is going to be huge; its this ear, next year, three years out; you’re going to see a lot more with mobile devices.

You mention that smaller newspapers seem to be more nimble with adjusting to the downward revenue trends. But aren’t these tools that you’re advocating something more of what the larger newspapers are already doing or attempting to do?

That’s right. The large newspaper – The New York Times, The USA Today’s, the The Wall Street Journals of the world – have the resources to continually invest in multimedia-type features and developing new tools. On the other hand, the smaller newspapers have very loyal readers, but their readership tends to skew older. What it comes down to is, we’ll continue to see the larger newspapers continue to exist in some form. Some of the local newspapers will consolidate – for example three newspapers in a city merging to one. What it will come down to is the folks who are better able to adapt online and accept online as the new reality.

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