USC Annenberg Online Journalism ReviewUSC





Business Side of Convergence Has Myths, Some Real Benefits 

0

Combined news units aren't going to save much money in staff or operations, and revenues won't boom. Instead, cross-promotion and brand-building are what sells convergence.

It very well could have started with a bean counter deep within a media company somewhere. That person must have said, thinking out loud: "Golly, we have people covering local news for our TV station and we have people covering the same news for our newspaper. Why can't we converge them and cut half the staff?"

Alas for the bean counters, if it were only that easy. Instead, the early convergence experiments combining print, broadcast and online operations are finding that they need more people to do more work -- including a "market director" who makes sure salespeople are working in concert and not against each other. The idea that you could train someone on multiple platforms doesn't mean you can stretch them beyond human capacity.

That's just one of the myths we'll debunk as we turn our attention toward the business, sales and marketing side of converged newsrooms. Last month we looked at how convergence affects journalists in the workplace, particularly in convergence-happy Florida.

This time we canvassed publishers and managers at operations in Tampa (Tribune, WFLA, TBO.com); Phoenix (Republic, Channel 12, AZCentral.com); South Florida (Sun-Sentinel, WB39, Sun-Sentinel.com); Lawrence, Kansas (Journal-World, 6News, World Online); Orlando (Sentinel, WESH, OrlandoSentinel.com); and New England (New England Cable News, Boston.com, NECN.com).

Many of these operations have multiple print and broadcast partners that aren't listed. And this is far from an exhaustive list of converged operations; check out the American Press Institute's Convergence Tracker for a more comprehensive list.

The following are some common myths of convergence and how they differ from the reality at various converged operations. Keep in mind that no operations would literally open their books for us or anyone else, so anecdotal evidence is all we have to go on in many cases at this point.

Myth No. 1: Doing convergence will save you money or jobs.

Doing more with less might have worked during the first, second or third wave of media layoffs, but organizations have already been trimmed down to the bone -- to be cut yet again. Instead, converged operations are striving to make each part stronger editorially.

Tampa Bay is the home to one of the premier experiments in convergence, where Media General put three of its properties under one roof in 2000: the daily Tampa Tribune newspaper, WFLA-TV and the Web hub TBO.com. Gil Thelen, president and publisher of The Tampa Tribune, says the News Center wasn't about cutting costs, but strengthening each partner. He told me there are more journalists in the News Center today than in 2000, but that they have been able to cut staff in some operational areas.

"From a news point of view this has never been about reducing headcount, it's been about doing more," Thelen said. "We have realized efficiencies in support areas such as facilities, such as HR, such as business office, and we're in the process of looking for additional efficiencies there. The idea is to find ways to support the content-generating areas -- news, advertising and marketing. This is not a venture in headcount reduction. It's about reallocating resources to improve our competitive situation in the market."

And in Lawrence, Kansas, the World Company never sought to eliminate jobs or save money by doing convergence, according to COO Ralph Gage. At OrlandoSentinel.com, management is preparing to add an employee because of increased online revenues, according to Julie Anderson, general manager of online for the Sentinel. The trend in these newsrooms is for steady or upward staffing, not draconian cuts.

"I don't know of any successful convergence operation that does well by reducing staff," said Al Tompkins, broadcast/online group leader at Poynter Institute. "In fact, I can't find one of these that is a bottom-line success -- whether it's in ratings, circulation or revenue -- that hasn't added staff. Those that do it on the cheap, those that do it with a thin staff, ultimately will find that they're not successful."

Myth No. 2: You can get fewer salespeople to sell on more platforms.

There are two major problems with this myth: Salespeople are just as hard to stretch across platforms as journalists and the advertiser will want a discount if you bring in one person to sell multiple platforms. In Tampa, Thelen learned it the hard way, after putting six people on a doomed "multimedia sales team" to sell all three platforms.

"Very quickly it became clear to us -- in a parallel fashion to news -- that that's not the right road to go down," Thelen said. "Each of these platforms is complex enough on its own. To ask a single person to be expert in all three is a kind of mental hyper-gymnastics that no human being can attain. So we do a lot of four-legged and six-legged sales calls. The heart of this whole thing is communication and collaboration."

So if each salesperson remains on one platform each, how do you get them to sell to other platforms if they don't get that extra commission? Organizations are getting creative here, with Tampa relying on a "Kremlinesque" scheme that's constantly evolving, according to Thelen. In Kansas, Gage told me commissions are becoming unified across platforms and all sales teams report to one manager. At the Sun-Sentinel and WB39 (both owned by Tribune Co.), Sun-Sentinel president and publisher Bob Gremillion makes sure commissions are the same and all sales information is shared.

"When we make a sale in incremental revenue (something due to convergence), everyone gets the same commission in both media," Gremillion told me. "We try to drive home the point that we want to make total dollar growth and not per media. It's a change in mindset and incentives are a wonderful thing to change the mindset. Like everything in advertising sales, if the incentives are put in the right place, behavior will follow."

But even if your sales staff might have incentives, the customer might not be ready to start buying on other platforms. For instance, a car dealer who is happy with TV ads might not be ready for print or online in one package -- without a discount. In Phoenix, a cross-platform sales team has had a tough road so far.

"If you were to ask me if I was blown away by the success of it (cross-platform sales), I'd say 'no' because it has been difficult," said Wes Freas, revenue manager at AZCentral.com. "What makes it hard is when you get in front of a client. 'You're wanting me to do what? I thought we were only talking about TV.' It's hard because you have to resist the urge to put 12 people on one side of the table. It's tough to get a unified front together who can talk the TV or online lingo."

Freas says they end up with triple commissions in some cases, and sales reps often don't have enough incentive to sell other platforms. Rich Gordon, chair of the Medill New Media program at Northwestern University and former head of The Miami Herald's new media division, says that he learned long ago that you can't cut salespeople and expect revenues to grow.

"There is a one-to-one correspondence between the number of sales representatives you have and the sales revenue you bring in," Gordon told me. "That amount varies depending on the product and skill of the salesperson. If you reduce the number of salespeople, it's hard not to reduce the amount of sales revenue you bring in. I don't see how you could ever reduce salespeople."

Myth No. 3: Combining efforts across platforms will bring in much more in advertising revenues.

So far, that hasn't been the case in most converged newsrooms or in content-sharing arrangements. Most of the obstacles have been related to the cross-selling problems noted above in Myth No. 2, though that may change as the media business improves and online starts to be attractive to traditional local advertisers.

In converged operations, they track money coming in due to convergence as "incremental revenues" or those that wouldn't have been booked if each medium worked separately. In Tampa, it took two years just to start seeing positive incremental revenues, which have averaged just 2 percent of sales annually, according to Media General spokesman Ray Kozakewicz. In South Florida, Gremillion says they've booked more than $2 million in incremental revenues over the 18 months that the Sun-Sentinel and WB39 have been converged.

These are not knock-your-socks-off numbers, but they're a start in the right direction. Gremillion says he personally doesn't care which platform is getting more of that extra money, but just that it's increasing. And he can tally that number very accurately because of the commissions that go out for each sale. While bundling might hurt some operations that try cross-selling, the Sun-Sentinel and WB39 offer no discounts for buying more than one platform, Gremillion says.

For regional cable station New England Cable News, the deal with The Boston Globe's site, Boston.com, has helped its small Web presence go from money-losing to money-making, according to NECN.com Managing Editor Steve Safran.

"Our partnership with Boston.com is generating more revenues for us than ever before," Safran said. "We have gone from losing a considerable amount of money to being modestly profitable. It's not enough profit to go IPO with, but considering the partnership is just 10 months old in this incarnation, it's been a tremendous, groundbreaking start. The old idea that TV Web sites and newspaper Web sites could partner strictly on content doesn't really get you anywhere on the business front. We needed Boston.com's dedicated sales force and they now have a video source to sell streaming video ads."

Some newspapers are finding even greater financial success by supplying news and sports content for radio stations. The Journal-World in Kansas has deals with local radio station Web sites outside of its newspaper delivery areas, while the Sun-Sentinel produces all the news for a local NPR station and the overnight news for an AM station. Gremillion says the Sun-Sentinel gets access to radio ad inventory for the AM station, while getting paid by the NPR station.

Myth No. 4: Cross-promotion is just about PR and won't help much.

While cost savings and increased revenues have been slow out of the gate, it's in the area of cross-promotions that converged operations have gained quickly. A newspaper reporter might appear on TV, or an ad for the newspaper might reach a younger audience on TV, while the TV station might gain visibility in print or online.

In Orlando, the Sentinel's Anderson says that cross-promotions are a huge help financially. "When we market in the cars category, we'll advertise for our print and for Cars.com and combine the messages," she told me. "That's a tremendous savings. When we execute partnerships, we cross-promote each other, and that's also a benefit. You do have to record the trade, but you're recording it at a little bit of a savings because we don't charge each other the full value."

So just how effective are all those cross-promotions? In Tampa, Thelen says they just completed branding research and found that the Tribune saw a 16 percent increase in people who perceived it as an improving newspaper over two years ago. While he can't say how much is due to cross-promotion, he says that both TBO.com and WFLA have had similar boosts to their brand perception. "My caution is that we cannot apportion any of that to convergence activities here, but it would be equally uninformed to say that none of it is related to it," Thelen said. "(But it appears) our combined efforts have made each of us stronger."

Though cross-promotion is valuable, there are limits. In Lawrence, Kansas, 6News did focus groups on how well on-air promotions for online or the newspaper worked for their audience. They found that some people wanted more depth in the newscasts themselves rather than having to go online for more information. Plus, the promos sometimes came across as just a way to peddle more newspapers. As a result, 6News decided to cut back on those promos.

Myth No. 5: Tampa (or somewhere else) is the perfect model for a converged newsroom.

Not yet, according to researchers at Ball State University. They wrote a paper called "The Convergence Continuum: A Model for Studying Collaboration Between Media Newsrooms" and presented it last year to the Association for Education in Journalism and Mass Communication. The researchers defined five stages of convergence, from content sharing to cloning content to "coopetition" (cooperating plus competing) to "true convergence."

Paper co-author Larry Dailey, assistant professor at Ball State's Department of Journalism, told me that no one had reached convergence nirvana yet because it would mean true content planning and sharing throughout the news cycle.

"Many of the convergence situations have gotten stuck at coopetition," Dailey told me. "They don't know how much to compete and how much to cooperate. From there you start sharing content but not really integrating the other into your organization. 'True convergence' is where you share from the planning process. 'What's Web gonna do that's gonna be best on the Web, what's print gonna do, what's TV gonna do, and how are we gonna market it all together to make something new out of it?' We call this true convergence or hugging and singing 'Kumbaya.' We're beginning to see people are at coopetition, and they're saying 'this is not enough.' Tampa is starting to go there."

0
0
Related Links
6News' APME Credibility Roundtable
AZCentral.com
American Press Institute
American Press Institute: Convergence Tracker
Ball State University
Ball State University Department of Journalism
Ball State University: "The Convergence Continuum" paper
Glaser Online: Lack of Unions Makes Florida the Convergence State
LJWorld.com
Media General
NECN.com
Northwestern University
Northwestern University: Medill New Media program
OrlandoSentinel.com
Poynter Institute
Sun-Sentinel.com
TBO.com
0

Julie Anderson, general manager of online for the Orlando Sentinel

0

Gil Thelen, president and publisher, The Tampa Tribune 

0

Wes Freas, revenue manager, AZCentral.com

0

Larry Dailey, assistant professor, Ball State University Department of Journalism

0

Rich Gordon, chair of the Medill New Media program, Northwestern University 

0

Ralph Gage, COO of World Company

0

Bob Gremillion, president and publisher, South Florida Sun-Sentinel

0
0
0