Source: NorthFulton.com

RAY%20APPEN
The truth about newspapers

July 09, 2012

Many years ago, there was a commercial for a stock brokerage (EF Hutton, I believe) and it showed a group of people standing around talking. Then off to the side, one person said to another, “Well my broker is EF Hutton and he says….” And the room went silent while everyone eavesdropped to find out what stock he recommends.

Well one person that most of the financial world listens to and/or follows, is Warren Buffett – one of the world’s richest men and arguably the best stock picker in history.

Buffett almost always buys when others are selling and sells when the rest are buying. He typically stays razor-focused on industries that he knows — companies that have well-established brands and are profitable, ideally companies that enjoy near-monopoly positions in their markets.

He buys value, and he buys and holds with the expectation that over time his investments will continue to appreciate.

That’s why he is buying newspapers.

Buffett is rapidly becoming one of the larger newspaper owners in the world. And he is doing it by investing in small to medium-size community oriented newspapers or companies that primarily own small and medium-size papers such as Media General and Lee Enterprises.

He is avoiding the large daily newspapers, but buying the smaller dailies and non-daily papers as fast as he can find them.

In the last year, Buffett has invested well over $500 million in newspapers and newspaper companies.

So why should you care, and what is the message here?

Well, if you are a business owner or a marketing manager, you should care because Buffett’s lesson to you is if it is important for your company to effectively influence a local or regional market, newspapers are still the best way to do it – despite all the, how ironic, “bad press” that newspapers have experienced.

While there has been a massive amount of good news surrounding “social media” and other “digital” marketing products, only print media – on a local or regional scale – is able to do the heavy lifting, still.

The analogy I make is this: Social and “digital” media are to a successful marketing campaign as an appetizer is to a banquet.

It should be part of the program, but you will starve if that is all you use. Print is still the main entrée on a local or regional scale.

The most ambitious “digital” play in the market has been Patch, which is owned by AOL. AOL is under intense pressure to shut Patch down, sell it or lure partners in to support the losses. In 2011, according to Starboard’s (Starboard Value is an investor group that owns 5.3 percent of AOL) estimates, Patch lost $147 million while generating a mere $13 million in ad revenue — roughly $15,000 per site.

“We do not believe Patch is a viable business,” Starboard’s recent report said.

Much of the buzz about social media and digital marketing on a local and regional scale is starting to fade and fizzle away because there is no local or regional scale.

Yes, social media and digital advertising are cheap, but there is a reason for that.

Buffett is buying – and will continue to buy – “small and medium-sized newspapers in places with a strong sense of community.”

His most recent purchase – announced last week – was the Waco Tribune-Herald, a 34,000 circulation Texas newspaper published in the hometown of Baylor University. Buffett has said, “Newspapers must rethink whether to offer free content on the Internet, and that publications with a community focus can thrive in markets where there is little competition.”

Because social and digital media are everywhere, he does not consider them “the competition” and instead is referring to print competitors.

On a local and regional level, only print has been able to reach an audience large enough to make a difference for a business.

Only print is able to brand companies so that people become trained to buy their products or services by default.

And, no, Buffett has not yet offered to buy Appen Newspapers.

In the meantime, though, if you own a local business or manage the marketing for one, we’re here for you, ready to get the job done.

But don’t believe me. Just watch what Buffett does. He may be the sharpest tool in the shed.

Extra! Extra! Read all about it!