Newspapers Turning Ideas into Dollars
The Naples Daily News – Restructuring the Sales Operation
As news organizations respond to the economic challenges of the digital era, one such response has been to focus on sales teams that had long been steeped in a legacy culture. Among the papers surveyed for Pew Research’s March 2012 report on “The Search for New Business Models,” more than three-quarters reported working on retraining their sales staffs and changing the way they are compensated.
At the Naples Daily News, publisher Dave Neill and his team have gone considerably further. As part of a broad cultural change at the paper that began almost three years ago, the News overhauled its sales operation with a change in personnel, structure and operating philosophy that included rethinking the basic concept of how sales territories are configured and managed.
The results at the News, which serves a Florida Gulf Coast resort community, stand out in an industry where many dailies continue to suffer from declining ad revenue, particularly on the print side. While total newspaper industry ad revenue, print and online, dropped by more than 7% in 2011 and by about another 6% in the first three quarters of 2012, according to the Newspaper Association of America, revenue at the Daily News grew in 2011 and then was up every quarter in 2012 over the same period a year earlier. When parent company Scripps releases its quarterly financial results, there is often a section singling out the economic performance in Naples.
Much of the credit is given to Neill, an aggressive and innovative leader who says the key to success is “engineering your organization with the intent of dramatically increasing professionalism.”
“He has the faith and the trust of those people that are working for him or with him,” says one of the paper’s ad directors who’d follow his boss “off a cliff.”
Mark Contreras, a former Scripps Co. executive who appointed Neill as Daily News publisher, says he is “as close as a public company can have to having an entrepreneurial figure.”
The Paper and the Market
Some of the success in Naples is related to the area’s newspaper-friendly demographics-an older wealthier population that has helped the Daily News hold on to the print franchise better than most dailies. Collier County, which includes the paper’s home community of North Naples, has a population of about 322,000 according to 2010 census data. While Daily News executives say residents are getting younger, 2010 census data indicate that 27% are 65 or older, 10 points higher than the state average. The median household income is about $57,000 a year, about $10,000 higher than the state average and the median value of an owner-occupied housing unit is $317,000, almost twice the state average.
As a resort spot on Florida’s West Coast, the Naples region sees significant seasonal population shifts that are reflected in newspaper readership. In winter, the paper’s circulation can swell as high as 100,000. In summer, it can dip to one-third of that.
There are those in the news industry who say it is easier for a newspaper to succeed in a wealthy community like Naples. Neill responds that “any media organization needs to be customized for the market, the local community. My feeling is that seventy percent of our success points to the talented staff and thirty percent to the market. The retooling of our advertising is seventy percent of our success.”
The Sales Transformation
Neill is not shy in discussing what he sees as excess timidity in the newspaper industry.
“There is too much fear,” he says. “It seems many in our industry choose to spend much time, energy, and discussion trying to better manage business decline. Our industry has been having a fifteen-year discussion on how to fix itself. We’ve been in the weeds trying to look down a path that can only be seen at 10,000 feet. It’s just my opinion, but I think industry solutions and customization will develop and flourish one market at a time.”
Like Clark Gilbert at the Deseret News, Neill talks about restructuring the paper to compensate for a less robust business model in the wake of a significant economic downturn toward the end of the last decade. “Our business was bigger years ago than it is now,” he says. “We had a larger staff, we had higher revenue…we have redesigned our business to fit the market [and] fit the world.” By 2009, the publisher says, he began to work in earnest on changes in the “structure and culture” at the News.
The re-imagining of the Daily News sales operation involved several major steps-the most fundamental of which was replacing the old sales territories, based on geography, with jurisdictions built around business categories or “business units.” That began by evaluating the Naples market, trying to figure out which business units to create. Part of that process included examining Daily News coverage of the community.
“The news component helped me assemble these business [units],” the publisher explains, adding that by seeing which industries were generating coverage and emerging as key local players, he could figure out “which of these business units are important to the community.”
The goal, he says, was to “operate at a much higher level of sophistication” and to move the sales approach “away from generalist to specialist.” The theory was that sales teams would function more effectively targeting the type of business rather than its location. That meant eliminating the routine in which an account executive had a 9 a.m. “appointment with the liquor store…at ten, they got an appointment with the nail salon, at eleven, they got an appointment with an ambulance chasing attorney and then maybe at three in the afternoon, they are meeting with the CEO of a hospital. Those days are gone.”
By having sales staffers assigned to specific industries “they’re able to share national industry trends, they’re able to share regional trends,” says one sales director. “They’re able to own that vertical, own that business unit and then it’s just proven exponentially successful.”
In late 2009, about one-third of the sales staff was assigned to new category-based business units and the results emerged quickly. “For the units assembled, we did see significant growth,” Neill says. “We saw a trend where business units were outperforming general” advertising sales. Neill and his top sales executives spent months on the evaluation before sharing the plan with the entire sales staff. In November 2012, the entire sales operation converted over to the business unit model.
Today, the roster of business units includes: a health and wellness team; a transportation team; a real estate and finance team; a fashion, beauty and arts team; a home services team that includes everything other than real estate; a food team; an advocacy and education team; and a community publications team. Several other teams handle business development, advertising operations and special sections.
Home services advertising director Kurt Anderson says that before the creation of the business units, “it used to be just a free for all. There was no focus on any particular type of business unit [just] trying to stick to a geography and with no real focus on what they were going after, with the exception of this is my home [territory] here, I can go here and I can try to find some business.”
In creating the units, the Daily News tried to combine businesses that shared economic connections. For example, the transportation unit not only includes cars, but boats and marine transportation businesses as well as the ancillary businesses connected with automotive, such as detail shops, car washes and tire centers. The real estate unit was broadened not only to include the sale of property, but other businesses intertwined with that, such as banking and finance.
With the units in place, the sale staff needed to be re-organized. The Daily News has a sales staff that numbers 106, with about half working in direct sales and half in support services. While that is still a large staff, it is about 20% smaller than it was five years ago, when cost cutting kicked in. At one point, the paper operated with separate digital and print sales personnel, but has now switched to a system in which “everyone can sell everything,” although there are still digital experts who function as “closers.”
The sales restructuring remains a work in progress. Late in 2012, the paper embarked on a four-month evaluation of the business units that led to significant changes in both the sales units and the staff assignments. Home services, for example, was separated from the broader real estate category and additional resources went towards the growing health and wellness sector. According to Neill, about 33% of the sales staff was reassigned to different units as a result of this process.
The creation of the sales business units was also accompanied by a revamping of the sales management team with each unit headed by an “ad director.” (There had been what Neill calls a “major retooling of the entire sales management team” even before the transformation, the result being that only two of the top managers who were at the paper five years ago are still in a management role today.)
The goal was to change the operating culture, to break up old lines of authority and to filter substantially more decision making power down to the units, the directors and account executives.
While the current group of business unit directors (some of whom have work experience in the areas they oversee) report directly to Neill and meet with him every Thursday, they also have a good amount of autonomy and meet among themselves every Monday.
“What was here previously was a traditional environment,” says Neill. “People had their marching orders and they had the rate cards…and they went to market and said ‘here are the rates, advertise with us.’ I want to have a creative environment and part of that was empowering the account executive to make decisions in the marketplace…Right now they can negotiate a deal with the customer. In the past they weren’t allowed to do that without approval from three or four people.”
In the publisher’s parlance, the sales directors “own” their units. At the same time, though, the directors work together as a team. “[We] all have our own forte,” says one sales director. “Some of us are better at day-to-day tasks…one might have a specialty with online sales, but the biggest thing that we have in common is that we communicate to each other on a regular basis…Sometimes, collectively, we sit down together. We don’t have to come upstairs, take a half an hour out of Dave’s day and say ‘what do you think?’ You figure it out, get it done, hold yourselves accountable for the decision you make.”
That decentralization of authority has many manifestations. For a few years, the paper’s biggest advertiser used to negotiate its annual contract directly with the publisher, something Neill characterizes as a “year-long battle.” Now, that deal is cut directly with the ad director and Neill never has to pick up the telephone.
The Ad Club
As a sales incentive, the News created the Ad Club about three years ago. The highlight of belonging to the Ad Club is a quarterly awards ceremony for high performing sales staffers. Initially, membership was open to those who made 75% of their sales goal, but that bar has now been raised to 100%. Club members attend a catered party at a downtown spot and are honored with a trophy.
Neill insists the idea is a major motivator, even if the trophy is “cheap…The trophy, itself, costs like seven dollars. [But] it means a lot, it means a great deal for these people that earn it. They’re formally invited to a party, they’re recognized, they get this seven dollar trophy and they love it. ”
“You have the competitiveness or pride in being a member of this club, and by the way, it’s very cutthroat,” he adds. “You don’t make your numbers, you’re not there. So, your peers are walking out the door to an after-hours party while you’re sitting here, right?…If you were to walk through advertising right now, there are some that have all of their trophies lined up on their desk.”
Signs of Success in Naples
Neill does not divulge detailed revenue information, but it is possible to get an overall picture of the financial health of the Daily News. The publisher says revenue has grown in both 2011 and 2012. For 2012, growth occurred in all four quarters compared with the previous year. Data from Scripps support signs of growth, showing revenue at the paper for the first quarter of 2012 up about 10% from the same period a year earlier.
While Neill does not provide a specific breakdown of print versus digital revenue at the paper, it is clear that in Naples print is quite healthy and brings in the overwhelming majority of income. Given widely vacillating numbers depending on the time of year, the paper has maintained or increased its circulation. In the most recent report for the six months ending in September 2012, average daily circulation (34,000) for just the print product without the digital editions was virtually identical to that for the same period in 2011. In the six months that ended in March 2012, however, average daily print circulation was about 54,000, up 20% from the same time a year earlier (45,000).
“Digital and print circulation growth is our top priority,” Neill says.
There is also some evidence that the new ad unit structure is working. For one thing, Neill says that the new units have effectively captured much of the paper’s advertising income, with only about 20% of ad revenue now coming from outside those business categories. He also says the overall number of advertisers or “business count” has increased in both 2011 and 2012.
One specific area where Neill has seen improvement is the twice-yearly sales “blitzes”-one in late fall, the other in the summer-when reps approach new businesses or businesses that haven’t advertised and try to sign them up for a digital/print package slated for a specific date on the calendar. The lead ad manager on the blitz is director of business development Shawna Devlin and the publisher says that since the restructuring “we’ve refined [the blitz campaigns] and we’re very focused and we’re more organized. We have added an element of creativity and energy to this staff that didn’t exist before.”
Asked to estimate how much additional ad revenue the paper has generated as a result of the restructuring of the sales operation, Neill says “we’ve improved our business by at least ten percent,” which is enough to account for much of the revenue growth in the past two years.
Challenges to Sales and Culture Change in Naples
One thing the restructuring at the Daily News did not involve was significant new funding. “It was simply reorganization,” says Neill.
But it did lead to what the publisher calls “a moderate amount of turnover” among the sales staff. “We were upgrading. We were looking for talent and talent was coming to us. We were raising the bar and there were people on staff who weren’t interested in taking this ride.”
It also initially ruffled feathers among some advertisers who were concerned about losing an account executive with whom they had forged a relationship. “There were questions from some of the businesses who called me a directly and said ‘why the hell are you doing it?'” the publisher recalls.
And while his ad directors speak glowingly about empowerment and the decentralized lines of authority, it was not an easy concept to sell.
“It was hard at the beginning,” Neill says. “It took time [for] people to even envision an environment like that. You’re basically forcing people to start operating in a mode of decision making. That was a difficult transition [but] we’ve gotten really good at it here. Some people kind of misread that as us going off the reservation. But it’s not.”
Neill says he received much support from Scripps corporate headquarters about his reorganization plan, although “there were a lot of questions.” In talking with people in Naples, it is clear that Neill is widely admired by his staff, in part for his ability to “manage up,” which can allow for flexibility for the local market.
“I don’t know that he wins every fight,” says executive director of circulation Tom Heck, who gives “Dave almost all the credit for what I’ve seen since I’m here…Working here gives you a lot of flexibility to be able to say ‘we’re going to do what’s best for the business,’ even though, in the short term, it may not be from a profitability point of view.”
The effort to implement a cultural change that emphasizes “professionalism and customer service,” is not limited to the sales side. One of those changes has meant an enlarged role for the circulation department, which is more involved in cross-departmental communication with advertising and editorial operations. Heck and circulation sales director Jorge Velasquez recall, not so fondly, the days when they had to punch in a code at the doorway to gain access to the newsroom.
“Circulation was something that happened at night and they were in this dark corner of the building and nobody really knew what was going on back there or who was running it,” Neill says.
On the editorial side, Neill believes the newsroom is now progressing on the transformation of the paper’s digital and print platforms.
As part of the effort to put the paper in the middle of a community conversation about the issues facing Naples, the News launched its Lighthouse Project in April 2012 with a 112-page special report that examined the history of the community from the earliest settlers to modern day residents. Managing editor Jeffrey Bruce says that half the newsroom was deployed for that effort, which was designed to “recapture the news agenda.”
“The Lighthouse Project was one where I wanted us to clearly take a leadership role in the community,” the publisher says, adding that “our plan is to better integrate this with our editorial content,” so that going forward, more stories will be published under the Lighthouse brand.
Lessons from Naples
A Detroit native, Neill exudes an energy and confidence that can be infectious. His former Scripps boss, Mark Contreras, calls him “one of the industry’s most inspirational leaders.”
Some of the key lessons from the Naples experience are related to the publisher’s leadership philosophy.
- Operate in a culture of risk-taking. Neill says that in selling the reorganization to his sales staff, the risk of not trying something different outweighed concerns about whether the new plan might work. Given the current economic realities, the publisher sees taking risks as a pre-requisite for success. “We are afraid,” he says, referring to the industry. “We need to be fearless.”
- Create an environment of greater “professionalism.” One of the ideas in restructuring the sales units, was to, in effect, upgrade the status of account executives so they were not just selling, but becoming experts in various sectors of the local economy. “What I want to do is to… help develop the staff [so] that when they wake up in the morning and report to the office, they are part of a professional environment, working as professionals in their business units,” Neill explains.
- Fundamentally rethink the structure of the sales department. In Pew Research’s March 2012 report on the search for new revenue models, the idea of revamping aspects of the sales operation-from training to compensation-was popular with a strong majority of the papers that responded. In Naples, they have gone further, rethinking the basic concept of sales territories and restructuring sales management around these new business units.
- Decentralize decision-making power. Ad directors and account executives now have far greater authority to negotiate on their own and the bureaucracy is more streamlined. It’s not easy, according to one ad director. “It takes an incredible amount of courage and trust from the head of your business,” he says. “So if someone is trying to replicate this and they don’t have the courage and the trust to pass that along, it’s not going to [happen.]”
- Print is not dead. In Naples, according to one observer, the moral of the story is “don’t give up on print.” The publisher is bullish, saying “we are going to reinvent print” and envisioning a future where the print product could be customized for the individual consumer. At many dailies, that may seem overly optimistic. But the lesson from Naples is that in communities where conditions are favorable, a substantial bet on print can still pay off.
If the Daily News publisher has gotten the reputation as someone who does things differently than some other properties within Scripps, he is quick to define the limits of his flexibility from corporate headquarters. “We receive regular corporate guidance and support, and don’t step outside these initiatives or expectations. We don’t do whatever we want…[but] I feel like we as a team, have confidence and produce great results in operating the way we do. ”
He offers one reason for that confidence and the freedom it allows him: “Results.”