Ad spending at Europe's papers grew 2% in 1994, a slowdown from 5% in 1992, according to media specialist Carat Media, which predicts 2% growth again for 1995. And papers' share of Europe's total ad spending will fall to 26% this year from 30% five years ago.
Newspaper execs are fighting a triple whammy: Ad dollars are decamping to TV, recession-bitten marketers still spend cautiously and newsprint prices are soaring.
European papers are also taking their first steps in electronic publishing-with less gusto than their U.S. counterparts.
Germany's newspaper market may be the hardest hit this year. Carat Media predicts a 3% decline in 1995 newspaper ad spending, in an accelerating slowdown from 20% growth in 1992. Leading German papers have undergone major revamps to buck the trend.
Conservative German national daily Frankfurter Allgemeine Zeitung attributes its small rise in circulation (to 391,638 last year, from 390,504 in 1993) and its hefty 9% jump in ad sales (to $266.7 million) to a touch of color. "Since last summer, we have printed ads in four-color on [shorter] notice," said Wolf D. Auerbach, FAZ's ad sales director.
FAZ's magazine supplement has been less successful. Ad pages in the FAZ magazine, free in every Friday issue, fell to 1,124 pages last year from 1,462 in 1993 as beer, credit card and airline marketers switched to TV.
German business daily Han relaunched last summer with a $15 million campaign by BBDO, Dusseldorf, and by yearend sold 4,650 ad pages valued at $85.7 million, an 8.1% gain from 1993. In one sales initiative, advertisers in both Handelsblatt and The Wall Street Journal Europe get discounts.
In the U.K., a 10% drop in newspaper sales since 1988 has made circulation-boosting price cuts a way of life. Rupert Murdoch's News International first cut downmarket tabloid The Sun's price to 32 cents from 40 cents in July 1993. The trial became a key strategy when he slashed The Times of London to 48cents from 72 cents two months later.
Its deadly rival, the Telegraph Group's Daily Telegraph, then cut its price to 48 cents from 77 cents; The Times hit back with a slash to 32 cents.
"We were selling 360,000 copies a day before the price cuts; we're now selling 630,000 a day," said Alasdair MacLeod, marketing manager for The Times Newspapers division. The Times' share of the broadsheet national dailies rose to 21% by the end of 1994 from 16% in 1993, according to Audit Bureau of Circulations figures.
The new readers come at a high cost-$64 million a year in lost circulation revenue for The Times.
"Mr. Murdoch will have to put prices up again soon. He cannot underwrite The Times forever," said Anthony Jones, head of CIA MediaLab, the centralized research operation of London's international media independent CIA Media Network.
This spring's campaign by Arc Advertising, London, supported The Times' price reduction. One spot asked: "Can you do without Britain's fastest growing daily newspaper? The Times. At 20p [32 cents], you can't afford to be without it."
The ads forced a response from The Daily Telegraph, desperate for young readers to offset its oldest readership profile of all U.K. dailies.
"We were reluctant to cut prices because our policy has been to add value to our product and charge our readers for it," said David Pugh, the Telegraph's marketing director. "But had we done nothing, we would have allowed The Times to grow and attack our advertising market."
The tactic did not come cheap. "The move cost us $64 million in the first year," he said. "We did it to preserve our future."
The Telegraph's daily circulation rose to 1.07 million from 990,000 before the cuts. A $4.8 million campaign by J. Walter Thompson Co., London, broke in mid-March.
The lower prices have boosted sales, but lost circulation revenue outweighs newspapers' gains, media experts said. "Only 5% of the people who buy newspapers increased the frequency" of purchases, said CIA Media-Lab's Mr. Jones. "And only 4% started to read other papers because of the price cuts."
Carat Media, in fact, forecasts a slowdown this year to 6% growth in U.K. newspaper ad spending, down from 9% last year.
Outside the U.K., no one cuts prices to tempt readers-in fact, French and Italian papers are upping newsstand prices to pay for costly newsprint and the loss of advertisers to TV.
In one possible bright spot for publishers, the European Commission is investigating an alleged price-fixing cartel among newsprint suppliers.
"[Newsprint prices] went up by 20% in January, and are set to go up between 10% and 20% in July," said Philippe Simon, executive manager of Le Figaro, France's conservative daily with a 350,000 daily circulation. The price of French national daily Liberation rose to $1.40 from $1.20.
Low TV ad rates also hurt French newspapers. "As TV developed, its share of ad spend increased, with much of this revenue coming from print," said Gilles Brochen, director general and managing editor of France's leading business daily, Pearson's Les Echos.
Italian papers, after April's newsprint-led cover price increase to 90 cents from 84 cents, embarked on adventurous schemes to keep readers.
The pace of promotions at Italy's two leading national papers, La Repubblica and Corriere della Sera, is frenetic as both bombard readers with music cassettes and compact discs. The two traditionally mimic each other's marketing strategies.
Corriere previously had a 980,000 daily circulation, compared with La Repubblica's 1 million, before surpassing it in January following a free atlas promotion supported by a $10 million campaign by TBWA, Milan.
To combat the atlas promotion, La Repubblica in March broke an estimated $8 million campaign by J. Walter Thompson Italia, Rome, supporting free family medical encyclopedia inserts.
Despite the pressure of high newsprint, postal and delivery costs, Italy's top financial daily,Il Sole-24 Ore, is using innovative promotions to consolidate its 360,000 daily circulation. "We have taken several initiatives to stimulate [families'] interest in economic themes," said Lorenzo Ronchi, Il Sole's marketing director. These include a four-year joint venture with Walt Disney Co. to publish weekly 24-page supplements targeted at families, using animated characters to illustrate financial issues. Publicis/FCB, Milan, promoted the series.
"Il Sole is increasing its readership as the economic situation of Italians improves, prompting greater interest in financial topics," Mr. Ronchi said.
Unlike the Italians and British, French publishers are not susceptible to promotions or price cuts, despite a long recession and high newsprint costs.
"We've never launched big promotional or discount campaigns, never given away televisions or stereos with subscriptions," said Les Echos' Mr. Brochen.
The lingering recession in France is still hurting newspaper ad pages. Property and real estate advertising, once about 70% of French dailies' total ad revenue, have fallen by 50% in the last three to four years, and recruitment advertising has dropped even more sharply.
Meanwhile, the U.K. leads European publishers' experimenting with electronic publishing. The Daily Telegraph has 85,000 subscribers to its ad-funded Electronic Telegraph. Barclay Bank's Barclaycall phone banking service broke ads in May.
"Based on ads alone, I would expect the Electronic Telegraph to break even before the end of the year," said Mr. Pugh. "The challenge for ad agencies and their clients now is to learn how to prompt [the ET's] users to choose to view the advertisements."
The Times is waiting for the online market to develop before placing its contents on the ad-free online service offered by News International's Delphi.
And the London Evening Standard started Business Day Interactive, an electronic version of its business section.
"We are looking at the possibility of producing pages for the World Wide Web and making the accompanying advertisements more lively," said David Maude, the Standard's systems editor.
The Financial Times in May opened a 60-page site, in its trademark pink, on the Internet's World Wide Web and hopes to add ads this summer.
In Italy, Il Sole in January broke Online Italia, a joint venture with computer marketer Olivetti. The marketer is also developing an interactive service with Corriere della Sera.
French publishers are more tentative about interactivity. "France is still just learning about the interactive and Internet possibilities, so this is not a pressing priority [for us]," Le Figaro's Mr. Simon said.
Dagmar Mussey, Bruce Crumley and Michelle McCarter contributed to this story.