The case discusses how 1998 onwards, the Internet expanded its reach, advertising opportunities grew, both in variety and audience targeting, and Internet advertising became much cheaper, taking away a significant amount of business away from newspapers.
Sarasota Journal, a 100-year-old daily, has been struggling to stay profitable. The company started an online division, which is now growing at a rate of 30% and has even increased advertising rates by 10%, but the print business is rapidly declining. Since the online newspaper requires fewer and differently skilled employees, in the past five years, the newspaper’s employee base has been reduced to half. The President and Editor-in-chief, Bob Bowen, calls a meeting and tells the managers that the circulation of print newspapers had fallen 2.1-3.1% over the past 6 months (2.5-3.6% for Sarasota). However, despite falling circulation rates, surveys stated that readers read, preferred and even trusted newspaper ads the most (compared to online, TV and radio ads). Also, fewer newspaper readers found ads obtrusive as compared to TV viewers and people were more likely to visit a store after seeing a newspaper ad. However, it is certain that newspaper business will decline further and Bob makes it clear that his strategy would be to build Sarasota’s online business.
Wilma Collins, a Sales Manager at Sarasota Journal, has worked in the newspaper industry for 35 years, is 3 years away from retirement and fears that if she is laid off now, she will lose her health benefits and pension. She has no formal sales qualification but has kept herself updated with the Internet technology and keeps a tab on the digital competitors. She worries about how Sarasota Journal, with its overheads, can compete with new Internet companies that have virtually no overhead expenses. However, despite having received a lucrative job offer from a start-up Internet firm to sell online ad space, Wilma decides to stay with Sarasota Journal.
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