Clive Milner: A newspaper tiger with teeth

News International's Clive Milner faces a fight – convincing advertisers that the industry he represents, as chairman of the Newspaper Marketing Agency, is in actual fact growing stronger both online and in print. Ian Burrell hears his pitch
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Clive Milner, one of the most powerful figures in the newspaper business, is in the British Library, where throughout the summer an exhibition is taking place demonstrating how a combination of elegant writing and stunning colour visuals can hold the attention of audiences over a period of two and a half millennia.

If only, he could be forgiven for thinking, the British press (less than 350 years old and already being written off) could have the enduring relevance of the Ramayana, the ancient Sanskrit epic that tells of Prince Rama's attempts to rescue his wife, Sita, from a demon king with the help of an army of monkeys.

Milner, the chief operating officer of News International with responsibility for The Times, The Sunday Times, The Sun and News of the World, is James Murdoch's right-hand man. He is also the chairman of the Newspaper Marketing Agency (NMA), which represents the national press, and as such, he has his own exhibition, one that tells of a struggle barely less dramatic than the escapades of Prince Rama. With the aid of a fresh raft of data and graphs, he hopes to convince the advertising planners and buyers who determine the success or failure of commercial media businesses that newspapers, whether consumed in their traditional printed form or online, are a medium with a viable future.

Milner steps on to a platform to address his prized ad industry audience and tells them: "Many people who follow the current debate – some of it in our own newspapers – may think that newspapers are in some sort of decline, living on former glories. Nothing could be further from the truth."

He cites as evidence the industry investments in modern colour printing presses, "more than a billion pounds just in plant and machinery", and in websites, "hundreds of millions of pounds across the newspaper companies". He tells them that 95 million unique users are now accessing newspaper sites a month (35 million of them from the UK) and that more Britons are aware of one or more national newspaper online brands than recognise such great internet names as MSN and AOL.

Yet, complains Milner, "people often talk about print and online as separate, unrelated. For our industry, print and online are inseparable."

Away from his audience, he speaks in soft, measured tones of his concerns that the national press is not given credit for the part it has played in the growth of Britain's digital media. "A big part of the growth component of digital is down to the newspaper websites, no question."

Newspaper sites stand apart from other online offerings because readers are younger and more affluent than the average internet user, according to Milner's NMA analysis, which is supported by pictures of smiling, smart-looking twenty- and thirty-somethings. "Because of the quality of the journalism that now sits on the digital platforms, we are reaping the dividends of longer dwell time and attracting new readers. It's a virtuous circle, as you would expect, given that some sites lack depth, quality and marquee names, which is what newspaper journalism is all about."

In spreading this message, Milner has no time to lose. The economic downturn has already sent media share prices hurtling southwards. "There's no question that we are operating in a very tough market," he concedes. "We are all familiar with the credit crunch headlines... A clear tightening of consumer belts is impacting on business and ultimately through to media companies and the revenues that they get."

But the savvy media buyer, Milner argues, will now turn away from risky strategies that have seen hefty chunks of advertising spend being allocated to niche media. "You will almost certainly see a reversion to tried and trusted media. As digital has proliferated there has been a lot of experimentation in the marketplace, and some of it not particularly cost-effective.

"There is always a pressure on media agencies to come up with ever stronger creative solutions, and it's a logical extension that as you see innovation, some things work and some things don't. There has been a lot of learning in the digital space in the last three years. The good news is, as media owners, we are pushing more creative ideas that do work."

In some sectors – "though arguably too few" – newspaper advertising is defying the recession, he says. "Retail is still very strong, not least because of supermarket wars. Energy companies clearly have to lay out their case to the consumer and are doing so [through press advertising] and probably will do more. Interestingly, the luxury goods sector is still going well."

Furthermore, he claims this is not so much a plummet into the abyss as a "cyclical" problem. "The market was going extremely well up until the turn of the year," he says. "We are in for a choppy ride for a minimum of a year and it could stretch into year two. In such a tough market it's up to us to make the case to clients of our proven medium, one that's fast, flexible and cost-effective."

Does he think that some titles may not emerge from the recession? "Some industry watchers have made the observation that we're oversupplied. In terms of newspaper penetration per capita, we are in the top five of the world, along with Ireland, and some of our newspaper businesses are not profitable. I wouldn't like to comment on the reasons why their owners want to keep it that way," he says. "If the question is, 'In such an adverse market would you contemplate newspaper closures?' then I don't have any visibility of that, but businesses under extreme pressure will have to look to cover price or radical moves in their cost base."

Cover price is a sensitive issue, especially at News International, which saw a sharp fall in the circulation of The Sunday Times when it began selling for £2. The Sun has just taken a cut in price to 30p and Milner does not align himself with those who think that newspapers are undervalued. "Arguably, some of the recent price rises have outstripped inflation. [Raising price] is a relatively easy button to press, but it's one that you would take a great deal of care in pressing, not least because it can damage your sale. The value for money delivered in each national newspaper, given its cost base, is tremendous, and there are strong advocates that newspapers should be keeping up with the price of a cappuccino. But we see very clearly that the elasticity of price is not finite."

Having two years ago worked on the launch of thelondonpaper, a giveaway title in the capital, he does not foresee the arrival of a free national newspaper any time soon. "A national newspaper moving to free is an interesting concept but not a particularly practical one, because it doesn't address the fundamental element of the free model, which is an extremely lean cost base. None of the paid-fors come close to what would be required to create a national free newspaper. The cost of content, the cost of people – they are not even close to what is required for a viable free model."

The NMA's Newspapers Online Analytics research found that more than 22 million people a month were accessing newspaper websites directly (as well as more than 32 million via Google), showing strong brand awareness. People who read newspapers online are more diverse in the titles they engage with. For example, News of the World and Daily Mirror print readers are far more likely than Sun readers to visit the websites of quality papers. "It tells us where the opportunities are to market more aggressively to people outside our own franchises. There are interesting crossovers there," says Milner.

Though newspaper websites are growing fast, he says that they still do no more than supplement the traditional income of the press. "None of the online revenues come close to the revenues that are currently generated by advertising and circulation revenue for newspapers. It's not a replacement model but it is a growing component of our revenue base. It still needs to grow vigorously in order to contribute profits, though current trends are ahead of industry averages."

That growth, he argues, is being limited by the BBC. "It's very, very tough to operate in a marketplace which is dominated by a state-funded behemoth, something of the size and scale of the BBC. It makes it very difficult for players to grow. In order to make online work, you need critical mass. The sort of people who make calculations about the profitability of a newspaper consumer versus an online consumer say you need to deliver very big audiences in order to make money online through conventional advertising," he says.

"The BBC is impacting on every media. Their vast resources outstrip anything in the private sector. You can see the impact it is having on regional newspapers. The growth of video is going to be a very interesting area because it is the new booster of audience and their significant access to video is going to fuel their growth further. I think the [press] industry view is that they have too much money and too much resource."

Milner argues that the national press, despite everything, is still spending heavily on reporters and commentators. "The most important investment is our continued investment in journalism and that, irrespective of genre, broadsheet or tabloid, sets us apart from other media, and allows us to grow vigorously on different platforms, including mobile, which is probably a sleeping giant in terms of audience and revenue in the future."

Though he argues that the combined offering of print and online is "a great package" for advertising clients, Milner points out that national newspapers, even now, make £2.7bn in retail sales a year, and better distribution is vital to the future of the business. "Our ongoing challenge is to put our product in people's hands every day before they leave for work. Whether that is subscription or whether that is doing more at retail or in home news delivery, it's about understanding how people's lives have changed and modifying what we do to still allow them to take a newspaper. In the three or four major cities in the UK [we need to deliver] much earlier than we currently do."

The NMA is now five years old, and along with its parent organisation, the Newspaper Publishers Association, is determined to quash the notion that the national press is a spent force. Despite all the doom, newspapers are actually growing their share of the advertising market (from 13.3 per cent in 2005 to 14 per cent in 2007, a period in which television, magazines and direct mail all lost ground). "They may be relatively small movements, but the fact of the matter is we've improved our position," says Milner. "There are people out there who continue to try to write our obituary but we will be around for a very long time to come."