Case 1 Lecture Notes
USA Today: Innovation in an Evolving Industry
Case 1 USA Today: Innovation in an Evolving Industry*
Synopsis: As the entire newspaper industry sits on the brink of collapse, Gannett and USA
Today work to avoid disaster and transform the nation’s most read newspaper into
tomorrow’s best resource for news and information. This case reviews the history
of USA Today, including its continued use of innovation to stay on top of the
technological and sociocultural shifts that are rapidly changing the newspaper
industry. In the face of continual competition across a variety of media sources,
the future of USA Today depends on its ability to continually push the envelope of
innovation and offer value-added, proprietary content to ensure continued
differentiation and the future of the USA Today brand.
Themes: Product strategy, innovation, target marketing, distribution strategy, changing
technology, changing sociocultural patterns, customer relationships, competition,
differentiation, strategic focus, SWOT analysis
Case Summary
USA Today is the most successful and highly visible newspaper that students have seen and read
on a national basis. The case provides an overview of Gannett’s strategic marketing approach to
launching and growing this unique newspaper. When USA Today debuted in 1982, it achieved
rapid success due to its innovative format. No other media source had considered a national
newspaper written in shorter pieces than a traditional paper and sprinkled with eye-catching,
colorful photos, graphs, and charts. Designed to address the needs of a sound-byte generation,
readers found USA Today’s content refreshing and more engaging than other papers. Circulation
grew rapidly from roughly 350,000 in 1982 to approximately 5.9 million daily print and online
readers today (1.8 million in daily circulation). This compares to approximately 2.12 million for
second-place Wall Street Journal and 1.58 million for New York Times. USA Today’s website
(www.usatoday.com) is one of the Internet’s top sites for news and information.
[Author’s note: Circulation numbers vary from quarter to quarter with USA Today and Wall
Street Journal frequently swapping the #1 and #2 positions. Instructors are encouraged to find
the most recent circulation numbers.]
The case reviews the history of product, promotion, and distribution innovation at USA Today.
Although the paper has been very successful, it had difficulty earning a reasonable profit early
on. To reverse this trend, Gannett created several USA Today spin-offs including Baseball
Weekly, Sky Radio, the international editions of USA Today, and USA Today Online. USA Today
continues to grow by enhancing the value-added components of both its print and online
versions. It has invested heavily in technology related to podcasting, news aggregation, and
* Michael D. Hartline, Florida State University, and Geoffrey Lantos, Stonehill College, prepared
Case 1 Lecture Notes
USA Today: Innovation in an Evolving Industry
online advertising; and developed partnerships aimed at providing news content for handheld
wireless devices.
Today, that history of innovation must continue if USA Today is to survive during a time when
overall newspaper sales, advertising revenue, and readership are declining. The paper faces
unprecedented competition from a variety of sources at a time when more and more Americans,
especially younger people, are turning away from printed news. That shift has affected the
company financially as well. USA Today and other newspapers have struggled with falling
revenues and increased costs for several years. Both print and online advertising revenues have
been falling steadily, declining by over 51 percent since 2005. Classified advertising has been hit
particularly hard, declining by over 71 percent in just six years, most likely due to sites like
Craigslist, which host ads for free. Although advertising revenues had been falling before the
recession, 2008 and 2009 saw steep declines triggered by a soft ad market, particularly in the
automotive, retail, and employment sectors. In fact, 2008 and 2009 were the worst years ever for
the U.S. newspaper industry. Although advertising revenues continue to decline today, the rate of
decline has slowed in recent years, with total newspaper advertising down 7.3 percent in 2011.
The multitude of choices for both consumers and advertisers means that USA Today will have to
work harder at innovation, finding a way to differentiate its products from the sea of competition.
This will be a challenging task given the continuing decline in newspaper readership and the
growing consumer demand for free online news.
Teaching Overview
As USA Today looks toward its future, a number of issues must be considered. Toward this end,
the latter half of the case is written in the form of a situation analysis. Students should be
encouraged to update this information as much as possible, and then conduct a comprehensive
SWOT analysis for USA Today. After this is completed, students could use this case to develop a
marketing strategy for maintaining the company’s dominance in national news. Perhaps the most
important issue to consider is the role of the printed paper in a future that is likely to be
dominated by wireless news delivery. The inevitable questions about the death of newspapers
will come up in the discussion. When this occurs, encourage students to explain their
assumptions about the consumption of news in the future. At least 75 percent of the class will
predict the demise of printed newspapers. However, the remaining 25 percent is usually quite
dogmatic in their belief that printed news is here to stay.
The case also gives students an excellent chance to think not only about promotion, sales, and
product development, but also the connection between these marketing elements and bottom-line
profitability. Students should have no trouble discussing USA Today’s competition and the
implications for USA Today’s marketing strategy. The case can also be related to a discussion of
competitive growth strategies and the ways that Gannett implemented these strategies during the
introduction and growth of USA Today.
Case 1 Lecture Notes
USA Today: Innovation in an Evolving Industry
SWOT Analysis
Internal Strengths
External Opportunities
• Huge Gannett media conglomerate
• Marketing know how
• Popularity, credibility, and familiarity
• Extensive information gathering resources
• Clear, concise, and colorful format that
subscribers find appealing
• Comprehensive sports coverage
• Contracts with national advertisers
• Consumers desire more timely news and
information
• The Internet is a highly accessible and low
cost distribution outlet
• Advertisers are becoming more interested
in targeted marketing, especially among a
highly mobile population
• The Internet allows for customizable
content
• New technologies exist, besides print
media, for reaching consumers
• Major news competitors are slow to
innovate
Internal Weaknesses
External Threats
• Lack of local news content
• High fixed costs associated with the print
version
• Crowded format of online version
• Online version is not as customizable as
competitors
• Online version uses popup ads that are
unpopular with consumers
• Some still see USA Today as a “McPaper”
• Perhaps some blind faith in the staying
power of printed news
• Abundance of free sources of news and
information on the Internet
• Online revenue generation ability is weak
compared to hard (printed) materials
• The Internet has introduced an interactive
and accessible delivery platform that
cannot be matched by a printed newspaper
• The volatility of newsprint prices
• Google and other non-conventional
advertising businesses are tapping into the
growing online advertising market
Problem/Decision Statement
Although increasing digital options for news and information have some industry observers
bemoaning the death of newspapers, some feel that newspapers do have a bright future and will
Case 1 Lecture Notes
USA Today: Innovation in an Evolving Industry
Strategy Alternatives
1. Change the format of the USA Today print version to include links to the website while
simultaneously cutting the dimensions of the paper. This would increase traffic to the
Strategy Recommendations
The first alternative is fairly easy to implement in the short-term. However, Gannett should take
the lead in developing news content for portable electronic devices beyond their current apps for
broadcast.
Implementation Issues
Gannett has already started to resolve the key implementation issues associated with technology.
Teaching Questions
1. What opportunities in the marketing environment did Gannett seize in launching USA
Today? How did the company learn about and respond to these opportunities? Answer
these same questions for USAToday.com.
Case 1 Lecture Notes
USA Today: Innovation in an Evolving Industry
It appears that Allen H. Neuharth, chairman of Gannett, had been doing casual marketing
intelligence, keeping his eyes and ears open to changes occurring in the marketplace. He
To check his assumptions, Neuharth did marketing research to identify the target market
for his proposed publication. From the start, USA Today practiced the marketing concept;
using research to discover unsatisfied reader needs and wants. Gannett did research
The same trends that suggested a need for USA Today in the early ‘80s also suggested a
need for an online version in the mid-90s. It is quite likely that the company revisited
2. How has a continuous strategy of marketing innovation proved successful for USA Today
and USAToday.com? Do you believe that USA Today is well positioned for the future?
Explain.
From day one the newspaper was designed to be like no other: The newspaper has
incorporated many quality improvements and added features. Some examples include
Case 1 Lecture Notes
USA Today: Innovation in an Evolving Industry
The paper incorporated many minor modifications over the years to set it part from
The online version was also not content to rest on its laurels. Changes over its first six
years included:
necessitated this (most websites are free or at least allow certain portions of their site
to be open to everyone instead of just paying subscribers)
3. What are the SWOT implications for USA Today as it looks toward its future? What
strengths and opportunities can USA Today leverage as it looks for a competitive
advantage in the distribution of news and information?
This question is addressed in the SWOT Analysis section of this teaching note.
4. Based on USA Today’s experiences with print and online news, evaluate the long-term
potential of printed news and the newspaper publishing industry. Do you believe printed
newspapers will continue to survive despite digital competition?
Case 1 Lecture Notes
USA Today: Innovation in an Evolving Industry
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Whether newspapers will survive is shown in the case to be a debatable topic. Gannett
officials seem to be quite bullish on the future of the newspaper medium in general, and
of USA Today in particular. The key seems to be constant innovation. Old media have
always survived the onslaught of new media. For instance, radio was supposed to doom
magazines, and television was supposed to sound the death knell for radio. In each case,
the old media reinvented themselves and did fine—magazines and radio both became
more segmented and focused, for instance. Some people predict that newspaper
readership will shift entirely to tablet devices like the iPad. Enhancements will include
audio text (a wireless service that provides information to the reader that is usually
related to an advertised product), videotext, and other document retrieval capabilities.