Learn From the WSJ – Attack Your Competitor’s Stronghold

The Lion, the Mountain, and the New York Times

It takes about 40 minutes by train to get from my home into New York City, just enough time to get through the Wall Street Journal and knock off a few morning emails. But last month I left my emails untouched and instead enjoyed a special treat: the Wall Street Journal’s New York Section.

The WSJ’s decision to launch a special section dedicated to covering New York’s local political, real estate, and entertainment news may seem like just a product expansion on its surface, but it illustrates a powerful strategic pattern with ancient roots, a pattern that works in war, politics, and business.

As it turns out, a former business classmate of mine is now the Wall Street Journal’s General Manager and so I got some firsthand insight into what is going on.

First the pattern. There is an ancient Chinese strategic narrative that says that if a lion comes down from its mountain stronghold, you win in one of two ways. Either you beat it on the open plain (because the lion is less effective on flat ground than in its mountain stronghold) or you take its stronghold so it can’t get back to the mountain.

This is like Haagen-Dazs leaving its stronghold premium ice cream in a failed attempt to compete with Ben & Jerry’s off-the-wall flavors. This is like the U.S.’s current strategy in Afghanistan which focuses on seizing the Taliban’s southern stronghold. In current U.S. politics, this is the "tea party movement" filling in where they feel Republicans have abandoned conservative strongholds. If your opponent leaves his stronghold unguarded, consider moving in.

For years the New York Times has been slowly abandoning its New York stronghold in pursuit of the national, and international, market. And the WSJ noticed. As my friend, Kelly Leach, general manager at the WSJ said (see interview below), "When we started exploring the opportunity in New York, we found that in the past decade the New York Times had seen a nearly 40% decline in its circulation in the New York market — that was evidence to us that there was a reader need in the New York market that was not being well met by the currently available options." The lion was leaving its mountain stronghold.

So, the WSJ decided to move in. What many analysts overlook is that this opportunity is even bigger than the readership numbers suggest. Sure, the WSJ will win over some new New York readers. But the real immediate money in the short term comes from the WSJ offering New York advertisers the ability to reach its existing affluent readers in the New York market as James Ledbetter at slate.com (see http://www.thebigmoney.com/articles/judgments/2010/05/11/wall-street-journal-s-new-york-section-isn-t-bad-it-s-just-misundersto) points out, the WSJ strategy is more about advertising than readership.

New York advertisers are hungry for a platform to put their ads in front of New York readers. Why should they pay for the eyeballs the NYT attracts from across the country and the world, when they selling shoes on Madison Ave? By creating a separate section of exclusively local content, the WSJ offers advertisers a targeted vehicle to advertise to commuters like me, who may actually decide to stop by that Madison Ave store today.

You can keep reading below to read my interview with Kelly Leach, and see how the WSJ is attaching the New York Times stronghold.

Kaihan: How long ago did the WSJ start exploring the idea of launching a New York section and what were the key rationales for doing so?

Leach: We began exploring the idea of launching a New York section about a year ago.  We view it as a continuation of an effort that began back in 2008 to expand the coverage in the paper to make it a more complete read for both our current Journal readers and prospective readers.  Beginning in 2008 we added news pages to the paper to create space for more U.S. and World news along with Sports and expanded health and wellness coverage.  We also launched WSJ magazine, which has provided a home for Journal-quality storytelling incorporating beautiful photography.  Local news is a key topic for which readers turn to a newspaper, so it was a natural next step in the progression towards making the Journal a more complete package of news for readers.  When we started exploring the opportunity in New York, we found that in the past decade the New York Times had seen a nearly 40% decline in its circulation in the New York market — that was evidence to us that there was a reader need in the New York market that was not being well met by the currently available options.

Kaihan: Will the NY section be available in regions outside of New York?

Leach: The content of the NY section is available on wsj.com and on The Wall Street Journal on the Apple iPad. (Kaihan’s note: In other words, "no." This fits my belief that the strategy is focused on local advertisers who do not want to dilute their ad spend by paying for non-New York readers.)

Kaihan: Was there a reason to use full color beyond the higher ad rates this might generate?

Leach: We decided to use full color because it would make the section a richer, more visually appealing experience for both readers and advertisers.

Kaihan: What types of local content will the new section focus on first (e.g., arts, local politics, real estate)?

Leach: The local content will focus on the topics you mention — arts, local politics, real estate — along with education, society, sports, local business, crime, and state politics of interest to this area.

Kaihan: Is the current coverage on the new section's launch missing anything or getting anything wrong (e.g., is it really a strategy focused on "attacking" the NYT)?

Leach: The first few weeks of the Greater New York section have exceeded our expectations.  While it's too early for sales figures, we have heard strong and positive response from existing readers and those picking up the Journal for the first time, welcoming the new section and our commitment to the New York market. Advertisers continue to see the value and embrace Greater New York. We already had 40 advertisers on board pre-launch, and we have added an additional 20 in just the first two weeks, with some scheduled through the end of the year.   Launching the section was a business decision that fits with our strategy of expansion, and the section presented as a great opportunity. Given the complexity of this market, and decline in regional coverage, there was room for a high quality, complete broadsheet to serve readers and advertisers in the New York market. 

To summarize, the WSJ’s decision to launch a local New York section plays on a proven strategic pattern: when the lion leaves its mountain stronghold, take the stronghold. Ask yourself the following questions to see how you can use this pattern to your advantage:

1.    What is my competitor's stronghold?

2.    What was my competitor’s stronghold last year, five years ago, ten years ago?

3.    How has my competitor’s focus shifted?

4.   What would happen if I moved in?

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