Magazine Publishers Australia on Thursday provided a copy of the interim report by Boston Analytics into the trials undertaken recently into the supply of magazines to several groups of newsagents. Here is part of the public statement from the MPA:
The pilot delivered on expectations with substantial increases in efficiency i.e. decreased rate of return (-17% in Pilot A and B vs. +2% in Pilot A and +1% in Pilot B historical and -2% in control groups). Based on the modelling work done by Boston Analytics, sales were expected to decline at an 8% given the amount of supply that was cut from the long tail. But the declines were higher than that with Pilot A and B delivering -9% and -11% declines in sales respectively. Excluding an outlier store that increased its sub agents, Pilot A delivered -12% which is quite similar to Pilot B.
The value of the trials changed with the closure of Network Services. The single distributor model – yes, I am not including IPS as their roster of titles is very small – is of itself leading to changes we are seeing and changes on the way.
I think the best time to assess where we are at with magazine distribution will be sometime after June this year. By then Gotch will be well settled with its expanded mix of titles and will have had time to talk with publishers, especially those publishers that provide considerably more inventory than ever sells for its is these publishers that drive the most significant and expensive over-supply.
I have been aware of the pilot results for several weeks and while they are interesting, I am more interested in a study that actively includes all publishers and not just the top three.
The original MPA trial application stated that the “Key Measure (of sales) for the pilot” was “Either an increase in sales across the newsagent channel or reversing the current trends of a declining market and maintaining current sales volumes”. Now after 6 months of analysis we get “sales were expected to decline at 8% given the amount of supply that was cut from the long tail”. So which is true?
In the end the decrease was 12% and the MPA has no credibility left when it comes to this trial.
I think the MPA should have ended the trial the closure of Network was announced as that changed everything.
Mark, in the period of the trial what decrease in magazine sales were shown in your quarterly benchmark study. I thought I can recall a 12% across the board decline in one or two quarters.
If this is the case then the trial had no effect as the industry as a whole was down that amount or close to it
Peter, 9.5% in the December quarter and 10.2$ in the March quarter.
So effectively the sales reduction for those in the trial was around 1%-2% greater than those not in the trial.
This could fall within the error margins of the trial and location of different newsagencies so the trial may have had no effect at all on falling sales.
Peter I think the more important assessment would be to look at data for the trial stores over several years and to lay this against the same for similar non trial stores.
The reality is the Network closure changes things and the result could be better for us as it focusses more attention from publishers that were not part of the trial.
So where are the ANF they supported this to the hilt ,despite strong opposition from many newsagents.
Also did the fight which newsagents put up at the ACCC hearing ,hasten Networks decision to pull out of distribution, as the MPA trial was all about stopping early returns.