Here’s the poster for a university campaign we launch for our online classified site, Find It, this week.
We’re looking to connect with people who would use eBay – the Find It pitch is that we’re free. Even when we do charge our prices will be a fraction of the eBay fees and Find It profits stay in Australia.
Newsagents can sign up for free to partner with Find It nd therefore access profit share.
pdf-mags.com provides links to pdf (design and art mainly) magazines available online and not in retail. It’s a great resource for designers. In retail, this category is delivering falling sales and it’s understandable. With so many free and low cost online titles now available and the image quality so good, why buy a print edition?
Why newsagents need to cut home delivery costs and look for new revenue opportunities.
I’ve had some time to digest the Fairfax half yearly results and comments by some reading this site and what the share some more observations.
Fairfax interests me because it is Australia’s largest locally owned newspaper publisher; their deliberations from recent years have been exposed through the recent book by former CEO Fred Hilmer; and, because of their considerable success at monetising their brand online.
THE AGE
Circulation Monday to Friday is up 4.5%; Saturday down 3% and Sunday up 11%. Circulation income is up 0.3% – interesting compared to the circulation numbers. I’ve mentioned problems with Saturday sales here before for The Age and the Sydney Morning Herald. Over the counter feedback is that the papers are too big for what people want in a weekend paper now. But I’m sure Fairfax have their own more scientific research on this. Whatever the reason, action is needed.
The difference in circulation revenue compared to actual circulation supports my concerns for newsagents who provide home delivery services. The pressure will be on them to take a ‘pay’ cut and deliver for less. They can’t afford to do this yet can’t afford not to, so they will – an economic consequence for newsagents of deregulation
DIGITAL
Revenue is up 43.7% and profit up 41.8%. Take a look at Digital profit contribution over the last three years
While these are exceptional numbers, they are not sufficient to replace the loss of advertising revenue if newspaper sales and ad revenue fall as has happened in the US. Their decision to promote more aggressively into other markets such as Adelaide where they do not publish a daily should boost revenue.
The pressure old media companies such as Fairfax is under was the subject of this story in The Australia last Thursday.
MASTHEAD VALUE
For months I have complained here about Fairfax newspapers, specifically The Age and the Sydney Morning Herald, abusing their masthead with post-it style stuck on ads. The accounts report intangibles representing 123% of net assets. Most of this would be mastheads. So, why what an ad on top of the masthead? The longer term damage is not worth the short-lived thrill from ad revenue.
I am sure that the half year results unlock more valuable information than I have covered here.
Key messages for newsagents are that Fairfax is pushing hard to replace old (newspaper) revenue with new (online) revenue and that while they do this they will be looking to cut costs associated with old media products. Newsagents need to make similar adjustments in their businesses.
It bothers me that newsagents are not being fed current information about these challenges.
Indiantelevision.com has an interesting report on niche magazines in India.
I’m in Adelaide and every newsagent I visit here tells me that SA Life is the best magazine they have. Since it’s launch, sales have been strong, especially in more affluent demographics. Here’s a locally published magazine aimed only at the local market and it’s outselling all other monthlies. Mention SA Life and newsagents here smile: great sales, good cover price and, most important, local. Parochial sells.
SA Life (distributed by NDD) is a great story beyond its own success in some newsagencies where they use the title as a ‘magnet’ to draw attention to other titles and try and grow the category.
Even though it’s not national, its stellar success demands SA Life is considered for the newsagent voted magazine of the year awards.
UPDATE 17/2: SA Life has two sister publications: Highlife Magazine in Bowral, NSW, and, Tasmanian Life.
I’m surprised that jmag is going monthly. The music category is as challenged in the magazine space as it is for over the counter CDs. Music retailers are scrambling to find products to cover the collapse of CDs. In the magazine space, general titles (Rolling Stone, Q, MoJo and Uncut) sales are down while some specialist titles are holding stead. The challenge of the re-launch for newsagents is making a noise in a stale category for such a launch – we’ll have to reconfigure to re-attract people to that space. Of course, the re-launch may product a title with a broader base than at present and that would be welcome.
Over of the side ==> we’ve added a syndication box providing access from here to Find It online classified ads. From the Find It site itself we’ve made syndication very easy. It’s the same for finding newsagents – allowing access from any site which wants to trawl our database.
Supermarkets could wrest instant lottery products from apathetic newsagents.
As I’ve written here recently Victorian newsagents risk losing scratch ticket product if Greek company Intralot is successful in the bid they have before the State Government of Victoria. Intralot has said that they plan to sell instant games through supermarkets if successful.
In the absence of any apparent prctical activity by newsagent and lottery associations I created a petition. The Victorian newsagent association, VANA, belatedly endorsed the petition and asked its members to get behind it. So far 154 have signed the petition – the majority are not newsagents. I know of 20 newsagents who are collecting signatures over the counter.
This is a pathetic response by newsagents. Talk to the industry associations and they will tell you it’s normal – newsagents rarely respond in a practical way on issues which affect them.
Newsagents will scream if/when Coles and Safeway get instant scratch tickets at the counter. By then it will be too late but they will scream and blame everyone but themselves for the loss of instant lottery product.
Now is the time to act on this matter. The petition is designed to create noise to enable representations to the Government and raise awareness on the issue. Other action is necessary if newsagents are to ensure that instant lottery product remains with small business. There should be letters to local members, flyers handed out to customers and, maybe, a protest rally on the steps of parliament.
If newsagents want to stop Coles and Safeway getting 10% of their lottery sales they need to act now.
Maybe I shouldn’t whinge about newsagents – they’re important to my business and I shouldn’t get them offside. I’ve worked with them for twenty-six years, I care about them. I care about their investment, their work ethic and what they get through day in day out. Their lack of entrepreneurial spirit is frustrating as is their victim mentality when issues like Intralot come along.
The Intralot fight is one of several newsagents ought to be politically active on. No one will take their case on for them. It’s up to every newsagent to engage for their business and for the channel as a whole. Either that or roll over and die.
My answer to the question in the headline – yes.
Gardening Australia has a great and practical feature in its latest issue (out yesterday) on water saving tips so we’ve done this display next to our busiest register. It more titles arrive with water saving tips we’ll add them to the display.
We are thinking of finding space in-store for people to add water saving tips of their own – to make for a more interactive experience with the title and our shop. That’s a project for another day.
I went to the Gardening Australia website expecting to find this opportunity but instead it’s a pretty static ad with no reader interaction. Disappointing, but the magazine rocks!
NW and Famous have Anna Nicole Smith cover stories this week and sales are average. Given the TV and newspaper coverage I expected to see spikes for both titles but it’s not happening. It could have something to do with the nature of the story – it is changing so fast that consumers know that the magazine stories will be out of date already. I am surprised that neither title has updated the story on their website since Feb. 9.
To drive this change and to focus on online revenue we’ve changed the business mission of our organization away from print. Going forward IDG Communications will define itself as a web centric information company complemented by expos, events and print publications.
This is from a blog blog post by Colin Crawford, Senior Vice President of Online at IDG Publications. It’s a post everyone involved in publishing from editorial through to newsagents ought to read. He steps us through why they have adjusted their mission, shifting focus to online first.
In the US, our online revenue now accounts for over 35% of our total US publishing revenues. Next year, for many brands online revenues will be greater than print revenues, if fact they already are at some of our key brands and by 2009 – approximately 50% of IDG’s US revenues will come from online.
Crawford writes positively about the opportunity of online for the publications in the IDG stable. IT titles are experiencing double-digit sales falls at retail. Consumers are showing from their retail and online behaviour how they want to access IT news and information. IDG saw that and adjusted their mission accordingly.
Unfortunately some publishers are not acting like IDG. Newsagents continue to receive IT titles in quantities as if there has been no downturn. Magazine distributors have an obligation to pull back on these titles regardless of the money they make from the distribution process.
For their part, newsagents need to learn from the IDG approach and adjust their mission to reflect the changing marketplace. This means reducing magazine display space, cutting dead titles and moving into new product categories which drive traffic and sales.
More good writing on this topic:
Louis Gray.
Jeff Jarvis at BuzzMachine.
Juha Saarinen.
Wanted: Division 1 Winner. Apply Within.
I have seen a sign with this text in at least ten newsagent windows in the last week. It’s usually printed in black on colour paper and laminated. No sales pitch, no connection with the dream other than some lame text.
This is very poor marketing and I doubt it generates any interest. I suspect the newsagents are all being trained or motivated by the same person or organisation.
Lottery products need to be marketed with flair and in a way which connects with aspirations. We use in house syndicate posters, self made t-shirts, mock-ups of oversize cheques from past winnings and bright balloon arch displays to have fun and draw attention to the lottery offering. Others are brilliant at newsletters to customers in their area. Others do great themed window displays. These are all low cost high energy marketing ideas – far better than a boring old window sign from the 1960s.
calendarXpress offers individual newsagents a competitive edge.
I often write here about the need for newsagents to pursue new traffic generators and basket builders for their businesses. One such area is calendars. While newsagents carry calendars now they are either from magazine distributors on poor terms or from other suppliers on terms which are not as competitive as they could be.
Through the newsXpress group we have put together a compelling calendar offer for any newsagent – not just newsXpress members. The enquiry form can be downloaded here.
Late last year we embraced calendarXpress ranging guidelines in my shop and achieved an excellent return – far better than we achieved the year earlier when we went it alone. It’s having access to smart category management resources which delivered success for us. Achieving a better return from a traditional newsagent range is what our channel needs to do.
Below is a flyer sent by fax to newsagents promoting the calendarXpress offering.
calendarXpress unlocks better margins and a better range of calendars for newsagents.
DISCLOSURE: I am a shareholder in newsXpress Pty Ltd, the company behind calendarXpress.
We’re drowning in Kitchen magazines with six current titles. This title came in today and the distributor, NDD, expects us to hold the stock for a year. Considering the sell price, the cost of the real-estate and our sales history for the title, it’s yet another magazine from NDD on which we will lose money. Newsagents need a central authority approving access to our retail network for titles. Without this we will continue to be over serviced in categories such as kitchens. This is draining millions of dollars from our businesses.
The merchandiser turned up in our shop asking for floor space to display their new partwork product. We said sure, go ahead. We’re happy to give you premium space to display the measly two copies of this new TV promoted partwork product. This iniial allocation by Gotch is nuts and while they will have excuses, it’s not good enough that we have to chase them for extra product. Sales from our shop prove that we are very successful with partworks. It’s like they want us to fail by sending two copies. Thankfully they sent another twenty copies today. Still not enough but it will do.
We are paying $3.00 per square metre per day in rent. The two copies would generate for us, if sold, $1.47 gross profit. Sometimes you feel like giving up in dealing with magazine distributors.
Newspaper publishers are demonstrating the value they place on newsagents as their distribution partners by taking long standing business from them without discussion or tender.
One publisher has struck a hotel supply deal with a company which sees newsagents unilaterally losing customers of many years standing.
Despite faithful serving which has grown business for the publisher, newsagents are not even provided an opportunity to tender for the business.
The ‘new’ hotel supply deal first surfaced in Sydney more than a years ago – where long standing newsagent / hotel relationships were torn up in favor of a new arrangement between a company ‘blessed’ by the publisher and the hotel.
This new arrangement is now hurting newsagents in Melbourne.
Newsagents affected receive a letter from the publisher informing them of the publisher decision to take the business from them and offering a token commission for short time. There is no compensation for taking, in some cases, tens of thousands of dollars in revenue.
Newsagents are hurt by more than the loss of revenue. Often they cannot reduce their costs by cutting hours because of the need to continue to deliver other product. Publishers would know this. For them, it’s all about clawing back a few cents from every newspaper delivered.
What is happening is further proof of the little regard demonstrated by publishers for small business newsagents. It is another example of the impact of deregulation.
The LostRemote blog has this report and a fascinating graph quoting a US study showing that US “newspaper sites grossed $81 million in local video advertising in 2006, compared to $32 million for local TV sites”. I’d love to see state from Australia.
Last year Vodafone slashed commission it pays to 3,500+ newsagent retail partners by 37%. Today I read a GigaOM that they have paid US$11 billion for Hutch Essar, the third largest mobile company in India. Okay, I agree I am drawing a long bow. However, Om Malik says
Vodafone historically has been one of the worst telecom operators when it comes to mergers and acquisitions – bad deals, ill-timed exits and overpaying are part of company’s legacy. By putting a valuation of close to $19 billion for Hutch Essar, the third largest mobile company in India, with about 24 million mobile subscribers, the British giant has ensured that legacy remains unchanged.
Maybe if Vodafone focused on its existing customers and service network more it would improve the return from what it has rather than cost cutting against weak small businesses and overpaying in acquisitions.
Several newsagents with Licenced Post Offices have told me that Australia Post has recently advised them that if they do not remove the Bill Express equipment from their counter immediately they face a dramatic increase fees association with Australia Post terminals.
Fran Bailey, the Federal Minister for Small Business, was on ABC Radio touting her government’s small business credentials. The Minister ought to acquaint herself with for Australia Post operates. They are competing with newsagents for customers through Government owned stores and now, if what I have heard is correct, they are pursuing newsagent LPOs over services they can provide.
Spread the love and send a free Valentines eCard courtesy of our 3loves free online dating site. Click the image to the left or click here. You don’t need to be a 3loves member or connected with the site in any way. For us it’s a way of spreading the love and our message along with it.
3loves is one of four social media sites we have created to drive traffic for our Find It online classifieds.
Fairfax Digital’s revenue was $61.2 million, up 43.7%, with a profit at the EBITDA level of $17.0 million, up 41.7% over the previous corresponding period.
Revenues grew strongly across all news and classified sites. Total traffic across all the Fairfax sites increased to over 6.2 million unique browsers per month, up 47.8% on the previous corresponding period. Fairfax Digital enjoys the leadership positions in online news (smh.com.au and theage.com.au), online dating (RSVP), and holiday rentals (Stayz), and strong positions in the employment, real estate and automotive classified categories. Fairfax Digital continues to invest in improving its competitive position in key markets, such as with the recent acquisition of Essential Baby and the launch of property site in.domain.com.au in Adelaide.
Fairfax released a good set of numbers yesterday thanks, in main, due to the excellent growth in its digital business.
As a newsagent I am tempted to blog from a negative perspective about Fairfax moving its revenue base from print to online and bemoan what this means for my business. The reality is that Fairfax is doing what every other major print media player globally is doing but with more success than most. They are advanced in monetising their traditional print brands through online offerings and they are bringing in new eyeballs and revenue through acquisition. The Trade Me acquisition from just a year ago, for example, has delivered A$20 million of the earnings.
Newsagents need to follow the Fairfax lead and find new sources of eyeballs and revenue to replace print products. Some are doing this, most are not. Newsagents need to be wary of investing capital in traditional areas of their businesses such as newspapers and magazines.
While sales will be key for years to come, they are not as strategies as they once were. The key investments will related to gaining greater efficiency from these decaying products. This is the big challenge for newsagents just as it is for Fairfax – they will drive production and distribution costs for newspapers and newsagents will bear some cost from that action. Home delivery margins must fall is Fairfax is to protect earnings from newspapers. Rural Press has been successful at this and Brian McCarthy’s role in the soon to merge Fairfax / Rural Press operation could see him bring Rural Press strategies to Fairfax. If this happens newsagents can expect to experience pain.
I have blogged here before about areas newsagents could consider developing in an effort to broaden the appeal of their businesses. The challenge is to alter the mindset of most newsagents. Having operated in highly regulated businesses and under the direction of powerful suppliers, newsagents are not used to being entrepreneurial. This must change.
For my part, my newsagency is benefiting from changes we have made over the last two years: creation of a card shop within a shop and to the front of our retail space; selling the home delivery run; entry into the art supplies space; expansion of our stationery offering; bold entry into the ink and toner space; and, better proactive management of our lottery offerings. The results achieved through these initiatives are excellent. Traffic is up and basket depth has improved.
We obsess about customer efficiency. Two years ago 77% of our customers used to purchase a newspaper and nothing else. Today, that number is 57%. While I say newspapers are challenged in the long term, our short to medium term goal is to ensure that newspapers customer are more efficient for us. We’ve implemented simple strategies to make this happen.
This is part of an invoice sent to a Coles store over a year ago listing the recharge products purchased and the commissions paid. It shows that they earn twice the commission newsagents earn. I know from nearby newsagents that they are likely to do considerably more recharge business than Coles.
Optus is preparing to reduce its commissions to newsagents again. My understanding is that commission on recharge will drop to 5%. I suspect that Coles will be on 12% or more for the same product. Plus, they have the benefit of the cash received for up to 30 days as they pay monthly. Newsagents pay daily.
Companies such as Optus have an obligation to be fair in their dealings with small businesses. To cut newsagent commission while paying Coles three and more times as much would be morally unconscionable. I hope that Optus considers this as it navigates its planned commission cut.
Following good advice from VANA I have modified the lottery petition to more accurately reflect the value proposition from newsagents and other small business outlets. The modified counter top petition can be download here. For the online petition please click here.
Please, let people know about this petition and get them supporting newsagents and small business.
Blokes will be happy to see the cover of Alpha is back to its very successful roots with the latest issue. Even though last month’s curvey issue sold well, there were enough comments to suggest guys prefer a sports magazine which looks like a sports magazine.