A shrinking pie: the newspaper marketing campaign ripping off newsagents
There is a newspaper promotion running in one state at the moment offering seven day home delivery for $1.00 a week for twenty weeks. I am told that this campaign is successfully switching customers from long standing direct with the newsagent relationship to a direct with the publisher relationship.
The customer saves around $7.00 a week and is very happy.
The newspaper publisher has a ‘new’ direct customer and is very happy even though they are now subsidising the customer to the tune of around $6.00 a week.
The newsagent delivers the same paper to the same house for around $1.00 a week less and is very unhappy.
The benefit for the publisher is that they now “own” the customer. This helps with print run planning and selling advertising space.
The newsagent has to accept the loss and provide a service as good as before and deal with a new master. Now, they will get a call from the publisher if there is any mistake with the delivery with such a call usually involving more stress than those made direct by customers.
Imagine how a newsagent of many years standing feels when one of their long term customers makes the switch saying that the publisher representative told them that nothing will change. A more truthful representative would have told the customer that the newsagent was going to lose close to 33% of their gross profit.
I appreciate the value of direct customer relationships to publishers. However, it is wrong that they cannibalise the long standing relationships newsagents have with home delivery customers. It is wrong that they offer promotions which effectively cut the gross profit newsagents make by 33%
The home delivery of newspapers is a premium service. In real terms, newsagents make at least 25% less today than they made four years ago. Publishers and customers cannot expect the quality of the service to remain the same if payments to newsagents continue to fall. A better alternative would be to price home delivery as the premium service it is. This makes more available for improving the service and surely this is a better outcome for all.
This current promotion ought to stop. If a publisher wants to do a deal then they need to carry the cost of the deal. To rip 33% of newsagent’s gross profit out of an existing relationship a grossly unfair treatment of a defenceless small business.
Pacific Magazine launched 
Having turned its back on newsagents by doing an exclusive deal with ACP magazines and Woolworths to sell its popular Pink Ribbon magazine this year, the 
Newsagents continue to be swamped by overseas crossword publications. We have an excellent range published in Australia and don’t need the 30, 40 or 50 titles of US and UK junk each month. These titles are expensive and represent a considerable drain on newsagent cash. Also, since many are small, they’re easy to steal. It is hard for newsagents to support local titles with these poorer performing titles demanding space. Newsagents seem to have little luck in cutting these overseas titles. Would consumer satisfaction be diminished if newsagents did not carry these titles? I suspect not.
With Holly Valance on the cover, a free stubby holder and a free beer offer Ralph this month has everything going for it. ACP Magazines have given us some of the best point of sale material I have seen. I like these types of promotions because they given us a chance to show what we can do compared to a supermarket or 7-Eleven promoting the same title.
This week will be an interesting test for the pulling power of the Terri Irwin story. Crass as that sounds it is fact of life. As you can see New Idea has Terri on the cover. I’d expect Woman’s Day to do the same. The story has evolved and it will be interesting to see if it has the same sales success because, after all, that’s what it comes down to. Based on the week ending today I’d say the story does have legs. Our New Idea sales are up 33%. Woman’s Day I can’t tell as we were not successful in getting extra stock. Based on results earlier in the week I’d say if we had the stock we’d be up at least 20%. Women’s Weekly, also with a Steve Irwin cover, is selling very well – 25% ahead of this point in its usual monthly cycle.
Melbourne Living sells for $6.95. My cut is $1.73 for each copy I sell. I received 17 copies this week and require four pockets to display this stock at a cost of $12.00 per month. I have to pay for the 17 copies in four weeks. I am supposed to carry the title until February when I return unsold stock with a credit due to be given on my March 2007 statement.
We thought we were special with the offer of a deal from the UBD street directory people (Telstra). Seems we’re not that special – Big W and Australia Post have the UBD street directories as well.
This is the new brochure from Australia Post and what a brochure it is. Hang on, am I mistaken? This looks like a newsagency brochure. Street directories, copy paper, calendars, ink, toner, files, folders, batteries, calculators, fax rolls, shredders. Gee my head tells me these are newsagency lines. Where are the stamps? Where are the other postal related products? Oh, that’s right, the Government owned Post Shops (the 865 Government stores) have the right to do things which are “incidental†to providing postal services. Silly me.