New Pew Internet & American Life Project report
The Pew Internet & American Life Project has just released a new report. Fascinating US based data on who is online and who is not by age, race and online access speed.
Newsagents, Coles Myer, Woolworths and the importance of image
Coles Myer and Woolworths control retail in Australia. This means they control suppliers and landlords. Their power is far reaching, way beyond what I imagine I am sure. It reaches from their shelves through the checkout out past their petrol pumps down the freeways and past factories, past the wharfs where they bring so much of what they sell in and down to the farms where they dictate what is grown and at what price.
The public faces of each of these companies does not reflect their long and powerful tentacles. The public faces are TV and print commercials of happy people working and shopping in their businesses. The carefully crafted advertising front humanises Coles Myer and Woolworths and while often the in store experience does not match the advertised image, we’re drawn back – such is the power of the image in the advertisements.
While there have been some minor skirmishes which scrape the images of these giants, they remain well thought of by consumers. This is despite their all powerful and profit motivated control over so much of our economy. Their respective benign public images have allowed them to extend their reach without challenge. Their move into petrol and convenience over the last two years is a good example. They now dominate in a category where they had no footprint just a few years ago. They have leveraged their P&C offering to create a smoke and mirrors loyalty scheme which bounces consumers between supermarkets and petrol outlets as if they are the silver ball caught on a pinball machine between two bumpers.
Newsagents have seen their businesses eroded by the power of these two retail giants. Whereas fifteen or so years ago they did not carry newspapers, magazines, stationery and greeting cards, today these two stores are very strong in these core newsagent categories. Newsagents have allowed the supermarkets to get away with it. They have been scared by their might.
This week newsagents are watching supermarkets do it to them again. We have discovered that a supermarket chain has leveraged 16% commission for product which newsagents receive just 5% commission for. Initial research indicates that newsagents sell more than supermarkets. Yet their commission is barely one third.
At some point someone in government is going to wonder when Coles Myer and Woolworths amassed this power and who let it happen. They will realise the damage to communities across the country. They will realise the jobs lost. They will lament the loss of small business stumblings, entrepreneurship and creativity which trained so many. They will wonder why their constituency has given up.
Newsagents can compete with Coles Myer and Woolworths by respecting and rewarding employees; engaging them in building the business; ensuring that the business has a bright and knowledgeable face for customers; that the product range is good; that prices are fair; that the business actively engages with the local community; that customer service is more than a policy – that’s it’s action every day. We need to out humanise these retail giants and provide a connect with consumers such that they feel the difference shopping in our businesses.
This is how we beat the giants. With small personal steps. Every day. While they can buy better and spend more promoting their businesses they cannot provide better service than an owner standing at the counter ensuring the best customer experience possible every time.
This is what newsagents need to be working on.
In the meantime we should also be educating our politicians and our customers about the social and economic risks of these and other retail giants having more control than they have today.
Fairfax launches podcasts
Fairfax have started podcasting. There are twice daily reports from Alan Kohler and This is a first for an Australian newspaper. The first podcast is a 2 to 3 minute podcast from Alan Kohler and a Garry Barker led conversation looking back at business stories from the week.
This is a great step forward. Now what I’d really like is a video version which I could play in store near the newspaper to boost sales. I could play the podcasts but it does not give me the retail theatre I want. Some publishers are using podcasting to connect with a new audience. I’d like it developed by my publisher suppliers with the retail network in mind as well.
More on the greed and power of supermarkets compared to small business competitors
Newsagents were told to get together so we could compete with the big guys. We now have 3,000 in a network offering bill payment and telco recharge product. Our nearest network competitor is Australia Post. Here’s how the value of unity has played out in terms of telco recharge commissions:
This table shows telco recharge commissions negotiated by one supermarket chain compared to newsagents. Even though newsagents represent 3,000 stores and offer easier to access and better quality customer service, this means little to the telcos.
While I accept that a supermarket chain will always negotiate a better deal than a network of newsagents, the difference is offensive. It tells me how the telcos view newsagents and demonstrates their preparedness to use newsagents to pay for the bloated commissions to the gorilla supermarket.
Newsagents have every right to be offended at the commissions being paid to this supermarket chain and to be questioning the future value of recharge in their business. At 5% commission newsagents are not even on a minimum wage payment whereas the supermarkets are in a nicely profitable zone. The rich get richer and while one can remind oneself that this is the way of a free market system, Vodafone and the supermarket chain have an obligation to be socially responsible. A 16% commission for them compared to a 5% commission for newsagents for the same product is greedy.
Vodafone and their telco colleagues are providing an excellent incentive for supermarkets to grow business and a disincentive for newsagents. yet if you read the pitches they send to newsagents they urge effort to grow the business. I respectfully suggest that the best encouragement to grow the business for newsagents would be a fair commission structure, one which can be compared with what this supermarket chain is paid without causing embarrassment.
The executives at this supermarket chain and at the telcos ought to be embarrassed for this exposure of their co-operation to harm small businesses, their employees and their customers.
Live TV on your mobile phone – now.
3 mobile yesterday introduced their mobile TV offering. Initial programs include: Forget The Rules – an interactive show where viewers vote on the ending; live Sky Racing; live CNN; ABC Kids, Cartoon Network and the live 9 network coverage of the Johnnie Walker Super Series. The pitch at their website is watch what you want when you want. As a first cut at TV on mobile phones we’re bound to be excited by this innovation. What I am most interested in what is next along this road. The mobile phone is a different channel to TV and cannot be compared to TV. It’s a channel I’d expect to see newspaper and magazines publishers play in. It’s also a channel newsagents need to somehow connect with if we’re to maintain relevance in the news and information sector.
Print needs and iPod moment
David Carr has written an excellent piece for the New York Times in which he says print newspapers need “an iPod moment,” a disruptive technology that revitalizes the industry it initially seemed destined to destroy.
Vodafone commission: Supermarkets – 16%, newsagents – 5%
I have received a copy of an invoice showing that a major supermarket chain receives 16% commission on Vodafone recharge business. Newsagents have just been cut to 5% from 8%. Australia Post licenced outlets have just been cut from 8% to 7%.
While supermarkets offer starter kits to attract new customers I doubt this warrants a 16% commission. If I offer these kits in my newsagency I can get 8% commission. Supermarkets (based on the invoice I have) get double that and I doubt they do great starter kit business.
This invoice tells me how much Vodafone values the 3,000 newsagents who offer convenient recharge for their customers; how much they respect the capital investment newsagents have made so they can offer efficient recharge service. Vodafone prefers supermarkets and Post Offices over newsagents. Vodafone prefers big business over small business. Or, maybe Vodafone was just out negotiated by the supermarket chain.
Vodafone has judged the newsagency channel, those who work in it and those who shop there by their actions. 5% commission is less than minimum wage. It is offensive compared the 16% paid to this supermarket.
On this invoice I can see that the supermarket did around 60 Vodafone recharges. There are newsagents who would do this volume of business.
The other difference seems to be payment terms. Newsagents pay their recharge aggregator daily. This supermarket seems to pay weekly if not monthly. This provides them with cash on which they can earn interest.
None of this is good corporate citizenship by Vodafone. It increases the divide between big business and small business. It demonstrates lack of respect for the small business channel. It puts at risk jobs in the small business channel.
Vodafone is a guest in our country. They have an obligation to be socially responsible. The only way they can redeem the situation is to urgently review their newsagent commission position.
Brian Evans leaves Fairfax for PMP
PMP Limited announced to the ASX yesterday that Brian is to join the company as CEO. Evans’ appointment to PMP will be welcomed by some newsagents who are keen for stronger competition in the magazine distribution sector.
Young people, blogging and the future of newspapers
A Guardian/ICM poll shows that a a third of 14 to 21 year-olds have their own online content (blogs etc) Source: Guardian.
Quality home delivery of newspapers: is the next step a flat doorstep delivery?
I learnt early in business that you compete from in front and you do this by making sure that your product offering is better in the minds of your customers than any other. Newspaper publishers and their partner newsagents have an opportunity to make a significant move on this as they work through the issue of how and when to introduce flat wrap home delivery of newspapers.
There are at least five trials of flat wrap home delivery going on at present. One is being driven by News Corp. in Adelaide and the rest are being driven by newspapers. Despite the name, none is delivering a truly flat product. Each is delivered with one fold and while that is a big step forward from the tightly rolled newspaper, it is not flat.
Newsagents have an opportunity to take a giant leap forward by going truly flat and delivering to the front doorstep. My sense is that enough customers would like this service to justify a premium price. The bag used to carry the newspaper could also carry other items. Newsagents working together could leverage the doorstop delivery as a new marketing channel for companies wanting to get brochures, sample products and other items onto doorsteps first thing in the morning.
I know from my own discussions last year that newspaper publishers have the view that they own the bag. That is, that newsagents could not put anything else with their product in the bag, not even another newspaper. This is nuts as it denies newsagents an opportunity to be business like.
Newspaper publishers ought to consider allowing true flat wrap in return for removing the restriction of what can be in the bag with the newspaper and what advertising can be printed on the bag. They ought to also consider removing restrictions on what can be charged for such a premium service since the costs will vary from area to area. This is what deregulation ought to have been about – creating mechanisms for entrepreneurial effort.
Some newsagents will label my suggestion stupid. Maybe it is. However, with newspapers under so much threat from online and with home delivery under threat from an ever increasing number of retail outlets, one way newsagents can get a bigger piece of the pie is by reinventing their offering and providing a premium service such as that which I propose.
In addition to the current flat wrap trials I’d like to see a trial of true flat wrap with the newspaper in a bag and delivered to the door. For newspapers to compete with online they need to reinvent themselves not only in terms of content but also in terms of the customer experience. Hence my push for a true flat wrap product.
As a consumer I refuse to have my newspaper home delivered. I like a pristine newspaper as the publisher intended it.
The current flat wrap trial, while a welcome initiative, is not pursuing the ideal home delivery experience and therefore does not explore the opportunity for providing a compelling point of difference for home delivery of newspapers versus news online.
Here’s the website for the News Corp. flat wrap trial: wraptrial.news.com.au
FOOTNOTE: Newsagents were forced in the 1990s in purchase and use rolled wrap machines. These machines have struggled to cope with the increasing thickness of newspapers – especially thre Saturday and Sunday offerings. Many newsagents would be carerying equipment on their books with a value of around $5,000. The (folded) flat wrap machines range in price from $5,000 to $25,000. Newsagents would need some guarantees on publisher commitment, on bag advertising, in bag insertions and weight to make the move worthwhile.
The future of newspapers
It’s interesting reading stories in newspapers about their future. In the last few months there has been exponential growth in coverage on convergence and disruption affecting mainstream media and, in particular, newspapers. This piece by Michael Sainsbury and John Lehmann in The Australian on the weekend is a good example. Six months ago such a piece in a newspaper was rare. Today it is common. What has changed is that newspaper proprietors are now seriously engaged in building their online offerings. This can be tracked back to Rupert Murdoch’s speech in April to the American Society of Newspaper Editors.
Driving sales in newsagencies, opportunities for publishers
News Corp and Fairfax both want newsagents in replace current newspaper display units with a new $3,500 unit. While the new unit will lift the standard in some stores, in others it will change something which is not broken. Instead of asking newsagents to spend $3,500 I’d recommend they ask newsagents to spend $200 on a small TV/DVD to be placed directly above the newspaper stand. We’ve done this with the Symply Too Good cookbooks and the sales results are wonderful.
The TV/DVD cost us $198 and Annette Sym has kindly provided a looping DVD promoting her books. From day one sales are up.
I appreciate that newspapers getting news related content to thousands of newsagencies could be problematic. Instead, I’d suggest a series of DVDs featuring columnists, the writers unique to the newspaper. Each ‘film’ could run for, say, 3 minutes. Give browsers a flavor of the columnist, their interests and have them talk about a relevant topic they write about. This builds a connect between columnist, newspaper and consumer. I am certain it would drive sales. It supports content only available in that newspaper and hopefully not available online. A new DVD every month with four or five items on it is all we would need. The investment would be small and the incremental sales worth it.
Publishers need to invest in a quality retail distribution channel if they want to drive sales. This pursuit of convenience purchases may generate a small kick in sales but the gain is not worth the cost of disrespect it shows to the existing specialists.
Our small experiment with the $168 TV/DVD player and the Annette Sym cookbooks shows that at least a trial is warranted.
“Advertising is becoming like a tsunami”
“Advertising is becoming digital, personal and controllable,” said Peter Sealey, the former chief marketing officer of Coca-Cola Co. and now CEO of Los Altos Group Inc. “These three trends are like a tsunami sweeping away our historical model.â€
From AdAge.com reporting prior to the Association of National Advertisers annual conference commencing this weekend.
Yesterday I posted this from John Battelle:
Battelle: Search has created a new attachment point for marketing. Marketers are used to the idea of attaching their messaging to content. For example, if you want to speak to women age 34 to 54, you need to buy your media and attach it to, say, “Oprah.” This is how magazines work, this is how television and radio work, this is how most Web sites work.
Search has created something that I call “intent attached marketing.” You’re not buying content attachment, you’re buying attachment to the intent as declared by a consumer. So if I’m interested in a Chrysler minivan, I go to Google and enter “Chrysler minivan. The sponsored link at the top of the search results page is Chrysler.com. And on the right-hand side are top Chrysler prices from CarPriceSecrets and CarMax, among other sites.
The point here is that I declare my intent into this engine, and the engine then organizes content for me. But the marketing is not attached to the content; the marketing is driven by the intent. It’s a shift in how marketing works. And it’s making publishers very nervous.
Kudos and a complaint for the Herald Sun
Kudos to the Herald Sun for their Phar Lap poster promotion today. Giving away a poster of this champion racehorse reinforces the newspaper’s connect at the start of the Spring Racing Carnival in Melbourne. Well Done. Customers loved it.
Brickbats to the people selling space at the Herald Sun website. They are promoting (above) Tattersalls online – a direct competitor to the in store Tattersalls business operated by newsagents. Newspaper publishers need newsagents to maintain and or grow sales. The fewer who visit newsagencies the fewer newspapers they will sell. So why promote an online business pulling people away from newsagencies? Nuts.
Women’s Weekly sales of 85 in two hours
Women’s Weekly, like any high volume magazine, experiences rapid sales decay from the date of launch. Today was the second weekend of the current issue and we would usually sell 2 or 3 copies. The problem was we had too much stock. Se we called in a spruiker, put a table at the front of the shop and offered a giveaway cookbook if they purchased Women’s Weekly. We sold 85 copies in 2 hours. The BONUS for us is that each customer joined our magazine club card promotion and started on their way to saving more off the cost of magazines in the future.
This is the type of sales building campaign which only a newsagent could do. The customers coming into our shop as a result of this promotion today browsed other magazines and our newspapers. Half purchased other product. Newsagencies are specialist retail outlets for newspapers and magazines and if suppliers more closely and purposefully nurtured them incremental sales could be achieved.
Is circulation for the Trading Post falling or is it just me?
While the sample size is small I’m tracking a year on year sales fall for the Trading Post of 15% across several newsagencies. This could be explained in part due to online competition, other competitor products and poor promotion for the product. Regardless, the retailers involved and Trading Post need to arrest the situation. If it is broader than these few newsagencies then Trading Post needs to act fast.
Search is the thing says John Battelle
An excellent interview at I Want Media with John Battelle, co-founding editor of Wired and founder of The Industry Standard, on traditional media, Google and Yahoo. This Q&A goes to the heart of Battelle’s message:
IWM: How is search technology impacting traditional media?
Battelle: Search has created a new attachment point for marketing. Marketers are used to the idea of attaching their messaging to content. For example, if you want to speak to women age 34 to 54, you need to buy your media and attach it to, say, “Oprah.” This is how magazines work, this is how television and radio work, this is how most Web sites work.
Search has created something that I call “intent attached marketing.” You’re not buying content attachment, you’re buying attachment to the intent as declared by a consumer. So if I’m interested in a Chrysler minivan, I go to Google and enter “Chrysler minivan. The sponsored link at the top of the search results page is Chrysler.com. And on the right-hand side are top Chrysler prices from CarPriceSecrets and CarMax, among other sites.
The point here is that I declare my intent into this engine, and the engine then organizes content for me. But the marketing is not attached to the content; the marketing is driven by the intent. It’s a shift in how marketing works. And it’s making publishers very nervous.
Hmmm…
Government owned Australia Post vs. small businesses
This is a peak inside the Australia Post shop opposite my newsagency. This shop is owned by the Federal Government. They compete more aggressively than others with us for stationery, greeting card, phone recharge, money transfer and calendar business. These government owned shops are taking business from independent small business newsagents through the monopoly they have on postal products and the fact that you have to walk through the store to get to the counter. The Federal Government is happy to sell off Telstra and remove their conflict but they refuse to even consider selling the Australia Post retail network. I wonder how much economic damage will have to be experiences by small businesses before the Government realises the damage their policy is doing.
Digital magazines: another company to watch
Texterity is another company to watch in the digital magazine space. Reader’s Digest is a client of theirs. Check out their August issue online. That Texterity has Reader’s Digest IDG, Time Warner and Conde Nast as clients puts them in serious contention in the digital magazine stakes. With so many magazines now offering online editions it’s only a matter of time before they also offer the purchase of stories online – maybe some days after the whole title is on the market.
The Age misses an opportunity to connect with the community
For years now The Age newspaper in Melbourne has run its Annual Short Story Competition. This year’s competition closes today. While it’s too late, I realised last night that this is a missed opportunity by The Age and their retail network of newsagents. Instead of giving away DVDs, CDs and drink coasters to drive sales, I reckon they would have been better off involving newsagents in the Short Story Awards and building the community connect at the heart of the awards. While harder work and of less broad appeal, an in-store promotional campaign built around the Awards says plenty about the newspaper and its community connect.
Is this the special interest magazine launch of the future?
Particletree has published (online) the first issue of Treehouse an online magazine about web development. Treehouse is a typical niche publication except that they are pursuing readers where they live – online. It makes sense for them. Low production costs. High quality on screen presentation. Excellent representation of advertisements. All leads to a low subscription cost. The high quality content as reflected in this first issue will drive sales.
Treehouse is showing how niche can be done efficiently and effectively online. It’s something we will see more of and I am sure the result will be more space on retailer shelves for higher volume product.
Decay strategy works – 33% sales kick for That’s Life
We’ve been tracking sales decay in our newsagency for several months and have refined an in store marketing campaign around day one for seven day titles. Yesterday was the first time we have used the strategy for That’s Life and the result was a 33% sales increase compared to the last 12 weeks. This is 33% growth on top of the 100% growth achieved year on year to the end of September. By understanding the sales decay and therefore the importance of day 1 of a seven day title we’re achieving very significant above average growth.
Harelequin offers romance novels electronically
To build its connect with a younger audience, Harlequin has struck a deal with Vocel to offer its romance novels and related tontent online and mobile. The eBook is alive and well. Source: CNW Group.
UK fight over magazine distribution continues
The Times reports the final salvos in the long running Office of Fair Trading review of UK magazine distribution arrangements.
Vodafone further frustrates newsagents
I received a call from a colleague yesterday saying that Vodafone was offering recharge at 10% off through the Woolworths stores if you purchase a one of their SIMs. While Vodafone are welcome to do whatever deal they want to attract new business, that they can offer 10% off recharge through a big business channel and nothing through a small business channel bothers me. Vodafone will say that the Woolworths stores are building the Vodafone customer base. Newsagents do as well through signage and adding to the Vodafone convenience factor – given our locations and the hours we are open. Vodafone recently announced a 37.5% cut in newsagent commissions for Vodafone recharge to 5% making it of doubtful economic value.