Online Advertising in the US up 26% this year
According to a report at news.com.
Newsagents v. Vodafone
Individual newsagents continue to protest the decision by Vodafone to but their commission on mobile phone recharge product by 37.5% from 8% to 5%. Once newsagents found out yesterday that Australia Post Licenced Post Offices are reportedly being cut from 8% to 7% more came out and discussed the measures they are taking in their businesses.
Most newsagents I have spoken with are protesting for a fixed period of time and explaining to customers that they are doing it to send a message to Vodafone about their unilateral decision to cut the revenue newsagents earn. They are using it as an opportunity to pitch the small business story. David v. Goliath (Vodafone and Australia Post).
I expect this campaign will continue for several weeks more. Newsagents want Vodafone to agree to the same commission as has been reportedly agreed with Australia Post.
Why classified advertising in newspapers will become extinct
Visit ononemap and you will see another site cleverly using Google mapping technology to navigate real estate advertisements. They take advertisement content from other websites and aggregate it with a cool mapping front end. brilliant.
Crikey publisher says newspapers are “on the skids”
In yesterday’s edition of Crikey, a daily emailed publication of news and comment, Publisher Eric Beecher commented about newspapers in the context of the appointment of a new editor for the Sydney Morning Herald, a newspaper Beecher once himself edited. Here’s what Beecher had to say:
17. Editing the SMH is about cost cutting, not creative journalism
By Crikey publisher Eric Beecher
The Sydney Morning Herald has a new editor – Alan Oakley, currently editor of The Sunday Age. “I am privileged to take on the best job in Australian journalism,” he said yesterday. “It is a challenging time for newspapers. I will concentrate my efforts to ensure that we are continually meeting the evolving needs of readers.”
Oakley, who is a popular choice, may feel he is taking up the best job in Australian journalism (it certainly felt like that when I had it in the late 1980s), but I suspect it won’t be much fun.
Newspapers like the Herald that depend solely on classified advertising for their profits are on the skids. Fewer people buy them or respect them, and their classified ads are migrating inextricably to the internet because it’s a better, cheaper medium for that kind of advertising.
Unfortunately, this consigns their editors to saying one thing (“I will concentrate my efforts to ensure that we are continually meeting the evolving needs of readers”) but doing another – cutting costs and eliminating jobs. These days, editors of papers like the Herald are more like executioners than editors.
Quality newspapers are a sunset industry desperately trying to prop up their historically high profits by cutting costs. Over the past week in the US, for example, six of the country’s more prestigious newspapers – including The New York Times, Boston Globe, Philadelphia Inquirer and San Jose Mercury News – have sliced hundreds of editorial and non-editorial jobs. And no-one believes this culling was anything other than business as usual for big newspapers.
Fairfax CEO Fred Hilmer said yesterday that Oakley’s appointment means the Herald “is in excellent hands for the future.” Unfortunately, that can only mean that Alan Oakley knows how to wield the knife.
I agree with Beecher’s comments about the viability of newspapers relying on classified advertising. Okay it won’t happen today or tomorrow. It will happen though. The economics of online classifieds make it inevitable. Newspapers cannot compete with the flexible search, production costs and mobility offerings of online advertising. Playing games with giveaways and competitions to drive sales will not fix that. Nor will offering free advertisements. Nor will free newspapers. Newspapers have a bright future if they focus on content.
I worry for the traditional newspaper supply chain in Australia. Newsagents are not prepared for the effects of the changes even though we are in the middle of them already with considerable supply changes impacting our businesses.
I disagree with Beecher’s comments about the viability of quality newspapers. Respected content (news, analysis and opinion) delivered exclusively in a print form will deliver sales of sufficient value to attract certain advertisers. Okay it’s more of a hope than a belief. People like Tim Porter and Jeff Jarvis and others have suggested how it may be achieved.
There is no doubt that this is a time of enormous disruption for newspapers. Denial only makes the road harder to navigate.
Australian Women’s Weekly sales strong following revamp
I’ve been looking at sales for The Australian Women’s Weekly for the last month. This is the first month of the revamped magazine. Sales are healthy for the stores I have seen. While sales in the first seven days were not as strong, sales over the next three weeks to yesterday (when the title came off sale) were above average.
Since the sample size is small, broad conclusions cannot be drawn. However, the result from my part of town seems to be good.
Free products on magazine covers drive retailers nuts
Walk through the magazine aisles of any newsagency in Australia today and you’ll find magazines with shopping bags, chocolate bars, aprons, chocolate bullets, pens, pencils, tampons and more chocolate attached.
While free product samples are a great way to draw attention to a magazine and offer added value to the purchase, it makes retailing the product challenging. Usually it’s easy to navigate. However, right now it’s peaking. We have more free product attached to magazine covers than I can recall in the last 10 years.
Donna Hay offers a tote bag; recipes+ offers raspberry bullets; Good Taste offers Lindt chocolate; Fresh Living offers a free Lovatts Crossword book (which we sold last month!!!); Vogue Girl offers Maybelline mascara. This is but a small selection of the giveaways.
What I’d do differently to allow the product to be merchandised well and out of respect for other product occupying adjacent shelf space is put giveaway product behind the counter. I appreciate that some retailers would be frustrated with this – however, the outcome will be better in store. As it is at present, this stock burdened with giveaway product on the cover gets battered quickly and this turns consumers off.
Government owned Australia Post trumps small business newsagents on Vodafone commission
The government owned Australia Post has negotiated a phone recharge commission with Vodafone of 7% on behalf of its Licenced Post Office (LPO) retail network. I assume the commission is the same for government owned post office outlets.
Independent newsagents have been told by Vodafone that their new commission will be 5%.
There are more newsagents than LPOs. The difference is that the newsagent network is made up of 4,600 independent stores whereas the LPO network, while privately owned, has the government owner Australia Post as the Master Franchisor.
This is another example of government ownership being used to the benefit of Australia Post and to the detriment of independent businesses like newsagents.
The government has no business owning and operatuing a retail network.
Generation Why and newspapers
Wise and Young is a blog worth reading if you want to understand younger consumers. Take this blog entry about newspapers and how to make them more appealing to young people. Here are the key points Levi Brooks makes in this entry:
1) Get your articles, content, etc. in to the hands of the youth (be it real world or online) – Why not have more news stands on campuses? Why not offer free newspapers on Sundays to college students? Get your product in to their hands, even if it means giving it away for free, and get them hooked.
2) Brand your newspaper as being smart and fresh – The youth are attracted to fresh and up to date material. Newspapers do provide fresh content, but the feelings evoked when purchasing a newspaper is stale and old-world.
3) Keep their attention – I’m not saying newspapers should turn to yellow journalism or mock magazines, but do something that would keep the youth’s attention span. Providing more youth friendly content and progressive articles that challenge the norm are a place to start (which the AP is trying to do with this new service).
4) Tie in with Online Services – MySpace and Facebook provide journalists a prime delivery method to the youth. Murdoch owns MySpace and I have no doubt he’s going to merge his news empire to the online space, but he better give the users complete control over what content they see. Facebook is a great place for newspapers to deliver content to the college group.
Wise and Young is also the name of the a communications agency Levi and his partner run in the United States.
Newsagents v. Vodafone; small business protests arrogant decision by major telco
Newsagents continue to vent their anger at the decision by Vodafone to cut their commission by 37.5% to 5%. The Vodafone decision is making many newsagents reconsider their position in terms of selling Vodafone product.
I have reviewed shopping basket data for over 30 newsagencies covering sales from June 1 through September 24. In all the data covered represents close to 2 million shopping baskets. On average in a suburban newsagency, phone recharge product is sold alone 77% of the time. In rural/regional newsagencies that figure falls to 65%.
This data tells us that phone recharge is not efficient in drawing consumer traffic which purchases other product. While this may be a commentary about newsagencies, it may equally be a commentary about the mindset of recharge customers.
It is important that newsagents understand the broader value of recharge sales. With 77% of sales being single item sales – that is a recharge purchase and nothing else – we need these sales to be time efficient, and business efficient (i.e. cash flow beneficial and little or no error). We need to measure the economic benefit on the sale of the recharge itself.
A $30.00 recharge generates $1.50 in commission (based on 5%). Allowing for credit card charges (data suggests 50% are purchased with credit), the $1.50 falls to $1.20. At 1 minute sale time $1.20 is okay. Anything longer than 1 minute and I’m losing money. This does not factor in the cost of the infrastructure, counter real estate and display real estate necessary to support sales.
These are point to make to Vodafone. The economic viability. While I can understand the drop in commission from 11% to 8%, this fall to 5% in the face of record profits is a tipping point. It pushes newsagents to the edge. It makes selling Vodafone recharge product of doubtful value in an average newsagency. Sure there is the traffic argument. I suggest there is reasonable data now to suggest that this is a phurphy. Recharge traffic is busy work and not all that profitable for us.
This is an arrogant decision by Vodafone against their small business partners, one they need to reconsider.
One of our store syndicates won $11 million Powerball last week
We run store syndicates for Tattslotto, Powerball and Oz Lotto games every week at our retail outlet – newsXpress Forest Hill. One of our Syndicates won $11 million Thursday night last week. Our customers are thrilled. They’re buying more tickets as a result. Some of the winners though seem less happy. “About time” was a comment from one of the winners – someone taking home over $1 million as their share. Those who didn’t win were much happier than this person. Ah, human nature. The biggest joy for us was the customer who won $5,000 in the same lottery draw. They deserved it and needed it and their face beamed happiness and thanks. It was great for our people in the store to take a moment and soak up some of this happiness.
Newsagents stopped from passing on high petrol prices to consumers.
Newsagent/Publisher contracts are stopping newsagents from passing on the high cost of petrol. These contracts restrict the control newsagents have in passing on reasonable operational cost increases. This means that newsagents have to carry the higher fuel costs and in some cases it is making the home delivery of newspapers unprofitable.
While News and Fairfax can increase advertising rates to cover higher operating costs, newsagents rely on publishers to adjust the cover price and to allow a fuel surcharge to be applied or delivery fees to increase.
This is an untenable situation as it leaves these independent and often cash strapped small businesses carrying an unfair burden while their much bigger suppliers benefit.
What newsagents want is an urgent and open discussion about fuel and agreement on reasonable trigger points for delivery fee adjustment reflecting the high price of fuel.
News sells newspapers
It’s the day after the AFL Grand Final in Melbourne and newspaper sales in my part of the world are proof that content sells. No deals, no competitions, no giveaways. Just good coverage of yesterday’s Grand Final in the way only a newspaper can cover such an event. There should be more days like this with newspapers getting back to the business of being newspapers.
Cricket live on your mobile phone
Just caught up with this Sydney Morning Herald report about the possibility of cricket streaming live on 3 mobile devices. As the headline says: It’s all happening on your mobile phone.
Phone recharge purchases inefficient for retailers, pressure remains on Vodafone to justify 37.5% cut in commission
Following the Vodafone announcement of a 37.5% cut in commission paid to recharge retailers (to 5%), I have been looking into the retail efficiency of phone card retail. While my sample size is small at present – 5 newsagencies – it seems that phone recharge is purchased alone 75% of the time. That is, in only 25% of cases did the customer purchase something else.
While one could argue that this result is a commentary on the effectiveness of the retailer in creating an environment which drives up sell, it also says something about the convenience factor in the recharge space. Consumers run low, they buy recharge wherever they can get it. This is why telcos have recharge retailers on every corner.
One argument put by at least one telco supporting a reduction in commissions paid to retailers is the traffic they draw to the store. My survey of five stores and their sales data over the last six months demonstrates that consumers are unlikely to purchase anything else.
All this adds consideration to the Vodafone decision and will focus newsagent attention on the dramatic cut by Vodafone for some time to come.
Can Sudoku save newspapers?
editorsweblog.org carries a story about Sudoku and reports that’s now being used in 140 newspapers globally. They link to a story on CNN Money which poses the question: Can the popular Japanese number puzzle save newspapers or is it just a passing fad? Based on our Australian experience over the last six months I’d say it’s not a fad. Sudoku continues to grow without impacting crossword sales. The key is to engage newspaper publishers, magazine publishers and retailers in marketing strategies which add more people to the Sudoku craze.
Podcasting grows and grows
Podcasting is growing. Mainstream media, independent media and amateurs are rushing the new channel. Here are some interesting recent podcast announcements/developments:
CBS podcasting segments of 60 minutes. Source: MarketingVOX
PBS is podcasting its American Experience series – the most watched history series. Source: PBS
Grooves magazine podcasts. Source: Grooves.
The brilliant Paul Harris, host of film buffs forecast on 3RRR-FM podcasts. Source: RRR-FM.
While there is an excellent selection in independently products podcasts coming from Australia it is surprising that there is nothing yet from Australian newspapers. In some respects this suits those in the newspaper supply chain. However, podcasting extends the reach and relevance of the brand.
Newsagents take protest action against Vodafone over commission cuts
Australian newsagents are getting louder in their criticism of Vodafone and their decision to cut retailer commissions from 8% to 5%. Many are taking removing signage and sending Vodafone customers elsewhere. While the value of such militant action in a commercial situation could be questioned, it demonstrates the hopelessness these newsagents feel for unilateral and hurtful decisions like the one taken this week by the executives at Vodafone.
I wonder if anyone is taking notice?
AFL Grand Final day in Melbourne and The Age promotes its newspaper with a classical music CD giveaway – how the world of newspapers has changed
It’s AFL Grand Final Saturday in Melbourne. Our one day of the year in this sports mad city. Everyone embraces the Grand Final – including those who ignore the game all year.
Newspaper sales are always high on Grand Final day. It’s part of the hype: what the experts say, the cartoons, the pre game scandals.
That’s why it is so odd that The Age is giving away a free CD with their newspaper today. It’s odd to have such a marketing push on Grand Final day. Odder even that the promotion has nothing to do with the newspaper as such.
I’m all for marketing newspapers. I just wish that the marketing related to the product and that as a newspaper retailer I could connect with it in some relevant way which could lead to sustainable sales growth.
It’s Grand Final day in Melbourne and The Age should be focused 100% on that in its marketing efforts today. It’s a newspaper, not a brand.
The future of newspapers is in the product and not gimmicks designed to sell the product
Bob Cauthorn has posted an excellent blog entry at Corante about newspapers and why sales are falling.
It is the product. Bob is right. His comments fit with my earlier entries here about the ridiculous number of product giveaways and competitions being run by News and Fairfax to sell their products. For every sale you win with a CD, a DVD or drink coasters you confuse a consumer about the value proposition of the newspaper.
Consumers are losing sight of why they are buying newspapers.
The masthead must stand for something beyond competitions and free product. Spike increases are not sustainable and while they may help with an audit they do not fix the newspaper malaise.
As a newspaper retailer I want product I can respect, product which consumers seek out because of content. That type of consumer will be more valuable in long term business and basket depth.
Newspapers don’t have to lose a race with online media. The two are different, serving different needs and even different consumers.
Free newspapers
From editorsweblog.org: free newspaper circulation up 33% in Europe in first nine months of this year. Comment: in most countries, free newspapers do not use the existing newspaper supply chain.
Newsagents react to Vodafone decision to cut commission income
Some newsagents have removed Vodafone signage from their stores in protest at the Vodafone decision to cut commission by 37.5%. Others are talking of refusing to offer Vodafone recharge. This channel of indepedent small business operators is reacting because the Vodafone decision is another in a long line of decisions by big suppliers cutting into margins.
Vodafone cuts newsagent sales commission by 37.5% and hurts small business
Newsagents are reeling after Vodafone announce a 37.5% cut in sales commission.
Around 2,600 newsagents have invested heavily in technology, delivered valuable in store real-estate and increased sales significantly. The reward for all this effort? The 37.5% cut in commission.
Under the new pricing newsagents receive 5% for Vodafone recharge sales.
Vodafone says that newsagents will make more because of growing sales an that the higher commission is competitively unsustainable.
Newsagents have high operational costs: around 11% of turnover goes in wages; rent – between 6% and 12% (depending on location); theft – between 3% and 5%; overhead – 5%.
While Vodafone recharge brings traffic to newsagencies, most customers want the recharge and nothing else.
To lose 37.5% of revenue having just invested in equipment and real-estate is a body blow to small business newsagents and something Vodafone could have managed better.
Online retailing to double by 2010 says Forrester Research
news.com has story of a Forrester Research report finding that U.S. online retail sales will grown from US$172b in 2005 to US$329b in 2010.
Newsagents are losing ground. As a channel we have no online strategy. This means we’re not preparing for the move of news, information and entertainment products (newspapers and magazines) online. Nor are we competing for online stationery, lottery or greeting card sales. We ought to be leading the charge online on some of our product categories.
Girlfriend magazine leads the charge on consumer engagement
Girlfriend is a successful newsstand magazine in Australia. It’s website is even more successful. They are at the forefront of Internet use – readers get to have a say in the making of the magazine including article suggestions and choosing the front cover. At their u make the mag section of the website their constituents can connect with the staff of the magazine in a way which I’d suggest no other media outlet in Australia matches today. Girlfriend is an excellent model. My only criticism is that the office blog entries are too well written and too sanitised to be genuine blog entries.
Other publishers in Australia should be following the Girlfriend lead and connect with their constituents in an open ended online conversation.
Films on mobile phones or mobifilms as they are called – there’s a festival coming up!
The Discovery Channel is running a film festival for films made on mobile devices. They’re looking for 5 images or a 30 second video with no more than 300 words content.