Newspapers
Why papers are still a good media buy
By Diego Vasquez
May 1, 2008 - 1:27:56 AM

The latest Audit Bureau of Circulations numbers were none too promising, with weekday circulation for more than 500 dailies down another 3.6 percent after several years of similar declines. All the while, fuel and newsprint prices are going up and newspapers are cutting jobs to offset a dip in ad revenue, all of which paints a rather bleak picture of the industry. But the raw numbers don’t tell the full story, and the full story is less worrisome. Some circulation drops are part of a calculated effort by large metro daily papers to reduce their circulation in outlying areas, where they are cutting coverage and letting subscriptions lapse. Too, the Do Not Call registry has hurt papers’ telemarketing efforts, making it that much harder to lure new subscribers. The real question may well be when we’ll start to see an end to this so-called junk circulation cutting. Rick Edmonds, media business analyst for the Poynter Institute, a non-profit school for journalists that also owns the St. Petersburg Times, talks to Media Life about managed reductions, justifying circ declines to advertisers, and what media people can learn from the circulation drops.

 
What's the most important thing media buyers and planners can take away from the new circ numbers?
 
Though the numbers are even worse than those for the previous six reporting periods, I am not sure that is earth-shaking news for media buyers. If an ad in a newspaper was effective yesterday, it should still be tomorrow.
 
One could argue for a rate reduction. On the other hand the cost of the newsprint that carries the message is up 10 percent this year, and with gasoline prices, it costs more to deliver the message to subscribers. So you would need to hammer out an equitable price with your sales rep.
 

How much of the declines can be attributed to newspapers cutting circ voluntary in outlying areas, like the Dallas Morning News began doing last year?
 
Where the losses are deepest, I suspect more than half is what McClatchy CEO Gary Pruitt recently called “managed” reductions.
 
It is not only outlying areas. Keeping up circulation by adding new subscribers as others lapse is expensive, particularly since the Do-Not-Call registry has increased the cost-per-new-sub threefold. All expenses are on the table now, and newspapers cannot afford some of what they used to do to keep up the numbers.

How much are the papers simply claiming to do that to save face?
 
It is mostly for real, as I said above.

I do wonder, as Deutsche Bank analyst Paul Ginocchio noted in a report [yesterday], when the papers are going to finish cleaning up junk circulation. We seem to be in the fourth year of that with no end in sight.

How do you explain circulation declines like this to advertisers?
 
By building a factual case for the continued effectiveness of print advertising. I think the NAA has done a decent job of demonstrating that print readers welcome the ads as informative and actionable.

I am not sure you can say both those things for local television or disruptive online display ads.
 

How will the poor economy affect the reaction to decreasing circulation numbers?
 
Certainly some advertising gets trimmed in a recession. However I am equally concerned that overstated “dying industry” doom and gloom will encourage advertisers to press their agencies more urgently to move budgets from old to new media--at a time while we are still in the early days of figuring what works well in the digital arena.
 

There were a handful of papers, including the Cincinnati Enquirer and Trenton Times, that saw circ gains. What are these newspapers doing that others are not?
 
I don’t make too much of that.

Cincinnati, for instance, picked up readers in the final three months of the period after its competitor folded. Organizations that are bucking the trend over time, like our sister organization, the St. Petersburg Times, continue steady investment in circulation marketing and follow population growth out to the exurbs. 
 

Did the circ numbers for any one paper in particular stand out as very good or very bad? Why?
 
I think it is noteworthy that the three national papers (Wall Street Journal, USA Today and New York Times) do so much better than the metros. The NYT was down this time with a price increase and some trimming of discounted Sunday distribution.

But over the last four years, all three have done well. It may be partly because they are not as exposed to classified ad losses and thus continue aggressive investments in circulation marketing.
 

Top Tribune papers took larger-than-average hits, with the L.A. Times, Chicago Tribune and soon-to-be-sold Newsday all off at least 4.4 percent. What does the company need to focus on in order to start turning around?
 
I’m waiting for Sam Zell and his merry band of radio guys to provide the answer. Having a mix of papers so weighted to big metros has been to Tribune’s disadvantage.

Also, except for the Chicago Tribune itself, I think the company was strategically adrift under previous management.