Inserts: Hanging on in the digital age
Spending rebounded after a brief decline early in the recession
February 4, 2016
By the editors of Media Life
This article is part of a Media Life series “Reinventing the American Newspaper.” Click here to read other stories in the series.
Inserts – the circulars that come in newspapers, such as the big coupon books on Sundays – are the media equivalent of mean girls.
A lot of media people have complaints about them. Yet they remain popular.
What are the complaints? They’re expensive and they don’t deliver a big enough return on investment.
A study by Omnicom last year found inserts have the second-lowest ROI for any major media, about half that of radio and television.
But they’re important to newspapers, which is why the pricing remains high and papers push them so hard. They account for up to half of local newspapers’ profits, with the decline of other advertising, classifieds and circulation.
Ad spending on inserts was down 9 percent during the first nine months of 2015. Prior to that, save a brief drop eight years ago, it’s been down slightly or stable.
In 2014, spending fell 2.8 percent, but it was up 3.4 percent in 2013.
“Back in 2008 we were seeing a slow decline of FSIs [free standing inserts], then the economy tanked and FSIs popped,” Kitrell says, because people were suddenly interested in coupons and saving money.
“That will probably keep them relevant for several years to come.”
Though digital has gained in many areas over print, inserts have maintained surprising relevance. Research from Nielsen Scarborough says 37 percent of adults over age 18 read the circulars in newspapers.
And Market Track, a market intelligence firm, says three-quarters of shoppers peruse circulars for deals during the critical back-to-school shopping period.
So while they’re costly, they remain in the media mix.
“One of the things that’s unique about FSIs is they reach 70 million people on a given Sunday, and those people often engage with them when writing shopping lists,” Kitrell says.
Still, there are indications that in the future, FSIs’ popularity could decline because of the potential threat from digital and their high cost. There are clear alternatives to FSIs, including direct mail, mobile coupons and websites devoted entirely to delivering coupons.
The number of pages of inserts declined 8.1 percent last year, to 186 billion, according to Marx data. The number of coupons on those pages was up very slightly, by 0.2 percent, which Marx attributes to more efficient use of space on pages.
The number of non-food coupons rose 3.3 percent in 2015, and the number of coupons redeemed in that category has increased the past four years.
However, while health care and packaged goods have bumped up their insert activity, major retailers have cut back on their pages, such as Walmart and Target.
Walmart reduced pages by a third, while Target was down by a quarter. Alas for those advertisers looking to reduce costs, there’s not much to be done about the expense of inserts.
“There are handling and redemption costs. And there’s also security cost. You’re actually printing money–the distributors spend a lot of time making sure the right number of vehicles go to the right number of newspapers,” Kitrell says.
“Since it is essentially printing money, there are financial controls in place, which adds to the cost of the medium as well.”
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