A blog on issues affecting Australia's newsagents, media and small business generally. More ...

Month: January 2006

The slow pain of calendar sales

As I have noted here before, calendar sales in Australia are stuffed. It is next to impossible to sell them at full price thanks to early discounting by selected groups. The result of their early deep discounting means that many stores are left with stock – like mine. We still have 40% of our 2006 calendar sock. We’d discounted by 75% and the stock is slowly moving. Customers are smart tough, they hover over the stock and mutter to each other that it will be another 50% off next week. They’re right of course because who wants their stock with 2006 calendar stock in February. Every other seasonal item has gone great guns this year -cards, back to school, diaries. Calendars are the only bad story. I’d say this is because calendars is the one category where there is absolutely no difference in range – so the majors make price the difference and ruin the category for everyone.

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Online employement ads to overtake newspapers

Industry research specialists Borrell Associates has published a report predicting that in the US online employment advertising will pass newspaper employment advertising by the end of 2007. In 2005 online employment ad spending in the US was $3.5 million a compared to $1.3 million in 2004.

Today, Australia’s own seek.com.au has 103,013 jobs advertised online. PBL has been smart in purchasing a share of this business. While News Ltd has careerone and Fairfax has mycareer, neither enjoys the success of Seek. Seek has been the sole advertising medium for my companies since 2001.

It’s usually at this point in a post that I’d note that newsagents need to act now in response to this move online. The reality is that they are waiting for someone else to act and deliver online relevance to their businesses.

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New Idea price rise notice delay

Newsagents didn’t receive their electronic invoices for Gordon and Gotch supplied magazines on time for today and this meant their computer systems didn’t receive advice of a price rise for New idea. While the loss of revenue won’t be that much, it’s frustrating that poor lines of communication by the distributor (Gotch) let them down.

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Newsagency challenges

The Economist on old media and the future

The Economist has excellent coverage on old media and the challenges of today. In the same issue is this piece on News Corporation and this excellent piece on newspaper giveaways. I’ve commented here before about giveaways. Consumers focus on giveaways and not the newspaper and the sooner advertisers realise the con of this game to boost audit figures the better. Giveaways to support a price change are fine with me, it’s the sustained and seemingly irrelevant campaigns at audit time which cause retailers pain and result in skewed figures.

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Newspapers

Double digit fall in auto ads reported by Tribune newspapers.

From a report published by Wall Street Journal:

Auto ads, a major source of newspaper-classified advertising, have been slipping steadily for nearly two years. But the slippage may be turning into a landslide.

Last week, Tribune Co. said auto-classified revenue at its newspapers plunged 16% in December. Also last week, Lee Enterprises Inc., publisher of papers such as the St. Louis Post-Dispatch, reported a 15.2% drop in auto advertising for the fourth quarter. On Wednesday, McClatchy Co. reported a 20% decline for December, saying the downturn in car ads had finally reached its West Coast papers, the biggest of which is the Sacramento Bee, in the heart of California’s car culture.

We’re seeing a similar fall here in the buying and selling category – titles focusing on classifieds like Trading Post. I don’t have data for auto classified revenue in Australian newspapers. Anecdotally I’d say it’s down. This is why Saturday sales are challenged as it was usually a strong auto and general classifieds day.

Later in the WSJ article:

Dealers are finding Web ads generate strong responses. “Eight out of 10 customers that walk into our dealership have already looked at our Web site,” says Wes Lutz, who owns Extreme Dodge/Hyundai in Jackson, Mich. Demand from the Internet is so keen that three years ago he designated a new position at his dealership: Internet manager. That person’s job is to reply to all Internet inquiries within an hour.

Mr. Lutz still advertises with the local paper, but not nearly as much as he did 10 years ago. “They’re just really antiquated,” he says. “They’re just stuck in time.”

I was talking to a local car dealer on Friday and his comment was that newspaper advertising is now more about the brand whereas just a few years ago it was about the brand and specific stock opportunities. They have moved their stock opportunities online because online ads are searchable and, he says, because “that’s where they buyers are”.

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TV soap podcasts

No better evidence of turning the supply chain on its ear is the news that As The World Turns, the US CBS network soap, which turns 50 this year, has commenced podcasting the audio of each episode. The details are at the CBS website.

Just over a year ago we didn’t know what podcasting was. Suggesting that CBS, or any other network, would do this with any of its shows would have been met with ‘not in my lifetime’ type comments. Podcasting is now a viable channel and a revenue generator for content publishers in TV, radio and print. My, how the world has changed in such a short time. And the pace of change will increase.

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Time Inc in online push

David Burkett, the new head of Time is Australia is quoted in the latest issue of advertising trade journal B&T (page 4) talking about their online push this year. he mentions Bride to Be and Practical Parenting as the first titles which will benefit from their heightened online focus.

This is a logical and even overdue move by Time Inc. Newsagents, who rely on magazines for traffic and sales, need their own online strategy so that if/when Time and others achieve more traffic from online than retail they/we are less affected. Such strategies need to include an online presence, broadening of in store product / service offerings and better customer service to reinforce why the over the counter retailer experience is better than online.

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Why I love Oprah or Kerry Packer or both

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Women’s Weekly sales this month already are on fire in my newsagency and several others I have checked with. Comparing the first two days of the on sale period this month with any of the last twelve months are sales are more than double. We’re promoting the magazine the same way , traffic in my centre has not grown much – so the growth must be due to interest in the product. Even after I allow for our annual growth of 26% Women’s Weekly is still up 100%. It’d got to be either Oprah on the front cover or the Kerry Packer story and photo tribute. I’m noticing more sales from our impulse sales points than usual. Women’s Weekly is usually more of a habit purchase. This month is different.

Newsagents, when they see a sales kick like this in the first two days of a 30 day on sale period can respond. Supermarkets and petrol/convenience outlets rarely respond. This is why newsagents make better retail partners for publishers.

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Washington Post transparency about online comments

Excellent coverage at Washingtonpost.com of a blogger’s roundtable on Wednesday this week involving some of the most respected media related bloggers. The round table came about because of disrespectful reader comments posted at post.blog. The Washington Post is to be applauded for its transparency. The transcript provides an excellent insight into the challenges of blogs and comments. Well worth reading.

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Penthouse goes digital

The South Florida Business Journal has the story. The print edition remains but I wonder how long for. The adult sector is soft in Australia thanks to better quality images online plus excellent searching facilities. The Penthouse move is not unexpected and more evidence of online impacting magazines.

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Magazine cash flow in newsagencies

I am neck deep in magazine related data from six newsagencies. Remember, Australian newsagencies pride themselves on magazine range as their key point of difference. Whereas other retailers who offer magazines carry up to 100 titles, newsagencies carry over 1,000 titles and often more. This cash flow data shows that the range is killing them. Titles which are profitable can be cash flow negative. Take Cosmos for example, this is a new title released last year. Not one newsagency I have looked at shows the title as cash flow positive. Indeed, Cosmos is cash flow negative in one newsagency to the tune of $500.00 over three months. Cosmos is one over 1,000 titles in this newsagency which is cash flow negative.

Another magazine worth looking at is Australian Woodsmith. Wood bloke love it. It sells well. It’s not cash flow positive in one newsagency. This title costs more than it earns. Should we stop carrying it? Maybe. If we do stop does that make us a me too magazine retailer? Maybe. It depends on how we make the transition.

At the distributor level, in one major suburban newsagency, they are $16,000 cash flow negative over the course of a year from just one magazine distribution company.

Our analysis is taking into account paying for stock, banking sales, paying for real estate used for magazines and paying for labour used for magazines. If anything it shows a conservative result with reality being worse.

Magazine distribution is at crisis point for newsagents and urgent action is necessary on the model if newsagents are to survive in the range game. While newsagents complain about the little money they make on magazines, few actually measure the cash flow implications.

Our new research will provide hard evidence and this will cause significant debate when released next month.

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Newspaper says online is a decade away from catching newspapers

ONLINE advertising, despite phenomenal growth over the past three years, is at least a decade away from catching up to newspapers, and a further five years from generating the revenues of commercial television.

This is the opening paragraph from a story in The Age (Melbourne, Australia Jan. 21) by Christian Catalano. The story quotes a report by Foad Fadaghi of the industry consultancy Frost & Sullivan .

I guess data can tell any story you require of it.

My concern with this report is that the industry is using it to say, hey, we’re okay, we’re okay. I guess if you repeat the mantra often enough you don’t need to plan for change.

If the report is accurate and balanced then why is News Corp. rushing online, why is Fairfax looking at more online purchases, why has PBL invested strategically in online. Newsagents, the people at the end of the newspaper food chain need to look at what the publishers are doing rather than what they are printing in their paper.

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Newspapers

10 Things Editors Should Do To Grow

Ken Sand’s post, 10 Things Editors Should Do In 2006, (Journal Sentinel, Milwaukee), is an excellent post for Editors and equally excellent for newsagents and other retailers who rely on newspapers for half their foot traffic. We’ve been insulated in Australia from the waves of change which have hit US and European newspapers. I, reluctantly, forecast that insulation will fade in 2006 as new technology offerings impact newspapers and sales are flatter than forecast.

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Newspapers

Star remains a weak magazine launch

I am beginning to doubt the seriousness of the folks behind the recently launched Star magazine. It’s as if the title is marking time until they come up with a better concept. Newsagents receive little in the way of point of sale material, certainly nothing to enable the product to be merchandised beyond being put on the shelf.

Compared to other 2005 launches – Real Living, Notebook and Explode – to name three – Star is flying under the radar.

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Trading Post upgrade – not good enough

Trading Post has beefed up its online offering with BUY NOW features. It’s still frustrating that you have to register before you can actually do anything. This is a huge turn off. Trading Post needs to decide if it’s an online or over the counter offering. Once it works that out the road forward will be clearer for their business and for consumers.

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Newspaper tries TV classifieds

An interesting move by the San Francisco Chronicle as reported by the Editors Weblog. The newspaper The paper will launch a 30 minute television program, ‘Chronicle Jobs TV’, to run Monday to Wednesday at 5:30 PM. While only time will tell if TV/newspaper classifieds work, I’d suggest that they are doomed. This is like trying to force a square peg into a round hole. It’s also a step sideways. The world is looking for classifieds online in a searchable form so we can look local or look at what specifically interests us. A TV program provides none of this. Sure it might be interesting but innovative it is not. Newspapers need to take bold steps to protect their classified revenue.

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“Papers are so clunky and big”

A good article in the New York Times about Gen Y and how to reach them. Here’s the heart of the problem as covered in the article:

In addition to thumbing his nose at notions of “prime time” by downloading his favorite shows (without commercials), Mr. Hanson almost never buys newspapers or magazines, getting nearly all of his information from the Internet, or from his network of electronic contacts.

“Papers are so clunky and big,” he says. If those words are alarming to old media, they are only the beginning of a larger puzzle for today’s marketers: how to make digital technology their ally as they try to understand and reach an emerging generation.

I could also say that retail stores are old and clunky to this generation. We’re out of date. While the baby boomers may enjoy physical world shopping, Gen Y browse online through formal and informal markets. If retailers want to have a future they need to move their businesses online. We’re experimenting with part of our retail newsagency businesses online. We now transact more online in a month in the selected category than we did through the retail store over the previous two years. What’s odd is that only very few sales are to what I would call traditional newsagency customers.

Newsagents need to re-think their businesses and re-invent their offering so they connect with Gen Y as they become a more valuable piece of the economy.

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Newsagency challenges

Newspaper publishers, change and double standards

Newspaper publishers are responding to the challenges of online competitors and mobile demands of consumers by purchasing competitors and even non competitors playing in the space. Each time this happens it increases the barrier to entry for others. While the publishers are doing this, they, in Australia at least, are forcing their retail and distribution partners, newsagents, to further increase retail outlets – even if they compete directly with newsagent outlets. This to me seems like double standards.

On the one hand publishers want more control over their own business while at the same time diluting the control newsagents have over theirs. Newsagents, unable to effectively collectively bargain, have little ability to resist the demands of newspaper publishers as to where newspapers are sold.

This channel of specialist news and information retailers become less relevant with every new outlet newspapers are put into. In years to come this will be a case study in business schools and the behavior of some newspaper publishers will be under scrutiny.

This issue is on my mind today as newsagents are being told to supply Gloria Jeans coffee outlets. No discussion, just a requirement. No matter whether you have another outlet selling newspapers next door or even if your newsagency is next door. There may be some exceptions but I have not heard of any yet.

I can see the logic of newspapers in Gloria Jeans outlets. However, how many business do you know of where the owver is forced by a supplier to compete with themselves, to dilute their point of difference?

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Newsagency challenges

eBay and the market for used magazines

Following this post I have spent more time looking into magazine product available at eBay Australia. I am surprised at the number of current issue and immediate past issue magazines for sale. The current issue product has to be of questionable sourcing (stolen?) because I cannot fathom how else it could be so heavily discounted.

The immediately past issue stock must be concerning for magazine publishers (it’s concerning to me) because this would impact sales – especially in, say, the craft or any other area where having the latest issue is not always important. Looking at the titles available, I’d suspect that people buy a current issue, copy what they want (for a craft or cooking magazine) and then sell the original on eBay and get back, say, 60% to 80% of their purchase price.

From what I can see, enough of this stock moves for people to keep loading eBay with magazine product. But then maybe there is no accounting for what people buy. (Maybe I could sell past draw date lottery tickets and attach a note as to the dream I had for the winnings if I had won. eBay sells wackier stuff than that!)
I guess there is no law against it. However, the structure of the eBay marketplace and the speed with which recent stock gets on eBay suggests that some rules may be being bent.

My retail business relies on magazines for around 30% of its revenue. That eBay is so strongly in this space and I didn’t know it is embarrassing to me.

I’d like to see some media attention to what’s selling on eBay and it’s impact on legitimate businesses like mine.

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Newsagency challenges

Strong January for newspapers

January data, for the month so far, in my newsagency is showing year on year sales growth for daily newspapers (The Age, Herald Sun, The Australian, Australian Financial Review) of 16%. During the same period I am seeing the Trading Post down 15%. The conclusion I draw from that is that, yes, print classifieds are dying rapidly whereas print news, in my part of the world, is strong. The strong sales are due, in part, to people not traveling this holiday period.

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Newspapers

Mary Mary starts the year

The holidays are over and magazines are back in business. This week’s New Idea and Woamn’s Day have Princess Mary covers again. There is no doubt she is the new Diana. My sense is that Mary on both covers will push sales of both products – more so than single copy sales. That is people who would usually buy one of the titles will buy the two. More Mary covers please!

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Sony Reader

Go here and you can see images and specifications for the Sony Reader referred to in my last post. It’s a sexy looking device … one which Sony hopes will take off for books like the iPod did for music.

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Media disruption