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

Month: July 2006

Cosmos magazine increases online focus

Cosmos magazine has beefed up its online presence with the addition of daily news updates to its website among other things. Frequent readers here will recall my criticism of Cosmos launching in an already challenged category and expecting newsagents to effectively fund their launch for at least the first six months. In most stores I see sell data from, Cosmos is a loss making proposition. If this is the experience nationally maybe the long term strategy is to move entirely online. Regardless, the experience of the last year, the first year for the magazine, is that newsagents need to be treated more equitably by publishers of a new title. They need fairer trading terms and a rebate compensating for brand building from which the publisher will reap rewards quite possible after they have turned their back on newsagents.

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The great divide in magazine sales data

Looking at magazine sales data for the last twelve weeks to July 15 for my newsagency compared to the same period last year, the gulf between successful categories and failig categories has widened compared to my last look three months ago. Here is unit sales growth or decline by major category:

Buying and Selling – down 19%
Computers – down 34%
Motoring – down 16%
Music – down 14%
Women’s Weeklies – up 26%
Women’s Interests – up 22%

Most others were up or down less than 10%.

These are extraordinary numbers. The falls are greater than I saw in the first three months of this year. Look at the Women’s titles. These are the titles where we compete with five other outlets in my centre yet we are achieving five and six times the industry average growth. That this extraordinary growth is not reflected in the other categories has me stumped. Our offering is excellent, the titles well displayed and our pitch is backed by a valuable loyalty (discount) program.

I wonder if this data reflects the end of the newsagent magazine range as we know it in Australia or is my store an aberration. I see enough data from other newsagencies to suggest this is not the case. The gap between successful categories and the others is a shock and everyone involved in the newsagent channel ought to take note.

Every newsagency is a reflection of the community it serves and while I would expect some variation in category performance, there is no doubt some magazine categories are in rapid steep decline.

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Newsagency challenges

Why do something when you can complain?

I have met with hundreds of newsagents in a trip around the country over the last three weeks and the most common topic raised is magazine oversupply. Newsagents complain loud and long, saying they are being ripped off because of too much underperforming stock. When I respond with practical suggestions on how to cut dead titles based on sales data from their shop many complain that they have nothing to put in the floor space they would save. Some even say that oversupplied magazines save them having to make a decision on new lines. That shocked me. While they don’t like the cash drain, they are happy to NOT have to make business decisions about the use of the reclaimed space. Sometimes I don’t understand newsagents.

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Newsagency challenges

In store TV

There are now three companies promoting in store TV and advertising solutions to newsagents. You have to wonder whether consumers will take notice in an already visually busy retail environment like a newsagency. Given the growth of online advertising it is surprising to see online in store TV advertising be of interest. The Age carried a story about in store TV on the weekend.

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Newsagency challenges

News Ltd revamps eastern seaboard websites

News Ltd has replaced websites for three of its newspapers: Herald Sun; Daily Telegraph; Courier Mail. The new common design is modeled on the Perth Now site which launched three weeks ago – curiously in Perth where News does not have a daily newspaper. News Ltd websites for The Adelaide Advertiser and Hobart Mercury remain unchanged. Even though the roll out has not been national, this eastern seaboard launch demonstrates the national control of News over its online strategy compared to the more traditional News state managed approach. The new design is clean and easy to naviagte. I particularly like the opportunity to comment on the new design at their blog.

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Newspapers

Social media beats news sites in reporting the turkey slap

No matter where you turned over the last two weeks, all commercial media outlets were reporting and commenting on the now infamous “turkey slap” incident on the Big Brother tv game show. People who really wanted to know what happened went to YouTube and watched the footage unedited.

While I care little for the contestants in the Big Brother house, I do care about manipulation of the truth by the producers of the game show and the gullibility of mainstream media when it comes to reporting what allegedly goes on inside the game show house. Prior to watching the YouTube footage I had read the newspaper stories, watched the TV news reports and heard the shock jocks shrill across the airwaves. YouTube provided context for the event. In a few minutes I was able to see the truth for myself. I was able to understand the con played on media outlets by the game show producers and the Network Ten. I am astounded that Network Ten and mainstream media outlets were so reckless with the truth and the reputations of two young men.

I wouldn’t have known this had it not been for YouTube. There was a time I relied on TV news and newspapers for the truth.

A big challenge for mainstream media in this age of massive disruption is how to compete with social media sites like YouTube and the people who load content on them. In the case of the Big Brother turkey slap, how does mainstream media compete with the truth? The approach of the last two weeks, conspiring to repeat spin put out by one of their own – will alienate consumers. Trust in mainstream media product will erode. Younger consumers are smarter – why do you think they are embracing social media? There, stories can speak for themselves.

In the case of the Big Brother turkey slap, the truth is less interesting than producer spin. To compete with the truth of social media, journalists and editors will need to realise that their laziness and bias will more easily and quickly outed.

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Media disruption

The Age runs bid2buy auction again

bid2buy.gifThe Age today starts its second bid2buy online auction promotion. The first was in November last year. These auctions use technology developed by CityXpress, a provider of event auctions, marketplaces and online classified solutions for newspaper publishers. It’s a good promotion in that it offers consumers, through the newspaper, an opportunity to access product at a discount, or perceived discount at least. I don’t see much long-term value in this type of promotion for the newspaper. Smart consumers will realise that using a newspaper to promote an online auction adds to the cost. Further, it potentially turns offline consumers online and runs the risk of diluting the value of future newspaper advertising by the companies supporting bid2buy. While bid2buy creates a buzz for the newspaper I cannot see it doing much more. Id like to see is Fairfax would run bid2buy if (when) they bring TradeMe to Australia.

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Newspapers

Enough with the guides already!

winguide.JPGMemo to magazine distributors: enough with the computer and digital photography guides already! We are drowning in such junk from here, the US and the UK. Too many titles. Too much cash being sucked out of newsagencies. It’s nuts. The magazine distribution system to newsagents makes it too easy to distribute junk and small business newsagents suffer the consequences.

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Newsagency challenges

Women’s Weekly redemption

magcard-blog.JPGWe have been running a magazine loyalty program in my newsagency since August 2004 resulting in same store sales growth of more than four times the national average. Australian Women’s Weekly is the single most redeemed magazine. That is, it is the title most customers choose as their free magazine. Last month, 10% of our AWW sales were copies redeemed as a result of our loyalty program. I am curious as to what it says about the title. I have talked to two customers this week who chose AWW for their free magazine. One said it was her treat, she was proud that her husband’s magazine purchases led to the treat. The other was pretty blunt “I wouldn’t buy it bit if it’s free…”. She went on to say she loves the magazines but that she didn’t have as much time as she used to.

My feeling, from across the counter, is that the considerable activity at the weekly end of the women’s magazine space (new titles, reinvigorated titles, more promotion) has pulled focus from the monthlies. The weeklies of today are deep inside what was the playing field of the monthlies. The monthlies, if they are to achieve growth, need to play in a redefined space.

Australian Women’s Weekly is a beacon title built around quality production and content. Maybe putting it in supermarkets and other mass locations distracts from that quality. Maybe some of the cover choices do not resonate – Oprah for example. Last month in my store we sold out in just over a week because of the Beaconsfield mine related coverage. I suspect that more of this type of coverage would boost sales. If I were in an editorial meeting I’d be saying – think Australian Story. I’d connect those stories with a TV Show and leverage the PBL cross promotion opportunity. No one is doing that today in the human interest area. Better Homes and Gardens does it in the DIY/garden/homemaker space brilliantly. There is a sales kick every Saturday.

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The PBL real estate classified play

Crikey reported earlier this week that PBL’s SEEK is preparing to launch into the real estate classified space. In part, their report says:

Seek had revenues of just $47.3 million in the December half, but managed a net profit of $27.1 million and is now capitalised at $1.5 billion.

This result demonstrates how removed the pricing for online classifieds is from the real cost. Companies like SEEK are purchasing bandwidth for a fraction of what they charge the advertiser.

Fairfax, News, Telstra and PBL control online classifieds in Australia and do not seem to compete on price as one could expect.

Disclosure: I am involved in Find It which is set to launch in the online classified space later this year.

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Media disruption

The changing face of local search

A good post from Greg Stirling of SearchEngineWatch (courtesy of Brad Robertson, VP Advertising for the Des Moines Register), referencing recent research and views on local search. It’s best summed up in this quote.

I tend to believe that what one might call an “integrated local marketplace” is what consumers ultimately want — the convenience and efficiency of getting their local needs met in one place. If I’m right this gives the search engines/portals an advantage “on paper” because of their more comprehensive content. But, to date, they’ve failed to fully leverage that opportunity in their local offerings, although they are improving under the intensifying pressure of competition.

I agree. Australia has plenty of vertical local search offerings. News Ltd’s True Local is the most interesting recent entrant but it’s overpopulation with brief listings ‘acquired’ from elsewhere without knowledge of the those listed makes the search results of dubious value. Searchers want honest results. That is, not results listing rich businesses which pay for more attention.

The Internet is a democratic place of equals and businesses paying to get in the way of good search results will soon frustrate consumers.

Smart local search will be about less but more accurate and more valuable content. Size (of one’s database) does not matter.

It’s good to see a newspaperman publishing this material for comment.

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Media disruption

Here, take my cash

Someone deep inside a magazine distribution company decided that my shop in Forest Hill Victoria would sell the Queensland Tertiary Guide for next year and so they sent us four last week. We are supposed to hold the stock until May. I make $3.28 off each copy if they sell. The space the title takes costs me $3.50 a month in rent. I can’t make money off this title and sales history shows that it should never have been sent to me in the first place. So, I decided to return the stock and for that right I have to pay the freight.

This is a perfect example of how newsagents are being ripped off. Our competitors (Coles, Woolworths, petrol outlets, convenience stores) don’t have to put up with this. They get the magazines they order. Newsagents get everything. The magazine supply model sucks our cash and makes us uncompetitive.

This is the supply model the Howard Government brought in when they deregulated the marketplace to make it fairer.

If newsagents were farmers or miners they would have been compensated for the damage done.

I’ve returned the QTAC 2007 guide and will wait a couple of months for the credit to hit my account and smash my fist against the wall one more time.

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Newsagency challenges

Women drive mobile game revenue

This Yahoo Finance report quotes research by analyst Telephia indicating that four of the top five revenue-generating titles fall into the Puzzle/Strategy category and that 65% of mobile game revenue is driven by female wireless subscribers. I wonder what the numbers for Australia. I also wonder how this data plays out as an indicator for moving crossword and puzzle magazine consumers to online product. Crossword product sales are very strong in Australia and newsagents dominate the category. Any move online would hurt.

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Media disruption

Wired magazine profiles Rupert Murdoch

Wired magazine has fascinating profile of Rupert Murdoch in the July 2006 edition. The article opens with this quote from Murdoch which gives context to News Corp’s current mission online:

“To find something comparable, you have to go back 500 years to the printing press, the birth of mass media – which, incidentally, is what really destroyed the old world of kings and aristocracies. Technology is shifting power away from the editors, the publishers, the establishment, the media elite. Now it’s the people who are taking control.”

Deeper in the article Murdoch provides the business case for their online investment:

“Everything we’ve ever done is about giving people choices,” he says. “The Net has a billion people looking for news, sports, and entertainment. Another billion are on mobile phones, and another couple of billion are coming up behind those. That’s a hell of a lot more people making choices.”

But these quotes don’t do the long article justice. There are opinions on all manner of things including newspapers – which, by the way, are discussed as online entities. No comment on print product. Read the article at Wired for yourself. My take away was the extent of Murdoch’s commitment to social media. It’s as if he sees social media as bigger than news in pulling viewers/readers/traffic. I’d like to hear from others in his organisation on this.

The article ends with this quote:

CONTENT VS. DISTRIBUTION
Distribution was nearly king – you couldn’t get a cable channel going in this country without John Malone. But when real broadband arrives, owning distribution will be less and less important.

Fascinating.

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Media disruption

ZOO Weekly drops cover price to $1.95 this week

zoo.jpgEmap’s ZOO Weekly has dropped its cover price again and sells at $1.95 this week. Newsagents need help supporting the title. I’d like the publisher to provide point of sale materials to enable display of ZOO next to newspapers. Many newspaper fixtures do not facilitate this – hence the suggestion that the publisher provide a stand to encourage the add sale with a newspaper purchase. Without such a unit, ZOO is placed with men’s titles and that’s a long way from newspapers. I see ZOO as an Alpha type purchase and Alpha comes close to selling out when promoted next to the newspapers.

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Woolworths, coffee and, maybe, newspapers at BWS?

Further to this post yesterday about Woolworths selling espresso coffee from their BWS bottle shop outlets, several people contacted me and advised they have seen the early morning coffee offer at other BWS outlets in the morning, suggesting that it is something the company is playing with. If they make it work, it creates a new newspaper and magazine market and further disrupts newsagent visits by consumers.

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Newsagency challenges

Early supply of 2007 calendars sucks cash out of newsagencies

NDD, one of the three magazine distributors supplying magazines to newsagents, has scaled out calendars to the newsagent network. While the calendars have a commission of 35% (usual newsagent commission on magazines is 25%), they have a shelf life of six months. My prediction is that unless different terms are negotiated, such as delayed payment until December 2006, these calendars will be cash-flow negative for newsagents for their entire shelf life. While I do not have the NDD national scale out data, I’d suggest that even a modest scale out to newsagents will suck out in the vicinity of $500,000 from newsagent bank accounts. My store received 10 copies of V8 Utes and Beautes and 29 copies of a Melbourne calendar. Such product without the support of other calendar stock will not sell. We will be returning the stock and not paying the NDD account.

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Newsagency challenges

Is Fairfax about to enter they directory business?

True Local (News Ltd) and Yellow Pages (Telstra via Sensis) are the two major online business directories in Australia at present. My Local (PBL) is on the track but not achieving much traction due to lack of promotion. truelocal.pngAs this Alexa generated graph of daily reach from the last three months shows Yellow Pages is way ahead but True Local is gaining traction thanks to its extensive outdoor campaign. Fairfax is the only major online advertising player not currently in the space but that could change if the rumor put to me is true. I’m told that Fairfax Digital is close to announcing entry into the now competitive directory space. I wonder if their entry will make for competition on price though. Take a look at the True Local and Yellow Pages advertising fees and you soon get an understanding of the size of the game being played and that there is not significant price competition. While each site offers basic free listings, it is the featured listings and options like photos which bring in the millions in revenue. Charges of between $1,000 and $6,000 for featured display are not uncommon.

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Media disruption

What did June 30 cost newsagents

If data from a sample group of newsagents is reflected across the channel, newsagents were supplied with close to $4 million worth of dubious value magazine stock last Friday (June 30). That is, stock outside the usual range for these stores. In my own store I have been hit with more than $3,000 in stock which will, for the most part, fail. While newsagents can return unsold magazines, the cash is out of their businesses for up to eight weeks, imposing a cash drain many cannot afford. This gross oversupply stock newsagents being able to effectively manage and display the growth titles.

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Newsagency challenges

What’s hot and what’s not in newsagencies

I’ve just completed two weeks of meetings with newsagents across the country and along the way checked in on some trends. Here’s a brief summary based on around 500 opinions:

– Crossword magazine sales are hot, especially the Lovatts brand. Many are tracking sales growth of 10% to 20%.
– Women’s Weeklies like New Idea, Woman’s Day, Take 5 and That’s Life are very strong. Thanks to Nicole, Bec and Simone.
– Beading magazines are overtaking the craft section.
– Cross stitch and quilting titles are suffering.
– Health, fitness and diet magazines are hot.
– Cars, motorbike, science and pet titles are soft.
– Travel magazines are dying.
– Music magazines are dying.
– Teen magazines are flat if not dying.
– Special interest titles are flat.
– Adult titles are dead.
– Newspaper sales are strong.
– Lottery sales are flat.
– Trade in newsagencies overall – okay, nothing stunning

The suppliers receiving the kudos remain the major players – ACP Magazines, Pacific Magazines, News and Fairfax. Despite newsagent complaints about some issues, overall they are happy that these suppliers support the channel with promotions and specials.

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Newsagency challenges

Another online classifieds site

Buyswapsell.com.au has launched a consumer campaign with billboards popping up – certaily around Melbourne. They offer free and low cost online classifieds. From their site:

Line ads are free and stay on line until the item is sold.

Photo Ads cost $4.95 and stay on line for up to 6 months unless sold earlier and as an Introductory Offer
you can have 5 additional Ads FREE.

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Media disruption

Restructuring newspaper distribution in Australia

Further to my post on June 5 about restructuring newspaper distribution and whether I should sell my home delivery business and concentrate on retail, I have reached a decision. It will be sold, publishers willing. (Newsagents need permission from publishers to sell.) This will remove the conflict for time and capital between the distribution and retail sides of the business. Ever since the government forced deregulation of 1999 it was inevitable that newsagents would have to choose to specialise in one area of the other.

Deregulation has meant that my newsagency has many more competitors. While I agree with this, the deregulation driven by the government and overseen by the ACCC has left newsagents disadvantaged. We have less control over our costs than our competitors and this is killing the traditional newsagency.

The inability to recover the real costs associated with newspaper home delivery in a limited size delivery area made the decision clear. Every year in the ten years I have owned my newsagency the return from the home delivery side has fallen. Without any ability to control the prices I charge or the discounts offered for home delivery, the situation is not going to improve. Each special offer from publishers cuts the margin make if it turns a retail customer to a delivery customer.

The increasing price in fuel and the refusal by publishes for us to be ‘allowed’ to pass this on is also a key factor in this decision.

Some newsagents will say I am giving up by selling my run. On the contrary, this decision acknowledges where my skills and the skills of the team at by business at Forest Hill in Victoria lie. It frees us to leverage those skills to a much better return. It also enables another newsagent, more skilled and scaled for distribution, to take our small area and add value to their business.

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Newsagency challenges

Report on US online real estate advertising

US internet advertising research and consulting firm Borrell and Associates has released a new report into online real estate advertising. Here are some interesting highlights from the executive summary:

For years we’ve heard how most brokers and agents despise their local newspapers. They’ve repeated their mantra ad nauseum: The only reason they buy newspaper listings is to appease the seller, not to sell homes. Newspaper ads don’t sell homes, agents and the Internet do. Yet, agents and brokers continued to plow money into newspaper advertising.

Toward the end of 2005, the nearly rotten started looking truly rotten. As home sales slowed down and the inventory of unsold homes grew, the Internet became the most-used method of selling a home – beating out even the old-faithful yard sign. The $11 billion spent on total real estate advertising stagnated, growing less than four percent over the past four years, while the available advertising inventory – the number of existing homes for sale on the market – rose 41 percent in the last 12 months. That metric alone is enough to stop a real estate advertising executive dead in his or her tracks.

While the Australian real-estate and advertising marketplaces are very different to the US, three real-estate agents I am close to tell me that, in their businesses, more than 85% of their leads come from online. In fact, one recommends an online only strategy to vendors.

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