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

Month: December 2006

Employment ads moving online faster than expected

Borrell Associates has published a new report which predicts that online employment advertising in the US is expected to pass all other media, including newspapers, by year end. Editor and Publisher has more:

Advertisers are forecasted to spend $5.9 million in online help wanted ads compared with $5.4 billion in newspaper ads.

The 2007 outlook on online recruitment advertising report also found that online help wanted advertising is expected to grow to $10 billion by 2011.

The news isn’t totally bleak for newspapers: “If newspaper Web sites were counted as a single entity, they would control the largest single share” of online recruitment revenue at 18.6% or $1.1 billion, according to the report.

Well, the news is bleak for newsagents because they are not part of the online newspaper mix. This is not new information, that online advertising will pass traditional offline advertising, and affect newsagents. The speed of migration is faster than expected. Many in Australia will deny this is happening here – you usually hear this from within newspaper companies where they need newsagents and other offline partners to stay focused on the offline product.

Newsagents ought to go to the Borrell Associates website and access the free executive summary of this report. It’s a sobering pre-Christmas read. Once you;ve read the report, put the gloom aside and start to plan for your newsagency of the future.

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Media disruption

In store promotion drives growth in lottery sales

We’re tracking year on year same store growth in excess of 25% for ‘online’ (non scratch tickets) lottery products at our newsagency. This is, in part, due to our wall of dreams approach:

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We thought it would be a risk to have a $675.00 per share syndicate for the $33 superdraw on December 30. It sold out in a week and yesterday we started another. We find syndicate purchases are most often in addition to regular lottery product purchases.

We have the production of our posters creation of syndicates down to a streamlined process so as not to interfere with the more general management of the newsagency.

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Lotteries

Another magazine we do not need

mag_airports.JPGI thought this was a TV show, you know, stories about the going on in airports. Why produce as magazine and why import it to sell in Australia? I will not even try and sell the title – we received two copies and cannot afford to give a pocket of space to it. Where would I put it anyway? Travel? There’s nothing like it in travel. Range sells stock and this title, all on its own, would languish for a month before being returned.

This title should never have been placed with newsagents.

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magazines

Newsagents winning from IT investment

I heard this morning that almost 300 users of my Tower newsagency management software are now live with EDI returns with Gordon and Gotch. This is fantastic because it means they are at the most compliant possible when it comes to IT. The business benefits are: faster and more accurate magazine returns processing; faster crediting to their account; and, better sell through rates thanks to more accurate supply. Tower newsagents account for 95% of all newsagents live with EDI returns.

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magazines

Reader’s Digest oversupply: unconscionable conduct

rd_cover.JPGIn April this year I blogged about gross oversupply of Reader’s Digest by their distributor NDD. At the time, my supply had been increased without justification. As a result of my blogging, supply was reduced to a more reasonable level. Last week my supply quantity for Reader’s Digest was increased to a gross oversupply level again. I have been supplied more than three times what I will sell even in a good month. NDD and its computer systems know this. They have knowingly taken advantage of my newsagency and, I suspect, many other newsagencies. This is unconscionable conduct. It is the type of magazine supplier behaviour that newsagents ought to complain to the ACCC about. It is the type of conduct which places newsagents at a disadvantage as it removes cash from small businesses as they have to fund this gross over supply.

Newsagent competitors in the magazine category control what they receive. Newsagents do not. NDD will say that I’m wrong on this and cite many examples of how newsagents can control supply. My questions is how is such control evident in the supply quantity for Reader’s Digest this month? Following my blogging in April this year I reached agreement with NDD about supply quantity for Reader’s Digest. Barely eight months on and it is being ignored. I do not control what I receive. This disadvantages my newsagency.

Data I see suggests that Reader’s Digest sales are falling. If we allow for shrinkage (theft and other loss) the sales fall looks worse. Reader’s Digest is easy to steal given its size so I’d suggest shrinkage is above the average of 2% I see for magazines.

Photo source: reader’s Digest website.

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Blogging

Successful newsagents forced to undertake unecessary training

Newsagents with years of success are being told they must undertake an accredited retail training course if they purchase or open another newsagency. The course must either be a Certificate 4 in Retail or the Australian Newsagents Federation industry specific week long course. The requirement for conpetency training is established by suppliers who decide if a newsagent is to receive supply dirct from them.

When the training requirements were established in 2004, the suppliers (News, Fairfax, ACP Magazines and Gordon and Gotch) agreed with the ANF Board that existing newsagents of good standing would not be required to undertake the training. There has been no explanation to newsagents when and why this changed.

I’ve owned my newsagency at Forest Hill in Victoria since February 1996. By any measure it’s a success. To force me to undertake training if I buy another newsagency would stop me further investing in the channel. Respect must be shown by suppliers to successful newsagents of good standing. Requiring such training will encourage us to not invest again in the channel.

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Newsagency challenges

Tattersalls ought to share online revenue

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The email from Tattersalls is more than a courtesy reminder about their upcoming $33 million Superdraw. It’s a full on promotion and includes a link which gets you a ticket in the draw in just one click. The State Government in Victoria would do well to look at Tattersalls’ online strategies as it considers whether to renew Tattersalls’ gambling licence in Victoria.

I understand the need for Tattersalls to play online. However, that they do this without sharing any revenue with its retail network is appalling. We actively promote their brand every day; we build their database; we create the local buzz which the online strategy feeds off.

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Lotteries

Christmas conga line at Australia Post

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I took this photo last Friday at the Government owned Australia Post shop opposite my newsagency. The line snaked from the counter right back to the door. Two thirds of the people in line were buying non postal service items – picnic sets, calendars, Christmas cards and books. Many of the folks are in line because they need stamps and along the way buy these other items. Thanks to its postal monopoly, Australia Post is landing these people in its stores for far less than its competitors. No one cares – no one in the Government at least. They crave the Post profits more than a strong small business sector.

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Australia Post

Good Health re-launch a success

gh.JPGGood Health and Medicine, the relaunch, renaming of Good Medicine has been a tremendous success based on data I have seen from several newsagencies. In my own newsagency we sold out in under a week. The health category is showing strong growth, so much so that it’s time for retailers to consider re-location and consolidation. For example, it currently has its own area with cross-over into food, sport and women’s interests. Half the health titles are in other categories in the traditional layout – by combining we give the category stronger presence.

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magazines

Time magazine, YOU and radical transparency

TIME magazine’s Person of the Year is YOU – in recognition of people being more in control of information than ever before thanks to social media sites. A consequence of the involvement of YOU is greater transparency. This is what people like about the social media sites, they have a voice and there is no gatekeeper silencing them.

Last week, before the TIME announcement, Chris Anderson, editor-in-chief at Wired magazine and author of The Long Tail: Why the Future of Business is Selling Less of More, blogged about what radical transparency would look like at WIRED magazine. At the heart of radical transparency is YOU – readers being put at the heart of the magazine in pursuit of creating a better product. It respects the new YOU focused two-way publishing model of today compared to the one way approach of yesteryear.

I’d love to know what Australian magazine publishers make of Anderson’s post and the comments of others on his six tactics of transparent media. Newsagents ought to read it as well as they have a business model which does not connect with the era of YOU.

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Citizen Journalism

Newsagent to lose their territory? Maybe.

I’m told that a newsagent gained a temporary injunction late last week stopping a newspaper publisher from taking the newsagent’s distribution territory, and with it their business, away from them. The publisher apparently cited a clause on the newsagent agreement which gives them permission to kneecap the small business without cause. The matter is up for another hearing this week.

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Newsagency challenges

Top performing newsagents win FAST 3 AWARDS

fast3_award.JPGEach year, my software company recognises the three fastest growing newsagencies in its our community of more than 1,300. The FAST 3 AWARDS are based on same store year-on-year growth in unit sales. There is no pitch to judges and no formal entry process. It all comes down to business numbers. We use unit sales because it eliminates the impact of price fluctuations. Data from the finalists is verified to ensure it has not been manipulated an that the win is fairly earned. The winners this year are:

Mornington Newsagency (VIC)
Clifton Beach Newsagency (QLD)
Greenvale Newsagency (VIC)

Each has grown unit sales in core categories of newspapers, magazines, cards, stationery and other areas way beyond the industry average. As part of the award they will share with other Tower Newsagents how they have achieved such stellar results.

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Newsagency challenges

The assassination of newspapers, or not

Will Bunch at Attytood reckons:

The American newspaper is being assassinated by “a lone nut.”

He names Craig Newmark of Craigslist as the lone nut. Bunch writes for the Philadelphia Daily News. H’e ignorant and biased. He’s wrong to blame falling newspaper circulation in the US on Newmark and his successful Craigslist free classified ads. Newmark is saving advertisers money, allowing them to use that money elsewhere. Craigslist is, in part, a response to unreasonably high classified advertising fees which are not based on a fair margin. Newspapers have priced themselves out of the market and now, thanks to the Internet, better broadband coverage and excellent mobile devices there are models which suit consumers better. Bunch ends ridiculously with:

In the meantime, I think every journalist who’s a threatened victim of layoffs should be sure to send Craig Newmark and Jim Buckmaster a holiday card this year, including a family photo, and let them know how we’re doing in 2006. After all, even a “lone nut” should see who his victims are.

Journalists threatened ought to spend their time focusing their skills on new print product which is more suited to the times and to online. Journalists are as important today as yesterday – all that’s changed is the medium.

Gee newsagents face tougher trading today thanks to supermarkets and others selling magazines. Are they to blame? No. It’s competition. We live with it by becoming smarter. This is what journalists need to do rather than moaning about someone providing a useful free service.

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Newsagency challenges

O2+ Design Directory magazine fails the retail test

o2.JPGO2+ Design Directory 2006 will not sell in my shop. The distributor, NDD, would know this from the sales data they have for my business. That they have supplied six copies of this $9.95 publication and expect me to pay for the stock now and hold it for almost six months is nonsense. It’s another example of a broken magazine supply model. The other problem with the title is the size – it’s non standard packaging means it cannot fit in the traditional magazine units and therefore will be put elsewhere, away from related titles. This will further impact sales success. Publishers and distributors ought to know this stuff. That they have newsagents providing free shelf space for six months allows them the opportunity to be lazy in their execution. I’ve early returned my copies and will not pay for them in the current invoice – I didn’t order them so why should I?

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magazines

Sticky cookbook offer

aww_free.JPGACP has a great offer – buy a Women’s Weekly Cookbook and you get one of these small cookbooks free. Trouble is the promotional sticker does not come off. Customers are complaining because they want to use the small book as a gift but can’t with the sticker there.

Now that we know we have to tell them otherwise there will be grief at present wrapping time.

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Newsagency challenges

The $25 a minute charge which disrespects newsagents

20/01/07 UPDATE. The concern expressed below has been well addressed by Bill Express announcing a sales game for newsagents. More here

This blog posts starts with three questions:

Should a supplier wanting retailers to sell their new product charge for in store training?
Is $200 for 8 minutes of said training fair?
Can the training be adequate if the trainers have not been trained themselves and are given up to 20 stores to visit in a day?

Bill Express (ASX code: BXP) is charging newsagents up to $200 to train them in the sale of the new BOPO rechargeable credit card. Well, actually, they are not charging newsagents. Rather, they are cutting this month’s marketing rebate – a credit newsagents have received to their Bill Express equipment lease costs since the installation of the Bill express network in newsagencies three years ago – by up to $200 depending on the rebate a store earns. We’re told it is a cut to the rebate for this month only.

By cutting the rebate Bill Express saves up to $600,000 this month – to fund the training. In my newsagency the training visit lasted eight minutes and consisted of dropping material off and chatting briefly – there was no training – certainly nothing of value was shared, yet I’d been told by a Director of Bill Express that this training would be important for compliance. There was no aspect of compliance in the training in my newsagency.

In some newsagencies the ‘training’ has been over the phone while in most it seems to be in person and completed in 10 to 15 minutes. One newsagent said their trainer was covering 20 newsagencies that day. Another said their trainer was trained over the phone. Another said the trainer said she was getting $30.00 a site to do the training.

There have been more than 100 public complaints by newsagents about this in the last five days. It’s a problem for Bill Express and for the industry associations which have endorsed the one off reduction in newsagent marketing rebate of up to $200 to fund the training. If the $30 payment to the trainer is accurate and allowing for a 25% agency premium plus some setup costs, it is fair to claim that this national ‘training’ has cost Bill Express under $150,000, leaving a windfall profit of up to $450,000, courtesy of newsagents, to book this month. If accurate, it’s a nice bottom line bonus.

The average time being spent per store supports the $30 per outlet theory, it’s why the training is rushed. While I am hot happy with a supplier asking me to pay to be trained to sell their product, what Bill Express has delivered is disrespectful and it harms their reputation among newsagents. The training will not improve compliance or the ability of newsagents to sell the BOPO product. Newsagents have effectively been forced, without proper consultation, to fund the delivery of in store marketing materials and not much more.

Would Coles or Woolworths accept this? I suspect not.

Bill Express would be well advised to reconsider its position on not paying newsagents the marketing rebate this month. In the light of the actual costs revealed and the evidence that no real training is being delivered it is inappropriate that newsagents be charged as originally planned.

If Bill Express does not reconsider and accept that it has made a mistake in its relationship with newsagents in how it has handled the BOPO matter, it will experience mass cancellation contracts as they fall due.

Newsagents have, in their national retail network, an asset of extraordinary value. The day newsagents price access to that asset commercially is the day newsagents will demonstrate that they understand the nature of competition.

Newsagents had hoped that Bill Express would draw bill payment traffic from Post Offices. This training mess puts the competitive offering at risk as billers will not be comfortable supporting a disgruntled network or a supplier which does not respect its retail network.

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Bill Express

Newsagents, free WiFi access and citizen journalism

Since my post yesterday suggesting newsagents establish themselves as free WiFi access points two players in the comms marketplace have made contact to discuss how this could be achieved. Unfortunately, like many suppliers dealing with newsagents they grossly undervalue the national coverage newsagents offer.

Newsagents’ business model based around newspaper, magazines and lotteries is being severely disrupted by mobile technology. A free WiFi offering, while not the solution, would put back into consumers’ minds as being relevant. For the comms partner newsagents offer instant visibility since the network tracks more than 15 million visits every two weeks.

A smart comms company might bundle in an internet kiosk at no cost and call it Australia’s Listening Post or something like that – to push along our fledgling citizen journalism movement.

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Citizen Journalism

Being selfish about newspaper promotions

age_cards.JPGThe Age has a great promotion tomorrow – a park of 50 Epicure recipe cards. We received 200 packs, we’ll sell 160 copies of The Age – the 40 spares will be for home delivery customers – not just from our area but others. Being in a shopping centre we get many customers from other areas. The 40 packs will be gone by 10 am. Rather than eat into the allocation and satisfy home delivery customers we’re quarantining 160 for our retail customers. I know this will upset the folks at The Age but we have to put our direct customers first. Promotions like this, with a scale out lower than demand, damage the brand – hence our decision to be selfish and hold back enough to satisfy our customers.

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Newsagency challenges

Real estate agents to take on News and Fairfax?

The Australian yesterday reported that the Real Estate Institute of Australia is planning to launch a website to collate property sales data and, ultimately, compete with realestate.com.au, domain.com.au and the many others. It’s a move by independent real estate agents to take control back of a key traffic generator for their businesses – online advertising. While the move is likely to be too little too late, it’s the arrogance of a major competitor which caught my eye in the story:

Realestate.com.au chief executive Simon Baker said those price rises were justified because they corresponded with the much higher rises in site traffic and property listings.

Mr Baker said the group was not concerned about the prospect of an industry-led site because it was unlikely REIA would be able to obtain enough capital to adequately fund a new sales portal.

The Australian is published by News Limited which owns 53% of realestate.com.au. Baker is wrong to justify price rises of 10% a year on traffic generated by the site. The Internet is not a place where such old school justification of price rises is accepted. Online shoppers do so because online costs are less. Price rises ought to reflect real price rises experienced by the supplier and not what they think they can get away with.

By allowing online advertising sites to grow unchecked as they have, real estate agents have lost control of traffic to their doors and this makes them vulnerable. If Australia follows the US there will be a move to cut real estate agent commissions through better online functionality. Just as happened with online travel portals taking business form travel agents. Why will I be happy to love, say, $10,000 to a real estate agent when I can use an online ad portal to take care of the main work for less than 10% of that?

To compete with the power of realestate and domain, the agents need to offer new and exclusive functionality. It’s not just about price as the story in The Australian suggests – offering cheaper ads will not work. The agents need to leverage their intellectual property to their advantage.

The disruption faced by real estate agents is similar to that faced by newsagents. Both are old world bricks and mortar businesses made up of independent business people often too busy running their businesses to see the tsunami of online driven disruption which threatens to impact business as they know it. Good on the REIA for acting on this. It’s more than we are seeing from newsagents. However, their reaction will need to be faster and smarter than current reports suggest.

The challenge is that real estate agents and newsagents rely on long term big business partners who are no actively competing against them. This issue is the elephant in the room no one wants to talk about – how dare we speak ill of a supplier competing with us for fear they will go harder. The reality is that News and Fairfax are competing with real estate agents, they are a huge threat to the model real estate agents operate under. Likewise with newsagents. Fairfax and News will do what is right for their share price – meaning that newsagents and real estate agents must do only that which is right for their profitability.

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Media disruption

Virtual bumper sticker: I blog and I vote

Just as roads, water and electricity were hallmarks of a developed country last century, free wireless broadband is a key measurement this century. Access, price and speed of broadband are a barrier to the education, commerce and development of a country.

Australia risks Third World status when it comes to broadband access. Rupert Murdoch was right to blast the Government on this last month and Communications Minister Helen Coonan was wrong to criticise him. The Government sees the provision of this essential infrastructure as the responsibility of the telecommunication companies. I see the Government having a key role. This should drive the cost down and increase the roll-out speed. Like any essential infrastructure, the cost to the consumer ought to be tiny if not nothing. By leaving it up to the telcos, the Government is making our country poorer by world standards.

While Rupert Murdoch wants more ubiquitous and faster broadband for his businesses, I want it so more Australians are participating in the new world – more bloggers; better education; more competitive commerce; and, a more competitive country.

Having returned yesterday from LeWeb 3 in Paris, once again having to navigate no access or, often, poor quality wireless access, and reading more finger pointing on this I’m frustrated that the government does not get it. National broadband coverage (wireless or not) is essential. It’s not about whether a telco will make a profit or not. It’s about the citizens of the country being able to compete on the world stage – today, not in five or ten years. Today we need this coverage. We are being left behind.

For location of free WiFi hubs the government could look no further than newsagents. There are 4,600 retail locations across the country. They are already hubs in their communities for other services. I am certain newsagents would gladly play a role in free WiFi access and help the government take Australia out of third world broadband access status.

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Blogging

UK newsagents seek competition review

The UK National Federation of Retail Newsagents this week made an unexpected formal application to Office of Fair Trading (OFT) for a full review of the newspaper and magazine supply chain. The newspaper and magazine supply model has been subject to OFT consideration over the last two years with OFT positions being advisory. The review sought by newsagents, if granted, could result in changes being imposed on the channel by the OFT.

The distribution of newspapers and magazines in Australia was deregulated by the Federal Government in 1999. No review on the impact of this deregulation has been conducted. Many newsagents contend that deregulation has seen them severely disadvantaged in that new competitors to newsagents get to choose the magazines they stock and only take the top 50 or so titles – leaving newsagents, who have little control over what they stock, to carry more than 2,000 less-popular titles which account for less than 25% of retail sales.

Given the Federal Government’s involvement in driving the deregulation in 1999 I would have thought that a Productivity Commission Inquiry would be an appropriate forum in which to assess the impact on the community, small business newsagents and small publishers of the government policy change.

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magazines

FHM closes in the US

Emap has closed the US edition of FHM magazine as a result of falling sales. The Mediaweek report has this telling quote:

“With conditions in the U.S. worsening, we have decided to focus our resources elsewhere on faster growth platforms,” said statement, Emap Consumer Media CEO Paul Keenan.

Sales in the ‘lads mags’ category is okay from the newsagent data I see but not strong. Lads mags suffer from second rate location in many newsagencies because of content. They also suffer because their target readers can find equivalent free content online.

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magazines

More abuse of newspaper mastheads by Fairfax

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Advertising people at The Age continue to treat the masthead as if it’s a web page with pop-up like post-it ads. Customers hate these. Editors and designers who put their heart into creating the front page must hate them too. What does it say about the publisher’s view of their product that it is desecrated like happened on Tuesday this week (above).

afr4.JPGWhile the advertising folks at the Financial Review don’t get to cover the masthead, they do get to cover front page stories as this photo from Tuesday’s AFR shows.

These post-it ads must be worth it otherwise Fairfax would not un them. I wonder if their increased use reflect lesser respect within Fairfax for their printed product. Would the editors and publishers of, say, twenty or ten years ago have agreed to these ads? I suspect not.

Am I alone in thinking this?

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Uncategorized

Is Fairfax about to launch online news dailies in three states?

Crikey published this story today (sourced back to The Australian) – suggesting that Fairfax is about to do in Brisbane, Adelaide and Perth what News did earlier this year in Perth with it’s online Perth Now news site. Such a move by Fairfax into capital cities where it does not publish today makes sense, unfortunately for newsagents.

We have been insulated from the print media disruption seen in the US and Europe because of our strong home delivery position. This play by Fairfax and the earlier by News will take the shackles off and speed up disruption.

It all comes down to monetisation. The publishers can see the income stream. Fairfax Editor in Chief of Online Mike van Niekerk said as much in his presentation entitled Cashing in on Digital Success at the Beyond the Printed Word conference I attended in Vienna last month. Fairfax has optimised its sites for financial return. They know what they will make with local editions in these new states.

News will respond to the Fairfax move into these new markets. The more the publishers compete online the less they will focus offline. They’d disagree with this if you ask them but it’s true – you only have to see what has played out overseas to see what will happen here.

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Media disruption