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

Author: Mark Fletcher

Basket penetration in Australian newsagencies: traffic rich, efficiency poor

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We have been collating and analysing data from around 8,000,000 shopping baskets collected from newsagencies covering January through May this year and for the same period in 2004. This data is enabling us to get closer to some industry benchmarks.

The table above reflects preliminary analysis of the data in terms of sales where items purchased came from a single category. For example, sales including, say one or two newspapers. Sales where a newspaper and a magazine are purchase would not be counted.

This data suggests a serious imbalance in newsagency basket penetration. To have 75% of a product category, a very high volume product category, sold alone is unhealthy at best and dangerous at worst. This data demands newsagents and their suppliers urgently work together on deepening cross category basket penetration – for the efficiency of the retail channel, to strengthen the viability of the channel and to broaden the appeal of newsagencies.

The categories which need urgent work are newspapers and lotteries. These generate excellent traffic for Australian newsagents yet suppliers rules dictate where their product is located and whether other product can be co-located. Further, they dictate how newsagents can co-promote. These rules stifle retail creativity and restrict greater basket balance.

In the data I see traffic rich businesses. However, the traffic travels on freeways from entrance to product selection point, to the counter and out. No meandering around the store, no exit ramp to other categories for browsing. This has to stop for the future of the channel and therefore for the future benefit even of these high traffic generating categories of products.

We are preparing to present the data to the newsagents who participated and to workshop efficiency growth strategies.

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Network Ten blows Neighbours 20th anniversary promotional opportunity

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Ben Kay who manages newsXpress Forest Hill (Vic) had a bright idea. He wanted to promote the hell out of the Neighbours special DVD in the Herald Sun this Saturday and a 20th anniversary Neighbours feature on TV Week next week.

Ben was keen because the hit Neighbours TV show is shot three streets away from the newsagency. Several cast members shop in the newsagency regularly. The shopping centre is used for filming shopping scenes used in the show.

News Corp’s Herald Sun team came on board with great promotional help. As have the team at ACP, publishers of TV Week.

To create a strong presence Ben wanted more and so contacted Network Ten for posters and other material. After speaking with ten different people and being pushed from pillar to post someone within the Network said “no”, we don’t have anything and there are all sorts of legal issues. At each point of contact the Network Ten people were unhelpful. It was almost as if why promote this?

All Ben was after was a few posters and maybe a cut out life size item for us to use in store. It would promote the Neighbours brand, connect with the product they have already endorsed and create a deeper connect with the community in which the show is filmed.

To illustrate the interest locally in Neighbours our newsXpress Forest Hill shop has received prepaid orders from customers wanting to make sure that their Herald Sun is kept for them tomorrow so they don’t miss the Neighbours DVD.

This is an opportunity lost. Network Ten blew it. The promotion in our shop could have been bigger bolder and more successful. As it is we have created tons of our own posters to make a strong presence.

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The lotteries challenge for newsagents

We know from our analysis of around 5,000,000 shopping baskets in newsagencies for sales from January through May this year that Lotteries products are sold alone (i.e. with no products from other categories) 68% in shopping centres, 61% in High Street situations and 55% of the time in rural situations.

These percentages are unhealthy for newsagents and we need to work with lotteries commissions on how we can increase lottery baskets to include other products. At the same time we can reveal ways we could work in other categories within newsagencies to unlock incremental lottery product sales.

This can be a win win.

the challenge is to get each of the lottery agencies around Australia on the same page and working together on this.

The current rules in some states of not being able to promote other product at the lottery counter denies the opportunity for an integrated approach to retail and that’s got to be unhealthy for all concerned.

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More on our campaign to increase magazine sales

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Whereas a year ago 48% of our Women’s Weekly sales were sold alone, today the number is 31%. Also, over the same period, we’d sell Woman’s day with Women’s Weekly 7% of the time, now it’s 1`2% of the time. This increase in companion business has been achieved at the same time as an increase in sales for the title of 30%.

The world is full of loyalty campaigns which reward consumers with fractions of cents for each dollar spent. Our campaign offers genuine savings in return for genuine loyalty. No faux campaign here. And consumers are voting by spending money.

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Take 5 data illustrates success of magazine campaign

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I have been analysing the results in my newsagency of our now ten month old magazine sales strategy. Take 5 best illustrates the success of this campaign.

Year on year our sales are up 53%. That is phenomenal growth. But, the real success lies underneath these numbers. Whereas a year ago, 16% of all copies of Take 5 were sold alone, now that number is 10%. That is, fewer customers today purchase Take 5 alone than a year ago. Further, a year ago less than 1% of Take 5 customers purchased TV Week whereas today more than 5% purchase TV Week as well.

While we cannot know if we are poaching sales from other outlets, my suspicion is that at least some of the sales are incremental for the title because of the value proposition which underpins our loyalty campaign.

Our magazine club card campaign is getting our customers shopping the category with more depth. It’s also delivering loyalty.

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Apple, iTunes and 500,000,000 songs sold in 2 years

Reuters reports that Apple has sold more than 500 million songs through iTunes.

The success of iTunes and the impact of file serving software has killed hundreds if not thousands of inpependent music stores and put some significant retail chains at risk.

The iTunes success is a business case which players in channels through which ‘soft’ product is sold (like newsagencies) ought to research. Too many in the newsagent channel have their head in a bucket of sand and ignoring the success of iTunes and the changes in mobile access space will only serve to limit the life of their businesses.

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News Corp buys MySpace

News is putting money on then table in pursuit of the new focus on the Internet set by Rupert Murdoch three months ago through their acquisition of MySpace.com. MySpace is a bit like rsvp.com which Fairfax bought last week. However, it also includes some interesting fringe technology businesses which add value of the News acquisition.

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News Corp. moves forward on Internet strategy

In April Rupert Murdoch addressed the American Society of Newspaper Editors and said, in part:

“Scarcely a day goes by without some claim that new technologies are fast writing newsprint’s obituary. Yet, as an industry, many of us have been remarkably, unaccountably complacent. Certainly, I didn’t do as much as I should have after all the excitement of the late 1990’s. I suspect many of you in this room did the same, quietly hoping that this thing called the digital revolution would just limp along.

Well it hasn’t … it won’t …. And it’s a fast developing reality we should grasp as a huge opportunity to improve our journalism and expand our reach.”

Now, three months on, we’re seeing movement in the News Corp. digital world. Fox Interactive Media is a first step on what in expected to be a new road of significant endeavor for News.

Today’s online model demands a shorter and faster supply chain between content creator and consumer than ever before. News has been slow to adopt to the opportunities of the wireless world. Now they are in the game it will be interesting to see how well they play. In Australia we’re waiting for some significant announcements from the Optus/PBL relationship.

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When did we stop promoting the news in newspapers?

TV stations continue to promote their news services as trustworthy and providing quality. You hear their advertisements in radio, see them on billboards and read them in print. Radio stations, too, promote the quality and depth of news and current affairs coverage. Not so much newspapers or am I not seeing content focused sell promotion? Sure newspapers use their own pages to promote themselves, but not outside, not to prospective readers.

I see plenty of promotions outside for houses, cars, trips and cash. I see Sudoku puzzles, CDs, DVDs, pins and stickers – being pushed by newspapers. But nothing promoting the quality and coverage of news.

I wonder about the impact of all this non news on the masthead. Surely it must be confusing consumers. The time newspaper customers become the most animated, except when their home delivered paper has been missed, is when there is a new competition or a coupon to clip for a sticker or pin. They like the games and I guess that’s why the publishers keep them coming.

It’s not about the news. But then again nor is their supply chain any more. Just as content has morphed from news to entertainment (for some newspapers) the supply chain has been moved from the specialists (newsagents) to all and sundry.

A few weeks ago I moaned here about the Sudoku craze and how it had overtaken newspapers. And it had. BUT, it’s spawned a new segment in the crossword niche. We have five Sudoku titles all traveling well and they’re generating new business. I don’t mind that.

I guess I long for well spent and successful effort in getting people reading newspapers for news again. Oh well, one can long I guess.

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The future of newspapers (again)

By Eli Noam, professor of Finance and Economics at Columbia University and director of its Columbia Institute for Tele-Information
and published July 14 by the Financial Times:

Are people drifting away from news? Not really. What people are drifting away from is paying for news. And that will be hard to reverse beyond the most powerful or specialised of news brands. It’s happened to music, and now it is beginning to happen to newspapers. Yes, the technology will create many new tiny news media. But the overall result will be more media concentration – a lot fewer but more comprehensive mainstream news organisations as the integrator of most information. First, the paper element of their operations is beginning to vanish. And then, the news part, too, will become unsustainable. Today’s newspaper becomes tomorrow’s news-integrator.

Well, that’s how Noam finishes his piece. It’s a well thought out paper which offers direction and hope (if they pick up on the direction) for publishers but not so much for the current supply chain serving publishers.

What Noam writes makes sense to me. You’ve only got to consider the changes (local and international) over the last six months to see the direction.

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New magazine Alpha hits the ground running

The new News Ltd. magazine, Alpha, is doing good business according to stories from around the traps. Many newsagents have sold out while others are reporting strong sales.

The launch at a price of $2.00 (purchased with the major News Ltd. Daily) is working. While some are grumbling at the need to offer it to the customers, the up sell is getting newsagents engaging – and many are happy with the result.

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We’ve gone all out in our own shop for Alpha with two significant displays. The sales results are good with strong sales on the launch day (last Thursday) and strong sales also Saturday. Even today, five days in we’re getting good business.

Alpha is creating a new niche since it’s not pure sports nor pure men’s interests. We’re finding strong interest from women – maybe because of the cover.

Alpha is a big test for newsagents as it challenges us to do more than put product on our shelves. It challenges us to engage with customers and prove that our channel can add value to a product launch. While non newsagents carry the product, I;’d expect newsagents to be more successful with the up sell because of the unique nature of their customer relationship. At least I hope that’s the case.

If Alpha sales are weak in newsagencies for issue #1 I’d expect ramifications for our channel.

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New Media Usage Growing Fastest Among 18-24 Year Olds According to BIGresearch study

BIGresearch, an Ohio based research company, has studied 14,000 consumers and their media influencers. Their press release provides a summary of their findings. Here’s a great quote:

“The 18-24 year olds are digital nomads who have adopted new media more readily than any other age group,” said Joe Pilotta, PhD, BIGresearch’s VP of research. “Not only do they use new media more, they are influenced by it much more than any other age group, when it comes to making purchase decisions. Which says that they have integrated new media in their daily lives,” said Pilotta.

No surprise. Good size survey and interesting data. This key consider group is mobile and content hungry but not bricks and mortar loyal.

I wonder how many such studies need to be undertaken before small business owners in the firing line of changes coming as a result of these trends act on their own business plans.

Whereas I can see regular activity from publishers in response to consumer, technology and societal changes, newsagents, who rely on newspapers and magazines for more than 50% of their sales, are not responding in a business planning sense.

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Huge growth in The Podcast Network activity

Cameron Reilly of the Australian based The Podcast Network (TPN) is reporting that the number of downloads rose from 91,965 in May to 205,766 in June.

That’s huge growth by any measure.

You can read the full release here.

TPN is following a publishing model and has a stake in each show available through its network. This makes their offering different to the traditional directory service. Some of their shows are a good example of what I mean when I have talked here in the past about setting the stories free from their traditional aggregated product such as newspapers and magazines.

Having an Australian platform gaining such traction at this stage is good for our voice internationally even if the production qualities of the AFL (local football) show could use a boost.

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Alpha new magazine launch

The News Ltd launch yesterday of Alpha – the slick sports magazine being sold for just $2 with News Ltd major dailies seems to have gone well from the newsagents I have spoken with.

Many have provided significant in store real estate to provide a strong presence for the new title.

In my own store we have strong displays in two locations plus we have Alpha at the counter and are offering it as an up sell. It’s a challenging product to up sell because most of our customers are female and over 50 so that’s a demographic issue for us.

The pitch for the product is strong with a good cover and good point of sale material. Where there is a challenge is what’s it about? That message is not as clear as it could be and this leads to a confusing message from newsagents in merchandising and pitching the product.

It’s early days since this product has a 30 day shelf life. The key in my situation will be the weekend sales. We’re planning a very strong pitch on Saturday.

Newsagency customers are very segmented. Eyes down, freeway into the part of the store they want, purchase, freeway out. Alpha is trying to get newspaper customers purchasing a magazine or vice versa. My experience yesterday is that we need to systemise that a bit more so that we get the sales uplift necessary to make it work for us and for News Ltd.

For example, there is a strong story at the newspaper display but not as strong a story and integration at the sports magazine display. At that place the story needs to be different to the newspaper stand story.

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e-paper much closer

Further to my earlier post on this Fujitsu has just announced a wireless version of e-paper which will be available commercially to consumers in around a year. They are saying it could be 2007 but with the scramble by several major companies in this space now the pressure to be first to market is considerable. The applications are from mundane price tags in stores through to content such as magazines and newspapers.

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Newsagents strike in Paris

The Guardian reports on 290 news vendors in Paris, who work 16 hour days for an average A$2,000 a month, staged a historic six-day strike over low pay and working conditions last month.

The story ends with this quote from one of the newsagents:

“At least half of what we get, sometimes up to 80%, is unsold. It’s madness: we have to be allowed a say in what we stock. That’s only common sense,” said Mr Maignan. “I’m in the middle of the financial district, so I sell a lot of business magazines. Colleagues in the suburbs won’t sell a single one – but they’re still given them all.”

These French newsagents are similar to Australian newsagents. Their channel was created by the publishers. While publishers have put their product elsewhere in pursuit of sales and moved content to new media in pursuit of advertising revenue, the channel they created has starved. While the publishers owe the channel nothing, there are opportunities for engagement which could benefit the publisher and the channel.

Publishers will bemoan the vast difference in compliance among newsagents as a reason for not engaging with the channel. There are ways this can be and ought to be addressed. All it would take is one publisher to pull back from going everywhere and focusing on the newsagent channel or even part of the channel in pursuit of a more viable model for both players.

To allow slow decay helps no one.

The Guardian story is timely and should encourage talks between publishers and proactive newsagents.

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Mainstream media in love with podcasting

The blessing from the “bishops” at Apple was all that was needed. Mainstream media players across the globe are doing it and they are reporting about whereas for the first year of the life of what is becoming a great advertising channel they, in the main, ignored it.

When a something new makes it ot the pages of USA Today you know it’s something the punters will understand and want to know about. Unfortunately this report suffers from the USA Today affliction of shallow reporting.

On ABC Radio National this morning, Fran Kelly had a story about podcasting with some depth. Good coverage of the development in mainstream media in the US and an interview with a Nine Network executive to give a local perspective from a television point of view.

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Newspapers, the supply chain and respect for the masthead

I’ve heard publishers bemoan the lack of respect and effort their products receive from newsagents and others in the supply chain. They argue that newspapers generate the most traffic yet receive the least attention. They wonder what happened from the halcyon days of newspapers (any time up to the late 1970s).

Besides that society has changed (television, mobile phones, working hours, recreation opportunities), newspapers are not what they used to be.

Until recently the news was the thing. Today news, in many newspapers, news has taken a back seat and there are consequences for that. Getting the retail and distribution channel to promote puzzles, games, CDs and all manner on non news devices to boost sales may give the circulation kicks necessary to achieve poor audit results however I doubt that these tricks create loyal customers.

Newspaper customer loyalty is rooted is trust for the masthead and this is earned through coverage. That does not mean high brow. It means news. The tabloids could be more about news than trying to run the political agenda or paying for gossip stories. Sometimes newspapers offer a consisted and strong news story from their front page but not often enough.

All it takes is one publisher to lift the ante, declare a puzzle and competition free zone and focus on creating much better content value. The supply chain should respond with more effort as a result of greater respect and this should result in sales.

Okay, that’s fairy land and the current market forces dictate how publishers react.

My point is that by pursuing all these non news strategies publishers are inviting their supply chain to be equally confused in their representation of newspaper product.

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Newspapers and podcasting

I’ve been ranting here for a while about the need for newspapers to embrace podcasting if they want to maintain and even increase the connect of their brand with consumers. Steve Outing discusses this topic in a good post today at Poynter online.

Newspaper journalists and columnists could take us beyond the page and use podcasts to build respect for the masthead. There is an opportunity for newspapers to reclaim ground as providers of trusted and respected news and analysis content and podcasting can provide a transparency and depth words on the page sometimes cannot offer.

As part of the newspaper distribution and retail channel in Australia I’d also like to see podcasts so that I may provide added value to the newspapers I sell in my shop. If I can broadcast, for example, the audio (or part) from an interview it provide more reason for people to visit my stores and others in my channel. Plus is enables browsers in my shop to hear and this cold/should lead to a sale which otherwise might not have happened that day.

We in the supply chain ought to be taking this to the publishers otherwise they might not find the opportunity on their own.

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Mobile phone newspaper in China

Is it a world first? Will it take off elsewhere? Who knows? It’s real though. Ningbo Daily Newspaper Group and Ningbo China Mobile in China have launched what they are calling a mobile phone newspaper. Customers will be sent stories, images, video and sound.

Those of us in the newspaper supply chain business will watch, learn and plan – if we’re smart we’ve been doing that for ages already.

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Guardian to launch mobile phone crossword game

Guardian Unlimited (from Guardian Newspapers) earns early adopter status for their decision to launch a mobile phone based crossword game as covered by Media Bulletin. Access will start with a free trial and then move to a paid model with costs reportedly to be 50p per day.

Are they a newspaper publisher or a games publisher? Content is content I guess and anything to accompany advertising which punters will be loyal to is all that matters. I can’t help but wonder about the brand. I mean, what does it stand for?

As others launch into this space and push their brand outside the traditional news it will become easier for pure news outlets to focus on news and analysis. Everything old is new again.

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Broadband on the electricity grid

Plenty of reports (including this one from the Denver Post) about the Google, Hearst and Goldman Sachs in Current Communications Group – a company leading in an area of technology called broadband over power lines (BPL). If hopes/plans are realised, BPL would allow electric companies to become an alternative to the cable and telephone companies providing high-speed access to the Internet.

This will be interesting to watch.

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