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

Author: Mark Fletcher

Generation Why and newspapers

Wise and Young is a blog worth reading if you want to understand younger consumers. Take this blog entry about newspapers and how to make them more appealing to young people. Here are the key points Levi Brooks makes in this entry:

1) Get your articles, content, etc. in to the hands of the youth (be it real world or online) – Why not have more news stands on campuses? Why not offer free newspapers on Sundays to college students? Get your product in to their hands, even if it means giving it away for free, and get them hooked.

2) Brand your newspaper as being smart and fresh – The youth are attracted to fresh and up to date material. Newspapers do provide fresh content, but the feelings evoked when purchasing a newspaper is stale and old-world.

3) Keep their attention – I’m not saying newspapers should turn to yellow journalism or mock magazines, but do something that would keep the youth’s attention span. Providing more youth friendly content and progressive articles that challenge the norm are a place to start (which the AP is trying to do with this new service).

4) Tie in with Online Services – MySpace and Facebook provide journalists a prime delivery method to the youth. Murdoch owns MySpace and I have no doubt he’s going to merge his news empire to the online space, but he better give the users complete control over what content they see. Facebook is a great place for newspapers to deliver content to the college group.

Wise and Young is also the name of the a communications agency Levi and his partner run in the United States.

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Newspapers

Newsagents v. Vodafone; small business protests arrogant decision by major telco

Newsagents continue to vent their anger at the decision by Vodafone to cut their commission by 37.5% to 5%. The Vodafone decision is making many newsagents reconsider their position in terms of selling Vodafone product.

I have reviewed shopping basket data for over 30 newsagencies covering sales from June 1 through September 24. In all the data covered represents close to 2 million shopping baskets. On average in a suburban newsagency, phone recharge product is sold alone 77% of the time. In rural/regional newsagencies that figure falls to 65%.

This data tells us that phone recharge is not efficient in drawing consumer traffic which purchases other product. While this may be a commentary about newsagencies, it may equally be a commentary about the mindset of recharge customers.

It is important that newsagents understand the broader value of recharge sales. With 77% of sales being single item sales – that is a recharge purchase and nothing else – we need these sales to be time efficient, and business efficient (i.e. cash flow beneficial and little or no error). We need to measure the economic benefit on the sale of the recharge itself.

A $30.00 recharge generates $1.50 in commission (based on 5%). Allowing for credit card charges (data suggests 50% are purchased with credit), the $1.50 falls to $1.20. At 1 minute sale time $1.20 is okay. Anything longer than 1 minute and I’m losing money. This does not factor in the cost of the infrastructure, counter real estate and display real estate necessary to support sales.

These are point to make to Vodafone. The economic viability. While I can understand the drop in commission from 11% to 8%, this fall to 5% in the face of record profits is a tipping point. It pushes newsagents to the edge. It makes selling Vodafone recharge product of doubtful value in an average newsagency. Sure there is the traffic argument. I suggest there is reasonable data now to suggest that this is a phurphy. Recharge traffic is busy work and not all that profitable for us.

This is an arrogant decision by Vodafone against their small business partners, one they need to reconsider.

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Newsagent suppliers

One of our store syndicates won $11 million Powerball last week

We run store syndicates for Tattslotto, Powerball and Oz Lotto games every week at our retail outlet – newsXpress Forest Hill. One of our Syndicates won $11 million Thursday night last week. Our customers are thrilled. They’re buying more tickets as a result. Some of the winners though seem less happy. “About time” was a comment from one of the winners – someone taking home over $1 million as their share. Those who didn’t win were much happier than this person. Ah, human nature. The biggest joy for us was the customer who won $5,000 in the same lottery draw. They deserved it and needed it and their face beamed happiness and thanks. It was great for our people in the store to take a moment and soak up some of this happiness.

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Uncategorized

Newsagents stopped from passing on high petrol prices to consumers.

Newsagent/Publisher contracts are stopping newsagents from passing on the high cost of petrol. These contracts restrict the control newsagents have in passing on reasonable operational cost increases. This means that newsagents have to carry the higher fuel costs and in some cases it is making the home delivery of newspapers unprofitable.

While News and Fairfax can increase advertising rates to cover higher operating costs, newsagents rely on publishers to adjust the cover price and to allow a fuel surcharge to be applied or delivery fees to increase.

This is an untenable situation as it leaves these independent and often cash strapped small businesses carrying an unfair burden while their much bigger suppliers benefit.

What newsagents want is an urgent and open discussion about fuel and agreement on reasonable trigger points for delivery fee adjustment reflecting the high price of fuel.

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Newsagency challenges

News sells newspapers

It’s the day after the AFL Grand Final in Melbourne and newspaper sales in my part of the world are proof that content sells. No deals, no competitions, no giveaways. Just good coverage of yesterday’s Grand Final in the way only a newspaper can cover such an event. There should be more days like this with newspapers getting back to the business of being newspapers.

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Uncategorized

Phone recharge purchases inefficient for retailers, pressure remains on Vodafone to justify 37.5% cut in commission

Following the Vodafone announcement of a 37.5% cut in commission paid to recharge retailers (to 5%), I have been looking into the retail efficiency of phone card retail. While my sample size is small at present – 5 newsagencies – it seems that phone recharge is purchased alone 75% of the time. That is, in only 25% of cases did the customer purchase something else.

While one could argue that this result is a commentary on the effectiveness of the retailer in creating an environment which drives up sell, it also says something about the convenience factor in the recharge space. Consumers run low, they buy recharge wherever they can get it. This is why telcos have recharge retailers on every corner.

One argument put by at least one telco supporting a reduction in commissions paid to retailers is the traffic they draw to the store. My survey of five stores and their sales data over the last six months demonstrates that consumers are unlikely to purchase anything else.

All this adds consideration to the Vodafone decision and will focus newsagent attention on the dramatic cut by Vodafone for some time to come.

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Newsagency challenges

Can Sudoku save newspapers?

editorsweblog.org carries a story about Sudoku and reports that’s now being used in 140 newspapers globally. They link to a story on CNN Money which poses the question: Can the popular Japanese number puzzle save newspapers or is it just a passing fad? Based on our Australian experience over the last six months I’d say it’s not a fad. Sudoku continues to grow without impacting crossword sales. The key is to engage newspaper publishers, magazine publishers and retailers in marketing strategies which add more people to the Sudoku craze.

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Newspapers

Podcasting grows and grows

Podcasting is growing. Mainstream media, independent media and amateurs are rushing the new channel. Here are some interesting recent podcast announcements/developments:

CBS podcasting segments of 60 minutes. Source: MarketingVOX

PBS is podcasting its American Experience series – the most watched history series. Source: PBS

Grooves magazine podcasts. Source: Grooves.

The brilliant Paul Harris, host of film buffs forecast on 3RRR-FM podcasts. Source: RRR-FM.

While there is an excellent selection in independently products podcasts coming from Australia it is surprising that there is nothing yet from Australian newspapers. In some respects this suits those in the newspaper supply chain. However, podcasting extends the reach and relevance of the brand.

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Media disruption

Newsagents take protest action against Vodafone over commission cuts

Australian newsagents are getting louder in their criticism of Vodafone and their decision to cut retailer commissions from 8% to 5%. Many are taking removing signage and sending Vodafone customers elsewhere. While the value of such militant action in a commercial situation could be questioned, it demonstrates the hopelessness these newsagents feel for unilateral and hurtful decisions like the one taken this week by the executives at Vodafone.

I wonder if anyone is taking notice?

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Newsagency challenges

AFL Grand Final day in Melbourne and The Age promotes its newspaper with a classical music CD giveaway – how the world of newspapers has changed

It’s AFL Grand Final Saturday in Melbourne. Our one day of the year in this sports mad city. Everyone embraces the Grand Final – including those who ignore the game all year.

Newspaper sales are always high on Grand Final day. It’s part of the hype: what the experts say, the cartoons, the pre game scandals.

That’s why it is so odd that The Age is giving away a free CD with their newspaper today. It’s odd to have such a marketing push on Grand Final day. Odder even that the promotion has nothing to do with the newspaper as such.

I’m all for marketing newspapers. I just wish that the marketing related to the product and that as a newspaper retailer I could connect with it in some relevant way which could lead to sustainable sales growth.

It’s Grand Final day in Melbourne and The Age should be focused 100% on that in its marketing efforts today. It’s a newspaper, not a brand.

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Newspaper marketing

The future of newspapers is in the product and not gimmicks designed to sell the product

Bob Cauthorn has posted an excellent blog entry at Corante about newspapers and why sales are falling.

It is the product. Bob is right. His comments fit with my earlier entries here about the ridiculous number of product giveaways and competitions being run by News and Fairfax to sell their products. For every sale you win with a CD, a DVD or drink coasters you confuse a consumer about the value proposition of the newspaper.

Consumers are losing sight of why they are buying newspapers.

The masthead must stand for something beyond competitions and free product. Spike increases are not sustainable and while they may help with an audit they do not fix the newspaper malaise.

As a newspaper retailer I want product I can respect, product which consumers seek out because of content. That type of consumer will be more valuable in long term business and basket depth.

Newspapers don’t have to lose a race with online media. The two are different, serving different needs and even different consumers.

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Media disruption

Vodafone cuts newsagent sales commission by 37.5% and hurts small business

Newsagents are reeling after Vodafone announce a 37.5% cut in sales commission.

Around 2,600 newsagents have invested heavily in technology, delivered valuable in store real-estate and increased sales significantly. The reward for all this effort? The 37.5% cut in commission.

Under the new pricing newsagents receive 5% for Vodafone recharge sales.

Vodafone says that newsagents will make more because of growing sales an that the higher commission is competitively unsustainable.

Newsagents have high operational costs: around 11% of turnover goes in wages; rent – between 6% and 12% (depending on location); theft – between 3% and 5%; overhead – 5%.

While Vodafone recharge brings traffic to newsagencies, most customers want the recharge and nothing else.

To lose 37.5% of revenue having just invested in equipment and real-estate is a body blow to small business newsagents and something Vodafone could have managed better.

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Uncategorized

Online retailing to double by 2010 says Forrester Research

news.com has story of a Forrester Research report finding that U.S. online retail sales will grown from US$172b in 2005 to US$329b in 2010.

Newsagents are losing ground. As a channel we have no online strategy. This means we’re not preparing for the move of news, information and entertainment products (newspapers and magazines) online. Nor are we competing for online stationery, lottery or greeting card sales. We ought to be leading the charge online on some of our product categories.

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Newsagency challenges

Girlfriend magazine leads the charge on consumer engagement

Girlfriend is a successful newsstand magazine in Australia. It’s website is even more successful. They are at the forefront of Internet use – readers get to have a say in the making of the magazine including article suggestions and choosing the front cover. At their u make the mag section of the website their constituents can connect with the staff of the magazine in a way which I’d suggest no other media outlet in Australia matches today. Girlfriend is an excellent model. My only criticism is that the office blog entries are too well written and too sanitised to be genuine blog entries.

Other publishers in Australia should be following the Girlfriend lead and connect with their constituents in an open ended online conversation.

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magazines

Newsweek on telcos becoming media companies

This Newsweek story is the latest in mainstream media about the disruption in entertainment and news distribution as a result of telecommunication developments. There was a time when publishers were publishers and TV networks were TV networks and Telcos were Telcos. The news and entertainment channels have become a mosh put and the original independent retailers in the channel are under the feet of the new dancers.

Government has an obligation to small business to help them navigate these challenges. I’m not talking about a handout but rather an obligation to ensure that small business understands the changes and has the resources necessary to navigate the future they choose.

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Media disruption

Dual standards exposed in Australia as Federal Government ponders changed in media regulation

Back in the late 1990s newsagents lost their monopoly in the distribution of newspapers. Newsagents had no say in the matter and were not assisted through the structural change by publishers or government. The result has been years of drifting with an outcome still not in sight. The focus of the changes was competition.

It is disappointing that at the pointy end of Australian media the government is not as focused on competition as it was with newsagents.

Rather than being told what to do by the few who control media and the pipelines which deliver access to media in this country, the government should remind itself of its obligation to competition and what is best for consumers.

I fear that Australia will be a media backwater unless the government changes its priorities. Their meddling is one reason our broadband take up has been slow; why digital television is failing; and, why media ownership is concentrated and therefore consumers less well informed.

Newsagents copped the competition push on the chin and have got on with business. Media companies need to do the same and the only way that will happen is if the government listens to and acts on its rhetoric.

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Media regulation

Newspapers and new routes to market, MediaWeek reports.

Why newspapers are finding new routes to new markets is a good analysis of significant changes occurring in the UK newspaper distribution space.

While our marketplace is difference we are experiencing change, significant change. What the MediaWeek analysis does not cover is the impact on the small business newsagents. The impact of loss of traffic will be significant. The big question is when. Phillip Meyer says newspapers will vanish in 2040 (in his book, The Vanishing Newspaper), newsagents say they will never vanish. Regardless of your position the channel is being impacted. Publishers are leading the change and newsagents need to understand the impacts of their moves and to take initiatives to mitigate the impact and find new traffic.

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Uncategorized

We always love a princess or how covers still count

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Princess Mary is a godsend for weekly magazine publishers and newsagents. Put her on the cover and sales jump. In my own store I know Mary can add between 15% and 25% in sales. While yesterday’s New Idea has been out barely 24 hours I can tell from the sales data that this issue, with Mary on the cover, will be at the high end of the range. Mary is our new Diana since the content almost does not matter – the key is the photo and the prospect of more inside.

Last week’s imported Hello! is another example of cover power. Kylie Minogue was on the cover and it was a sell out in five days whereas we would usually return 30% of supply.

While the science of magazine covers is not a new discussion, it is important to newsagents and other retailers as it helps us attract new shoppers and that underpins our relevance compared to online, for the moment.

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Uncategorized

Sudoku delivers healthy magazine sales

In just four months we have seen thirteen new Sudoku magazines published covering twenty individual issues. This is a new segment within the magazine category, a segment quite different to traditional crosswords. Sudoku sales are strong and smart newsagents are leveraging of newspaper traffic to grab these sales.

While on the one hand I comment and even worry here about the impact of technology on newspapers and magazines and in particular newsagents, on the other hand I’m happy to cheer this bricks and mortar success with Sudoku product. No other retail channel could have launched a new magazine segment like Sudoku as successfully as newsagents have. The success underscores a value proposition newsagents have for publishers in launching titles – as long as we have the core traffic necessary.

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Uncategorized