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

Author: Mark Fletcher

Online greetings start-up raises $5M

Seattlepi.com reports that, Smilebox, an online greetings start-up, has secured US$5 million in funding. The story is three weeks old, sorry. Like any start-up story there is plenty of froth and promise. What makes this interesting is that it’s in the greetings space which hae been largely ignored in online plays in recent years. I’m interested because greeting card sales are important to newsagents. I’ve seen data suggesting that our retail channel has round 40% of greeting card sales in Australia.

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Media disruption

Is another News Ltd Newspaper promotion about to shun newsagents?

I’ve heard a strong rumor that News Ltd is to launch a promotion on one city in a few weeks which will only be available at a certain petrol outlet. If true, this would be the second time this has happened. The newsagency channel was created to distribute and sell newspapers and magazines more than 120 years ago. Petrol outlets have had newspapers only recently. News Ltd relies on newsagents to keep the costs of distribution down and invest in over the counter sales at a rate unmatched by any other newspaper outlet. If News Ltd refuses to include newsagents in what looks likely to be a high profile campaign then newsagents would be right to respond. Some folk in News Ltd have to decide how important newsagents are and if the answer is ‘not important’ then they ought to stop the death of a thousand cuts. If I’m wrong let me know: mark@towersystems.com.au.

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Newsagency challenges

Newspaper stand boost sales

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Thanks to co-operation from News Ltd we have a new newspaper stand on trial at our lotteries counter and it’s working a treat. Getting a newspaper sales with a lottery sale is much better than just the lottery sale. It’s only been on the shop floor two weeks but indications are that the stand is worth between 5% and 10% in additional sales.

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Newspapers

Magazine tidbits

NW has a bright green masthead this week – making it stand out in the crowding women’s weeklies section on newsagent shelves.

The WHO Weekly once off price drop to $2.95 is working with consumers – sales have been very strong. In my own store I’ve seen people who usually ignore the title purchase it because of the low price. It’s a great way to get people to take a second look.

ZOO Weekly is soft in its third week. Compared to Picture and People it’s slipping. Blokes are not weekly magazine customers. But maybe they are in enough places to warrant the title being published.

The Commonwealth Games Program is selling very well.

Magazines were up 7% in February this year compared to last in my store. What’s interesting is the Buying & Selling, Food & Wine and Computers & Gaming categories were all down 20%. It’s been this way for a year now. These categories are in serious trouble yet newsagents continue to get loaded with stock.

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magazines

How newsagents can lose a sale thanks to ‘smart’ technology

Over 3,000 newsagents use equipment from Bill Express to process credit card payments, telco recharge business and bill payment.

Up until about 2 months ago if you processed a Credit Card transaction on the Bill Express EFT Terminal and failed to press yes or no to verify the signature, the transaction would process through as an approved transaction. If you were tied up with that or another customer and didn’t answer yes or no then your transaction would still go through and the funds would hit your account.

Somebody in their wisdom decided it be best that if yes or no was not pressed in time the transaction should decline regardless of the document signed by the customer showing ACCEPTED.

We experienced this first hand several times in my shop. We approached Bill Express and they advised that the change was an ANZ policy. We approached the ANZ and they denied this. They went on to advise that it used to be the case years ago on old MultiPOS terminals.

ANZ Merchant Services advised us ten days ago that this was one of the most common reasons people (especially newsagents) called their support centre. ANZ changed their software on the new stand alone MultiPOS unit so that the transaction would go through. Given the conflicting information put to us by Bill Express and the ANZ we cannot be sure as who needs to do what, one or the other needs to change their software for processing on Bill Express terminals.

The idiot who made this decision has cost newsagents (including us) money. That there is spin from Bill Express and (possibly) the ANZ is disappointing.

To Bill Express we ask: Why make a fundamental change such as this and not clearly inform your customers? Bill Express should have advised clearly what steps we need to take to recover the funds in an approved transaction being converted to a declined transaction.

ANZ Merchant Services, to their credit, have provided us with a process for recovering money from transactions cancelled. This at least helps us claw back funds Bill Express told us were lost.

My frustration is that either Bill Express or ANZ or both have let newsagents down. That no one has owned up to this is most frustrating and demonstrates a lack of regard for the newsagent channel. Had I not alerted newsagents to this problem ten days ago they would not have known nor would they have had knowledge as to how to recover the money lost.

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Bill Express

Fox and other media outlets beat up Craigslist

FOX News yesterday, on the Fox & Friends TV show landed some punches on Craigslist, even calling the free classified site Craigslust. It didn’t matter that the comments were ill-informed. Balance was almost non-existent in their discussion except for a brief glossed-over comment acknowledging a response from Craigslist founder, Craig Newmark. The ‘story’ was that prostitutes used Craigslist’s free advertisements to promote their services. Hmm, and News Corp. has never allowed such advertising; News Corp. has not used breasts to promote newspapers?

It’s one thing for a media company to comment on another, however, such comment ought to be fair, factual and balanced. The Fox & Friends spray was none of these things.

Craigslist has come in for other sprays in mainstream media recently: Boston Herald, New York Times – to list just two.

Craigslist is a tiny company causing significant impact on the classified advertising business. Media companies ought to respond to this competition through their offerings to consumers and not through biased stories.

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Media disruption

The revolution of engagement, the new brand experience

Alan Moore has posted an exceptional article at Masternewmedia.org. In Brand Experience Replaces Broadcasting: Online Communities And User Engagement Are The Access Keys, Moore covers plenty of ground, all of it compelling for anyone interested in media, marketing and or advertising. The following paragraphs, at the end of the piece, offer an excellent take-away:

The revolution of engagement is built upon the power of the meritocracy of ideas, and the strategic combinations of different media to propel that idea into the world. But more fundamentally than that, it is about connecting large or small communities with engaging content to a commercial or social agenda.

Rather than boiling everything down to a unique selling proposition, engagement marketing is able to create bigger ideas that emotionally engage its audience. Rather than focus on the single proposition that would result in a manufactured communication strategy, engagement marketing is built upon the fundamental notion of shared and co-created experience, something which ‘interruptive’ communications cannot do.

If as a brand you are not also a provider of a valuable experience – go home – hang up your boots and retire. In this new world the key to commercial success is to make your customers successful – understand your customers needs – involve them – engage them – develop strategies that by holding their attention willingly, you can also have a commercial relationship

As a practitioner of cross-platform engagement strategies – I see more and more and more requests for ‘big ideas’ – cross platform strategies. Terms used are of engagement, creative content strategies, which we have advised on a few. Customers you see, embrace the world holistically – funnily enough where-as we marketers like to chop chop chop, everything down into little tiny pieces.

IF ONE THINKS THAT AT THE POINT OF PURCHASE YOU HAVE JUST MADE THE FIRST STEP – WHERE DOES THAT TAKE YOU?

Remove the notion that marketing is ‘adversarial’ and you start to get into a really interesting place – that can be tailored and enhanced by new digital technologies – one in which you can create and co-create value in so many ways.

Customer base is replaced with customer community – all brand interaction should deliver an experience that actively links customers, media and brand in relevant and meaningful ways.

Brand experience replaces broadcasting in its broadest sense.

It is these shared, co-created experiences available to consumers online that we in the bricks and mortar world need to somehow embrace. The MySpace generation are enjoying creating this thing and one only has to see how they wield their power over the ‘owners’. The generation wants more control than the traditional retail offers today. Just as eBay has trained people to negotiate and be prepared to wait.

Moore’s message on engagement resonates on a variety of levels.

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Media disruption

Advertising 2.0

Paul Beelen has written an excellent white paper about the future of advertising. Paul works in a creative role for Leo Burnett Santiago, Chile. He discusses the impact of technology on advertising and in particular discusses contextual advertising, the phenomenon of online social communities, blogging and the blogosphere and new language of the age. He also talks about what we used to consider PR as being part of the advertising mix in the online world. The paper is well worth reading.

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Media disruption

Famous launch update

Famous, the new weekly magazine from Pacific Magazines, has been on sale four days and it’s time to check in with performance. Taking a look at data from my newsagency and several others the title seems to be getting good traction. Sales can be misleading so I have looked at sales for Famous compared to sales of WHO, New Idea, Woman’s Day and Star in those stores. Famous is selling well with New Idea and Woman’s Day. There are some instances where it is sold alone but not many. While it is unfair to compare the titles, I’d note that Famous is selling better than Star is (even now) in several stores.

The Famous cover does not have quite the cut through a new title needs. In the magazine rack, between all the weeklies, it does not sufficiently stand out. That will change. Look at the tweaking of New Idea, Woman’s Day and NW. They have all benefited from cover design adjustments.

I compared Famous to ZOO, the other launch this week (last week’s ZOO was free). In the stores I have seen data from Famous is doing better than ZOO. ZOO is extending the reach of a category whereas Famous fits within a well established category so the ZOO road in pursuit of an audience will be longer. It’s worth noting that ZOO is more often sold with a newspaper.

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magazines

The things you do for WHO

WHO is celebrating its birthday today with a 50% discount to its cover price. Time has done a great job getting information out to newsagents to promote the special issue and publiding momentum in the public. We decided to order more stock so we could make an impact and while the stock was available from the warehouse prior to today’s shipment we’re having to drive from Forest Hill to Laverton and back to get the extra 50 copies in time for the weekend. Network, the distributor, suggested a Monday delivery but that would be too late. The point of this is that driving for two hours for 50 copies (gross profit value – $31.25 – seems nuts. But you do it if you’re focusing on the magazine category in your store. Coles or Woolworths would not pursue business in such a micro way but then they don’t need to.

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magazines

Melbourne Observer delivers better baskets

I look carefully at shopping basket data for my newsagency and others and an particularly interested in the basket depth achieved from newspaper customers. The industry average in suburban (high street and mall) newsagencies is 65% to 70% of newspapers being sold alone. The Melbourne Observer, a weekly newspaper aimed at the older reader, is sold alone 35% to 40% of the time. It’s an add-on sale in many cases and the traffic driver leading to more business in others. Our Melbourne Observer sales are at 80 to 100 a week and in a challenged newspaper marketplace this growth has to be appreciated. Theirs is a niche publication which serves the niche extremely well. It’s more efficient in terms of inventory, real-estate and labour than half the magazines I sell. I’d note that my sales team reckon the Melbourne Observer customers are happier than most!

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Newspapers

Cross media ownership changes

The World Today on ABC radio yesterday ran the first part of a two part piece on the issue of cross media ownership. The transcript is at their website along with an audio file of the story. It’s well worth a listen.

Any change to the cross media ownership laws must serve Australia and Australians above all else. If the changes serve the traditional media companies, their suitors and or the new entrants in this rapidly changing space so be it.

In my viewwe need are lower barriers to entry, a framework which promotes diversity of coverage and delivery platform.

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Media disruption

Some calendar relief thanks to eBay

I’ve observed here several times about the challenges of retailing Calendars with many retailers discounting in this category from November. They are ruining what was a good (fair) margin business. An employee of mine grabbed some of our remaining calendars when we cut their price to $2.00 to move the last 300 or so we had last week. He bought the stock and has started listing them on eBay. These mostly $19.95 calendars have been discounted from New Year’s Day by 25% then 50% then 75% and finally to $2.00. The first eBay auction ended last night and the results are:

Jude Law – no sale

Tom Jones – no sale

Teri Hatcher – 99 cents

Teenage Mutant Ninja Turtles – 99 cents

Audrey Hepburn – $2.25

Usher – $4.25

Natalie Portman – $7.00

Kylie Minogue – $9.50

Charmed – $10.50

Buffy – $16.02

His $20.00 of purchases from my shop resulted in $51.50 in sales. The eBay fees will take around $10.00 of that so it is still a nice margin. It makes me wonder if I would have been better off not discounting at my shop and using eBay to quit the slow moving stock.

Footnote: Poor Tom Jones and Jude Law. What does a no sale in an eBay auction say about their appeal? To be beaten by the teenage Mutant Ninja Turtles would be humiliating for anyone.

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Newsagency challenges

Qantas, Singapore Airlines, Australia Post and newsagents

The Australian Government has decided to protect Qantas from competition by continuing to shut Singapore Airlines out of the on the lucrative US route. The is the same Government which has approved greater competition by Australia Post against small business newsagents.

So, while one Government minister lectures newsagents about the importance of competition for the economy (and the government’s shareholding in Australia Post) another government minister is extolling the virtues of blocking competition in the skies.

My newsagency is directly opposite a government owned Australia Post outlet. Their range of stationery continues to grow – especially the products they import from China and brand as Australia Post products. I’m told this is good because it keeps my business on its toes.

The reality is that my business and the businesses of my colleague newsagents are not as well connected with Prime Minister Howard as Margaret Jackson and the team at Qantas.

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Newsagency challenges

Crikey on Sensis hype and a tipping point for newsagents

I have commented here in the past about the Sensis (Telstra) owned Trading Post and falling sales. It seems that no matter what promotions are built around the product, sales are flat at best (in some outlets) and falling significantly (in others). in The real numbers behind the Sensis hype published at crikey.com.au, Mike Houghton provides some analysis of the Trading Post situation including this:

The re-branding of Trading Post nationally has failed to grow circulation. If the decline in circulation continues, the entire Trading Post business model could implode requiring a massive restructuring of the business and forcing Sensis to admit it paid too much and potentially forcing a revaluation.

2004-2006 Trading Post sales:
Sydney 65 to 43
Melbourne 95 to 68
Brisbane 65 to 45
Adelaide 35 to 27

It seems to me that the Trading Post newspaper is crucial to keeping their brand top of mind as they focus most of their attention into building their online model. While that may be appropriate for Sensis, it does not respect the investment by newsagents in real-estate and time propping in a stagnant or even decaying retail product. There will be a tipping point with sales where just to keep the product in store newsagents will need to receive some form of retail display allowance since it would not make sense to provide real-estate and labour when you’re not making enough gross profit to cover your costs.

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Newsagency challenges

Thong watch: Ralph

I was remiss in not mentioning that this month Ralph is giving away thongs. So that’s three magazines giving away thongs in January/February. At least with the Ralph giveaway, as opposed to Shop Til You Drop, the blokes are not putting the magazine on the floor to check the size of the thongs.
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magazines

NAA Newspaper conference blog

The Newspaper Association of America has a blog covering their Marketing conference being held in Orlando this week and related news. Some naval gazing and some excellent insight into conversations about the challenges being faced by and the future of newspapers.

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Uncategorized

Magazine real-estate and labour costs for small business newsagents

I’ve been researching the cash flow implications of magazines in Australian newsagencies for several months. After considering data from many businesses, I am now focusing on six case studies. What is interesting is the monthly labour and real-estate costs for magazines in these stores as shown on this table.

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It clearly demonstrates the cost differential between a rural newsagency, #4 and a major shopping centre newsagency, #2. It stands to reason that shopping centre newsagents have more cash flow negative titles and that they will be the first to pull out of carrying the traditional newsagency range of magazines – that is unless the magazine supply model changes to create more economical circumstances for such newsagents.

With newsagent competitors able to easily choose the titles they carry (and thereby focusing on the top 50 of 100 titles), newsagents face the need to signifcantly alter their business model to stay in the game. It can be done as some are demonstrating already. It takes stength in dealing with suppliers and focus on sale and return data.

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Newsagency challenges

Syndication of blogs on mianstream media sites

Thanks to Micro Persuasion I have found out that BlogBurst is offering a syndication service that places selected blogs on mainstream media destinations such as: the San Francisco Chronicle, Washington Post, Houston Chronicle and San Antonio Express-News. This is clever innovation. It respects the value good blogs can add to an existing media outlet, it recognises that reporting is changing and it opens an opportunity for mainstream media brands to build a more relevant connect to today’s online news consumer. Citizen Journalism is alive and well and making its way to smart newspaper websites.

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Citizen Journalism

Famous Launch and plenty of other magazine activity

The real-estate battle has begun in newsagencies today. Famous has launched with a counter unit, a slick looking floor stand and a bunch of other point of sale material. The support for a strong in store display from Pacific is fantastic.

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The floor unit.

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The counter unit.

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At the front counter with other women’s weeklies.

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In the main magazine display next to women’s weeklies.

The space and time available for the Famous launch is challenged because several titles out today and wanting to feature in store: it’s the 1 year anniversary edition of Madison, the New Weekly is engaging in a major in store promotion, Burkes Backyard has a design CD giveaway and the second issue of ZOO Weekly is out (with a free standing floor unit which needs to be at the counter.

All this magazine activity is fantastic. The challenge (speaking selfishly) is having enough stock on hand to adequately promote these feature titles.

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magazines

Is Google making us stupid?

The Monthly, a self intelligent and witty magazine, has a cover story this month about Google. Gideon Haigh, author of the cover piece, investigates Google and suggests that it may actually be making us stupid. I accept much of what Haigh writes – it’s a worthwhile analysis of Google.

Footnote: The Monthly makes me stupid, as a newsagent. The magazine sells for $6.95. I need to sell three copies a month just to cover the real-estate costs. Sometimes I sell more than this but most times not. So, I’m losing money on the title. By having the title on the shelf I provide a browsing opportunity for consumers. They can see, in the magazine, the subscription offer: $39.95 for a year whereas buying each copy from my shop would cost $76.45 ($57.33 of which goes back to the distributor and publisher). I have no real control over whether I carry the title. It annoys me that the publishers and distributors use newsagent real-estate to build brand awareness and at the same time seek to cut out newsagents and go direct. Yeah, I’m the stupid one.

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magazines

Australia Post market research

I received a six page market research survey from Australia Post – the Australian Lifestyle Survey – in the mail at my home last week. Checking around the office just about everyone received the same survey. By completing the survey and returning this to Australia Post by June 1 I can be in the running to win a Sony home theatre system and some other prices. The total prize pool is worth over $30,000.00.

The survey is also available online.

Australia Post wants this information so it can use the data to sell its direct mail services. Nothing wrong with that except that Australia Post is government owned. Anything it does is seen be many consumers as government endorsed, even encouraged. This provides the an imprimatur no other business can leverage. This is Australia Post abusing its government ownership.

Remember, this is the organisation which has entered the general retail space aggressively over the last ten or so years. The 863 government owned Australia Post stores take greeting card, stationery, computer supplies and other business from small business newsagents like mine. They do so behind the Australia Post shingle and leveraging the government endorsement. That my government does this to me and newsagents like me is appalling.

This survey which I received in the mail is another step in Australia Post’s pursuit of record profit and record shareholder return – to their one shareholder, the Australian Government.

Government owned Australia Post is, in my view, operating way outside the functions permitted under the Act which governs its operations.

I hope complete the survey with useless data.

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Newsagency challenges