Author: Mark Fletcher

I saw a customer in my newsagency a couple of days ago pull out what looking like ten different loyalty cards, looking for their magazine club card for my shop. Their comment was along the lines of “I should get rid of them cause you never get anything.”

I succumbed to temptation and asked how they viewed our campaign against the others. “It’s great,” was the answer. The customer explained saying that our campaign told them how close they were to free product. It also offered more valuable rewards. Plus it was in a product category no one else catered for – magazines.

I talked to the customer for five minutes, listening to their complaints about the other loyalty cards and how she used them religiously without getting any benefits. She was highly critical of FlyBys for offering nothing.

Her reason for keeping the cards was habit. And that surprised me. Here you have a smart customer, using something to which she attaches little value, only because of habit. Great job Coles Myer on FlyBys.

But great job us too because this customer has altered their magazine buying as a result of our loyalty program.

I am thinking about loyalty programs today because more newsagents are embracing them – but in a me too type way. They are providing cash and other rewards based on purchases without sufficient strategy built into the campaign to get customers shopping more frequently and spending more. To my mind a loyalty campaign has to offer as close to instant gratification possible. It also has to differentiate from the likes of FlyBys and other traditional points campaigns. If you don’t differentiate then you get judged as if you are part of their game.

In the case of the simple (low tech) campaign I run in my shop, year on year we’re achieving excellent sales growth in our magazine category and several other categories. While we do reward some customer who shop with us regardless, we’re seeing significant incremental growth and that’s the name of the game.

I am yet to see numbers of a more traditional (points based) loyalty program in a newsagency which show similar incremental growth.

The conversation with this customer has encouraged me to work on a more structured gathering of customer feedback. I reckon there’s gold there if we can mine it appropriately.

Jeff Jarvis at BuzzMachine has blogged several times over the last two months about his experiences with a new Dell computer. Tracking of blogosphere discussion of Dell following the initial Jarvis posting shows the viral (and powerful) nature of this space. This analysis post by Matt Galloway is particularly interesting.

With many US and European newspapers releasing daily podcasts of news, entertainment, reviews and background pieces to stories, it strikes me as odd that publishers here are not playing in this space.

I see podcasting as extending the reach of the masthead (brand) and that has to be good for the publisher, good for supportive advertisers and good for retail businesses like mine which rely on newspaper brand loyalty to lure customers in.

Given the investment in MX in Sydney last month it’s clear that News is interested in reaching the commuter marketplace. Stand at a station and count the number of commuters getting off the train with earphones in. I did this last week in Melbourne and was surprised. I don’t know what they are listening to – certainly not shows from Australian newspapers.

I only see upside for publishers playing with podcasting.

I’d certainly play in the space in my retail business if there was a economically viable model for providing download facilities and if I had sufficient commuter traffic across the front of my shop.

Ignoring podcasting will not make it go away – especially with the new range of mobile devices about to be launched.

A range of BBC television programs are now available for online viewing – as announced by the BBC.

While speed is an issue, it’s great to have access to this content in such flexible way.

This entry is further unscientific and anecdotal evidence that economically rational supply stops a retailer from reaching its potential.

This week we received 50% more of a weekly women’s magazine unexpectedly.

We decided to do a two day push and display the magazine prominently in our feature area as well as in the usual location.

The result is that by the end of yesterday, two days in, we had sold 20% more copies than we usually sold in a week.

The display took less than 10 minutes to put together and relied on the cover to sell itself. The additional stock allowed us to do the display.

While one could argue that the cover story is the reason for the success, I’d suggest that it may be a factor but not the factor. My theory is that there are many purchases of these magazines which are impulse and having the stock to display in the right place to attract the impulse decision is crucial.

This is why economically rational scale out decisions will push our sales down rather than grow them. We need spare stock so that we can invest the time and floor space in promoting product.

The extra sales from this promotion are doubly beneficial for us as we get to promote our magazine club card loyalty program and develop more long term relationships.

News Corp. is bidding for the portion of realestate.com.au which it does not already own according to this report (any many others).

“Within our lifetimes, the distribution of news and information is going to shift to broadband,” Arthur Sulzberger, Publisher, New York Times. BusinessWeek January 17, 2005.

I’ve gone back over sales data for my own newsagency to try and cost the financial impact on my business of lack of stock.

I’ve looked at sales achieved over the last three months when we have been over supplied a major weekly title. I have looked at the sales achieved in the last two or three days of shelf life of this product. I then looked at when we usually sell out when we receive our regular quantity.

Based on this I estimate that I am losing between ten and fifteen sales a week.

While this is less than $5,000 in business a year, it is actually considerably more than that. There is the cost of the add on sale which could have been achieved had the anchor product in their purchase plan been available. There is also the cost of losing a customer permanently.

If I had absolute control over my supply figures for weekly magazines, I would order at ten percent above the sales achieved in the previous six weeks. The scale out model used by publishers and distributors does not work for my business and I suspect many other newsagents. While it reduces wastage caused by over supply, it helps pushing customers to non newsagent outlets where stock is managed such that they have stock for the full seven days.

In an ideal world I would like to see a commitment to the newsagent channel that it is the channel of choice – meaning that the majority of newsagents will not be left without stock for major weekly publications for the entire on sale period.

By controlling stock in the newsagent channel as tightly as is done today, publishers are directing consumers to alternative outlets later in the week. This puts the newsagent channel at risk and it makes the alternative channels (including supermarkets) stronger.

Part of the publisher argument is that sales in newsagencies for weeklies peak in day one and day two. I have seen data from enough newsagencies to suggest that this is not the case in a significant number of newsagent outlets. I am seeing a spike day one and ay two and then good consistent sales through the week while they have stock.

In the newspaper side of my business it’s easier to get top up stock during the day. Since we started tracking lost trading hours (hours without a newspaper title on the shelf) we have increased sales. We cost the time without stock and with this are able to value the impact on the business.

The solution to this challenge of magazine supply lies in the data held in newsagencies. We have to unlock this in a timely way which allows publishers to limit their exposure to inefficient print runs and which helps newsagents maximise sales.

Interesting announcement from Fox Broadcasting Network that they are embracing podcasting (except they are calling ot Foxcasting) and extending their program brands to the mobile world. Their strategy is clever and a good use of the medium.

We received additional stock of a national weekly magazine last week and the result is an 80% increase in sales. With this title we usually sell out by day 5 or day 6 and last week, thanks to having stock, we were selling product on day 7.

While basing print runs on maximum is what the accountants in a publishing company will want, as a retailer there is nothing worse than turning customers away because you have sold your allocation.

You only have to turn someone away a couple of times for them to stop visiting your shop.

The US I-Play company has announced a deal with Twentieth Century Fox’s new unit Fox Mobile Entertainment to develop, publish and distribute one of the market’s most desirable licenses – “24” – as a mobile game to a global audience.

The plan, apparently, is to create a game which captures the tension of the TV series and provide a level of view interaction which will create for a more personal “24” experience.

Okay so in the past we got to watch the TV show and maybe buy the magazine inspired by the TV show or, occasionally, watch the movie inspired by the TV show. Now we can watch the TV show and interact as if we are part of the show. We get to be part of the “24” reality.

Given the demographic of the show (25 – 54 year olds) it will be interesting to see their take up of the game. It will also be interesting to see if the interactive mobile game tie in attracts the younger demographic.

I see a vague connection between this “24” deal and citizen journalism. It’s about interaction, personal connection. While the “24” deal is a game, it’s interaction nevertheless. Now if only there was a way to get the game players interacting on real matters.

The Economist this week publishes a good report about convergence. It starts with:

“WE’RE not a telephone company anymore; I sort of resent that,” says Lea Ann Champion, an executive at SBC, America’s second-largest “Baby Bell”. “We’re a communications and entertainment company.”

Phone companies are under attack for traditional call based revenue and they are chasing content plays as a means of replacing this. Just look at the content deals done here in Australia in recent months. Then consider the Telstra acquisition of Trading Post.

While The Economist report focuses more on the threats to the phone companies, it provides a good perspective of the IPTV opportunity in their business plan.

Hot on the heels of the PBL/Optus deal, the Seven Network has announced a deal with m.Net.

According to the Seven release, m.Net Corp. will mobilise Seven’s content assets such as Home and Away and The Great Outdoors through to Girlfriend, New Idea, k-zone and Better Homes & Gardens magazines.

While Seven and Pacific Magazines will see this as a means of extending the reach of the brand (and therefore not impacting over the counter sales of the magazines), who can say what the medium term future will be of magazines as we are in unchartered territory in terms of low access cost high consumer enjoyment mobile devices.

The Seven deal makes sure that their brands are accessible through the rapidly growing mobile channel.

Seven Network’s Head of Digital Media, Rohan Lund was quoted in their release saying “Mobile content isn’t just about watching TV or reading magazines on your mobile. It’s about delivering a richer experience for our audience and offering them a deeper interaction with their favourite brands. This could take the form of WAP sites, SMS promotions, mobisodes, ringback tones, games or music.”

This move makes it easier to release the story from the current old world aggregator – the TV show, the magazine. The story can be free on its own and available on these mobile devices for a few cents. This pushes the brand, creates an advertising opportunity and grows the consumer connect. All with a more efficient supply chain than the old model.

These developments are fascinating. It’s appropriate that Seven moves in this direction as it would be for any content creator and aggregator.

The challenge for the newsagent channel is to have a game plan to maintain and indeed build their relevance in this mobile world. This game plan needs to be build around the personal and local connect. It needs to rely on products people purchase which are less likely to be sold over the internet.

Digitimes has published a good report summarising current e-paper developments. So heavy hitters are involved in a range of projects. The first commercial products are almost ready to hit and focus more on business applications and book publishing. Still a way off from the reusable e-paper newspaper but projects well worth watching as I am sure many publishers are.

Good to see MSNBC adding more (free) podcasts to its offering.

The respected C-Span public broadcasting network in the US has just launched podcasts of several of its programs.

This new Formula 1 podcast bypasses traditional news and information channels in a way which I’m sure will get traction among the fans.

Released almost a month ago but worth a mention again are the San Francisco Chronicle podcasts – a good demonstration of how a newspaper publisher can add value to the printed story.

This list is by no means complete.

A search at News Ltd and Fairfax sits produces no podcasts from these Australian publishers.

To provide a visual context for comments in recent posts about the challenbges of in store displays, here are pohtos from the six most significant in store displays in my 230 square metre newsagency at the moment.

I’ve written here before about my frustration with the constant stream of giveaways being used to boost newspaper sales. I understand the need to pursue growth but to spend the bulk of marketing dollars on competitions rather than building brand awareness and respect does not make sense to me.

With the marketing push for competitions consumer perception of the brand will change and one day publishers will wonder what happened to their brand. Or maybe they know what they are doing and it’s about the pickup of the product rather than the reason for the pick up.

I was reminded of my frustration when I read News vs. Entertainment: Should newspapers give readers what they need or what they want? At editorsweblog.org today. While their report is more about the low brow content many newspapers are providing, it’s in the same space as my point.

For years we have been hearing that it’s the 18-39 demographic which is the demographic for advertisers. So this is what people have concentrated on, all but ignoring the 40+. Now here in Australia we have just see the launch of a radio network focusing on the 40+ demographic. They’ve done this because there is money in that space. All it took was for research to be undertaken about what the demographic wanted so that appropriate product could be created.

So, just as there is money in the older demographic, there is money in the respected news and information space. People want news and information they can trust. Publishers focusing on their brand by building consumer trust will attract valuable business.

For an understanding of why publishers are throwing billions of dollars at online businesses this year you need look no further than the Pew Internet & American Life Project study, Teens and Technology.

The report tells us that 87% of those between the ages of 12 and 17 are online; they play games, get news, communicate; email is more for communicating with adults; instant messaging is the way to communicate.

The 57 page report contains valuable information for anyone in a business trying to reach the younger demographic. It will help you understand how they are using the Net. It also goes some way to explaining the new language and the accompanying desire for shorthand communication. This impacts how they access news and information. Whereas a generation back people would take the time to read a story, this generation is growing up on truncated sentences and part words.

The language of reporting news and information will need to change to reflect what the generation is using itself so that the product of the news and information services is accessible.

Okay so TV, Radio and print news services will not switch to instant messaging (SMS) type text messages. However, they will embrace it somehow to connect with the demographic – if they want to access the advertising potential of the group.

“The Pew Internet & American Life Project produces reports that explore the impact of the Internet on families, communities, work and home, daily life, education, health care, and civic and political life. The Project aims to be an authoritative source on the evolution of the Internet through collection of data and analysis of real-world developments as they affect the virtual world.” … from their mission statement to provide perspective for their study.

Burst Media released a study concluding that the Internet is well on its way to being the entertainment medium of choice for online consumers between 14 and 24.

Burst surveyed 13,000 online users aged 14 and over. While the most respondents (52%) listen to music on the Net, 77% of those between 14 and 24 do so. 39% of those 24 and under also reported that they primarily listen to music on the Internet. More than half, 53 percent, of respondents younger than 25 watch movies and other video online, compared to 28 percent of all respondents.

The game is online folks. Online music, movies, games, news, information.

But we knew that.

This survey, okay it’s by an interested party, demonstrates why the cable and free to air TV companies are fighting here in Australia and elsewhere to get a piece of the Net TV space. The will be the next channel through which to capture the lucrative consumers.

Here is some information direct from the Burst press release:

Nearly half (47.3 percent) of respondents use the internet to gather local, national or international news. Men are significantly more likely than women (50.3 percent vs. 44.3 percent) to say they use the internet to gather news.

Nearly two-thirds (65.2 percent) of respondents report using the internet to stay in contact with family and friends; among women 55 years and older, 77.5 percent report doing so.

Broadband respondents are more likely than dial-up respondents to use the internet to listen to music (58.7 percent vs. 40.2 percent), play games (53.4 percent vs. 43.9 percent), and watch movies and other video (31.7 percent vs. 17.1 percent).

Four out of five (86 percent) respondents say their daily routine would be disrupted if their home computer were taken away and not be available for one week. Some 42.1 percent say their daily routine would be disrupted “significantly.”

With the sale and distribution of newspapers and magazines deregulated consumers can find these products in all manner of stores across Australia. However, newsagents, the original retailers and distributors of these products, continue to be the only outlets actively promoting the product in store.

Here’s a list of current promotions in my own newsagency today:

TV Week 20th anniversary Neighbours display (aisle end)

Maidson promotion (aisle end)

Three new part works products (each a separate feature display)

Herald Sun Monopoly display (separate in store display)

Alpha promotion (separate in store display)

Investigate magazine promotion (in situ display)

Computer magazine feature (promotions areas display – a promotion we have created for ourselves to push computer magazine sales)

Crossword magazine feature (in store display – a promotion we have created to push the segment)

Care and Friendship Week – a card company promotion to boost card sales and encourage acknowledgement

This is all part of retail. We like it. It’s great to have the excitement of promotions. The challenge is to fulfill promotional obligations, maintain our own identity and create an integrated solution which leverages the whole rather than the parts.

Standing in my newsagency you’d be hard pressed to believe that magazine and newspaper publishing is challenged at present. But then all this activity is about keeping consumers interested.

It’s in stores like mine where the battle is really waged. Battles actually. For time. For money. Customers come in for a paper, a lottery ticket or a phone recharge and the challenge is to get them browsing so that they make the additional purchases. Hence the bright and bold in store promotional displays.

This is why newsagencies are important to newspaper and magazine publishers. We provide a retail presence second to none in Australia. And we do it for little cost.

The high number of newspapers and lottery products sold alone in newsagencies has been troubling me. Not only because of the risk to the newsagency retail channel in Australia if sales fall but also because of the lack of efficiency as a result of the traffic.

I have been looking for some research on why people buy newspapers but have had no luck so far. I’m guessing that the research has been undertaken by publishers and others for their own use and will not reach the public domain for that reason. My bet is that the purchase is as much or more about habit, like the morning coffee, than news content.

Looking at the way newspapers are promoted and the focus on competitions more so than news content suggests that it’s about habit. Competitions focus on maintaining and, hopefully, building habit. Content is not as important as the coupon or add on gift.

Lottery television commercials focus on habit. That and the fear of not having your ticket in when your numbers come up.

The risk for newsagencies is that they (we) are not part of the habit equation. Some of our products are but we are not. As consumers are able to satisfy their habit at more and more outlets it is reasonable to expect that the auto pilot will adjust and fewer will trek to the newsagency on auto pilot.

We need to promote ourselves as part of satisfying habit demand. The newsagency needs to provide the fix rather than the product. Promoting ourselves this way makes us more interesting to suppliers (current and prospective).

We can make the habit connect through competitions, as used by publishers and through emotional connect commercials, like independent grocers. My preference, however, would be that we find a way within our shops to collectively and universally across our channel make the habit connection and build on this to shore up current traffic and hopefully build more traffic moving forward.

The international courier market is well served with private enterprise businesses. There seems to be no sense in our Government owned Australia Post joining a postal consortium to compete with them in the express courier space as covered yesterday in the Sydney Morning Herald.

I continue to be astounded at how Australia Post is able to fly under the radar on issues like this. The government ought to sell off all but the essential services side of their operation. The continued government ownership makes for an uneven playing field and businesses like mine suffer as a result.

I spoke at an industry conference last week about the shopping basket analysis data I’ve been collecting and analysing. The presentation was a call to arms for newsagents — proposing that they better measure their businesses and take a more professional approach to business operation.

Here are my closing words:

Our businesses are icons. We were created in the 1800s to distribute newspapers and magazines such as The Bulletin. We have a proud history and a deep community connect. Our future lies in tapping that community connect, focusing locally and standing for something.

Where our competitors think that big is beautiful and that one size fits all we like our independence, we like being local. We are standard bearers of Australian culture and that’s something to be proud of.

To ensure we have a bright future, we need to plan for it and to plan for it we need to measure and understand. Then we need to execute as business people, leading our businesses rather than working as if on a production line. Most of all we need passion. Being a newsagent is not a job, it’s a profession. Professional newsagents build better businesses and there’s data to prove it.

Newsagents need suppliers to treat them as professionals and to trust them. Part of the reason newsagents are traffic rich and efficiency poor is that suppliers demand control of the freeway to their product at all costs to more efficient use of the traffic they generate. For example, newspaper publishers have rules about what can be advertised news newspaper product, lottery companies have similar rules. If they worked with newsagents and with each other they could achieve incremental sales. There is data which supports this.

Beyond working on a more integrated approach to cross category selling, newsagents and their suppliers would also benefit from better use of the core point of sale technology. (I note that I own a business which is a major player in providing point of sale software to newsagents.) Whereas today lottery products are sold on separate terminals, by integrating this category with existing point of sale equipment it would be easier for newsagents to up-sell non lottery customers and herein lies an excellent business opportunity. The same is true with bill payment. We have separate devices for this and could be better served if our point of sale registers provided the tools.

While I am aware of some progress in this area, it’s crucial that all suppliers to newsagents study the traffic patterns and counter operation as greater co-operation would make achieving real sales growth easier. We ought to decide that the existing sales point is the business focus and build all new initiatives/technologies around that.

Interesting to see that Alpha is continuing to sell, albiet in small numbers, in newsagencies where there is still stock.

A frustration expressed by newsagents is the requirement that it is sold with local News Ltd newspaper. Several newsagents have commented publicly about experiences where they have seen or known of the product being sold in non newsagent outlets without such a cross sell requirement. This needs to be addressed by News for the next issue.

I’d like to see newsagents with stock left allowed to use these last two weeks of shelf life of Alpha issue #1 to sell the product alone. A fresh in store cmapaign might achieve a nice kick along in sales.

Since the blessing by Apple, podcasting has received enormous media coverage. Some of it insightful and driving deeper use of the technology and other of less value such as this piece in the latest Newsweek.

I continue to be amazed at the low take up of this technology in Australia.