Is digital the only revenue growth answer?

Floyd Lewis

For many years in the USA, we enjoyed strong readership growth from home delivery while the majority of the world continued with single copy (racks, newsstands, hawkers). For most publications, the home delivery paid subscriber base is a reducing revenue source that also is affecting ad revenue. The industry has responded with a heavy emphasis on digital, but is it the only revenue response? Has our industry overlooked single copy revenue?

Perhaps we should revisit distribution with a goal toward increased opportunities for readers to purchase a copy of our newspaper from newsstands and in stores, not only as a revenue driver, but a digital driver as well.  Consider including, for example, a QR code to a one-day digital pass, or a smartphone link.

As you consider ways to improve single copy sales, one factor that should not be overlooked is the impulse purchase. In the past we addressed this with "bad news" headlines, and – while this can still work – other information can be just as effective, especially if we are in a store where potential readers are close enough to see smaller print.  Perhaps you might introduce a redesigned front page that features more photos, together with brief captions and page numbers for more detail.

Many new studies show people still want to read newspapers as long as we are providing the relevant news they want to read.  We simply need to do a better job of marketing our coverage to them. Since that is a wide spectrum, a new style front page showing many of the issues being covered could be the impulse trigger for a purchase. Local is the best news we still own or could own (Note: local is not city hall; it is clubs, schools, religion, parades, local events, etc.)

For this concept to work best, you will need to have your newspaper in an impulse-buy location. The best of all worlds would be in front of the express checkout counter in a supermarket. For a second location, the most frequently used full-service checkout, and – in a large store like Walmart – you would need three or four locations. 

One inexpensive way to gain that space is to offer a free coupon ad to the retailer, perhaps in a new "coupon" section you provide to cooperating retailers. Of course, there is their profit margin, and since most retailers operate on 2 percent to 8 percent net, a 20 percent margin with full returns should be very attractive to them. When talking with your retailer, it is best to discuss the 20 percent margin rather than the 10-20 cents it provides.  I have heard managers say that candy offers a better margin, but I wonder if they have considered how many newspapers sell during the same time compared to candy bar sales?  

When your location puts your paper in an afterthought position or makes the paper a dedicated buy due to a poor location, you are losing up to 75 percent of your impulse sales. Also, in presenting inside sales, don't forget to include add-on sale items that most customers will buy while in the store, if it's the newspaper that brought them in.

In a recent industry article, the Albuquerque Journal announced a decision to remove its coin racks and concentrate on in-store sales, citing price as the main driver.  The results are early, but thanks to Robert Rivera and Joe Leong for providing some results.  The initial change removed 520 racks that attributed 2 percent of total circulation. These same racks also accounted for 24 percent daily and 27 percent Sunday of rack pilferage.  The staff was able to convert 262 rack locations to daily inside sales, and 373 locations are selling Sunday.  While there was some circulation loss, the delivery cost and theft reduction will likely offset any revenue loss.

That is a great start, and the Albuquerque Journal is now tasking its staff to find innovative ways to increase inside sales and improve locations in dealer stores.  A good goal for our industry is more study on what drives the impulse sale of single copy.  If we master this, it could be possible for single copy to reach a goal of 40 percent of paid distribution.  

Lewis Floyd is a senior associate with W.B. Grimes & Company, with responsibility for the Southern states.  He may be reached at (850) 532-9466 or lfloydmedia@gmail.com.