Times Media has shaken up the newspaper advertising industry with its announcement that it is to link advertising rates to the core circulation of all its titles.
These include the Sunday Times, The Times, Sowetan, Sunday World, The Herald, Daily Dispatch, Saturday Dispatch, Weekend Post and its Eastern Cape community papers.
“At a time when most shocks are unpleasant I was speechless with excitement when I read the Times Media Group announcement that their rate setting for 2013 would be based on the Advertising Media Forum (AMF) definition of core circulation,” said Gordon Patterson, chairman of VivaKi SA and group MD of The Starcom MediaVest Group (SMG).
“What a breath of fresh air, a bold and confident statement that that will send a clear message to advertisers that TMG not only means business but will commit to a partnership of shared responsibility and reward.”
Times Media’s Trevor Ormerod, general manager of advertising sales and strategic communications, has been heralded for the brave move.
“I don’t believe it’s a brave move, but more a move of strategic importance. We are continually asked about the demise of print, and we need to let our advertisers and clients know that this is not the case particularly amongst our TMG titles where we are holding circulation. We are showing confidence in our publications by telling the industry that we will deliver on core circulation,” Ormerod told TheMediaOnline.
“However in line with media inflation and a difficult economic climate, if we don’t deliver value for clients’ advertising commitment, we are prepared to compensate. The decision also ensures that there is a tighter working relationship between the circulation, editorial and advertising departments, where each has to deliver core circulation that is optimised. There are no major drawbacks as we will compensate our advertisers via a free space percentage allocation and not via cash paybacks,” he says.
Ormerod explains how the model will work, and it doesn’t revolve around charging more on successful titles. “The way the process will work is that we have calculated and set annual rates which take effect from January 2013. The circulation of our titles will be analysed each quarter when the quarterly ABC certificates come out. If the circulation numbers have dropped below the buffers we have put in place, then we will compensate by giving our advertisers from the previous quarter added value for their next campaign. The model has not been used before because publishers and circulation managers are generally nervous about the volatility of their circulations. In our case, Times Media’s circulations over the past couple of periods have remained stable,” he says.
Audit Bureau of Circulation (ABC) results for July to September 2013 show Times Media’s daily newspapers (The Times, Sowetan, The Herald and the Daily Dispatch) achieved a 1% combined circulation increase on the previous three months. Times Media is the only media group to register a quarter-on-quarter combined circulation increase in daily newspapers during this period. The Sunday Times has a core circulation of 401 295 copies.
“What is clear is that in these tough economic conditions the financial wellbeing of a title/publisher group cannot only rest in the advertising sales department. Good, honest journalism plays a significant role as circulation is a demographic expression (vote) of support for the content. Let me emphasise this again, CONTENT!” Patterson says.
Ormerod concurs. “I do agree. The publishers, circulation and editorial departments now share advertising revenue risk. Each area has a vested interest in keeping the circulation numbers as stable and robust as possible,” he says.
Patterson explains the background to core circulation. “In 2009 and just as the global recession started biting in the SA economy, a major publisher suggested that the 50% rule was anti-competitive. This rule simply required a newspaper to prove that they had obtained at least 50% of the cover price (on average) before the sale could count as circulation. While not perfect and still open to abuse this was the compromise accepted historically by all stakeholders,” he says.
“The suggestion was that the ABC figure should include circulation sold at less than 50% of the cover price, on average. The opportunity for abuse was enormous. Smaller publishers were threatened by this, advertisers saw the move as a devious way to move the currency (ABC) closer to print order and many worried that the ABC currency would lose its value. Within publishing circles the view was split between pro, against and a large group who thought it would not make a difference.”
Patterson says the AMF stepped in and following internal discussions and a snap survey there was a presentation held at the JSE to share the findings and announce the AMF way forward. “It was a heated time for all involved. Fortunately the pre-meeting industry furore was such that views were forged well ahead of the meeting. The attendance exceeded expectations as stakeholders prepared for a battle, which ultimately never happened. In the presentation the originator of the proposal to include sales at less than 50% chose to remain silent. Following this meeting the broad print industry accepted the arrival of this watchdog currency and while the intention was not to challenge the authority nor credibility of the ABC, its presence was nevertheless a reminder.”
Ormerod says his proposal was as fiercely debated. “This plan has been under discussion for approximately three months. We had to look at our circulation trends, market trends, how volatile the markets may become, marketing initiatives across our titles, quality of editorial, distribution, readership growth opportunities and competitor activity. It was fiercely debated. However, having all the relative facts at hand helped the debate to move in a constructive direction and ultimately the plan was embraced by all the relevant parties,” he says.
Innovation, he believes, is key to survival. It’s a stance that media strategists embrace. Gordon Muller, through his Twitter feed, congratulated Times Media. “@mzansimedia: #TimesMedia putting their money where their mouth is by linking ad-rates to core circulation. Now that’s a real new age challenge for #media!” Similarly, Wicus Swanepoel, media strategist and consultant at 1910 Pounds adds, “Congratulations on the decision to link your rates to core circulation. A brave but necessary move. I hope others will follow!”
“Innovation in all aspects of our business is an imperative for success,” says Ormerod says. “In a country where the media industry faces numerous challenges, we are always confident in the power of print. What better way to show our confidence than to implement a system that impacts our bottom line if we do not maintain the core circulation levels our advertisers expect.”