Gordon Patterson uncovers good news as he interrogates the position of weeklies in terms of circulation and advertising.
Weekly newspapers in South Africa have largely been ignored by most media commentators as daily press and Sunday titles steal the show. This month I decided to take a dive into the well-being of this category in the hope of throwing light on what is keeping it alive, or not.
As advertising or commercial support follows circulation – or at least it should – I felt that circulation should be the starting point of this exploration.
In the table below I compare the growth of weekly circulations since 2008.
While it is clear that between 2009 and 2010 this category suffered losses, we have since seen a recovery, and while the category is still volatile, the quarterly performance trends are slowly returning to normal.
Comparing second quarter 2008 to 2012, no growth has returned, although during this period we have seen an approximate 10% swing in both directions. The downward swing may well have been created by the global economic recession and negative sentiment in our market. The upward swing I believe is influenced by more positive economic sentiment. Weekly newspapers, with a few notable exceptions, are driven by Saturday editions, which, in my opinion, rely heavily on leisure interest and home purchasing activity.
So with category circulations more or less unchanged, let’s have a look at the advertising income performance of this category as measured by Ad Dynamics. Direct comparison is difficult due to titles coming in and out of the category, but the trend is clear, as can be seen from the graph below.
Across the past five years, revenue has grown by 34%, or just under 7% per annum.
Within this performance, however, we have seen the composition or genre of advertising change considerably.
Since weekly newspaper revenue growth has been 34% over this period, category comparisons should be compiled with the relevant performance in mind. Where the revenue growth is less than 34% it could indicate the following:
- Fewer advertisers;
- Smaller or less colourful advertisements being placed;
- Declining return on investment for weekly newspapers and hence fewer smaller advertisers;
- Less affordability; and
- Less frequency of placement.
Looking at the sources of income, we note that retail remains the most important source of advertising revenue at 31% share and, across the five years, this income has increased substantially; in fact, more than three times that of the category growth.
Second and third place have swopped over the past five years. In other words, travel, transport and leisure and financial advertising. Looking at the growth shifts, it’s interesting to note that the latter is in decline, while travel, transport and leisure is growing at twice the category growth. Specifically, financial advertising income has decreased in share from 22.46% to 15.81%, hence the decline in revenue. Business to business share has dropped 4.4% and hence the decline in revenue. It could be that alternative news channels (digital, growing popularity of certain news TV channels and so on) have eroded this support.
Looking specifically at the growth categories, ignoring tobacco-related activity, which is tiny, the real opportunity of the newspaper category must rest in leveraging:
Food advertising (while small in contribution, the rate of growth cannot be ignored and);
Given that this category seems to rely on leisure and home-related advertising, it must be of concern or perhaps an unseen opportunity to see zero real growth in beverage advertising. The complementary relevance I would have thought would have stimulated greater response. Maybe a lack of sales effort is responsible for the indifferent performance.
An area of concern has to be the loss in small display advertisements. Either advertising (undiscounted) is too high, the platform no longer provides return on investment for small businesses, or perhaps the cost of advertising sales is just too high to justify dedicated effort.
In conclusion, weekly newspaper circulation has been stable and while the advertising revenue source has changed, this medium remains retail reliant but increasingly relevant to home/house and leisure advertising. n
Gordon Patterson is the chairman of VivaKi South Africa.
This story was first published in the November 2012 issue of The Media magazine.