The Daily Sun, which not long ago broke South African circulation records, has shown a rapid slide in numbers over the past few years.
Second quarter Audit Bureau of Circulations (ABC) figures show that the tabloid’s total circulation is declining steeply. The Daily Sun has taken a precipitous drop from a total circulation of 508 512 in the first quarter of 2007 to 296 489 in the same period this year.
Yet Ads24 said in July that the tabloid’s readership remains stable at 5.6 million (Amps 2012), which indicates that while readers may not be buying the paper, they are still reading it. Daily Sun general manager Minette Ferreira has attributed the decline to the present economy, in which mass market readers, like those of the Daily Sun, give up the luxury of a daily paper. They still engage with the brand on a daily basis, Ferreira told The Media Online, including through the paper’s new television platform, Daily Sun TV.
Ferreira cited the overhauling of Media24’s distribution network as one of the reasons for the tabloid’s problems. “[This rebuilding is] a difficult process, but absolutely necessary to provide a solid platform that will ensure the future growth and reach of the ‘people’s paper’,” she said.
Of course Daily Sun is far from being the only newspaper experiencing circulation decline. There is no denying that print media is ailing. While the predictions of its demise may be exaggerated, the numbers are down – for the most part – across the board. This is blamed on a variety of reasons, such as the recession and digital media. But the tabloid has dropped rather more dramatically than many other papers and this points to the crucial role played by supply chain management.
Media24 suffered a substantial loss in numbers attributed to the introduction of a customer management system called Cycad in 2009. Cycad was intended to consolidate the company’s distribution structure and manage distribution routes. At the same time, Media24’s logistics partner On the Dot was formed from the consolidation of the company’s newspaper, magazine and leaflet distributors. Cycad had disastrous consequences. Distributors didn’t know where to take newspapers, or where to collect returns. Subscribers were billed for copies of newspapers they never received, or received newspapers even though they had not renewed their subscriptions, among other problems.
Media24 was frank about the fact that Cycad was a debacle. CEO Esmaré Weideman admits that the company felt its after effects for a while. “The near collapse of Cycad when it was introduced a few years ago damaged the reputation of the company and caused havoc not only with our newspaper subscription base (our magazine subscribers were never moved to Cycad), but also the delivery of newspapers and magazines to retail – so-called single-copy sales. It has taken a long time and much effort to restore our readers’ faith in our ability to deliver our products to their doors, post boxes and retail outlets.
“[But] Cycad has been stable for a long time and we are still delivering our products to retail on the system.”
She says that Cycad had stabilised by March 2011 and it’s been at least 18 months since Media24 had any Cycad-related customer complaints.
“We are in the process of replacing Cycad with a new ERP [enterprise resource planning] system, SAP,” explains Weideman. “It is a complex task but the modules which we have already implemented work well, thank goodness. One of the major phases of the project was to move all our newspaper subscribers from Cycad to SAP and we are very happy with the way things are working.”
Weidman points out that SAP will also be deployed for finance, payroll, newspaper subscriber management and magazine advertising management.
“Over the next few months we will extend the subscriptions solution to magazines, the advertising solution to newspapers, and introduce single-copy distribution. The modules we have introduced work very well indeed,” says Weideman.
Meanwhile, Daily Sun’s slide has levelled out a little to an 8% loss in quarter-on-quarter data. Media24’s other newspapers have also slowed their drop. Weideman is optimistic. “The recovery process will be challenging, but there are good signs of sustained growth in key areas around the country.”
Sources knowledgeable about distribution emphasised that there are a number of universal reasons for circulation decline, such as the increasing penetration of digital media.
But there are also reasons that differ from proprietor to proprietor. Independent Newspapers is recovering from mismanagement by its former Irish owners and a financial squeeze. Times Media Group has gone through a stage of upheaval, from restructuring newsrooms to taking Business Day to ‘digital first’ and then installing paywalls for some of its online publications. Then there are also exceptions to the decline. Zulu title Isolezwe has shown phenomenal growth. Die Burger is clawing its way back up again, which editor Bun Booyens has attributed, cautiously, to their attracting back readers they lost during the worst of the Cycad debacle.
Dickon Jayes, managing director of Media Distribution Africa, which handles the Mail & Guardian’s distribution, agrees that the reasons for circulation decline differ from paper to paper. However, from a distribution point of view, he identifies some structural issues.
Distribution companies have been under pressure, he says. “Firstly, advertising revenues are declining in general. This is putting cost-cutting pressures on publications. There’s expensive circulation and cheap circulation and the first thing was to look at expensive circulation.”
Expensive circulation included the distribution of copies to places that were relatively difficult to get to but did not offer a high return on sales, such as airports and educational institutions. “These got cut at various stages,” says Jayes.
The next phase was to look at margins. “If we cut an extra five kilometres off that route that’s going to that retailer, that’s okay because we only lose out on five copies,” he says.
The problem with this is that while the distributors save on costs, the number of publications getting out there falls. It’s fine if it’s just five copies here or there, but once these corners are being cut all over, readership drops. “You cut costs in the short term, but you lose readers in the long term,” says Jayes. And marketers, advertisers, media planners and buyers look at numbers. Jayes says that this kind of cost-cutting seems to have affected Independent Newspapers particularly.
“The third issue is that subscription costs are being rationalised,” says Jayes.
For example, a big corporate subscriber may take out a subscription for a large number of copies. When subscription fees increase, the company won’t pay more money, so fewer copies are supplied. The rand values remain, but readership has dropped.
Another broad problem is that many of those managing distribution are not newspaper people, as they were in the past, but come from sectors like fast moving consumer goods. Jayes agrees that newspaper supply chains are quite unique.
“Our products pass their sell-by date much faster than most,” he says. “Yoghurt and milk have a longer shelf life!” And systems have to be accurate. “If a supplier makes a mistake, maybe sending too many size 14 jeans to a Woolworths branch, that’s something they have to fix, but they have time to fix it. If we send too many copies of a newspaper to a store, we have a few hours in which to fix that.”
Yet distribution should not be “rocket science”, he adds. “You don’t need huge amounts of massive up-to-date technology. It’s about systems and people managing those systems. You’re just trying to get papers round the corner to the shop where people will buy them.”
From an editorial point of view, supply chain management doesn’t loom so large: newsrooms are busy grappling with the digital age. The two problems are linked in many ways, however. For one thing, the less revenue generated from print advertising, the less there is to go around to all departments and the more everyone is hit by rationalisation.
Among the challenges distributors face is the high cost of fuel. So could distributors possibly consolidate their operations? Is there a competitive advantage to having separate distribution companies? Jayes is among those who does not think there is.
“Getting your paper into the shop five minutes before your competitor doesn’t give you any competitive advantage. In fact, it might hurt you because they can dump their papers on top of yours,” he says.
“So it’s crazy that we have an Allied truck going up the M4 to Polokwane, then five minutes behind that is a Media24 truck and five minutes behind that is an RNA truck. It’s not even as if you get better shelf space, because that is centrally planned,” says Jayes.
The fact is that newspapers right now need as many readers as possible, so distribution is crucial and there is no room for this to be an issue with regard to readership/sales numbers. So, if this is indeed a reason for successful and unique publications not getting to enough hands, it needs to be addressed urgently.
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