Delivering No Options

By: Mark Fitzgerald

Newspapers don’t want to be paper BOYS anymore, and are quitting their routes at an
accelerating speed.

“It’s not a core competency – we have to get out of the business of running trucks,” says William J. Higginson,
president and chief operating officer of the 18-daily Journal Register Co. Last year, the chain turned over the business
of delivering its hometown daily, The Trentonian in Trenton, N.J. to Publishers Circulation Fulfillment (PFC), an
outsourcing of distribution that is becoming common.

“We’re having our best year ever,” says David Morel, director of strategic planning and development for another big outsourced distribution company, American Circulation Innovations. ACI just won an expansion of its contract with the Los Angeles Times and with The Atlanta Journal-Constitution, where it is now delivering just over 1 million TMC (total market coverage) and 375,000 SMC (selective market coverage) packages.

In a sense, choosing to outsource delivery is the first step in newspapers’ response to the digital future. Just as with the decision to manufacture the physical newspapers, publishers face a choice in delivery: Outsource – or go big into the delivery business.

In October, for instance, the Chicago Sun-Times turned delivery of single-copy sales in the Chicago city limits to its editorial rival, the Chicago Tribune. With that agreement, the Trib now distributes 100% of Sun-Times Media’s dailies in the city and suburbs. Off-loading delivery “will allow us to focus on where we can add the most value to Chicago Sun-Times advertisers and readers,” says Sun-Times Media President and COO Rick Surkamer.

Up the road in Milwaukee, the Journal Sentinel took the opposite tack, creating a distribution business. The Journal Sentinel was taking on more commercial work, printing for dailies and weeklies in Wisconsin and Illinois. It just made sense to sell the papers on outsourcing delivery as well, says Vice President of Operations Sheila Davidson. The
business of delivering such papers as The New York Times, The Wall Street Journal, the Chicago Tribune and other dailies will contribute almost $6 million in revenue this year, according to Publisher Betsy Brenner.

But, in a practice that’s also increasingly common, the Journal Sentinel is also a delivery-outsourcing customer: Gannett Co. newspapers deliver the Milwaukee paper in northeastern Wisconsin.

A big growth area for outsource-distribution companies are TMCs and other delivery packages to
non-subscribers, which newspapers traditionally mailed to households.
“There’s definitely a pretty fast move lately from
the Post Office to alternative delivery,” says Kennedy Higdon, vice president of business development for Los Angeles-based CIPS Marketing Group, Inc. “Basically newspapers are taking it in-house or, more often, contracting with the small handful of alternative delivery companies like us. With the postal rate hikes and the talk of eliminating Saturday delivery and maybe eliminating Tuesday, newspapers find they’re not getting what they originally signed up for – reliable delivery at a competitive rate.”
Outsource distributors also bring more technology and efficiency to delivery than newspapers could do with their carrier force, Higdon says. “You can’t lump alternative delivery carriers in with guys distributing door-hangers,” he says. “Our guys know what houses to hit and what ones to skip. The single biggest mistake newspapers make when they take on alternative delivery themselves is [delivering to] do-not-deliver households. In a number of markets there have been blogging and Facebook movements against the
deliverers, with local news reports and movements to boycott advertisers.”
The technology of bigger outsource deliverers also ensures that packages actually are delivered where they are supposed to – important in such delivery strategies as Sunday Select, says ACI’s Morel. “We have GPS technology that reports what streets our carriers are on, how fast they’re going, so we can verify carrier results,” he says. “Newspapers just don’t have that technology. And verification is critical when you are delivering hundreds of thousands of packages.”

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