Advertisers Should Focus on Results, Not Audited Circulation

By: Jay Schiller Newspaper advertisers pay for results, not distribution. That being said, it's the lawyers and not the circulation directors that are inflating the numbers the most these days.

Granted, if I was a lawyer, you'd find me rummaging around those deep Tribune Co. and Hollinger pockets (well, maybe not so deep for Hollinger). But a $100 million lawsuit? $600 million? I know lawsuits are supposed to make plaintiffs "whole," but $600 million? That's a whole lot of whole.

In basketball, there's an expression "no harm, no foul." Which raises the question: How much were the advertisers who are suing actually harmed? Plaintiffs against Newsday and Hoy include restaurants and a realtor. Speaking of restaurants, you wouldn't keep going back to one if you didn't like the food or service. An advertiser wouldn't keep spending money with a newspaper unless it was getting decent results.

If I were any of the censured newspapers, I would readily admit to circulation numbers being inflated. And you know what? Who cares? The Audit Bureau of Circulations (ABC) can keep its numbers. Regarding those plaintiffs against Newsday and Hoy, did enough customers eat at their restaurants or buy and sell homes through the realtor to justify what they paid for ad space? If this was true before the lawsuit, then nothing has changed.

I'm not an advertiser and I've never worked in advertising, though I did work at ABC, but I'm pretty sure of one thing. If you give an advertiser a choice between reaching more people and selling less product or reaching less people and selling more product, you have a true no-brainer.

Newspapers don't even have to cheat to report inflated circulation figures. ABC reports often contain duplicated circulation as well as copies not paid for or even distributed.

My guess is that the most if not all of the original plaintiffs never even heard of ABC prior to the lawsuit. Why should they? People saw their ads and ate in their restaurants and bought and sold houses through the realtor.

The funny thing is that to date none of the parties that could make a legitimate case for being harmed have joined in any of the lawsuits. I'm referring to major preprint advertisers like Sears, Kmart, and others. They're the ones that pay directly for distribution based on how many thousands of newspapers are sold.

No offense to the Crab House of Douglaston, College Point Restaurant, Gallaghers and East Coast Realtors (the four original plaintiffs against Newsday and Hoy), but I don't see them being harmed $1 million per year. Let Newsday stipulate to a 10% overstatement of circulation and pay the original plaintiffs 10% of what they spent on ad space for the last few years.

Ultimately, however, the newspapers will negotiate settlements with the advertisers that involve giving them additional space as opposed to making financial restitution. Maybe the smartest thing to do would be to have ABC and the attorneys leave the room and let the newspapers and advertisers work things out. The one thing ABC numbers and the lawsuits have in common is that their value is greatly overrated.

I believe that when all is said and done advertisers will realize that ABC circulation numbers aren't standardized and that comparisons based on them aren't valid, be it one newspaper against another or even a newspaper against itself. And what happens when Newspapers A and B have the same circulation totals though Newspaper A charges its home-delivery subscribers $15 per month and Newspaper B charges its home-delivery subscribers $2 per month? Does the circulation of Newspaper A and Newspaper B have the same value to the advertisers?

What if Newspaper A drops its home delivery rate from $15 per month to $5 and realizes large circulation gains as a result? Does the higher circulation at the lower rate have more value to the advertiser than the lower circulation at the higher rate? I bring this up because the Securities and Exchange Commission, the Justice Department and various district attorneys are getting involved in the "circulation scandals." These government agencies may end up coming to the conclusion that determining "circulation value" is even more difficult than explaining "salary caps" or how the Bowl Championship Series (BCS) selects a national college football champion.

ABC has convoluted what is "paid circulation." Savvy circulators can keep their numbers up even when readership and revenue decline, thanks to ABC rules and bylaws that enable them to do so. Which brings this all back to the premise that advertisers pay for results and not distribution. For those interested in paying for distribution, I can direct them to a newspaper that claims to have greater than 200% penetration in at least one area.