Few Put a Premium on Giveaways in U.S.

By: Mark Fitzgerald In Europe and Latin America, the promotional products that Mediasat Group offers newspapers practically sell themselves. Every couple of weeks, the Madrid-based company announces another newspaper premium campaign, from encyclopedias offered by Le Figaro in Paris to a collection of DVDs on world history by El Universal in Mexico City. Competing newspaper premium marketers like Spain's Grupo Planeta and Belgium's Paperview are just as busy.

Then there's the explosion of music CDs and movie DVDs given away in the tabloids and "quality" papers of Great Britain and Ireland. The Economist magazine reported earlier this year that U.K. newspapers are spending as much as $1.5 million each to give away DVDs in weekend papers ? and reaping a single-copy sales spike of as much as 20% of normal circulation.

Yet when sales manager Juan Carlos Huertas returns to Mediasat's Miami office, he's as lonely as the Maytag repair man in the classic TV commercial. When he talked with E&P in February, he said the company had just placed premium campaigns in 15 Brazilian papers: "But North America, not yet. This is a new model for them."

Mediasat's Miami office is intended to be the company's beachhead to conquer North America's newspaper market. Paperview has established a similar outpost in New York City. It's safe to say neither has set the world, or at least North America's part of the world, on fire. So far, Mediasat's only success is a 2004 campaign in the Vancouver Sun that the paper's marketing director says was probably too much of a good thing.

If a U.S. paper does a single-copy premium promotion these days, it's usually a special price for a newspaper and cup of coffee down at the 7-Eleven. How is it that the elaborate premium campaigns to build circulation numbers and revenue that are so popular abroad are such non-starters here?

One obvious answer is that single-copy sales are far more important in Europe and, especially, in Latin America, where home delivery is virtually unheard of. North American publishers simply don't feel the need to one-up competitors with premiums, says Mike Smith, executive director of the Media Management Center at Northwestern University.

"If you remember the Bingo/Wingo craze of the late 1970s and '80s, most of that was done because of competition," Smith says. "And you can be sure that in Britain, several of the papers wouldn't be giving away DVDs and CDs of Christmas carols if the other guy wasn't doing it."

Even apart from the competition factor, says John Murray, vice president/circulation marketing for the Newspaper Association of America (NAA), "There are a lot of reasons to believe that when it comes to adding incremental growth to circulation, the investment that Latin America and European publishers are willing to make is greater than in the United States." The U.S. newspaper business model also depends much more on a circulation revenue stream than foreign papers, he notes.

Ironically, Murray adds, the most popular presentation at an NAA marketing conference last year was about British newspaper giveaways of CDs and DVDs. "People here loved how aggressive the English are in single-copy," he says.

U.K.-style giveaways in the States, though, would crash up against Audit Bureau of Circulations (ABC) rules, which would not count the copies as paid circ unless the price includes at least 25% of the basic price of the newspaper ? plus the full publisher's cost of the premium. "At the end of the day, the purchaser has to pay out-of-pocket the 'qualified price,' as it's called," says ABC spokesman Neal Lulofs.

The premium campaigns Mediasat and other vendors are trying to get American publishers to accept would pass ABC muster, as the Vancouver promotion did. Over three 10- to 12-week cycles, taking time off for Christmas and Easter breaks, the Sun offered a 32-volume collection of classic children's books. Readers took coupons to stores and supermarkets to buy the books at a reduced price.

"It was a good branding and positioning thing for us," says Sun Director of marketing Jamie Pitblado. Reader feedback was good, and the campaign dovetailed with the paper's own literacy mission. The promotion, though, probably ran too long, Pitblado says. Coupon returns ran a couple of thousand a day for weeks, and then "sort of petered out at the end" to 400 or 500, he says. It's not clear what, if any, single-copy spike the newspaper received from the promotion, but Pitblado says that wasn't the point for the Sun, which home-delivers 75% of its circulation. "Probably the reason [premium promotions] don't do so well is they're being pitched as a single-copy play," Pitblado says. Mediasat's Huerta, though, says he's trying to get North American publishers to see it as a way to generate revenue while extending the paper's brand.

Even as they polybag CDs and DVDs, some Brit publishers are questioning the long-term effect. The Economist quoted Rupert Murdoch saying he dislikes the idea because "people grab the paper, tear the DVD off and throw away the paper."

But Smith says premiums have worked long-term in Latin American papers when they offer local folk music CDs or guides to indigenous ruins. "They've sort of built on their brand of being the ... keeper of the culture," he says. "Whatever you do should be consistent with the paper's mission of literacy or education."