No More 'One-Size-Fits-All' Circ

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By: Jennifer Saba The Philadelphia Inquirer was one of the few major metros this past spring to report circulation gains. Sure, the increase was tiny, a virtual rounding error in any other industry ? but growth is growth. Monday through Friday, the paper increased its circulation by 0.6% to 352,593 copies.

A closer look at the numbers, however, shows this spurt occurred due to a rise in discounted circulation. That category soared 357% compared to the same period in March 2006.

Scores of newspapers across the country have been gaining readers with the lure of discounts, but it's a tricky line to walk. Raise the price too soon, and the paper risks losing penny- conscious subscribers. Don't raise the price at all, and the paper risks losing circ revenue.

Michael Proebstle, vice president of circulation at the Inquirer and its sister Philadelphia Daily News, wanted to have the money and the readers ? especially since his new boss, publisher and part-owner Brian Tierney, made circulation growth a main priority. Tierney made it clear he wanted to grow circulation, Proebstle says: "When he took over, circulation was declining. We had stopped investing in circulation growth over the past three years. We had to turn that ship around in a hurry."

To Proebstle, the best way to do that was to extend discounts to subscribers ? but he realized overall subscription rates would eventually have to go up too. (Before Proebstle joined in 2002, the Philly papers never raised the cost of discounted subscriptions.) That's where Matt Lindsay, president of the Atlanta-based firm Mather Economics, comes in.

"We are moving away from a one-size-fits-all price," says Lindsay. He has been working with the papers, analyzing home subscribers, and determining if and when to hike the discounted price. "We look at each person individually and calculate how sensitive they will be to a price change," he explains. A seven-day subscription at full price is $5.25.

Those subscribers who are educated with high household incomes are more willing to absorb subscription increases. People who are starting a career, have less education, don't have a lot of disposable income, and ? this is important ? aren't typical newspaper readers might sooner dump their subscription than tolerate a price hike.

Each week, Lindsay recommends which subscribers will bear a price increase, for how much, and which ones to keep at the same rate. The newspaper provides him with each subscriber's history, including when they started, if they use EZPay, and on what days the paper is delivered to their home, for example. Then, he "overlays" that data on the demographic information the newspaper provides (typically gathered by such third-party marketing research firms as Claritas). That info helps Lindsay map certain subscriber demos out in clusters.

Says Lindsay, "We are finding we can generate more revenue from fewer people. That has enabled us to bring people in at discounted offers, and then move them up at different price points."

Advertising revenue is taken into account as well. If a subscriber lives in an area or ZIP code that pulls in a lot of preprint dollars, the paper may keep that subscriber on discount, regardless of the demographics or propensity to pay more, since they are helping the paper make advertising gains.

It may sound like spreadsheet hell, but Proebstle testifies that the method works. Circulation is up, a feat he expects to repeat in the fall with both the Inquirer and the Daily News. Circ revenue has advanced too: for the month of June, it was up 2%, he says.

Proebstle credits Tierney for pumping money into the circulation department and marketing the paper on radio and TV. "We pay the bills here," he says. "Our revenue exceeds our expense. I'm really bullish on the direction we are taking."

He adds, happily, "It's a lot more fun to manage growth."

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