Preprints Insert (Needed) New Revenue

By: Mark Fitzgerald When Michael Lombardo, president of Tactician Media, looks at the newspaper industry these days he sees two camps. "One camp is newspapers that are still in a cost-cutting mode, bunkering down and not doing anything," he says. "Or they're in a camp with papers like Dallas, Chicago, The Orange County Register."

What newspapers in that latter camp are doing is investing in ways to save and even ? dare they think it? ? grow their preprint business. But Lombardo and others on both the newspaper and advertiser sides of the preprint business say more papers are waking up to the fact that advertisers want to continue to spend big on print ? they just want to be sure their circulars are reaching the right readers and non-readers.

"We have a lot of clients who believe in the medium, but what they want is some tangible proof of the benefits" of delivering their preprint ad through newspapers, says Craig Desens, NSA Media's chief development officer. Downers Grove, Ill.-based NSA and Tactician Media of Chesterfield, Mo., convened a kind of emergency summit about newspaper inserts earlier this year.

The bad news is that newspapers can no longer depend on the once-mighty but now shrinking home-delivered Sunday paper to handle all the needs of preprint advertisers. "The dirty little secret is 40% penetration could mean you're reaching exactly the wrong 40% of households," NSA CEO Dave Walker warned at the summit.

But there's way more good news about preprints. For one thing, the Net has proven so far to be a poor delivery vehicle for coupons and other retail traffic-building ads. For another, the newspaper delivery force has increasing cost advantages over direct mail, even factoring in increased gas costs, and does something no one else can: deliver on Sundays. Says Lombardo, "Newspapers rival the Post Office ? they just don't know it."

And while classified ad revenue has been collapsing at increasingly high double-digit rates in the past year, preprint advertising has dipped only modestly, even at metro dailies. Rather than chase, say, real estate classified business that is unlikely to come back strong when the economy turns around, newspapers can expect a bounce from preprints.

Newspapers are responding to the demand for targeting by developing sub-ZIP code delivery of a wide range of products.

The Chicago Tribune, for instance, has rolled out "Preprint Optimization," which uses database analysis to deliver one ? and only one ? preprint to every household in Chicago by matching the home with the product most likely to engage. On any weekend, the offerings include the paid Tribune; the free with opt-in home-delivered Saturday RedEye; and the free with opt-out non-subscriber products ShopLocal, a Red Plum-style ad package, and Fin de Semana, the weekend edition of the Spanish- language daily Hoy.

A.H. Belo Co. is doing something similar in its flagship market. This summer's rollout of the digest-like free home-delivered Briefings is a key part of its strategy to offer non-subscribers to advertisers on a targeted basis, rather than with a mass total market coverage (TMC). The strategy dovetails with the increasing interest of big preprint users like Kohl's or Best Buy in creating different versions of ads, "messaging" as it's called, for different microzones.

At its 16 largest newspapers, Gannett this year has been rolling out its "Sunday Select" ? a "permission advertising" program that wraps a package of national and local pre-prints from the paper's largest 40 advertisers in a quick-read editorial product called Yes! Your Essential Shopper. It's delivered free in targeted ZIP codes to households that ask for it. Most of the "subscribers" to the product are acquired through telemarketing, says Jeff Bergin, director of advertising for the Gannett Newspaper Division.

Gannett had worried that the program would cut into its Sunday home delivery, and estimated that single-copy Sunday sales might slip as much as 20%. "We've had no drop-off at all," Bergin reported at the insert summit.

NSA's Desens worries that newspapers scrambling just to survive will fumble the opportunity to strengthen insert business. "The spirit is willing, but the flesh is weak," he says. "Even though they know it's the future of the business, with a lot of papers it's hard for them to make the investment."

Newspapers should realize insert advertisers are facing the same factors, with the price of paper and transportation high. "Already, one of our major clients told us, 'We really don't want to be in the newspaper game,'" Desens adds.