Would Daily Circ Reports Hurt Newspapers?

By: Lucia Moses When Audit Bureau of Circulations board members meet in Scottsdale, Ariz., in early November, one item on the agenda more than any other will likely provoke anxiety among newspaper executives. In what would be a fundamental change in the way papers report circulation figures, the ABC is considering requiring them to report averages by each day of the week. For advertisers who are clamoring for more detailed audience information from all media, getting newspapers to report verified sales for seven separate days instead of (in most cases) a daily average and Sunday, is a long time coming. But publishers aren't exactly lobbying for the change, fearing it will cost them time and money and lead advertisers to reduce their newspaper spending once their long-held assumptions about day-to-day circulation variances are confirmed.

It's no wonder, then, that some buyers are gearing up to do battle over the proposal, which advanced a step in July when the 36-member ABC board directed its staff to look into the feasibility of requiring day-of-week reporting, starting in April 2005. "I think it's going to be very contentious because newspapers don't even want to negotiate contracts based on circulation," says one senior vice president of a major media buying firm.

For newspaper execs, day-of-week reporting could mean more audit time (read: expense), depending on the required level of detail. Al Smith, vice president of circulation for Cox Ohio Publishing and member of a committee that advises the ABC board on such matters, sees more work for papers that don't already count single-copy returns each day, and increased auditing fees. "Who's going to pay for this additional information?" Smith asks. "I think it's safe to say the advertising community isn't."

Mary Jacobus, president and CEO of Fort Wayne (Ind.) Newspapers, wonders if her circulation system will be up to the task: "That would be the biggest fear: How can we do that kind of reporting in the format the ABC is going to want?" Jacobus heads an ABC subcommittee that makes recommendations on issues impacting newspapers.

Indeed, the Chicago Tribune had to make costly changes to its circulation billing system when it started reporting Monday-Tuesday and Thursday-Friday averages in 1998, says Vincent Casanova, the paper's vice president of circulation and consumer marketing. Reporting daily averages, he says, is "going to be a lot of work."

It's taken for granted, however, that the burden of day-by-day reporting would fall more heavily on small-circulation papers, which are assumed to have less reliance on single-copy sales and thus less daily circ variation than large metro papers, and have more limited circulation reporting ability. "They may wonder about the benefit of reporting day-of-week circulation because they basically would be reporting the same number," Jacobus says.

That's why the ABC is on a fact-finding mission to figure out what information advertisers want and how best to provide it. The ABC might decide to let smaller papers or ones with extremely small variations off the hook, for example. "It might be a little bit more difficult for our smaller papers to break it out," says Robert M. Jelenic, chairman, president, and CEO of Journal Register Co. and member of a liaison committee of newspaper executives that advises the ABC board. He says reporting circulation by day "might be a little more difficult" for their systems.

On the other hand, James W. Hopson, vice president for publishing at Lee Enterprises Inc. and an ABC board member, found surprisingly strong fluctuations from day to day at Lee's smaller dailies. He also found that Lee's computer systems were already set up to provide daily figures. While he concedes his audit costs could go up, he concludes that day-of-week reporting "does not appear to be an unreasonable requirement for small newspapers."

After day break

Among papers, day-of-week reporting does have proponents, who say advertisers already intuitively know that circulation varies by day. They acknowledge that in a time when many of their best retail customers are struggling to hold their own, helping them make better buying decisions can only benefit papers in the long run. Says Jelenic, "If it helps advertisers, it's the way to go."

If many newspaper execs grudgingly accept the seemingly inevitable change, advertisers share an intense interest in audited daily circ numbers. ROP buyers see them as a better reflection of their household reach on a given day. For users of preprint advertising, which constitute a growing portion of newspapers' ad revenue, audits by day of week would provide a check of distribution while helping them determine the best day for future inserts.

For all advertisers, this may confirm what they feel they already know: that a newspaper's audience tends to grow as the week goes on. According to 2002 reader behavior research by the Readership Institute, Tuesday is the least-read day of the week, while Sunday is best, followed by Friday.

For Sears, Roebuck & Co., which spends 80% of its newspaper budget in the form of inserts, day-of-week reporting is "additional disclosure that allows the advertiser to go after the largest circulation day they can and maximize their investment," says Matt Spahn, director of media planning and marketing budgets and an ABC board member.

Papers worry that if daily circulation numbers are published in ABC FAS-FAX and audit reports for all to see, it will only cause advertisers to pressure them to cut rates on light days, typically the early weekdays. But some advertisers say while they would expect newspapers to bring rates in line with circulation, getting the additional information would help them make smarter buying decisions and may ultimately lead them to up their newspaper spending. In sum, they see the change as evolutionary, rather than revolutionary.

Christopher Cope, president of American Communications Group Inc., a Torrance, Calif.-based retail ad-buying firm with annual billings topping $300 million, believes day-of-week reporting won't reduce newspaper use in any way, but will "increase the productivity of the newspaper medium." (He's a member of the buyers' committee that will advise the ABC board on day-of-week reporting). And S. Scott Harding, chairman and CEO of Newspaper Services of America, with more than $1.6 billion in annual billings, says, "We as buyers may very well be motivated to consider non-traditional days of the week. To me, it would increase the opportunity for newspapers to market their product in more innovative ways."

From weak end to weekends

While day-of-week reporting could create more demand for bigger-circulation days, circulation isn't the only factor that determines the date of an advertising buy.

Retailers tend to run ads toward the end of the week to get people on their way into the shopping weekend, and if they paid higher rates on those days newspapers could realize added revenue. Service advertisers whose ads are less date-sensitive and smaller retailers with smaller budgets, on the other hand, could be enticed by lower ad rates to help plump up thinner early-week editions. Others choose the day by who's reading the paper that day.

Ultimately, Spahn sees the increased disclosure changing the nature of newspaper-advertiser relationships. "What it allows is the opportunity to incentivize the newspaper to grow circulation on the right days." Now, he says, "If a certain day is a priority for us, it might not be a priority for the newspaper." Laura Bader, advertising vice president for The Morning Call in Allentown, Pa., echoed that view, saying that if the industry adopts mandatory day-of-week reporting, "It's going to make it obvious that we have to grow those days even more."

As for worries about segmented pricing by day of the week, here's a newsflash: it's already happening. Until recently, the ABC actually prohibited most papers from reporting more than an average daily and Sunday number. The rules permitted them to report days whose average circ is 5% above or below the weekday average, while requiring separate reporting when the variance was 15% or more. Foreshadowing mandatory day-of-week reporting, the ABC in July removed the minimum 5% variance criteria to permit optional day-of-week reporting by all member papers.

While the vast majority of papers report only average weekday (or Monday through Saturday) and Sunday, a small but growing number have been reporting early week numbers separately or breaking out strong weekdays, typically Thursday or Friday. After seeing they could drive circulation later in the week, often by packaging Friday through Sunday or Thursday and Sunday editions, they realized they could leverage the gains on the advertising side by aligning their rates with circulation variations.

Since the Atlanta Journal-Constitution began doing just that in the mid 1990s, there's been minimal change in advertising patterns, says Mike Perricone, vice president of advertising at the AJC. That's not surprising, he says, considering that most of the papers' advertising comes from local retailers, and "80% to 85% of our business runs between Thursday and Sunday." Many papers also already offer Monday and Tuesday discounts to advertisers. Atlanta occasionally puts early weekdays "on sale" when advertising looks to be light. "I believe ultimately ... it just seems like there's more leaning in the direction of differentiating by day of week," Perricone says.

A sister Cox Newspapers Inc. paper, the Dayton (Ohio) Daily News, began offering Thursday-Sunday to advertisers five years ago, seeking to leverage its strong circ on Thursday, when the paper publishes its popular community news sections. Despite some switch business, most of the new Thursday revenue was incremental spending by local retailers. "It was almost like magic," Advertising VP Mark Stange says of advertisers' reaction. "They just loved it." As for early-week days, he promotes their loyal, educated, and influential readership.

At the Tribune Co., in a natural extension of its print-broadcast convergence, several dailies are in various stages of pricing days to reflect audience levels and advertiser demand. "The advertising community is pushing us more and more toward the broadcast model," says Lou Stancampiano, vice president of advertising at the Orlando Sentinel, where he is building such a pricing model.

In Michigan, 21st Century Newspapers Inc., seeking to recreate the success of its Sunday edition during the week, started delivering its Thursday edition free to Sunday-only subscribers of its three Detroit-area dailies. Based on the circulation jump, 21st Century began charging a premium for Thursday. Company Chairman and CEO Frank H. Shepherd says some of Thursday's revenue growth came from advertisers who migrated from other days. But since they paid higher rates, he's not complaining.

Shepherd believes more use of tiered pricing is coming, and voices little sympathy for publishers who worry they'll have to cut their early-week prices. "As newspapers are scrambling for subscribers, I believe you're going to see more and more newspapers unbundling your delivery schedules," he says. "You're simply going to charge on a CPM basis. ... At the end of the day, if they think they need to lower their rates, their goddamn rates ought to be lower. They're cheating the advertiser!"

Working on a daily

In these days of growing advertiser resistance to rate increases, adopters of tiered pricing advise caution in raising rates. Stange says that to encourage advertiser acceptance, Dayton increased Thursday through Saturday rates by 10% -- once -- but held Monday through Wednesday level for two years, without making "a big deal about it."

While tiered pricing may become the standard way of doing business, one may overstate the impact of day-of-week reporting, Perricone says: "At some point, you have to think the advertiser can only deal with so much complexity at a time." But as pressure to demonstrate ROI of their media dollars grows, marketers' thirst for data isn't likely to abate. Remember that a few years ago the ABC expanded the definition of paid circulation while requiring papers to disclose more details about their sales to advertisers; some see day-of-week reporting as a natural next step.

Many believe it's only a matter of time before newspapers are measuring circulation -- and yes, readership -- by section. "As advertisers continue to drive costs out of their operations, the need for better newspaper targeting only increases," ad-buyer Cope says.

Newspapers may see themselves in a struggle with advertisers, but in the end, are the papers themselves the biggest obstacle to growth? Day-of-week reporting may highlight a reality few publishers want to advertise, the decline of the seven-day subscriber, but what they do with that information is up to them. Cox's Stange says the answer is for papers to exploit their readership differences by day, "rather than taking the view that, 'Oh God, the world has changed, we're losing seven-day readers.' We're still the best-read medium."