Here is a common scenario, using a fictitious newspaper as an example.
The Belleville Bugle is a high-quality weekly that has served its community for more than 100 years.
The town the Bugle serves is prosperous. Households have more than doubled over the past 30 years. There is new industry. Belleville is also a bedroom community as many residents commute to and from their jobs in a nearby metropolitan area.
In 1987, there were 5,000 homes in Belleville and the Bugle’s local circulation was 3,800, or 76 percent household penetration.
In 2017, there are 12,000 homes in Belleville and the Bugle’s local circulation is 3,000, or 25 precent household penetration.
Why the loss in local circulation and the even more shocking loss in household penetration?
We can cite all kinds of trends but by far the number one reason is the influx of “exurbanites” – very busy people who live in a community but don’t identify with it. And people who don’t care about the town they live in don’t subscribe to their local newspaper.
Intense circulation campaigns can help somewhat – maybe a few hundred additional subscribers. But that’s it.
It’s frustrating for the newspaper owners and staff who know the Bugle needs to reach more local homes to serve its advertisers and for the good of the community itself, which needs the newspaper to retain or even rebuild its identity.
The Bugle can’t do that unless it reaches residents. But it’s obvious that the days of 75 percent or even 50 percent paid household penetration are long gone.
Is there a solution?
One possibility deserving of serious consideration is a conversion from paid circulation to free distribution, effectively going from 25 percent household penetration to 100 percent — or near it — instantaneously.
It’s a huge decision that requires careful study, keeping in mind that once the move from paid circulation to free distribution is implemented, it would be almost impossible to revert back to paid.
The key is to prepare a financial analysis that takes into account the total loss of circulation revenue versus the gain in advertising revenue; as well as the printing and delivery expense for a free product.
Keep in mind there will have to be guesswork when it comes to projecting advertising revenue. Be conservative, but don’t be timid either.
Expense estimates for printing and delivery will be more definite.
Here are a few factors to keep in mind if you decide to take on this analysis.
- ●Usually, there are no staff changes.
- ●Ad rates will have to go up, of course. Typical would be around $1 per column inch or more per 1,000 additional distribution. For example, let’s say the Bugle averaged $6 per column inch as a 4,000 circulation paid weekly. As a free weekly, distribution will be 14,000, a 10,000 increase so add an average of $10 per column inch to the advertising rates.
- ●Per piece insert rates usually stay the same, but the increased volume (i.e. 3,000 to 12,000 local) is a major revenue booster.
- ●Are legal ads a major source of revenue? Would they be jeopardized if the paper converted from paid circulation to free distribution? Check with the state press association.
- ●How would the free paper be distributed and how much will it cost?
Rack distribution – inexpensive but unpredictable.
Standard mail –pricy for heavy publications.
Requester mail – inexpensive but complex regulations.
Carrier force – direct control, but complicated.
I wish there were a mathematical formula that would give management an absolute answer as the financial consequences of this dramatic change. Those consequences could be an absolute delight. They could be an absolute disaster.
I won’t kid you – there is an unavoidable gamble-factor, and to better determine the odds the all-critical advertising revenue estimate is the card that really counts.
Research will help the odds, including plenty of input from current advertisers. But it will also require guesstimates that are part educated and part instinctual, made by staff who not only know the market but feel its tendencies and potential, or lack thereof.