UK Publishers Still Give Away DVDs That Cost Them A Fortune

They spend a fortune buying rights to CDs and DVDs and then they give them away with their newspaper as part of a huge advertising campaign in the hope of capturing new permanent circulation. Trouble is, nearly all the national newspapers are doing it, and for the most part new readers are there just for the covermount day to get the freebie and then they’re gone. At close to a cost of €0.45 a DVD that’s a lot of marketing money washed down the drain.

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If that’s not bad enough, research suggests that one reason newspaper circulation is on the decline is that the reader is frightened off by the sheer huge bulk of the daily read. Just the thought of going through so much newsprint has become a turnoff and for the ecologically minded the thought of cutting down the trees to support such verbiage becomes repugnant.

So what do the British publishers do? According to Starcom UK, a media buying agency, the UK national newspapers now print 8,500 pages weekly – a 9% increase in 18 months -- and some Saturday newspapers now carry even more sections – often more than 10 -- than do some Sunday newspapers. More than 55% of the week’s newsprint is used for weekend editions.

While the advertising department triumphs at selling so many different “sectioned” topics, many readers have responded by not even wanting to even try and get through it all, turning instead to what they consider a more “friendly” news medium – the Internet.

So if publishers have it right with the CD/DVD giveaways, and the increased verbiage, then obviously circulation obviously must be doing just fine, right?

The June ABC figures showed all nationals down except for the circulation-leading Sun that saw all of a 320 copy increase. The Guardian had a 2,99% monthly decrease; the Daily Mirror was down 2.14% The Daily Telegraph down 1.3% and the Financial Times down 1.24%. Other newspapers had losses ranging up to 1%.

July, of course, will be different given two major stories – the Olympics being awarded to London in 2012 and then the next day the horror of the London bombings. Circulation has obviously spiked upwards for a few days, but the underlying problems for the UK national newspapers remain.

Adding to the circulation woes is that UK advertising dropped 5% in Q2 over the same quarter last year, and slowed by the same percentage from Q1, according to Thomson Intermedia.

And on a revenue basis, the London terror story while undoubtedly increasing circulation saw higher printing costs coupled with some lost revenue as much advertising was rightfully bounced, especially on the first day, to make way for the additional editorial copy, although that may be made up later.

And so UK national newspapers that have been in cost cutback mode for several years continue the exercise. The Sun newspaper announced in June various editorial expense cutbacks and said that 20 staff would go. In February the Daily Telegraph, under new ownership, axed 90 staff.

To their credit many publishers are investing millions of pounds in building new, larger print plants that will vastly increase their color capabilities (and also allow them to consolidate printing, close older plants and operate with less printers). They hope additional color opportunities will attract more advertising spend and also draw back some of those readers who may have left the print editions for the Internet.

But when it comes to the bottom line one can’t help but ask how long the giveaway madness is going to continue – if selling books and the like at cut-price works for the rest of Europe then why not the UK? If you’re going to spend so much money for such promotions to stabilize/increase circulation then why not also make money from the promotion itself, plus have the circulation success?

The main reason for giveaways is, of course, to boost circulation that in turn leads to higher advertising rates. And there is no doubt that on the day of the giveaway it works. People will buy the newspaper if only for the giveaway. What the marketing folk want, of course, is for those people to taste the paper, decide they like it, and then keep coming back even when there is no giveaway. But the numbers show very few of those giveaway sales stick.

Also the public is getting somewhat choosey. With nearly all the newspapers giving away DVDs (CDs used to be the rage but complaints by retail stores caused recording labels to restrict the licensing to newspapers and Hollywood gleefully stepped into the breach) you now need to have something pretty good to give away to entice the readers, but the better the DVD title the higher the licensing fee.

According to the Independent, when the Times gave away the great Humphrey Bogart-Katherine Hepburn classic, The African Queen, it sold 1 million newspapers that day, a 50% spike, and the marketing people hope that some 50,000 of the additional 300,000 readers will stick.

The compact Times has invested heavily on DVD giveaways, particularly since its switch from broadsheet last year. The June ABC showed a monthly decrease of 1,200 copies (0.18%) but year-on-year the increase is 3.35%. The question, of course, is whether that 12-month increase is due to the compact move, the giveaways, or a combination of the two? News International says the newspaper continues to operate at a loss.

DVD sales (rather than giveaways) do work if you have the right subject for your market. For instance in Italy when Milan’s famed La Scala Opera House reopened last year Corriere della Sera produced six opera DVDs to be sold one a week with the newspaper. It was a huge financial success.

Corriere della Sera started the idea of selling the giveaway and now such projects are an integral part of not only its sales strategy, but also for several groups across the continent. Such projects can account for up to 20% of a newspaper group’s total revenues.

And in the UK, where the advertising market has taken a downturn, wouldn’t that 20% increase from elsewhere be very welcome?

As Circulations Continue to Decline, UK National Publishers Still Give Away DVDs That Cost Them A Fortune and They Scare Away Readers With More Pages and Sections. When Will They Learn?

In Europe, newspapers are earning sizeable fortunes by selling cut price DVDs, books and encyclopedias with the daily newspaper. It’s a marketing ploy that has been successful in many countries, but the Brits have to be different.