FEATURE 

Taking advantage

Traditionally, the relationship between circulation managers and readers could best be described as ‘at arm’s length.’ However, with the explosion of the internet and the, surely irreversible, arrival of multi-media platforms, circulation managers are having to get much more involved with the needs of individual customers. Those publishers that embrace this new approach have, says Tony Coad, a bright future.

By Tony Coad

Can it be true that only a minority of the Times readership access that title solely through its printed form and, if so, what are the implications for the Times - and for the prosperity of newspapers generally? How does the rapid rise of internet readerships impact the role of circulation management at Times Newspapers? Does this phenomenon also affect the UK’s regional newspaper industry and, if so, how will it impact the business and the practice of circulation management in our regional dailies?

"Our business model is rapidly broadening in scope," says Paul Hayes, the newly promoted managing director of Times Newspapers, "and we are very positive about the future. The ‘Times franchise’ is growing strongly across all media and is currently about 14.5m customers, and it is true that a minority of this number - some 40% - read the Times only through the printed newspaper. Of the remainder, around 22% access the Times both from the web and from its printed form, and 38% just from the web. Our business now operates from a multi-media platform and is embracing the many opportunities that the integration of print and electronic media offers. As a result, within the next two years, at least 10% of our profit will come from our data and digital activity."

Disintermediation

At the heart of this revolution is a phenomena Hayes calls ‘disintermediation’ - the way that the internet has removed many layers of intermediaries between buyer and seller. "Buying has become much more efficient," says Hayes, "and it is now normal for consumers to buy their airline tickets, holidays, books, cars and their music direct from source, over the web. The problem with this process is trust - who do you trust with your expenditure when you may be dealing with someone you don’t know, anywhere in the world, in possibly unregulated environments, where before you were buying from a known local retailer? The obvious answer is to buy direct but through a known media brand - and the Times is one of the best known brands in the world."

"The constant in the multi-media world of the future is the individual customer and our brands will only be recognised and respected if we are consistently relevant to that individual," says Hayes. The battle to establish truly dominating brands is on, and the Times finds itself competing with non-media brands for the attention and trust of the web-enabled consumer. Retailers know that their future will be less about bricks and mortar and more about their presence on the web, and their online advertising expenditure will quadruple by 2007 and quadruple again by 2010. "The Times is already a trusted guide in the multimedia space and can command a payment for being that referrer, whether it is through ‘pay-by-lead’, ‘pay-by-deal’, ‘share of profit’ or just a fee for navigating the customer through the information or sale process."

How will customers use integrated media? "Those of our Sunday Times customers who are interested in skiing may be reading the travel section in its printed form and be considering the various options for their skiing holiday. When they have finished the article, we now invite them to visit our skiing websites and consider various destinations. A customer might choose to read about Val d’Isere, for example, and be offered snow reports, and reviews of hotels and chalets, of ski-schools and restaurants, and be given the chance to receive a brochure, a free ‘customer guide’, or to be linked into another web site, or to make a booking. This puts pressure on journalists," says Hayes, "who are being asked to provide more ‘meta-data’ content for use across many platforms."

Keeping the customer onboard

Hayes’ strategy is to keep the individual customer within the Times and News International media pathways, making sure that they support each other. "If your product becomes the hub then you have a real chance of influencing the way the customer chooses to spend their money - we are a brand navigator. While in the past our job has solely been to provide mass awareness and audiences for advertisers, our task is now extended to provide individual audiences and individual customers for our business partners. We would, therefore, only serve the advertisement of a used-car finance company to those who are appropriate - like those accessing ‘Mototrak’ (the Times’ used car website). We can support a car manufacturer by assembling an audience of 500 company car buyers for a weekend test drive event or by giving a sponsor access to the ‘Power 100’ (the Times’ assessment of the 100 most powerful people in the UK)."

"What we are not talking about is the cannibalisation of print advertising," says Hayes. "On the contrary, what we are doing is adding value to print advertising by integrating print with our other media. Through print, therefore, we offer our business partners a medium that creates a mass or segmented interest, and through our electronic media and database expertise an individual and relevant audience. So if I choose to place a classified in our newspapers, one of the responses I can expect is from people sent to my website." And the process is not one way - the Times supports its newspapers through its other media. For example, says Hayes, "we send out 160,000 emails per week to our customers signposting the individual items of particular interest coming up in the newspaper – like the Milan fashion show or a road test of the new Aston Martin."

An examination of the ‘Money’ section of the Times on Saturday August 13th and 20th illustrates these principles in practice. In this section we find the following invitations to customers to seek more information through, for example:

* Links to 12 advice websites, including www.timesonline.co.uk/investorscentre, www.timesonline.co.uk/insure, "for more advice on insurance" and www.getthatjob.co.uk "for training on how to get a top job"
* An invitation to a "Times financial makeover" by emailing moneymot@thetimes.co.uk and accessing www.timesonline.co.uk/money-makeover
* www.timesonline.co.uk/invest for "a library of investment articles"
* The Times Free Guide to Retirement Solutions
* The Times Guide to Planning and Investing
* The Times Student Guide 2005
* The Times Free Guide to Inheritance Tax
* Best gas, electricity and broadband deal by calling 0800 056 3557
* Pay less for life assurance by calling 0800 083 7418

... while in the process being asked for their contact details and permissions for further contact.

Trust in the brand

Hayes, therefore, seeks to win each customer’s consent to further contact and dialogue, by being useful and by being seen as a valuable and trusted source of free content and information. "We are very open about the contract we seek. We can only be useful to our customers if we have their contact details and current information about their needs and interests and if we can track their passage through our websites. For example, if I look at Caribbean weather for three days running I might expect to receive a brochure on Caribbean cruises or an email on last minute Caribbean holidays."

Will consumers be willing to share the information to make this dialogue possible? The evidence is that consumers are so willing when they have confidence in the brand and when they see the benefit. Hayes cites Tesco as an example. "Tesco has 8m of their 12m customers using their loyalty card, thereby giving Tesco information about their preferences every time that they shop. Tesco’s great strength is that they are obsessive about customers, about giving them value and service quality and about their needs as individuals. As a result their brand is trusted - well beyond food purchasing into car retailing, fashion and financial services." Through their obsessive understanding of each consumer, observes Hayes, they have transcended a focus on market share in food retailing to one of ‘share of customer wallet’ in the wider marketplace - and they have done this by being relevant. News International newspapers have an even greater reach and an even greater opportunity, reaching one in two adults in the UK each week through brands like the Sun and News of the World as well as the Times and Sunday Times. "Our challenge," says Hayes, "is to develop the kind of dialogue and understanding of our individual customers that Tesco has and we are well on our way to doing this. What we have that our competitors do not is a vast content and information providing machine to serve this multi-media world."

Customers not readers

So, what are the lessons for circulation management? "Newspapers don’t have readers," says Hayes, "they have customers. Newspapers are a brand like any other and they have customers because of their content and because of the commercial benefit they bring to their customers. If we can make that leap, then the future is all opportunity."

The future is about listening to our customers and responding to their needs and preferences. "A revolution is taking place," says Hayes who quotes Jeff Jarvis, a New York media consultant, who says "we in big media have owned the printing press for centuries. Now, thanks to the internet, the people own their press. They are speaking. It is our turn to listen – and link – to them."

So, says Hayes, we must focus on growing – and keeping - our customers both as mass audiences and as individual ones. ‘Renting readers’ through mass DVD promotions is not the strategic way forward - creating relevance to individual and loyal customers is. The job of circulation is, therefore, to grow and keep loyal customer audiences across media platforms - newspapers certainly but not only newspapers. The task is, therefore, one built around the individual customer relationship - and about integrating our media under our brands. It will be pivotal to our future."

The regionals

It is not only national newspapers like the Times which have substantial and growing internet readerships - there are regional newspapers, for example, with as many readers of their internet sites as of the papers themselves. Most regional dailies have invested significantly in a wide range of local websites that provide a new depth of detailed local content (in the process attracting new audiences) and create many additional opportunities for advertisers. Johnston Press, for example, has indicated in its 2004 annual report that it has 182 websites including local news websites that drill down to small local areas.

Audience delivery

In such a context, the more radical view of the circulation task – but one enjoying increasing support within the regional press – is that its primary function is to deliver the audiences desired by advertisers no matter which medium is used in that process. In the past, the argument runs, that audience was delivered solely through the medium of ink on paper, and the task was to produce and deliver a product that people would read. While, over the next few years, it is understood that the bulk of revenue will continue to be generated through newspapers, it is also accepted that the new electronic media should deliver increasing revenue volumes by providing content that people will read but also the commercial propositions that such readers find attractive. Therefore, while the principal task of circulation management will remain maximising newspaper sale on a daily basis, it needs also to be aware of the need to woo those audiences who prefer other media, and to bring them into the branded fold. The beauty of regional newspaper internet sites seems to be that the audiences they create overlap so little with newspapers and that enables a wider range of audience profile to be delivered in combination with that created through the printed media.

This focus on assembling the right audiences for advertisers is important and timely. Advertisers, even regional advertisers, are increasingly buying on the basis of the profile of readers rather than the penetration of the newspaper within their circulation areas. Newspapers, therefore, increasingly seek to recruit the readers that their advertisers want rather than recruiting just anyone who will buy their titles. This process of selective recruitment implies a number of new disciplines, such as the use of database marketing - or ‘customer management.’ This approach depends on the use of ‘the loyalty ladder’ where we seek to start and grow increasingly strong relationships in digestible stages, and through whatever medium is likely to be most effective in doing this. We might find that we can best attract young people to our media brand through a website but that, in careful stages, we can introduce a number of these web users to the newspaper. Clearly this can only be done if we understand the characteristics of each of our prospects and customers - so this requires a focus on data acquisition, from both internal and external sources - and a means of storing and retrieving information about the individuals with whom we are in dialogue. It also requires an understanding of the relative efficiencies of each medium in attracting and keeping customers - so a focus on measurement. This discipline of managing the individual customer relationship is a new one for circulation management, but one very much in line with the new role of creating the audiences desired by advertisers described earlier.

Customer management is also key to achieving improved levels of retention, which those dailies increasing their sale say is key to their growth (it is at least five times cheaper to keep a customer than to create a new one). One example is in the management of cancellations. The norm at many publishers is passively to accept cancellations from home delivered customers - but a new environment is being established by companies like Sky TV. As one circulation director put it - "have you ever tried to cancel a subscription to Sky? When I tried, they reminded me what I would miss (the Lions tour of Australia and the Liverpool game) and then packaged a bespoke deal that I found attractive."

So is the growth of new media a green light to lower newspaper sales targets? Clearly not – multi-media is not a cop-out but gives an opportunity to aggressively sell more copies. How? Like the Times, at least one regional daily is using its database of local consumers with mobile phones to forewarn their readers of stories and features in the newspaper likely to be of interest. The onus is on circulation managements to think and act creatively, using the changes in media to build newspaper sale rather than being cannibalised by it.