MEDIA: Number crunch - As advertisers and national newspapers set out to restore the Audit Bureau of Circulations as a credible trading currency, Andy Fry asks whether it can ever serve the interests of both

On December 18, the Audit Bureau of Circulations (ABC) will meet

national newspaper publishers and major media buyers from the Institute

of Practitioners in Advertising (IPA) to thrash out a formula which can

restore the ABC’s credibility as a trading currency.

The stakes, potentially, are enormous. If the buyers get what they are

asking for, which is far from guaranteed, ’it will fundamentally change

the ratecards on which newspapers are bought and sold,’ says one senior

buyer. ’It’s making newspaper owners anxious that they’ll lose ad

revenue.’

The sensitivity of the issue cannot be underestimated. In an unlikely

display of unity, media owners and agencies which are actively involved

in the debate refuse to comment on likely changes at the ABC for fear of

rocking the boat at such a crucial stage.

Guardian circulation director David Owen sums up the mood when he says:

’I’d be very unhappy if I read all sorts of pronouncements in advance.

If people start giving their own interpretations too early, it can only

give a false impression of where the process is going.’

Treading with caution

Despite such caution, pressure is building for the resolution of a

debate which has dragged on for over a year. Advertisers are fed up with

what they see as obstructiveness on the part of some media owners and

there is evidence of uncertainty in the marketplace. When major press

buyer Dixons decided to pull its spend from News International titles,

the issue was as much to do with the need for transparent circulation

figures as it was NI’s decision to harden its rates.

Most observers agree that the ABC’s troubles are the direct result of

squabbling between media owners. As circulations have continued to

slide, the press barons have fought to hold on to their market share

through price cuts, promotions and enhanced editorial packages. This has

introduced an unprecedented volatility into their sales figures.

Not content with trumpeting their own gains, some companies have sought

to show up the deficiencies in their rivals’ sales figures - a strategy

which eventually encouraged the buying community to question the basis

upon which ad space in the nationals is traded.

The argument is best understood through a straightforward example of

what is at stake - let’s take the October 1997 ABC figure for The Times,

which is 814,899.

That figure is a monthly circulation average which, prior to the recent

dispute, would have been the only official benchmark that agencies used

as a negotiating point with press owners (though they would also turn to

qualitative data from the National Readership Survey and TGI to argue

their case. They might also be privy to supplementary information from

the press owners.)

Figures under fire

At the heart of the dispute has been how that monthly figure is

comprised.

For example, were all the issues sold at full price or were some given

away cheaply as part of a subscription or promotional offer? Were any

sold or given in bulk to an airline or retailer - and if so how

many?

What about papers sold to Eire or Spain? Were they included in the total

and if so how could that be justified as a piece of credible advertising

data?

Such questions almost spilled into the courts earlier this year when a

dispute erupted between NI and The Telegraph Group over the latter’s

cut-price subscription drive. NI’s insistence that subscription figures

be broken out of the total turned the ABC into a political football.

The upshot of the debate is that the ABC has, over time, produced a raft

of secondary figures which clarify the exact nature of the monthly sales

figures. Using The Times’ figure, we discover that more than 10% of the

814,899 - approximately 90,000 - were not classified as full-rate

sales.

50,655 were pre-paid non-postal subscriptions while 31,424 were bulk

sales.

This is not unusual. The Daily Telegraph, Daily Express and Daily Mirror

all deal in bulk - or multiple copy - sales. In the case of The Express,

a third of its 1.2 million circulation in October did not count as

full-rate sales.

Whether this makes a newspaper’s circulation less valuable is open to

debate among buyers. But the revelation of such figures is something for

which NI has aggressively lobbied. Not only has NI drawn attention to

The Telegraph’s heavy reliance on subscriptions, but it promotes the

News of the World by pointing out the high level of bulking by its

rivals the Sunday Mirror and The People.

The irony of the debate is that the battle between newspaper owners has

woken advertisers and their agencies from their sloth. TMD Carat’s head

of press Nigel Breckon says: ’The objective of certain media owners was

to undermine the credibility of rivals’ figures to media buyers by

exposing how circulation was composed. But then the cry went up from

advertisers that we want objective and accurate accounting of actual

sales figures to reflect price inflation. So you might say that they’ve

shot themselves in the foot.’

There are two unresolved issues of particular concern to advertisers.

One is an archaic rule that allows press owners to exclude up to six out

of 25 daily sales figures from the monthly average on the grounds of

disruption in production or distribution.

While this rule was designed to deal with industrial disputes, it is now

viewed by critics as an opportunity for newspapers to exclude the worst

performing figures from the buying equation.

Hot off the press

Another hot issue is the reliability of the monthly figure itself.

Advertisers are dissatisfied with a number that they believe fails to

reflect the reality of what they are buying. Director of press buying at

The Media Centre, Tim Armes, says: ’We’d like to know what each paper

sells daily and we’d like to know week-to-week fluctuations. The papers

all boast about Saturday but keep quiet about Tuesday and Thursday. If

one day is dramatically higher than the average, you don’t have to be a

brain surgeon to realise the others are lower.’

Armes is keen to see an end to the dispute but believes that the press

must fall into line with other mature media. ’In television, ITV will

tell you how Coronation Street is doing regionally on Monday, Wednesday

and Friday. But if a newspaper owner says he can offer me a cheap deal

next Tuesday, I have to ask ’Am I getting the true circulation?’’

Another buyer stresses that buyers don’t want to hamstring the press -

even if that were possible. ’A lot of sophisticated techniques go into

marketing newspapers and we’ve got nothing against that. But all we get

is one bland figure each month when we are actually buying into

individual issues. In a typical month, the volatility in daily

circulations is immense.’

The Times example is of particular interest due to Monday’s 10p cover

price, which has driven up the paper’s average monthly circulation. If,

for argument’s sake, The Times sells 1.2 million on Monday, then there

are obvious implications for the client who wants to buy space on

Thursday and Friday to catch the weekend trade. Quite possibly, that

client is reaching 100,000 fewer purchasers than the figure being used

as a trading mark suggests.

Whether the ABC’s discussions will give the buying community daily

figures is unclear. However, some proprietors acknowledge that the

buyers have a point. Telegraph managing director Jeremy Deedes accepts

’there was a need for greater transparency and over the past two years

we have made great strides towards allowing media buyers to see the

numbers they want.’

Deedes believes that progress towards a ’fair and transparent picture is

nine tenths of the way there’. But he is sceptical about the need for

the release of all daily circulation figures. ’For a long period we had

those numbers broken down at The Telegraph but no one asked for them.

When we stopped, no one complained.’

That said, the market is more volatile than it has ever been, and there

are circumstances where Deedes believes the release of data would be a

benefit. ’I think that if the sales of the 10p Times were revealed, the

ABC would provide a reporting system that gives the media buyers what

they want.’ He accepts there may be a general case for breaking down

figures ’where a promotion severely disturbs a weekly circulation

return’.

Some buyers support this position. CIA Medianetwork’s Richard Britton

wants greater transparency but insists that, ’we only want information

that is useful for trading. If you had all daily circulations, how

useful would that be? I’d welcome a situation where a publisher has to

give a specific daily figure if it is plus or minus 10% from the

average. If they have a bumper circulation it should be stated why.’

Based on the past year’s activities, the prospects of finding a

compromise that suits all parties is as likely as a reunion of Kelvin

MacKenzie, Piers Morgan and Roy Greenslade at The Sun. Both NI and

Associated Newspapers have been reported as mooting the possibility of

withdrawing from the ABC, while Mirror Group Newspapers’ decision to

leave the trade body the Newspaper Publishers’ Association shows the

depth of disagreement within the sector. One buyer talks of a possible

shift to using point-of-sale data from retailers such as WH Smith’s and

Menzies.

For the ABC, it is clear that keeping pace with change will require the

wisdom of Solomon - particularly as it is only one part of a much wider

debate. Already, some buyers are concerned about the widening divergence

between ABC and NRS data which suggests that ongoing promotion is

changing the reliability of readership patterns. For the NRS, live

issues include discounted readership, sectional readership and the speed

at which it turns round data.

ABC director Ray Hall rejects the doom and gloom scenario. ’The

attendance of all the major publishers at every ABC meeting since this

debate arose, irrespective of their fierce rivalries, shows the

importance of the ABC to them.’ he says. ’If they weren’t bothered, they

wouldn’t have shown up. I also believe that having two major publishers

slugging it out over the ABCs is a measure of how the currency is

valued.’

For Hall, one of the most important advances is the commitment, from

next year, to hold a quarterly meeting of publishers’ and advertisers’

representatives. ’Whatever the issues that come up, they will be

addressed by the working party,’ says Hall. ’Rather than have a

situation where the rules sit in the bottom draw until a problem arises,

we can keep up with innovation. We don’t want another situation where we

are accused of being out of touch.’

Drowning by numbers

For some observers, however, the ABC is caught in an invidious position

which is unlikely to improve until the national press begins to focus on

the bigger picture. Roy Greenslade summed it up in The Guardian

(November 17) when he pointed out that full-price sales on the dailies

have dropped by more than two million in the past five years. In

October, more than 1.5 million daily papers were not sold at full rate -

and that doesn’t include the 10p Times which is classified by the ABC as

a full-rate sale.

With such a rapid decline in fortunes, the need is for concerted

marketing to reintroduce readers to the sector. BJK&E Media’s managing

director Mark Pattinson says: ’There is no doubt that despite the press

hype, the ABC is still a gold standard. But agencies don’t just buy on

numbers.

Media owners have become obsessed by the numbers - and while they think

they are doing themselves some good they discredit the whole industry by

showing their insularity. The danger is that we are all dancing on a

pin-head, arguing over 2p on the cost per thousand. What matters is that

they should be selling a brand.’

National press ABCs

Title            October       Mth-      Year-    Full-rate

                    1997     on-mth    on-year        sales

                             change     change

                                  %          %

Sun            3,749,138      -3.55      -4.59    3,363,217

Express        1,209,920      -2.53       0.65      811,406

Mail           2,208,144      -5.80       6.55    2,043,807

Telegraph      1,099,953      -2.64       3.95      747,282

FT               333,309       2.08       8.68      318,183

Guardian         408,374      -4.59       4.25      397,828

Independent      265,156      -7.99      -1.76      238,848

Times            814,899      -0.74       3.11      723,881

Total         10,088,893      -3.22       2.61    8,644,452

Title            Lesser-       Pre-       Bulk

                    rate       paid      sales

                   sales      sales

Sun              385,862          -         59

Express          346,236        477     51,801

Mail             154,450        631       9256

Telegraph         35,057    286,615     30,999

FT                 8,005        325      6,796

Guardian           4,738          -      5,808

Independent        2,695         38     23,575

Times              8,939     50,655     31,424

Total            945,982    338,741    159,718

Source: Audit Bureau of Circulations

This article was first published on Marketing