Blogs - Media and Entertainment Services Outsourcing
| Targeting the loyal reader by harnessing the power of analytics |
| By Sachin Chadha on 2/1/2010 2:19:55 AM |
Recently, there was a small news item in an issue of Business Week magazine that most readers may have missed. Titled “Black, white and Unread," it caught my eye simply because of an accompanying picture of a news vendor featuring the San Francisco Chronicle. The caption that said the newspaper had lost more than a quarter of its circulation so far this year. (2009)
This news item wasn’t actually all bad news for newspapers. It talked about a strategy that other newspapers, including the New York Times (NYT) and the newspaper group, Media General, used to cut costs. Surprisingly, they actually increased prices and cut circulation, and, over a six-month period ended September 2009, circulation revenues shot up. According to the Audit Bureau of Circulation, circulation revenues for the NYT and Media General rose 11 and seven percent, respectively.
This demonstrates that every newspaper has loyal readers who will stick with the paper even if the price per copy goes up. That’s what the publishers of both media groups betted on--- and the strategy worked.
But the question to ask is that with ad revenues declining, how much can a newspaper cut circulation or print runs and more importantly, how much more can the price be increased? At what point will the price rise start to impact circulation?
Circulation alone may not be the key to revenues. According to an article published on the New York City-based news website The Huffington Post, circulation accounted for only 38 per cent of NYT’s first quarter (2009) revenue, while other publications "rely heavily on advertising."
This is where analytics can help managers take decisions based on insights rather than gut. Newspapers should look at deploying analytical techniques such as predictive modeling, demand modeling, price optimization, and tipping point analysis to identify the trends that drive profitability and not just circulation numbers. |
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