MRG Evening Meeting – Press Price War
Last night’s MRG evening meeting on the Press Price War attempted to answer questions such as what opportunities does price cutting offer advertisers, and will they have to make up the short fall in revenue by paying increased advertising costs?
First to speak was Stella Beaumont from the Guardian. Stella attributed the Guardian’s immunity to the price war to its strong brand strength. She also cited the Guardian’s continued steady success as the real starter of the price war. With regard to the heavy decrease in readership, down 19.1% year on year from the latest NRS figures, Apr-Sep 94, she explained this by saying NRS data only makes sense over time. The reason for the big decrease was because of the extra high figure in 1993. She ended by saying that the Guardian was having “A pretty good war”. Carolyn McCall of the Guardian then spoke about the Guardian’s continued marketing strategy, an important part of which is their ongoing qualitative research, used for both advertising and editorial. Since 1988 the Guardian has been redesigned, with all the core products updated. Carolyn claimed that the A5 guide was the best newspaper listings launch ever, and that it put on 22% extra sales in the London area.
The Guardian now takes 43% of the entire quality market recruitment advertising share. Finally Carolyn told the MRG meeting that the Guardian’s predictions for the newspapers of the future will be published on 1 December.
Jonathan Hartley of News International began by adamantly pointing out that News International had not carried out cost cuts in order to increase revenue, but to halt the long term decline in circulation and readership that the quality papers were suffering.
However, broadsheet readers were widely expected to be price insensitive, so why did News International do it? * The Times had been seen as the same product for years, with a stuffy image, as the voice of the establishment. * The quality daily market was falling, and cover prices were rising out of proportion with inflation. * The recession had changed the consumer, who now wanted value for money; price trials showed that broadsheet readers were indeed price sensitive, despite expectations.
The Times price cut’s success has taken the latest circulation figure to 614,000. (October ABC).
In response to how advertisers can benefit from this increase in circulation, Jonathan said that readership figures have also increased, and that the new readers have a similar profile to existing readers. A Millward Brown tracking study showed that the Times’ image has also changed with the price cut.
Steve Millington of the Daily Telegraph said he would explain why the Telegraph entered the war, and who were the winners and losers.
Why? As a response to the Times’ price cut. The Times’ circulation was steadily increasing after the price cut, and although the Telegraph’s circulation was holding steady, they were fearful that the Times’ increase in readership would make it much harder for them to charge rates premiums if they lost their large readership lead. Who loses? The Independent seems to be the main loser, but now, under new management it is fighting back. Advertisers are not losers because readership is delivered the same; the proportion of AB and ABC1s is up, as is under 45 readership, but there is no evidence of increased duplication. Readers do not miss out because the product has not reduced in quality; so, Jonathan concluded, nobody loses.
Peter Bowman of WCRS attempted to answer whether or not advertisers are the true victims of the price war. The strongest argument that the price war is in fact detrimental to readership is illustrated by the Times’ price cut of the 1960s, when the profile fell. However in the current price cut, there is no evidence of a “rush down market” in the readership profile. But Peter pointed out that if there is to be a hardening of ad rates then the upscale profile must be retained.
Price cuts can mean that less people read each issue, but more actually buy the paper themselves; therefore price cutting can cause an increase in the number of loyal readers. Price cutting makes sense to the purchaser, and concluded Peter, should be welcomed by the advertisers, as there is no dilution in delivery quality.
The debate that followed led to the point being made by Peter Bowman that the readership of newspapers should be measured separately from magazines.National newspaper readership should be measured by an audience panel, such as BARB, to enable short term readership changes to be shown, much quicker than the NRS can at present. Harold Lind claimed that the dramatic effect of the cuts show the market to be far more volatile than previously thought, and that therefore more research is needed.