The circulation audit is still relevant and here’s why

The circulation audit should still be relevant, however the controls appear to have been loosened recently; no doubt to tie up as much support as possible from the publishers. An example of this was late last year when News Corp papers were provided for “free” with purchase at Coles supermarkets.

Auditors in the past would have put a line through this type of communication, as it contravenes the “spirit” of the audit rules. Yes, this style of promotion has been running for a long time, however the communication of the offer would in the past never stipulate “free” or “complimentary”.

Clearly there have been issues at the Coles counter with take-up on these offers in the past, and, unless it is spelled out very clearly to customers, News won’t achieve their targeted circulation lifts from this type of promotion.

News will claim this as a Bundled Sale; one of the separated categories that make up their Average Net Paid Print Sale, or as advertisers see it, the quarterly audit figure. The rule around bundle sales states that:

“A bundled Sale is a sale at a price of a Publication involving the bundling of the Publication (Primary Publication) with other consumer good(s) or service(s) under Arrangement by or with the publisher of the Publication(s) and the supplier of the items making up the Bundled Sale”, where one of the rule condition states that “the price of the bundle must exceed the Cover Price of the Primary Publication”.

The key word in this definition is price. In this case, the paper is declared to be free by the wording of the offer. Average Net Paid Sales need to be paid for (which Coles will be paying a nominal price per copy to News Corp based on scan data).

The use of the word “complimentary” potentially positions this offer not as a bundle, but as a dependent transaction sale.

“A dependent Transaction Sale is a sale (not being an Event Sale) at a price of a Publication under an Arrangement by or with the publisher of the Publication (Secondary Transaction) which is made as part of another transaction (Primary Transaction).

Spending $20 in store is the primary transaction. The newspaper, being complimentary, is the secondary transaction. This “freebie”, it could be argued, is a dependent transaction sale.

Why is this relevant? Dependent Transaction Sales are what is referred to as an “Other Print Sales”. Other Sales are reported separately, and are excluded from the Average Net Paid Sales. Thus, the Complementary wording should ethically and could technically make all sales for this specific promotion excluded.

Hence, the Audit Bureau appear to have loosened up on rule interpretations, because, in the past, this promotion would not have been acceptable.

News are chasing aggressive targets through discounted channels and expensive consumer promotions. The fact is that publishers can’t afford to keep inflating their circulation numbers through discounted sales and exiting the audit is a financial necessity that goes well beyond saving on membership fees.

Circulation reporting is necessary; particularly given the gross inconsistencies between the main audience reporting metrics. Let’s hope it continues, and becomes more robust.They can start by looking at period on period reporting.

Agree

Hi George.

Clearly you have worked ‘on the inside’ because you would be one of the few who knows the rules. Drafting these rules was long and contentious.

Apart from de-duplicating digital and print copy subscriptions, the most debated issue was discounted copies “at a price”. Every rule we drafted we were able to break. The break-out categories (or ‘buckets’ as they were called at the time) were designed to account for all circulated copies (hey, why not know exactly how many copies hit the streets and people’s hands) but also to classify them according to some form of perceived worth based around how the copy was obtained and where on the price continuum it was.

In the days of yore, people were content to pay full price for a newsstand copy. So, if the cover price was $1.50 and the person paid $1.50 then it was a ‘paid copy’. It was black-and-white (no pun intended). There was a perception that anything other than full cover-price was a lesser-valued sale. So, what is the difference between a $1.49 copy and a $1.50 copy.

It was also a rule that could have been easily gamed. Some devious mind posited a scenario where a desperate publisher could do the rounds of newsagents and offer them 10 cents for each copy of the rival’s title they sold for 5 cents off. The consumer gets a $1.45 paper, the newsagent gets $1.55 per copy, and the affected title would get no ‘paid sales’ from the particular newsagent when audited. Is it likely – No. Is it possible – yes. Was the rule unintentionally manipulable – yes. Can I envisage devious scenarios – yes.

The point is, at whatever price you included in the rules “no more than 10 cent discount”, “must be at least 75% of over price” … we could break it.

Interestingly, every subscription I have seen included a discount. I’d argue that subscribers (especially for magazines) are probably the most important readers – yet they don’t pay full cover price.

Further it is in the interest of the publisher to get their product in as many hands as possible to encourage growth in readers. Strict rules could be a boat-anchor on the business – which is not the intention of the rules.

One category alone proves this point – airline sales. You pick up a copy in the lounge or boarding gate, sit on a plane and read it for 30 minutes … an hour … whatever. Probably one of the most prized uninterrupted reading sessions an advertiser could want. And a premium audience especially in the lounge. So why are the copies free? Well there is a deal between the publisher and the airline where a ‘consideration’ is paid, Frankly I don’t really care how much the ‘consideration’ is. What I care about is that thousands of copies get into readers hands in a captive environment of high attention every day.

So similar categories like events, schools, etc. were added.

Problem is, most trade media, sales decks and publishers went with the biggest number – the gross sales.

Given that print/press is normally a specialist/separate buying function in most media agencies I hope/believe that the planners and buyers look at all the buckets, discount the copies that have little or now value to their advertiser client and negotiate accordingly.

Having said all that, I feel disappointed that the current events are happening.

But when you consider the ‘new opposition’ of online-only publishers, who do you know pays to read any of their content on-line? Bugger all? There sure is no restriction around claims of online readership having to be paid. That is the new reality. Accordingly the rules were changed to reflect that new reality and to focus more on the mode of copy acquisition and environment, and less on the actual cover price paid.

Do I think that the rules as a result of the most recent revision are being used properly and to their fullest? Sadly, no. The horse was led to the water, but it’s thirst was found wanting.

Thank you for your comments and support of the circulation audit in delivering a verified hard data point for print evaluation, which works as a calibration point for the sample based readership metric.
Setting rules for circulation audits is a detailed and nuanced task.
John Grono hits the nail on the head with his comment: “Strict rules could be a boat-anchor on the business – which is not the intention of the rules”. The audit rules are not designed to, nor should act to, constrain publishers from selling their titles, but to ensure like for like transparent verified reporting.
The ABC paid sales audit includes detailed rules and categorization, so that particular types of sales can be identified, with free distribution excluded from inclusion. Period on period reporting is included in the AMAA database, along with year on year reporting.

Oh my. Sorry, some very respectable contributors here but…Advertisers have forgotten and walked away from magazines (and newspapers) so unjustifiably so and the magazine industry has been expert at letting them…perhaps encouraging them and the AMAA audit did nothing to stem to leakage.
Bulk sales have been around for decades and serve several purposes: artificially boost circ averages, sample exercise for potential new purchases and get more readers (people to see your ad). Circulation audit is a sense check on good readership estimates. Anyone who translate circulation as readers and therefore customers doesn’t understand magazine consumption.
Someone tell me why a reader of a niche magazine isn’t the most engaged media consumer you will ever find.