Retailing Staple of Newspaper World Shifts to Web

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NEW YORK ( -- Circulars -- the boring but effective free-standing inserts that have long been a staple of newspapers -- are now becoming a major tool in marketers' online arsenal.
Shop 'n Save supermarkets now use online circulars created by G-A Communications of Atlanta. The food retailer has also launched a TV ad campaign to promote that its circulars are available online and its sales begin on Saturday -- while its competitor's weekly sales don't start until Sunday. Click to see larger image.

Watch a Shop 'n Save TV ad on 'TV Spots of the Week.'

In their traditional print format, circulars are, most frequently, brightly colored pages listing daily and weekly sales specials for grocery, drug, hardware, clothing and other retailers. They often are inserted in specific newspaper editions -- such as the heavily read Sunday papers -- to announce the coming week's sale items.

But now, online versions of these illustrated announcements are being used by many of the same marketers to reach consumers faster and more flexibly.

New players
The trend also has introduced new players into the local markets which were once the nearly exclusive domain of newspaper companies.

Microsoft's MSN, for instance, has been running its Digital Circular program for six months.

Yahoo! has a new online circular program that provides freestanding insert publishing services for six major national retail chains including Target, Staples and Nordstrom. It said it plans to have 25 more retailers on board by the fourth quarter.

Print publishers strike back
Not to be outdone, newspaper companies Gannett Co., Knight Ridder and the Tribune Co. in May acquired the online promotion company CrossMedia Services and announced the rollout of ShopLocal, their own online sales circular service. The three old-line publishing companies, which operate a combined 140 newspapers, announced that 50 national and regional retail chains have signed up with CrossMedia.

Yahoo!, MSN and CrossMedia say retailers have caught on to online circulars in the last year because they are cheap, efficient and effective. The conversion rate is 3% to 5% higher than traditional banner ads, said Mark Ugar, senior sales director of verticals at MSN. And the ads' overarching goal is to drive customers precisely to the place the

Target's current online weekly sales circular is aimed at back-to-school shoppers.
offline counterparts always have -- to the local bricks-and-mortar store.

Comparison shopping
"Seventy to 75% of the consumers who see the online circular go into the retail stores and purchase products based on what they've seen," said Brian Hand, CEO of Chicago-based CrossMedia, which hosted online circulars for retailers for two years before making the newspaper deal. That finding is on the crest of a trend that has become a retailing truism in 2004: Consumers like to compare prices and products on the Web before buying at a local store.

A Yahoo! survey of 3,300 of its members showed that 62% of them research online before making a purchase of $200 or more, and 51% research online before making a purchase of less than $200.

"If you are a consumer today, you are not abandoning one medium for another -- you're looking at all media," said Michael Schornstein, category development officer of retail at Yahoo!

'Thumb' through pages
The electronic inserts are remarkably un-Internet-like. They are, in fact, identical to their offline siblings. Readers can "thumb" from one page to the next the way they peruse pages in a newspaper. Interactive elements are a click away, enabling users to zoom in and examine particular products, perform a search for a certain item, build a shopping list that can be printed out and carried to the mall, or complete the transaction online. Visitors see

Staples' Web site enables users to enter their ZIP Code to access weekly sales circulars for the retailer's stores nearest them.
the circular for the retailer in their area by typing in their ZIP Code.

That paper-and-glue-type creative works, said Katherine Cusack, vice president of consumer marketing at Framingham, Mass.-based retailer Staples, which runs banners for its circulars on Yahoo!, MSN, iVillage and and its network of newspaper sites, among others. "The circulars appeal to customers who are looking at the circular offline and customers researching online," she said.

Yahoo! claimed the online circulars enhance the retailer's offline presence. Ms. Cusack concurred. She pointed out that Staples has not reduced its newspaper advertising.

Declining readership
While Web readership has skyrocketed, Sunday newspaper readership has declined steadily, dipping from 68% of the population in 1998 to 63% in 2002, according to the Newspaper Association of America.

"Newspapers are losing readers, but so is every other medium," said David Cole, editor of News Inc., a newsletter about the newspaper business. "I don't think retailers are going to stop advertising in newspapers because there is a Web."

Newspapers, with their thousandfold sales force, can offer offline/online deals that Internet portals such as Yahoo! cannot, Mr. Cole pointed out.

True, said David Hallerman, senior analyst at online research firm eMarketer. "But consumers don't think about researching products by going to their local newspaper."

In addition to Yahoo's greater reach, the portal's Internet prowess gives it an edge, Mr. Schornstein said. Yahoo! can reach retailers' target audiences by slicing and dicing its member registration data and behavioral data it gathers on Yahoo! sites. It can also append its data against a retailer's customer lists to refine a particular campaign.

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