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Newspapers may finally have realized it's better to encourage existing subscribers than to launch endless promotions to build circulation.

A recent subscriber "churn" study by Newspaper Association of America found subscriber turnover at newspapers with circulations greater than 100,000 can climb as high as 70%.

An accompanying 78-page "churn management" handbook offers 83 suggestions for handling the problem, based on survey and information and site visits to newspapers around the country.

Even newspapers with circulation under 25,000 have churn rates that approach 30% or higher.

"Why newspapers should care about churn is that subscriber churn is expensive," says Leon Levitt, NAA director of circulation and readership. "It costs newspapers on average between $25 and $30 to acquire a new subscriber."

Turnover has long been a question mark when it comes to buying newspaper space, with advertisers closely examining circulation, demographic and geographic reach information.

"It's never been clear what newspapers' churn has been," says Anne Parr, media supervisor at Leo Burnett USA, Chicago. "But it comes up as an issue from time to time."

"Churn can be [good] if a newspaper is losing overall circulation but is gaining subscribers in key demographics," adds Steve Greenberger, VP-director of print media, Grey Advertising, New York. "National advertisers care more and more about reaching specific target audiences, and if a newspaper can show it's reaching a certain audience, a solid audience, that is crucial information."

As defined by NAA's 14-member Standardization Task Force, churn is the "percent of subscriber base that must be replaced on an annual basis to maintain the same level of home delivery circulation."

The NAA project, which consisted of survey and data gathering, as well as site visits to seven newspapers, identified kinds of churn: "Core Churn" subscribes for one year or more; "Marginal Churn" subscribes for less than a year; "Natural Churn" cancels subscription due to moving out of the market; and "Controllable Churn" cancels a subscription but remains in market.

The greatest opportunity, NAA believes, is in marginal churn, where newspapers in recent years have resorted to regular discounts and other promotions to entice home-delivery readers to renew their subscriptions and thus boost their circulation rolls.

The problem, newspaper executives say, is that readers have become smart about newspaper discounting, and they'll wait for the newspaper to come after them with offers and discounts before renewing.

"Readers knew more about our promotions than we did," acknowledges David W. Perona, VP-circulation director, The Buffalo (N.Y.) News, which spends $2.5 million annually on subscriber promotions.

"All we cared about was the numbers," he says, with the newspaper's circulation hovering around 300,000 primarily due to its regular promotional programs.

But a task force last year found that 30% of the subscribers were churning. So the paper last year bit the bullet.

The News ended its practice of offering readers up to 40% discounts on subscriptions, instead offering a discount-coupon book from advertisers as a premium for new subscribers. Management recognized that circulation would probably drop.

Coupled with price increases on home-delivery and single-copy sales, Mr. Perona says the paper showed a circulation drop of about 7.1%.

He says a circulation drop was expected with a worst-case scenario of as high as 10%, so the 7.1% decrease was within an acceptable range.

Circulation at the now is 282,000, a decrease of 20,000 readers. And Mr. Perona estimates 16,000 of those 20,000 subscribers were lost due to the lack of a subscription discount.

Still, Mr. Perona says he believes circulation is leveling off.

"These are numbers we feel good about, and it's a story we feel we can take to advertisers," he says.

The Fort Myers (Fla.) News-Press is touting its successful cross-promotion with a local music-and-video store as a way to build its 83,598 circulation without fueling subscriber churn.

The paper offered free video rentals and a sweepstakes to new subscribers and renewals to strengthen circulation among households with children under age 15.

The paper had a 2% response rate-327 subscriptions and renewals. According to Lee Susdorf, circulation sales coordinator, that's good for the market and a level the paper can sustain.

"Our goal is to build circulation among specific demographic groups, and then show advertisers that we can hold onto these people," he notes.

Advertisers and agency media buyers want to hear concrete examples of how circulation changes, because circulation is one of the most difficult areas of newspaper buying to grasp.

"My theory is that if newspapers' subscriber renewal rates were very high, we'd be hearing about it," says Roberta Garfinkle, senior VP-director of print media, McCann-Erickson Worldwide, New York. "Having this kind of information will help improve newspaper buying. These are subscribers [the core buyers] that (an advertiser) can feel good about marketing to."

Advertisers "always want to know how much is doorstep delivery and how much is newsstand .... and a substantial turnover of readers could be a factor in whether or not to make the buy," says Paul Bankert, print media buyer at Zenith Media Services, the media planning & buying arm of Cordiant, New York.

Although NAA's study doesn't break out churn by demographics, newspaper executives agree such information could be developed into success stories that would appeal to advertisers.

"It touches on our knowledge of our market," says Terry Thompson, circulation director, Reno (Nev.) Gazette-Journal, one of the newspapers NAA included in its study.

"Although we haven't done any studies of churn by demographics yet, we believe we're able to go to advertisers with our churn-management program and explain how this benefits them," says Mr. Thompson.

The Reno Gazette-Journal's churn-management program surveys 500 subscribers monthly to guage service satisfaction-with a response rate of 30% to 40%. The paper offers little discounting, but places a strong emphasis on customer service.

This strategy was in place before the NAA's study and was one of the reason's the Gazette-Journal was selected as a study site. Its techniques are recommended in the association's 78-page handbook.

While churn reduction can erode the subscriber base, the newspaper still benefits because it doesn't have to spend money to hold onto short-term subscribers who only buy for the duration of the promotion.

In addition, the remaining subscribers are more valuable to advertisers because they're constant in the circulation demographic.

"We're now able to start talking up quality circulation rather than quantity," says Mr. Levitt. "Bigger sometimes is often better, but the idea today is to give the advertiser the biggest bang for buck."

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