Free tabloid newspapers, aimed at commuters, are becoming a weapon in the battle for the eyes and wallets of time-pressed younger consumers.
Metro this week is expected to launch in Boston; a Philadelphia edition has been circulating since January 2000. And in the Big Apple, the New York Daily News has committed itself to continuing Daily News Express, which debuted in mid-September of last year.
The commuter papers' goal is to grab people Monday through Friday who don't usually buy newspapers and give them a fast once-over of the day's news. Because the papers are free, advertising becomes the core source of revenue.
NOT BRAIN SURGERY
"The Metro concept isn't brain surgery," says Earl J. Wilkinson, executive director of the International Newspaper Marketing Association. Metro International "balled their fist up and delivered a punch directly between the eyes of traditional paid-for newspapers, which thought their only competition were television, radio and the Internet."
In Philadelphia, Metro Publisher Jim McDonald won't discuss the operation's finances but says the September circulation of 143,269 will be up substantially in the most recent audit. Metro's circulation is audited by Certified Audit of Circulations, a non-profit circulation audit group.
By contrast, the city's dominant dailies, The Philadelphia Inquirer and The Philadelphia Daily News, had circulations of 400,385 and 154,145, respectively, for the six-month period ended Sept. 30, according to the Audit Bureau of Circulations.
The first U.S. paper for Sweden-based Metro International (see AdAge.com for Juliana Koranteng's story on the burgeoning empire of Metro International), the Philadel-phia edition is awaiting research on its reader demographics. But among the early gleanings is the fact that 55% of its readers are women, ages 18 to 44, with average annual income of $40,000 to $50,000-a desirable group for advertisers.
Distribution of the paper on city buses and train platforms, under an exclusive deal with Southeast Pennsylvania Transit Authority, remains the subject of a lawsuit leveled by rival newspapers. That suit is still under mediation, but it isn't stopping Metro from moving ahead with a redesign of the 15-month-old publication.
"We're out of the traditional newspaper paradigm," Mr. McDonald says. "Daily newspapers continue to raise their rates and give you declining circulation. People are looking for other venues."
Knight Ridder's Philadelphia Newspapers, publisher of the Inquirer and Daily News, says Metro's impact has been minimal, even though Philadelphians now have three morning papers to choose from. Circulation of the tabloid Daily News is down 3,000 copies since Metro invaded but there's been no effect on the Inquirer, says Helene Pierson, director of business operations at the Daily News. As for advertising, neither the Inquirer nor the Daily News has seen "any real significant impact," Ms. Pierson says.
ADDS KEY DIRECTOR
Metro's credibility in the ad community took a leap when it recruited away Nancy Stuski, retail director of the Inquirer and Daily News and advertising director of the Daily News. Ms. Stuski found herself talking up to advertisers the very publication she had dismissed.
"What I use are the demographics," says Ms. Stuski, now VP-advertising at Metro. "The distinction we have and the readers have is what is attractive to advertisers. That younger female audience is helping sell the paper."
Questions linger, though, about whether marketers are willing to put their ad dollars behind Metro. Advertisers in the paper include AAA Travel, American Appliance, Gateway, Modell's Sporting Goods and local auto dealers, but these are the same names as months ago.
modell's sees results
New York-based Modell's ran a coupon early in its relationship with Metro and saw a "tremendous" response, both in its inner-city and suburban stores, says Richard Reizovic, director of marketing and advertising at the retailer.
Modell's also put the same coupon in both the Inquirer and Metro on the same day and found that Metro held its own. Modell's has since entered into an annual contract with Metro and dropped its ads in the Daily News. Metro "has been a much better buy for us," Mr. Reizovic says. "It was a no-brainer for us to add them to the mix."
One reason for Metro picking Boston as its second U.S. market was the opportunity to offer discounts to advertisers to who buy in both papers. Metro promises an initial pressrun in Boston of 193,000.
"We've got a big education job ahead of us," says Russel Pergament, publisher of Metro in Boston. "In Boston, people think for a newspaper to be important, it's got to be fat. [Advertisers] are either going to understand and embrace this potential very quickly, or they're going to be afraid of anything that is new."
Metro failed to secure a similar distribution agreement with the Massachusetts Bay Transportation Authority. Instead, it has hired 180 hawkers in red satin jackets to hand out the paper, and has positioned hundreds of news boxes in nearby suburbs. Mr. Pergament hopes to eventually transfer the bulk of distribution to news boxes.
On average, paid circulation contributes only 13% of a newspaper's revenue, Mr. Wilkinson says. What newspaper companies in big cities have to decide, he says, is whether they will be baited into a pre-emptive strike against the free dailies.
HOW TO RESPOND
In New York, the Daily News blinked first. Rumbles that Metro might descend on the city prompted the Daily News to create its own free afternoon tabloid, distributed by hawkers at 75 transportation hubs in Manhattan and Brooklyn. Circulation of Daily News Express stands at 90,000 but there are no plans to rise above 100,000, says Ira Ellenthal, exec VP-associate publisher.
Media buyers aren't convinced about the value of free dailies for their clients.
"When you give a newspaper away, people have no voluntary investment that makes them need to read it," says Neil Aronstam, president and co-CEO of Independent Media Services, New York. "It's just handed to people. I don't think the readership is as valuable as when people have to pay. Free things are often not worth so much."
Chicago newspapers also have reached out to p.m. commuters, but they still expect readers to pay. The Chicago Tribune's "Evening Update" wrapper, which surrounded the a.m. product but was sold during the evening commuter rush, was discontinued earlier this year. At its peak, circulation totaled 8,000.
The rival Chicago Sun-Times continues to publish a "Final Markets" version that wraps around its morning tabloid and is distributed in the central business district for the regular newsstand price of 35 cents. Circulation currently tops 10,000.
"We do believe it is an obvious way to draw more people into our brand," says Mark Hornung, VP-circulation. "And we get to make a little money while we're at it."