Matt Lindsay will be speaking at the NAA annual meeting in San Diego on April 7th. Matt’s presentation will cover his work with newspapers in the areas of circulation pricing strategy and customer profitability analysis. A white paper that summarizes these topics has been published by the NAA on their website.
Customer profitability analysis is an opportunity for newspapers to understand where they are making money from their home delivery circulation and where they are losing money chasing unprofitable customers. Using data on preprint insert contracts, delivery costs, and production costs, in addition to their circulation revenue, it is possible to measure operating margin by customer. As is true in every business, there are some customers that are unprofitable to serve due to their high cost to serve, low willingness to pay, and low value to advertisers.
As the business model for print newspapers evolves, the reach of newspapers into high-income and highly educated households provides an opportunity for significant revenue from preprint advertising. This is one bright spot in an advertising market that is more competitive by the day. When we study preprint advertising for newspapers, we find that the variation in preprint advertising across the market can vary dramatically due to partial-run insert contracts. Knowledge of which customers draw significant advertising revenue from preprints enables newspaper circulation departments to focus their resources on acquisition and retention of those customers.