I’m of course thankful for the quality local news that my local newspaper provides, but the real reason my family will buy at least one copy of the paper is for the coveted Black Friday deal inserts from retailers (also known as “preprints”). As a matter of fact, I’m pretty sure that by the time I get to my parents’ house, the paper will already be in the recycling bin but these circulars will be left out for the family to browse.
In this highly digital world it seems odd that the Thanksgiving circular ritual still doesn’t have a great web-based solution usurping its position. Sure, there are sites that will post the ads online ahead of time — but as tech-savvy as I am, I will still most likely flip through the preprints.
Publishers across the country give thanks for the fantastic single copy sales they get on Thanksgiving because of these offers, but, really, they shouldn’t get too excited. For quite some time people both inside and outside of the newspaper industry have been discussing the fact that the preprint business is declining — and might go away altogether.
This causes quite a concern. Preprints account for about 25 percent of newspaper revenues — and that percentage continues to grow even as the amount of revenue from preprints is declining. Essentially preprint revenue has declined at a much slower pace than other sources of revenue for newspapers, but it’s still declining. A study by the Newspaper Association of America earlier this year showed that more than 50 percent of the people who buy a single copy are purchasing the paper for the ads. And ask most Sunday subscribers if they would continue to subscribe if the circulars went away and most will tell you they probably wouldn’t.
One new major threat to newspapers preprint business is Valassis Communications. They are the ones responsible for the “Red Plum” ad circulars that you get in the mail via the US Postal Service. Valassis and the USPS have reached an agreement that allows Valassis to distribute their circulars through the mail at a significant discount compared to what newspapers would pay for the same service. The Newspaper Association of America estimates this could cause newspapers to lose out on $1 billion of revenue. The NAA went to court to get an emergency stay on the deal, but was denied.
And preprints aren’t just big business for newspapers. According to a 2011 study by Nielsen more than 90% of Gen X and millennials said direct mail and newspapers influenced where they shopped. This influence means that circulars, by some accounts, are the number one driver of in-store sales.
With so much money invested in preprints by retailers, and so much demand from consumers, it’s not surprising that a lot of digital companies are working to disrupt this part of the local marketing industry. ShopLocal, owned by Gannett, is one of the leaders in the area — although the company’s focus now appears to be on providing the digitizing solution to retailers. Meanwhile, the Associated Press has teamed with 40 newspapers to create a service called iCircular that embeds “digital versions” of the circulars in newspaper mobile apps.
But some of the lack of innovation in these digital offers platforms stems from the fact that if someone wants to see Target’s Sunday ads they can simply view them on Target.com. In the print world, retailers need the newspaper as a distribution channel and the consumers need the newspaper as an aggregator. Online, that’s just not the case.
When I worked at Tribune, I participated in many conversations about how we could “save” preprints. We even had one meeting composed of executives from multiple newspaper companies. The problem with all these conversations was they were always focused on the newspaper’s problem (preprint revenue declines) and not the consumer’s problem (how can I find out what’s on sale).
The other elephant in the room is that newspapers understand that if they offer a great way to get Black Friday or Sunday deals online, it’s likely that fewer people will then actually purchase their paper. This is flawed thinking because if a company is aware of a potential disruption but doesn’t take advantage for fear of cannibalization, then it’s only a matter of time before someone else does.
But even when these conversations focus on the consumer, I’m still not really convinced that the Web is a great way for most consumers to browse deals. As I mentioned above, there are plenty of sites that let you find Black Friday deals and circulars anytime of the year. None of them, however, have created a great user experience — or at least one that can compete with the preprints. The idea of flipping through ads on your computer just isn’t very compelling.
On tablet computers, however, newspapers have a great opportunity to build an app that can be marketed around Black Friday deals. It should have a clean interface for flipping through local ads and discovering top deals, and should allow for families and friends to share and plan out their Back Friday schedule or even their weekly shopping. It would be prudent to spend some time with people as they plan out their shopping using the paper preprints in order to adequately fill the needs of the consumers. Newspapers could then on the following Sunday send a push notification that the latest ads are ready for viewing. It will take time to change people’s habits, but it’s possible.
If newspapers don’t take advantage of this opportunity, someone else will. Daily deals companies will invest more money to build out a better interface and figure out how to sell placement to the retail outlets.
I also wouldn’t be surprised to see a company like Flipboard get in on the preprint/circular business. Flipboard’s creators understand that the way people consume content on a tablet is different than on a website. Imagine a beautifully designed catalog of deals being pushed to your iPad each week, customized based on where you live. It also doesn’t hurt that the company already has 1.5 million users each day, and has just launched a bookstore.
On this Black Friday my family and many others will stick to our paper preprints, and newspapers will be happy. But I do look forward to a Thanksgiving without ink-stained fingers. It will happen — it’s just a matter of who will be the disruptor.
Matt Sokoloff is a 2012-2013 Reynolds Journalism Institute Fellow working on a project to help local independent websites and bloggers gain additional revenue opportunities. Matt’s background is in building digital products for media organizations. Read more about Matt’s current work here and respond in the comments or at email@example.com and @MattSokoloff on Twitter.