Brunswick Review Issue 2

Why Circulation Is Irrelevant

Don’t let declining numbers at traditional publications convince you that their influence is necessarily waning.

How many people read newspapers, magazines, and websites? And who are they? These have long been critical questions for advertising executives and communications professionals trying to reach the biggest or most appropriate audience. But while the circulation figures of international publications such as the New York Times, the Handelsblatt, and the Financial Times may appear to be impressively specific, authoritative, and objective – offering detailed data on incomes, spending patterns and education levels – they have never been as reliable as they appear to be. And in the age of the BlackBerry, Kindles, home computers, airline televisions, and other electronic news sources, the official numbers are becoming even less useful.

At this stage, it is safe to say that circulation is almost dead as a meaningful concept. To try to capture the new multi-media, multi-channel, multi-device reality, publishers and broadcasters are developing new metrics that offer a better reflection of their readership. CNN recently claimed leadership in each of the following categories: “Total TV and web consumers,” “TV/web multi-platform integrators,” “Total (online) usage minutes,” number of “video streams,” “Mobile web users,” “Mobile TV viewers,” “Audio podcasts,” and “Video podcasts.” Scarborough Research and the Newspaper Association of America (NAA) have joined forces with the Audit Bureau of Circulations to launch “Audience FAX,” which measures a newspaper’s weekly print readership, online readership, and the combined print and web readership. In June 2009, The Media Audit, a Houston, Texas-based syndicated media ratings service currently covering more than 80 metropolitan markets, released data looking at the top United States newspapers’ “reach” in their respective markets. The concept of “reach” combines unduplicated print and internet audiences. According to The Media Audit, the New Orleans’ Picayune Times and its companion site, nola.com, reach 83 per cent of their overall market. 

The problem is that these next-generation metrics are still not yet broadly accepted in the US or anywhere else. “A procedure for measuring audience penetration levels for both printed and online newspapers that is both accurate and accepted by business advertisers has not yet been devised,” the Bundesverband Deutscher Zeitungsverleger (the Federation of German Newspaper Publishers) concluded in a 2008 report. 

CIRCULATION: MYTH AND REALITY

So what to do? Before answering this question, it is useful to start with some basic definitions. In the US and the United Kingdom, “paid circulation” is defined by the Audit Bureau of Circulations as the number of newspapers paid for by an individual reader or distributed via “specialized channels.” For example, as of March according to figures released by the Audit Bureau of Circulations, the circulation for the weekday New York Times was 1.039m. Of that group, 65 per cent receive the Times at home, 21 per cent bought it on newsstands, and 14 per cent is via “bulk sales.” Bulk sales are the copies newspaper groups sell for a nominal fee to airlines, hotels, gyms and restaurants (which may give them away for free). They are controversial, because the publisher need only haul more copies to the nearest airline terminal to boost circulation. Indeed, in the UK ABC is conducting a “forensic review” of bulk circulation claims by newspapers, and a number of UK titles have reportedly decided to eliminate bulk sales from their calculations of paid circulation, substantially reducing sales figures.

By these measures, the circulation of many of the most venerated brand names in the media is steadily sinking. According to the Pew Research Center’s Project for Excellence in Journalism (PEJ), circulation for daily US newspapers fell 4.6 per cent and 4.8 per cent for Sunday editions in the six months ending September 30, 2008, compared to the same period a year earlier. Since 2001, daily newspaper circulation has fallen 13.5 per cent and Sunday paper circulation has declined 17.3 per cent. 

That downward trend has, furthermore, been accelerating. In the six-month period ended in March, circulation dropped another seven per cent compared with the previous year, according to figures released by the Audit Bureau of Circulations. (One exception to this broader trend is the Wall Street Journal, which reported a gain, albeit only 0.61 per cent, in circulation in the six-month period between October 2008 and March 2009, according to ABC figures). 

The seemingly obvious implication of these numbers is that communications professionals should direct less attention to the old titans of the mainstream media. But that conclusion does not really stand up to closer scrutiny. For one thing, the concept of circulation has never adequately captured the size of a given publication’s “audience” – the number of people who actually read a newspaper or magazine. That is where outfits like Mediamark Research & Intelligence (MRI) in the US and the UK’s National Readership Survey (NRS) come in. Each conducts tens of thousands of interviews a year to gauge reading habits, including how many people read an individual issue of a magazine. According to most recent data from MRI, for example, an average issue of BusinessWeek is read by 5.28 adults and has a total audience of 4.67m readers, down slightly from the 4.7m readers the magazine had in 2008. (Compare this to a paid circulation figure of roughly 900,000.) In the UK, according to the NRS’ latest figures, while its circulation has fallen, the Financial Times has seen its estimated UK readership jump 15 per cent in the 12 months to the end of March 2009, compared with the same period the previous year, to an estimated 417,000 per day. 

Now enter the internet. The standard measurement of a given website’s total audience is “unique users” – the number of times an individual visited a website in some defined time period, say a week or a month. By this measure, it would appear the content produced by news organizations appears to be getting consumed by millions more people. Traffic to news websites is growing even as the outlets themselves are losing advertising revenues and in some cases facing extinction. According to a Pew PEJ analysis of comScore data, the average number of unique visitors to the top 50 US news sites each month grew 27 per cent in 2008 over the year before. The number of monthly unique visitors to all 700 news and information sites measured by comScore grew seven per cent. So the seemingly dire picture presented by circulation statistics is misleading.

The statistics are impressive, to be sure, but as the Pew Center’s PEJ State of the News Media 2008 report points out, the new online standard – unique monthly visitors – does not measure intensity of reader engagement. For example, readers of the physical edition of a newspaper spend vastly more time with the paper than those who visit the web version. In June, the average individual spent 38 minutes and 24 seconds, in total, at newspaper sites over the course of the entire month, according to Nielsen Online. Contrast that with the most recent data available from the UK’s NRS, which found that the average UK newspaper is read on average for a total of 50 minutes every day. 

As is the case with circulation numbers, online traffic numbers need to be read with a grain of salt. “Those numbers are all funky,” adds Alan Mutter, a former newspaper editor and venture capitalist who now writes Reflections of a Newsosaur, an influential media blog. “Different people get different counts from the same website all the time.” Mutter served as the No. 2 editor of the San Francisco Chronicle before joining InterMedia Partners, a media private equity firm. He argues that the only meaningful statistic that matters is how many are actually paying for the privilege. “The reason why it is important to charge people for circulation is to validate the passion of your audience for what you produce. That’s the argument for charging for content on the web,” he says. In addition to 20m visitors per month, WSJ.com claims 1.079m paying subscribers. The Financial Times website, FT.com, has 117,000 paying subscribers (up 18 per cent in the first half of 2009) in addition to its 1.4m non-paying registered users worldwide and average monthly unique users of 9.8m. 

CIRCULATION VERSUS INFLUENCE

There is little doubt that so-called “influencers” are migrating online. A recent study by Forbes Insights and Google determined that the “internet has become the chief source of business information” for the C-suite. The survey of 354 top executives at large US companies with annual sales of greater than $1bn found that during work hours 70 per cent of executives prefer to read “traditional” media online rather than in print (30 per cent), and 69 per cent prefer to access “traditional broadcast media” online rather than over the air. Brunswick’s own research with investors and analysts shows a similar trend.

As these readers move online, the world’s most enduring news brands still claim their attention. According to its 2008–2009 Opinion Leaders Study, research company Erdos & Morgan found that the New York Times reaches nearly 61 per cent of US opinion leaders, followed closely by the Wall Street Journal, which reaches 59.5 per cent, NBC Nightly News, with 48.1 per cent reach, USA Today, with 48 per cent, and ABC World News Tonight, with 44.4 per cent.  According to Erdos & Morgan’s 2009 study of the reach of digital media among opinion leaders, Google News reaches 46.8 per cent of opinion leaders, followed by the New York Times, CNN.com, Yahoo! News, the Washington Post, MSNBC.com and the Wall Street Journal. What is behind the enduring lure of these brands? Chiefly, the fact that new online news outlets are viewed with more skepticism than their established print, broadcast and cable counterparts. According to Pew’s 2008 State of the News Media report, of the seven online news organizations it evaluated, none is viewed as highly credible by even a quarter of online users able to rate them. 

What does that mean? Plus ça change, says George Janson, Managing Partner and Director of Print at Mediaedge:cia, which buys advertising space for clients including Xerox, MetLife, Chevron, and Accenture. “To reach the C-suite, the people who are the decision-makers, there are still only so many places to reach them.”

Or to put it another way: Don’t let the declining circulation numbers at the traditional business outlets mislead you into believing that their influence is declining. While the data is difficult to interpret, the opposite may in fact be true.

Michael France is a Partner in Brunswick's New York office. A former US attorney, he served as a Senior Editor at BusinessWeek where he oversaw the magazine's coverage of management issues and legal affairs.

Justin Dini is a Director in Brunswick's New York office. He was formerly a speechwriter and business and financial journalist.