Sunday Ad Circulars Going Digital

In the world of newspaper circulars, several interested parties must work together to make the format a success:  The retailers offering deals, the newspaper publisher that prints and distributes circulars to its readers, and the shoppers who redeem coupons. This system has been working well for decades but that may be about to change. The revenue that newspapers receive from their Sunday inserts could be about to take a big hit.

Earlier this week, several newspaper publishers, in conjunction with the Associated Press, announced a test run of iCircular. From now through the end of 2011, newspapers will be rolling out new functionality on their mobile sites. This functionality will display the weekly printed circular in mobile format.  To appeal to mobile users, the digital insert will allow:

  • Conversion of items to a shopping list
  • Ability to send offers to friend
  • Ability to add store purchases to digital loyalty cards
  • Product searches that will return lists of where to buy items, along with associated prices and sorting by zip code

Several major retailers have signed on for the beta test of iCircular, including Target and Walmart. Writing for Poynter, Rick Edmonds notes that retailers will not pay for the digital inserts through the end of the year. However, the financial modeling behind this business arrangement is based on the belief that retailers will be upsold by newspapers. Eventually, after retailers buy into the print format, they’ll be offered the digital version for an extra fee.

It’s hard to say if a 3‑month trial run is long enough to determine whether this new format will be a hit with consumers. We can guess that it might do very well with tablet users who can use their additional screen real estate to browse circulars.

But if iCircular catches on with enough consumers, newspapers could find themselves at yet another financial crossroad. Currently, the advertising circulars contribute 18% of revenue to the newspaper industry’s bottom line  or about $5.2 billion.

Consumers who use iCircular might no longer want or need to subscribe to the printed edition of the newspaper. It’s a situation worth pondering. How would the potential loss of preprint revenue impact the newspaper industry and your local daily paper?

[Sources: Edmonds, Rick. AP, newspapers to redeem their share of coupon business. Poynter​.org. 19 Sept. 2011. Web. 21 Sep. 2011; Steel, Emily. Taking a Page From Papers. Wall Street Journal. 19 Sep. 2011. Web. 21. Sep. 2011] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.