Latin Publishers and Advertisers bet on Readership Concept

Advertisers and publishers targeting Spanish-speaking audiences are increasingly focusing on readership as opposed to paid circulation. “To pay or not to pay is not the question. To read or
not to read, that is the question.” The phrase comes from a recent presentation by Jose Antonio Martinez Soler, publisher of Madrid based 20 Minutos, a free daily that refers to itself as “the
first newspaper that is not for sale.” “In the Hispanic market there are very few successful paid models. You have to readjust your thinking and work with the unpaid model. And make sure they can provide good readership,” says Young Soo Cho, media buyer/planner at San Francisco based Headquarters Advertising. Soo Cho buys print media in both free and paid publications for major companies, including PG&E and General Electric Consumer Finance.
 
“Advertisers want quality distribution and readership with audited circulation,” says Mike Cano, general manager of Al Día newspaper, which adopted a partially paid model in Dallas.Hoy (Tribune, Spanish, published in Chicago, Los Angeles and New York) publisher Digby Solomon says he would have launched Chicago and Los Angeles editions of Hoy as free papers from the beginning had he known then what he knows now. “The New York market has a very different distribution organization, based primarily on several established wholesale organizations and large numbers of newsstands. It is much cheaper for us to distribute a paid newspaper there than in Los Angeles and Chicago, where the distribution picture is very different,” explains Solomon. “It saved us millions of dollars to go free in L.A. and Chicago, where we had to spend a lot to subsidize distributors. We would not rule out going free in New York if we decided it made sense.”
In most Spanish-speaking countries print advertising has a low ratio compared to the overall volume of advertising (see box). “The structure of the advertising market in Spain is similar in many ways to the U.S. Hispanic and Latin American advertising markets,” explains Jose Antonio Martinez Soler, publisher of 20 Minutos. “TV and radio have the highest shares in the ad market, while newspapers and magazines clearly lag behind. A large part of the population just doesn’t read newspapers. In Norway, 70% of the population reads newspapers; in Spain it’s only 30%.” Soler says that in order to increase readership and advertising, newspapers needed a “free leg” (the same way TV and radio are available for free).
 
20 Minutos (majority owned by Norway’s Schibsted [80%] and minority owned by Spain’s Grupo Zeta [20%]) has a daily circulation of 1.15 million newspapers and is published in 14 Spanish cities. Founded in 2000, 20 Minutos broke even in 2003 and last year it had revenues of proximately 30 million euros and an EBITDA margin of approximately 25%. 20 Minutos publishes approximately 24 pages every day and charges 28,690 euros for a full page color ad. Advertisers include Ikea, Wanadoo, and many automotive brands. 20 Minutos leads the pack in an increasingly crowded free daily newspaper market. Que (Recoletos, former majority shareholder in the Rumbo newspaper network), was introducedearlier this year in a dozen Spanish
cities. And Group Planeta, another major publishing house, is currently planning to introduce its own daily into the mix. According to the latest readership data, 20 Minutos’ daily readership
(2.129 million readers) is only slightly smaller than that of El Pais (2.186 million), the market leader in paid circulation and advertising revenues.
 
While advertising in Spain’s free dailies only amounted to 4.4% (69.5 million euros) of all newspaper advertising in 2004, it grew by 49.8% compared to 2003. “We are taking market
share away from TV and radio,” says Martinez Soler. The third and fourth ranked papers in terms of readership are also free dailies (Que 1.972 million and Metro 1.828 million).
As evidenced by Hoy’s switch from paid to free distribution in Los Angeles and Chicago, publishers targeting Hispanics are increasingly trying to entice readers and advertisers with free
circulation models. The vast majority of U.S. Hispanic weeklies and an increasing number of dailies are free.
 
Paid model does work
Of course, some Hispanic newspapers have successful paid distribution models. La Opinión in Los Angeles, El Diario/La Prensa in New York and El Nuevo Herald in Miami are all examples
of successful paid newspapers, says Al Cruz, media supervisor at New York based Media Planning Diversity.
 
However, it has taken most of them decades to get where they are and they have had to ask for a lot of patience from their investors along the way.
 
Hybrid model
Mike Cano, general manager of Al Día (Belo Corp., Spanish-language, daily avg. circ. 34,000) is a firm believer in the hybrid model. “I believe that there is room for paid and for free, and for hybrid products like Al Día.” Cano adds that editorially driven home-delivered publications
(requested by the reader or paid, as opposed to advertising driven saturation
products like direct mail) are essential to the development of the Hispanic print media sector.
Media Planning Diversity’s Cruz says that weeklies tend to be less newsoriented,
creating a more casual atmosphere for advertising. Advertising that appears in free publications, mostly weeklies, tends to be primarily local. Goods and services consumed by higher purchasing power Hispanics may be better placed in more targeted publications, which are often paid. Soo Cho at Headquarters Advertising says it’s crucial that both paid and unpaid publications support their viability with readership studies.


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