Covermounts - Too much to take

Giveaways - whether they're covermounted to the front of the newspaper, a pick-up at the retailer's cash register or ordered for free with a coupon - remain a popular way for papers to claw back circulation. The sting in the tail is that consumers are now conditioned to expect covermounts, so an uplift in sales is no longer guaranteed.

Publishers are responding to this new market reality in one of two ways: either making a big splash with one-off premium content, or taking a more targeted, cost-effective approach. The Mail on Sunday is the market leader in the premium model and spends millions of pounds on exclusive, original content - such as the Prince CD launch, the first release of Vinnie Jones' movie The Riddle and CDs by Simply Red and UB40. Similarly, The Sunday Times gave away Moby's latest studio album last month.

Chris Reed, managing director at brand marketing agency Cocktail Marketing, says promotions such as these have upped the ante in the covermount game: "Content needs to be more compelling - these days you need to have real films or real albums."

Other publishers are taking a different route and focusing on targeted promotions that might convince readers to buy the paper more frequently. For example, The Daily Telegraph and Sunday Telegraph gave away an eight-part series of Margaret Thatcher DVDs over a week, with the first two discs covermounted and the others available for pick-up at the register.

Mark Gallagher, executive director for media agency Manning Gottlieb OMD, says the key is to have an enticing giveaway that will encourage sampling and enhance customer loyalty, without blatantly buying sales.

"The media buying community knows this goes on and we know they are trying to increase their circulation any way they can," he says. "But we're not so happy with covert operations - such as last summer when three of the qualities gave away bottles of water with the paper. To do that on a hot day is taking things a bit too far." He adds that the water was worth nearly twice as much as the paper and that he saw a pile of abandoned papers behind the shop counter and outside.

Gallagher says giveaways that are relevant to content are more appropriate and cites The Guardian's wall charts as a good example. However, he says promotions such as the Prince CD are worthwhile as a marketing exercise, given the amount of publicity The Mail on Sunday giveaway generated globally.

The market is continuing to change. Covermount brokers say they are now finding it easier to convince record companies and film studios of the benefits of a newspaper distribution deal and they are turning away more offers than they accept. On the flipside, the cost of producing a covermount is rising.

CDs and DVDs remain the most popular type of covermount because they are flat and can be included inside the newspaper or polybag. Yet the recent collapse of manufacturer ODS, which pressed CDs and DVDs at its plants in Swindon and Germany, has removed a huge amount of capacity from the market and Andrew Smales, managing director of Covermounts.com, says it's inevitable that prices will rise as a result.

"Most of the plants geared for short-run capacity are not willing to go down to the sort of prices that ODS went down to or they aren't willing to do runs of 2.5 million," he says. "Prices will definitely go up for (manufacturing) CDs and DVDs, possibly by 15 per cent."

Meanwhile, Smales adds, intellectual property owners are wary of outsourcing to Eastern Europe or East Asia because of past problems with blatant copying. The high value of the euro is another factor making outsourcing to Europe less competitive.

Gifts are most effective when they are physically covermounted, but copyright deals and manufacturing costs usually make this the most expensive option. One alternative - which is cheaper but less effective in terms of sales uplift - is to let consumers pick up the gift in-store.

Simon Stanford, managing director of Upfront Promotions, thinks recent changes in the way music royalty payments are calculated will make this option more popular. "If you did a pick-up in store, they called it a premium promotion and, instead of paying a small amount per disc, you were suddenly paying a huge amount per track," he says. "They are relaxing that now so I think we're going to see a lot of publishers move to doing pick-up in-store promotions."

Downloads are another possibility. Cocktail Marketing's Reed says this would be great for publishers as they would save on manufacturing costs and be able to capture customer data, allowing valuable opportunities for upselling and relationship marketing.

Stanford, however, believes downloads are unlikely ever to be effective as a gift. "Not for the foreseeable future," he says. "With a CD, all they have to do is buy it and then they can stick it in the car stereo - but the harder you make it for them, the less likely they'll bother."

There is evidence that publishers are moving away from covermounts, with the high cost, rising consumer expectations and the scepticism of advertisers leading to diminishing returns. The Daily Express, News of the World and Evening Standard have virtually abandoned them, while other publications such as The Guardian and The Times have scaled back, using them more as a value-add than a bribe. The Standard is focusing its promotions efforts on the Eros card, its prepayment and loyalty scheme, and there is an increased emphasis on hooking customers through related content, such as the Telegraph's popular Fantasy Football competition.

Last month brought more gloom to newspaper publishers battling with declining circulations - figures from the Audit Bureau of Circulations show The Sun and the Daily Mail were the only national newspapers not to record a fall in April. Yet newspapers won't go down without a fight and, however they choose to play the game, covermounts remain one of the most useful weapons in the arsenal.

COVERMOUNTS TODAY

Mark Gallagher, executive director at Manning Gottlieb OMD, gives his verdict on some recent giveaways

- The Mail on Sunday

2 May 2008

UB40 CD: "UB40 were big in the 1980s and people who are into them would be in their 40s, so it seems a pretty good fit."

- The Daily Telegraph and The Sunday Telegraph

14-19 April 2008

An ITN-produced documentary on Margaret Thatcher, distributed on eight DVDs (covermounted on Saturday and Sunday, then pick up in-store from Monday to Saturday): "You can't get better than that, can you? They are getting back to their roots and also capitalising on the ascendancy of Cameron and the Conservatives - to do something like that now is not just for the existing readers. It's very core in terms of readership but it's also a good sampling exercise. People will find it's not necessarily the same paper as five to 10 years ago - (editor) Will Lewis has moved it on a lot."

- The Guardian

19 April 2008

Godzilla DVD: "When you get to the box office ones, you have to think, 'Was it big at the time, was it iconic?' It's a bit a of a name, but is it core to The Guardian? It seems a bit like it was available and they did a deal on it."

- The Observer

March 2008

The Sheltering Sky DVD, a "Book of the Earth", and a poetry booklet: "That's very Observer. If you put a book of poetry out with the Daily Star, I'd think, 'Hmm.'"

- The Independent

24 April 2008

A CD with indie tracks from past 20 years, including from The Primitives and Ned's Atomic Dustbin: "Who? I've never heard of them. In general, compilation CDs - 'best drive music' for example - are very cheap to acquire but don't necessarily reflect the brand. But The Independent has done some quite good ones with language learning and that makes sense because it's a clever, upmarket audience and it adds value."

- The Times and The Sunday Times

1-7 March 2008

Seven free PC and DVD games (Monopoly and Scrabble covermounted in weekend editions, others obtained through voucher redemption by post or at WH Smith): "Games are moving more mass-market - they used to be very niche. It makes sense, but will it drive circulation? I can't imagine someone would go out of their way to buy The Sunday Times for £2 just to buy computerised Scrabble."