Retail Circular Advertising Still Works
It has been said that print advertising is dead. Apparently, someone forgot to tell the retailers.
In 2014, advertisers spent an estimated $5.84 billion dollars on newspaper circulars in the United States, according to a study by Borrell Associates. The vast majority of those circulars involved retail advertising that offered Black Friday deals, Presidents’ Day steals and weekly coupons for consumers in search of inexpensive meals.
What’s astounding about these facts is circular advertising’s ability to remain a multi-billion dollar industry in an era of shrinking newspaper subscriptions. Pew Research reports that weekday and Sunday newspaper circulation fell by about 3 percent in 2014–and the numbers aren’t likely to be any better in 2015. In fact, readership for all demographic groups has been falling precipitously since 2000.
On the other hand, we all know web shopping, showrooming and webrooming are all on the rise. So how are retail circulars doing well enough to pull in nearly $6 billion a year.
Well, they work, that’s why.
A Quick Case Study
In 2011 and 2012, Wal-Mart Stores decided to stop using circulars in a handful of mid-sized markets, including Tucson, Arizona and Fargo, North Dakota, so they could re-channel those print ad dollars into online ads. Rather than reap benefits from this shift, Wal-Mart saw a major decline in store traffic in the cities with advertising circulars. So it went right back to them and saw their numbers pick up again.
Why It Works
There is a clear dichotomy between where people are going to get their information about products and how they like to get information about deals on products.
People use the Internet to research products—but they still reach for the circular before they buy.
This is largely because Americans have been trained to turn to the circular when they want the best price—and they have come to find that online ads are largely annoying.
According to Wanderful Media, which manages digital circulars for 400 newspapers across the country, fewer than 1% of the people who read newspapers online bother to click through digital circulars. In contrast, about 80 percent of people reading printed newspapers pull out and peruse the circulars.
So even though there might be more people doing product research online, more people look to retail advertising circulars for deals. And deals drive sales.
Making It Work Even Better
In a world where print advertising is still alive and well and online advertising is growing, retailers should be able to combine the enduring popularity of printed circulars with the dynamic characteristics of online advertising.
One example of how to do this comes from Kohl’s. They are testing a strategy in which it leverages data about consumers to determine where the printed retail advertising would have the most impact, then it tailors its online ads to Internet users in those areas that supplement and support the print advertising.
It’s a test that could offer big-time savings for the company, which operates more than 1,100 stores across the country. If it works, the company could reduce its print budget by as much as 40 percent and use those dollars to better connect with its most loyal customers.