The commercial verdict on the compact

What will Fairfax’s move to compact size for The Age and The Sydney Morning Herald do for the market? Nic Christensen finds out.Compact

Last June Fairfax dropped one of the most significant announcements in its history. Amid the flurry of media coverage detailing a major restructure, the loss of 1,900 jobs, the introduction of paywalls and the closure of printing plants, one major change overshadowed them all. Fairfax’s decision to abandon its 180-year heritage as a broadsheet newspaper publisher and move to a smaller tabloid or ‘compact’ version would impact not only readers, journalists and the publisher itself but also the many advertisers who still spend money on print.

“Handling change of this magnitude is difficult,” says Alex Pekish, group media investment director at Aegis Media, whose clients include Fairfax Media. “Given all the circumstances I think they’ve done a good job and delivered a great product.”

The move to a lower production cost format has been repeatedly mooted, discussed, even announced, as it was in 2007, only to then be aborted. On Monday the new format was finally delivered with The Sydney Morning Herald and The Age moving to the more cost-effective format.

The change came after 18 months of discussions with media agencies and partners. And most media agency executives are effusive about the new format. “I like it. I don’t know if that is just because of the build up to it, but it’s clean, it’s easy to follow and I think it will go down very well,” says Chris Mort, CEO of media agency TMS.

CEO of Ikon Communications, Dan Johns, agrees. “It’s come together well and looks good,” he says. “This is a positive move and will help alleviate some of the pressures on circulation.”

Nick Keenan, head of trading at media agency Mediacom’s Melbourne operation, says the move will be beneficial for Fairfax. “It’s a positive move for them in that it makes their format more contemporary and that word isn’t often used when talking about newspapers,” he says.

This a viewpoint shared by other agencies who point out that the shift in format is part of a wider change.

“Viewing this as a change to print alone doesn’t do justice to the changes Fairfax has made for which it should be applauded,” says Chris Stephenson, head of strategy at PHD.

The media agencies Encore spoke to welcomed the new format but the commercial verdict will depend largely on what happens next. Will the Fairfax audience rise or continue to fall? What will this mean for their online audience and rate cards? And can anything really be done to stem the decline of newspapers as a medium?

Media analyst Steve Allen says that in the short term there should be a rise in Fairfax’s print circulation. “We would expect a modest increase in circulation and a larger increase in readership because people would be inquisitive,” says Allen.

And some media buyers believe the rise in circulation could be sustained. “The precedent is Brisbane’s Courier Mail,” says Aegis’s Pekish.

“It went through a similar process a few years ago and the effects are they increased circulation. I am sure the change will have the same effect on the Fairfax papers.”

Mediacom’s Nick Keenan is more circumspect. He says: “It’s definitely a more commuter-friendly paper, and while this was debated inside Fairfax for more than a decade, I don’t think it will grow the print audience. What it might do is keep the current audience buying the paper editions.”

PHD’s Stephenson agrees. “It’s really hard to say it’s going to improve circulation,” he says. “What publishers are looking to do is maintain and hold readership as a trend.”

This perspective is shared by Fairfax. At a recent media briefing Fairfax’s commercial director Ed Harrison signposted the company’s strategy with print. “I wouldn’t buy into the hype about the imminent death of newspapers,” he said. “These are huge products. There are 600,000 readers a day for The Sydney Morning Herald and The Age. They are big products bought in large numbers and that’s simply not going to change overnight.”

“We do acknowledge there is a long-term decline, but no-one can put a timeframe around that. The point at which the papers become unprofitable… we will remove them. But that time could be a very long way away.”

In the meantime, media buyers have been pushing to amend the advertising rate card to reflect the reduced page size. Fairfax has argued it should stay the same on the grounds their research shows a higher reader engagement with the compact format.

“We know that engagement is improving. We’ve got a 22 per cent uplift. We know the environment is remaining strong and there is more time spent on the page,” said Sarah Keith, Fairfax’s director of print ad strategy and operations, last month.

“Our agencies and clients trade very, very hard with us on that basis and we take a pragmatic approach to deals. But ultimately the rate card is the rate card.”

Encore understands discussions are continuing and many media agencies declined to comment on this point.

Mediacom’s Keenan told Mumbrella: “No rate card has been agreed. I think market demand will dictate what clients pay – they can have official market rate card, that’s fine by us, but we negotiate on a client-by-client, case-by-case basis.”

Keenan also makes the point that the paper is just one part of the Fairfax advertising network which includes online, tablet and mobile. “Yes advertisers are looking at what they are doing with the compact size. But most will want to advertise across the network,” he says. PHD’s Stephenson agrees. “To view the pure change of size in isolation doesn’t do justice to the positive changes we’ve seen across the board,” he says, pointing to Fairfax’s growth of audience on the tablet, online and mobile platforms.

Ultimately most media buyers believe the key challenge for Fairfax is not in print but instead in integrating the compact product with other digital products in particular, building a print subscriber revenue stream from its metered paywall to be launched later this year. “It’s very important that the masthead in the traditional world is seen as contemporary so that it compliments the digital assets,” says Keenan. “Eventually – be it five, 10 or 20 years – there may not be a need for (print). Fine, but by then you will have a good subscription base that will pay for that content.”


Encore issue 5

This story first appeared in the weekly edition of Encore available for iPad and Android tablets. Visit encore.com.au for a preview of the app or click below to download.


Get the latest media and marketing industry news (and views) direct to your inbox.

Sign up to the free Mumbrella newsletter now.



Sign up to our free daily update to get the latest in media and marketing.