Only months have passed since The Times and The Independent resolved a damaging dispute with media agencies over the advertising pricing for their compact formats. Now The Indy's bold move to a seven-column page grid (Marketing, 6 April) has reopened the argument, with agencies vociferously resisting the potential 16% increase in page rates.
A radical redesign, unveiled on 12 April, has seen The Independent convert to a single-section compact format. Its Review section and themed daily tabloid supplements are now folded into the main newspaper. The changes mark the final stage of The Independent's evolution from the ailing minnow of the broadsheet market into an innovative compact brand that has shaken up the UK newspaper industry.
Readers have enthusiastically embraced the new compact format, with monthly sales increasing from 218,567 prior to the conversion, to sales for February of 263,595 - a 20% gain in a declining newspaper market.
The latest changes, supported by a 拢1.2m campaign urging readers to 'Take a new look', are ostensibly aimed at giving the compact a cleaner look in a one-section package, making it even more commuter-friendly.
Aesthetically, media buyers are mostly complimentary about the redesign.
However, there is deep-lying scepticism about its real purpose. The shrinking of the column widths to absorb an extra column, going from six to seven, is, many suspect, merely aimed at increasing its advertising revenue per page.
Brewing resentment
Newspaper ads are sold on the basis of a single column centimetre; an extra column on the page means that full-page and half-page ad prices would increase by 16%, while fractional ads will be smaller, and therefore less impactful.
This comes on the back of what media buyers say was an effective 16% increase in rates when the paper shifted from broadsheet to tabloid. They are resentful that, having supported the paper, it is now testing their goodwill again.
Steve Goodman, group press director at MediaCom, says the timing is not great. 'To make the change to a compact with six columns was not without its problems. Now, before all that is really ironed out, they have chucked a new spanner in the works.' Other press directors warn of a looming 'punch-up'.
The Independent, which is still losing money, can hardly afford another damaging stand-off with advertisers. The change to compact has brought in new readers, but that has yet to translate into advertising gains.
Ad revenue at The Independent was down almost 14% for the 12 months to February, with The Independent on Sunday down 14.5%, according to Nielsen Media Research. Yet the newspaper market was up 2.8% overall.
For its part, The Independent insists its redesign is editorially driven, and the shift to seven columns merely brings it in line with tabloids such as the Daily Mail (although the compact Times, for now at least, is retaining its six-column grid). The Independent says its redesign will benefit advertisers by providing more colour advertising opportunities.
Brand evolution
Simon Barnes, The Independent's commercial director, doubtless acutely aware that he is heading for a tricky period of negotiation with agencies, is abdicating responsibility for the redesign.
'The change is nothing to do with me. It is aimed at evolving the brand and sustaining and increasing the circulation growth,' he says. To suggest that the changes are simply designed to extract more money from advertisers is, Barnes insists, 'one of the more stupid statements I have heard'.
'The newspaper's revenue pattern will change as it is brought in line with other tabloids in the market, but those changes will be treated empathetically,' he adds.
Chasing revenues
Barnes joined The Independent after it made the move to a compact format, and claims that the change is now starting to realise advertising growth.
He also says the paper now has better relationships with advertisers, and trades with them in different ways.
However, during a round of visits to media agencies in advance of the implementation of the latest changes, Barnes was left in no doubt that these 'better relationships' are being sorely tested.
'He may think he can get away with price increases among smaller agencies and advertisers, but he won't be able to implement them across the board,' warns one big agency press director.
MindShare managing partner Paul Thomas says he is now reassured that confrontation might be avoided: 'Having had negotiations with The Independent, I am not as worried as I was. However, the pricing of newspaper ads is becoming a minefield.'
The Independent and its sister Sunday paper lost 拢10m last year, partially as a result of the investment in the change to a compact. Yet the company's business plan projects that the papers will become profitable in the second half of 2006. To achieve this, it needs to attract greater revenue. The circulation gains from the shift to compact are slowing, and although a cover price increase has been mooted, The Independent fears losing its readership gains to rivals.
Meanwhile, The Guardian is believed to be preparing to unveil its new mid-sized Berliner format, perhaps as early as this autumn, so The Independent could soon lose its innovative design edge over its closest rival.
With limited upside in circulation revenue, if The Independent is to move out of the red, it needs to sell a lot more ads, or overcome media buyers' resistance to rate increases. Simon Barnes clearly has his work cut out.
DATA FILE - QUALITY DAILIES CIRCULATION
Newspaper Sept 04-Feb 05 Sept 03-Feb 04 Year-on-year
Av circulation Av circulation % difference
The Independent 261,176 238,849 9.35
The Times 669,166 639,560 4.63
The Daily Telegraph 908,797 916,925 -0.89
The Guardian 372,749 383,890 -2.90
Source: ABC