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Piers Morgan's sacking from the Daily Mirror has inspired nearly as many conspiracy theories as the car crash that killed Princess Di.

Was it Tony Blair, exasperated by the incessant attacks from a traditionally Labour-supporting paper, who wielded the knife? Was it the power of US shareholders, opposed to his strident anti-Iraq war agenda? Some even suspect he was set up by internal pretenders to his editor's throne.

A more rational theory is that his bosses panicked in the face of widespread condemnation and threats of reader boycotts after the paper published faked pictures of British soldiers abusing Iraqi prisoners. But Morgan has survived similar scandals many times before, and he may yet be proved right over his allegations of prisoner abuse.

Perhaps a more plausible explanation, one overlooked by the conspiracy theorists, is that his boss, Sly Bailey, simply tired of an undoubtedly talented but ebullient editor, who took advice from nobody and whose media profile had become bigger than the Mirror brand.

Editorial scoops involving former royal butlers and footmen provided an entertaining insight into palace life and earned the paper several awards, but they failed to arrest the paper's long-term circulation decline.

The stark fact is that 634,356 fewer people now buy the Mirror than when Morgan became editor in November 1995. More tellingly, he failed to make any dent in The Sun's circulation lead over the Mirror, which averaged about 1.5m copies a day throughout Morgan's eight-and-a-half year tenure.

Serious debacle

The latter part of his editorship saw Morgan, who forged his reputation on The Sun's Bizarre celebrity page, lead the Daily Mirror into a radical rebranding after converting to serious journalism in the wake of September 11.

This overhaul, which positioned the paper away from the red-top tabloid market with a black masthead and a serious news agenda, was a debacle.

Despite a £23m investment in marketing and price discounting, sales continued to decline. A year later Bailey ordered an end to the strategy, saying the paper had misunderstood its readers and should return to popular journalism.

The Mirror's marketing director, Alisdair Luxmoore, carried the can and was sacked, while Morgan, using up another of his nine lives, kept his job. But the legacy of the rebranding fiasco remains a problem for the Mirror. Morgan's return to a populist agenda was half-hearted, and the paper continued to pick at the scab of the Iraq War.

The result was a paper that was a confusing mix of celebrity gossip alongside hard-hitting, campaigning news stories. Readers didn't know what to expect from their paper.

It is not just readers who are confused. Advertisers would also like to see the paper find a clear identity. According to Alison Wright, managing director of Manning Gottlieb OMD, the Mirror must establish a differentiated positioning since, as the number two in the market, it cannot sell itself purely on circulation figures.

'Advertisers need a strong competitor to The Sun, but at the moment the Mirror looks schizophrenic,' she says. 'Going down the serious route did not suit the readers, but the paper does need to find a strong, sustainable brand position.'

Finding this brand identity will be the biggest challenge facing the next Mirror editor. The adoption of a differentiated position must carry existing readers along with it - something Morgan failed to achieve.

In hindsight, perhaps Piers Stefan Pughe-Morgan, who grew up in affluent, Tory-voting Sussex, was the wrong man to get under the skin of the paper's typical northern, working-class reader. Tim Pemberton, strategy director at Carat, believes this lack of natural empathy has been the root of the Mirror's, and Morgan's, problems.

'The serious news agenda was probably wrong anyway, but it didn't follow the issues that concern the core readership, who are more likely to be interested in crime on sink estates than global conflict,' he says. 'Morgan was on more comfortable ground when he launched the 3am Girls page, which added readers. But the rebranding, based on his own gut feel, was misplaced.'

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There are some, however, who believe the rebranding was, and still is, the right way to go. According to Marc Sands, marketing director of Guardian Newspapers, it successfully returned the Mirror to its traditional campaigning roots and created a real point of difference between it and The Sun.

'Before the rebranding, the Mirror was a poor imitation of The Sun,' argues Sands. 'There is a gap in the tabloid market for a questioning voice of dissent, and that's what Morgan provided. Sales fell initially, but it was always going to be a long-term strategy, and the paper did not give it enough time.'

Many at the Mirror share the view that the strategy was right, but poorly executed. Insiders claim the paper underestimated The Sun's response to its price discounting, and that Morgan failed to follow the brief.

'The plan was not to have the first 13 pages filled with gory coverage of the Iraq War. Even we started reading the paper at page 14,' says one insider. 'But then Piers' perception of a Mirror reader was a million miles from reality.'

Whoever Bailey chooses to replace Morgan has a Herculean task ahead of them to establish differentiation in a consolidating market that now includes tabloid editions of broadsheets. But it might help if they put the reader first.

DATA FILE - SALES UNDER MORGAN

Daily Mirror The Sun

At start (Oct 1995) 2,522,501 4,055,746

At end (Apr 2004) 1,888,145 3,345,828

Decrease 634,356 709,918

% decrease 25.1 17.5

Source: Audit Bureau of Circulations