Thursday, December 08, 2005

Walmart buckles to whiny newspaper publishers.

Bidness: What is happening to Walmart? Now I have to take part in propping up newspapers whenever I buy something or prices may have to go up to take on the added costs.

SPRINGFIELD, Mo. - Wal-Mart Stores Inc. placed full-page advertisements in 336 Midwestern newspapers after publishers nationally complained they are ignored by the world's largest retailer. The move comes at a time when the company is trying to address accusations it treats workers poorly and drives local shops out of businesses. The ads, which ran in smaller papers in Missouri and Oklahoma between Nov. 30 and Dec. 6, were a test for a possible change in newspaper advertising policy at Wal-Mart, which publishers say has ignored their dailies and weeklies for years. "I think it is a good first step. They are such a big economic force in our communities and were not participating in those papers," said Mike Buffington, past president of the National Newspaper Association and editor and co-publisher of the Jackson (Ga.) Herald.
Why the hell should they be forced to subsidies papers? This brings up the question how honest the reporting is to businesses that don't advertise enough in these papers.
Retail and grocery store ads together account for anywhere from 60 percent to 80 percent of revenues for community newspapers, said Brian Steffens, the executive director of the National Newspaper Association. Grocery stores purchase the bulk of those that advertising, with local grocers often placing full-page ads several times a week. Wal-Mart has grown in recent years to be the nation's largest seller of groceries with the expansion of its supercenter store format, but it generally has not taken out weekly ads to showcase its grocery prices in local newspapers. "If one local grocery store goes out, a community newspaper loses at a minimum one or two full-page ads or inserts a week," Steffens said. Wal-Mart said it would look first at whether the new local ads increased sales and traffic at 218 stores in those newspapers' territories. "If there is a significant return, we would consider incorporating the local papers into our overall ad strategy," Wal-Mart spokeswoman Mona Williams said. Williams said Wal-Mart had traditionally not advertised locally because it had strong customer traffic anyway. Its practice of "every day low prices" also means it does not need to advertise sales and individual items like many other retailers do. Community relations may also play a role in deciding whether to change the advertising practice, Williams said. "The question is also whether to advertise to support the local newspaper and generate good will from that. These are probably good, non-traditional reasons to advertise locally and considerations we will also factor in once we have the market test results," she said.
It sounds good till you realize why there is a test run.
The NNA says it worked out the ad test in talks with Wal-Mart executives after Buffington wrote an open letter in January that accused Wal-Mart Chief Executive Lee Scott of ignoring the association's 2,500 members. "Wal-Mart built its foundation of stores in many of our rural and suburban communities, the places where I, and many of my fellow publishers, operate newspapers," Buffington wrote in the letter posted on the NNA's Web site, "Yet community newspapers across the nation are all but invisible to Wal-Mart _ unless the company is looking for some free PR in our pages. Wal-Mart has a fairly standard policy of doing little to no local newspaper advertising," he wrote. The letter came after Wal-Mart at the start of the year placed full-page ads in major metropolitan dailies defending itself against criticism, then had a public relations firm approach local papers, hoping to place news stories on Wal-Mart's views.
So this is your basic backdoor union threat given to Walmart by papers whose economic model is dependent on ad dollars that Walmart doesn't have to spend. The NNA saw an opening and Walmart fell right into the trap.
Nearly 60 percent said Wal-Mart never advertised in their papers, but about 80 percent said Wal-Mart sometimes or often asked for publicity, such as pictures in the paper of Wal-Mart presenting a charity check. The NNA did not list its methodology for poll. Neither the NNA nor Wal-Mart were willing to discuss how much the ads cost. As a rule, ads printed in the paper make more money for the publisher than inserts, which Wal-Mart has tended to use in the past on the few occasions it did advertise. Inserts require more labor to put into a paper and are usually printed elsewhere, rather than on the newspaper's own presses, so the paper cannot charge for its printing costs.
Does this mean the NNA is taking money away from printing companies and their employees to prop up their failing newspaper members? This whole deal stinks, if Walmart gets the results and sees no improvement, anyone think the NNA will say okay, thanks for trying? Nope. This bunch of bloodsucking leeches will never let go.

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