Muller’s Popcorn Principle: Or which part of “wastage” don’t you understand?

When the publisher of one of Mzansi’s largest magazine groups tells the industry at a major forum that a reader’s relationship with a magazine is, in essence, no different from a housewife’s relationship with her chosen washing powder, then it is clear that, if the print industry has not already hit rock bottom, the earth is approaching fast.
Time to deploy the parachute guys! Which part of wastage don’t you understand?
Like it or not, and I don’t, there is a new rule governing the reporting of ABC data. Whether your cover price is R50 or R5, as long as you get rid of your publication for 5c (the lowest legal tender denomination) you can tell the world you have “sold” that publication. And the ABC will give you a certificate to prove it.
As I sat at the JSE last night, waiting for the AMASA forum to begin, I watched Bloomberg channel reporting Toyota’s share price decline. A thought occurred to me on the 50% rule. If Toyota manufactured 50,000 new vehicles, sold them a R1 each and then added these to their unit sales figures, would their share price go up, or down? If you print a newspaper with a cover price value of R10 and sell it for 5c, does its value to advertisers go up, or down?
Anybody with half a brain … oops can’t say half a brain anymore cause somebody might take me to the Competitions Tribunal … Anybody with a brain, whether that brain be more than 50%, or less than 50% of an average sized brain, provided some discernible portion of the brain can be identified under a microscope, knows the answer to that question.
One of my bright media sales colleagues posed a good question last night, “what’s the problem with a bigger circulation? How come bigger isn’t always better than smaller”! The answer is, quite simply, wastage and diminishing return.
This is the crux of our discussion.
A paper sells 100 copies carrying an ad for popcorn. They charge the advertiser R100 for the ad & it generates 100 popcorn sales units. That’s the perfect scenario. Now that paper “sells” 200 copies (100 of them at some arbitrary cover price to a bunch or strangers) and the ad generates an additional 35 sales unit. “Why”, asks my colleague, “is that a problem? That’s more response”. Yes it is but the problem is that, when a publication “sells” an additional 100 copies, copies on which they receive no meaningful cover price revenue, they want someone to pay for it. And that someone is the advertiser.
Why do the second 100 copies only generate 35 popcorn units? Because the “readers” lie outside of the defined core target market! It’s called “wastage” and the primary purpose of media planning is to maximize response and minimize wastage. That’s what we do for a living.
So now we have a new scenario.
• Scenario1: 100 copies @ R100 = 100 units
• Scenario 2: 200 copies @ R200 = 135 units
The first scenario ROI is R1 per unit. The second R1,48 per unit. That’s diminishing return on media investment. This is the crux of the core circulation approach. This is Muller’s Popcorn Principle. You can print and “sell” as many copies of your publication as you wish but I only want to pay for the original 100 because that’s where I get the best return.
Nobody cares about how much nominal reach you can generate against increasingly irrelevant people. That’s called “dumping” and it’s last century’s game.
Of course, if you are a publisher with no concern about advertiser ROI, because next year you’re just going to change the title of publication, or better still the name of your company, then none of this if of interest to you. Hoist the Jolly Roger on your Pirate ship and sail off with your treasure.
What’s the bottom line on the 50% rule.
The emperor has new clothes. The emperor thinks the clothes are really phat. Sadly somebody has to tell the emperor the truth before someone tries to steal the family jewels.