AP, newspapers to redeem their share of coupon business with mobile app iCircular, starting today
The Associated Press and most major newspaper companies will roll out a test run today that offers one of their healthiest revenue sources -- preprinted inserts -- in a mobile format.
Can the bargain-hunting and planning/shopping experiences be squeezed down to small-screen format? Will customers stand up and cheer? Or yawn that their geo-specific couponing needs are pretty well taken care of already by the stores' own sites and other earlier-to-market competitors?
The product will be known in the trade as iCircular, but it will appear to consumers as a house-branded "app-within-an-app," embedded in individual newspapers' mobile sites.
iCircular is the first of two major initiatives by the AP, not ordinarily a player in advertising matters, to craft solutions to business challenges in which a common industry approach may create the scale for success. (Later this year, the second initiative will launch with the AP spinoff, News Licensing Group, that tracks aggregation of original content and collects royalties and data).
I demoed iCircular last week with Jeff Litvack, who has directed the project for AP, and Mary Junck, CEO of Lee Enterprises, representing the AP board. That preview and interview left me convinced that more than a year of tinkering in the lab has produced a credible digital replica of the printed insert.
The mobile circulars display, store by store, six or seven stacked items to a screen (see above). A user could also search by product and get a list of where such items are available and at what price. The searches can be sorted geographically by typing in a ZIP code or address.
And for the quasi-Luddites among us, you can alternatively get a reproduction of the print insert, illegible, but you can zoom in to enlarge a portion of the page.
There are other bells and whistles -- a function to convert items to a shopping list, an ability to send an offer to a friend and a way to record in-store purchases to a digital loyalty card.
The beta phase, starting today and continuing through December 31, includes 40 newspapers, two-thirds of the largest 25 and a representation of small circulation titles. Nearly every major company has at least one paper in the test.
Twenty prominent national and regional retailers are participating in the trial, including Target, Walgreen's and Walmart. For the test period, the mobile ads are free to the retailers. Ultimately, they will be offered as upsells to preprint insert buys.
Junck said she detects "a lot of enthusiasm" among the newspaper participants. The structure allows for placement of ads in a single format in as many papers as an advertiser chooses. Should the companies follow through in a full roll-out, the result will be a simple-to-use, industrywide buy.
Litvack added that "the level of interest from retailers is already a measure of success," but the months ahead will provide a critical test of "consumer engagement."
The first step is to let users know the service is available. Promotions are planned in print, online and in the mobile apps themselves. And the circulars will turn up on the top line of navigation, at most organizations under the "deals" tab in the apps.
The tougher task is to determine whether the product solves a problem users have or at least is a user-friendly way of shopping on the run, smart phone in hand.
Some older readers and other print-centrics will probably continue to prefer scanning and clipping the sheaf of inserts that come in Sunday papers.
Those already wedded to their smart phones do have other existing options. Apps from individual stores like Target or Best Buy are well-developed and have loyal followings. There are existing digital sites, mostly Web-based, including Gannett's ShopLocal and the Suburban Newspapers' Zip2Save.
Litvack argued in a talk to the Newspaper Association of America annual conference in Dallas earlier this year that iCircular could be a remedy for "app fatigue." He pointed to studies showing that a high proportion of apps are accessed only a few times, then abandoned. Hence a measure of downloads often overstates the impact.
Users of mobile news apps, on the other hand, Litvack said, return frequently for updates and will be likely prospects to combine news and bargain-hunting visits.
But the proof will come from actual usage numbers over the next three-and-a-half months -- both visits and purchases as recorded on the digital loyalty cards.
Fresh from mulling the difficulty of innovation for newspaper organizations in my most recent post, I'll give the AP and its partners an A for collaboration -- offering scale and uniformity out of the gate. That is rarely achieved when each organization independently cooks up its own solution.
On the other hand, iCircular is not an outside-the-box idea like Craigslist or Groupon. The newspapers are relatively late to the mobile commerce party. First movers in couponing or the company sites like those of Target, Best Buy and others, may have the advantage. Some of the same mass retailers -- like Target or Walgreen's -- may also have an advantage within iCircular, more than those with expensive product lines like Best Buy (not a participant). And it only is a real fit for those who do print inserts already and have a customer base that uses them or at least remembers them. The program might have less relevance to elite and/or national publications like The New York Times, Wall Street Journal and USA Today.
There is an element of defense here -- protecting the lucrative preprint franchise from gradual erosion (already taking place), as advertisers shift some of that budget year-by-year to a variety of digital alternatives.
But with slightly smaller runs and the same sort of space reductions readers see in the print newshole, inserts remain a big part of the advertising effort for national and regional chains. They reliably bring customers into the stores, and a parallel reach into the shopping habits of smart-phone enthusiasts would be highly valued.
With even moderate success, newspapers will be well-positioned to hold business as consumer preferences swing more strongly from print to electronic formats. (This is generally the case with the current generation of paid digital content schemes.)
I asked Litvack and Junck whether the AP, a non-profit cooperative, expects to make money on iCircular. They did not answer directly but did say the more important purpose was to strengthen the business models of member newspaper organizations, also allowing them to afford the AP's expensive content offerings.
Tom Curley, AP's CEO, sounded a similar theme speaking to the Associated Press Managing Editors annual conference in Denver last week. Alluding to disappointing financial results for newspaper organizations on the Internet, he said, "We've got to be smarter, this time (with mobile), in the do-over. There won't be a third time."
I don't have a crystal-ball prediction on whether iCircular will fly high or flop. But I agree about its importance to the business future of newspaper organizations. A significant presence in smart-phone commerce would count as an important business win for an industry that hasn't had many lately.