Third Party Service Providers: Retailers Are Turning over All Ad Analysis, Placement and Billing to These Companies

By Fitzgerald, Mark | Editor & Publisher, December 14, 1996 | Go to article overview

Third Party Service Providers: Retailers Are Turning over All Ad Analysis, Placement and Billing to These Companies


Fitzgerald, Mark, Editor & Publisher


A third party has insinuated itself between newspapers and the retailers who last year bought $17 billion worth of advertising - and papers have only themselves to blame, consultants Jim Currow and Phil deMontmollin say.

"I need to tell you up front, it's not a pretty picture," Currow told the recent annual meeting of the Inland Press Association. "There's an honest feeling out there among retailers of dissatisfaction with newspapers."

Retailers are increasingly turning to so-called third party service providers who take over all advertising analysis, placement and billing. But these service providers do even more: Armed with the knowledge of the real rates a broad range of retailers are paying, they negotiate rates hard, cut out unnecessary circulation, pore over the notoriously sloppy billing retailers get from newspapers, and audit insert waste assiduously.

Last year, third party service providers placed more than $700 million in newspaper advertising, including $150 million in ROP ads, and "influenced" another $700 million worth of advertising, say Currow and deMontmollin, who studied third party providers for the Newspaper Association of America.

"Third party service providers will continue to grow at an astounding rate and they with continue to grow in influence," Currow said.

Just one company alone, Newspaper Services of America, accounted for $500 million in the third part ad placements, Currow said.

NSA, he added, has 20 major clients that include some of the biggest newspaper buyers in retailing. Among them: Sears, Kmart, AT&CT, BMW, True Value, Kohls department stores and Levitz furniture stores.

Clients like these permit NSA and others to develop a database that tells them exactly what rates - on and off the card - retailers are paying to newspaper. Third party providers also open retailers' eyes to billing and circulation abuses that remain standard operating procedure at too many papers, the consultants say.

"This is not an indictment of all newspapers," deMontmollin said, "but neither are these isolated instances."

Retailers discover that they are sometimes paying for 10%, 15%, 18% more inserts than [the newspapers] have total circulation," he said.

Retailers are also realizing big ad expense savings just because third party providers rigorously analyze billing.

"Sears told us approximately 30% of all bills from newspapers are inaccurate," said Currow, a former president of the Milwaukee Journal Sentinel. …

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