Freebies headed for the mainstream

Vivian Tam 

[Nov 2011 - The Journalist] With the newly-launched Sharp Daily there are now six free daily newspapers in Hong Kong. That's a total of about 3 million copies distributed every day, or about three times the number of regular newspapers sold. The Chief Executive Officer of advertising company Group M, Tsang Kam Keung, believes freebies will continue to advance.  
We put a series of questions to him.

Q: What did your clients think of the free daily when it was first introduced in Hong Kong? 
A: They were worried about the quality of free daily and were not sure if it would succeed. But the reaction has been quite positive since and my clients have found that people do read them. When we advise them on how to make use of the media, we tell them to look at readership and quality of readers. Whether a paper is free or not is not the key issue.  
Q: What is the readership of a free tabloid?  
    A: These free tabloids are mainly distributed at MTR stations, so most of the readers are working people. Some freebies have made their way to residential areas, reaching out to different types of readers. The most popular freebies are Headline Daily, <am 7.30> and Metro News. So we usually recommend our clients to place ads in these three free dailies plus Oriental Daily and Apple Daily. These five papers can reach out to nearly all types of newspaper readers. Most clients have adopted this practice when placing ads in the print media, accounting for 60 to 70 per cent of print advertising. Clients who want to reach out to high-end readers (executives or those at managerial level) put ads in Hong Kong Economic Journal,Hong Kong Economic Times and the South China Morning Post. Our experience tells us that it is more cost effective to place ads in free dailies.  
    Q: Hong Kong Economic Times’s Skypost, is quite new. How is it doing in the market?  
    A: Frankly I don’t find Skypost very appealing. But our internal survey found Skypost readership to be higher than the traditional paid newspapers. I am quite surprised at the findings. It may be because readers will read it anyway as long as it is free.  
Q: What is the situation like now that Sharp Daily has joined the competition?  
    A: Sharp Daily is speeding up the decline of traditional paid newspapers, as Apple Daily readers also switching to Sharp Daily. Before that leaders who shared Apple Daily’s political viewpoint and preferred sensational stories basically could not find a substitute in the free daily market. But Sharp Daily now serves as the perfect substitute for Apple Daily which has a readership profile that is quite similar toOriental Daily. So I believe Sharp Daily is capable of fighting for ads which originally went to these two newspapers.  
    Q: But the experience in Taiwan was that Sharp Daily does not affect the circulation of Apple Daily.  
    A: Taiwan is different. Sharp Daily controls the distribution network, but the paper has failed to reach people in remote villages. Sharp Daily in Hong Kong, however, is determined to launch a war againstHeadline Daily by producing half a million copies a day. But it seems Sharp Daily is eating into Applemore aggressively in Hong Kong than in Taiwan.
Q: Oriental Daily is rumoured to be planning a free daily as well.  
    A: If it’s true then it will really speed up the death of traditional newspapers. The market in the future probably will be made up of 70 per cent of free daily readers and 30 per cent of readers who look for quality news such as the Hong Kong Economic Journal, Hong Kong Economic Daily and the South China Morning Post. There will be little room for paid newspapers to survive. Paid newspaper can only focus more on business news to build up its reputation and image to make its way to school and households. Freebies have adopted this strategy too, as Headline Daily, AM 730 and Metro News have shown. They don’t use sensational pictures.  
    Q: What is the profile of traditional paid newspaper readership? Are they attractive to advertisers?  
    A: The content of the traditional newspaper is much richer. The readership is much older and prefers reading in-depth analysis and reports. They might be retirees or have affluent backgrounds. But they don't appeal to advertisers, as they are getting old and the number of readers keeps declining as death takes its toll.   
    Q: Will the influx of free dailies in the market affect the effectiveness of ads?  
    A: About 30 per cent of expenditure on advertising go to free dailies. There is still room for free dailies to grab a bigger market share, and they will first take ads away from traditional newspapers. There is also competition among freebies, as it takes time for the 30 per cent to go up to, say, 80 per cent. Some free dailies might not be able to survive the competition. Skypost, for example, is not doing very well. Sharp Daily, might speed up the death of Skypost. But in the long run, I think, the Hong Kong market can accommodate four to five free dailies with a distribution of 3 million. The reading habit will change, too, and readers will pick up a few free dailies and only read the columns they like.  
Q: Why is the freebie successful?  
A: Right time, right place and right people. Readers prefer reading short stories. It is perfect to finish reading a newspaper in just about 20 minutes. The free daily satisfies this need. Also, the internet has changed reading habits. By now people have also become used to reading free dailies.  
    Q: Which newspapers, in your view, are in danger of being kicked out of the market?  
A: All traditional newspapers, especially those which are not the top two sellers. Hong Kong Daily News, Sing Pao, The Sun, Ming Pao…they are all in danger. Traditional newspapers have to woo affluent readers in order to survive and only newspapers that focus on business news can make it or the major titles like Oriental Dailyand Apple Daily. But once they both introduce free dailies, I doubt the rest can survive much longer.  

(Translated by Senga Lam) 

The stark share-out of the market currently, in Tsang Kam Keung's estimation, is as follows:
Market share of the advertising sector

Ads TurnoverMarket share per centage(4 billion
Traditional Newspapers2.8 billion70%
Headline Daily600 million15%
AM730300 million7.5%
Metro News300 million7.5%
Television(30%) is the biggest ads market, followed by newspaper (25%=4 billion), outdoor ad(20%), magazine(15%), internet(10%).    

Price list of a full page ad

Full page ad
South China Morning Post100,000
Oriental Daily/Apple Daily100,000
Hong Kong Economic Times80,000-100,000
Ming Pao50,000-60,000
Headline Daily/Singtao Daily40,000-50,000
/ Metro News20,000-25,000