MEIDA & MARKETING:CD giveaways and promotions are paying off, says managing director Paul Henderson

THE RECENT failure of ad agency McConnells left media owners seriously out of pocket. Not as badly affected as most was Associated Newspapers Ireland, publisher of the Irish Daily Mailand the Irish Mail on Sunday.That's because a few months before the collapse, managing director Paul Henderson refused to budge from the agency's reception area until he was handed a very large cheque.

Henderson explains that when he worked for the Irish Daily Star, he was fired by his boss Paul Cooke for not having collected debts owed by advertisers. "Paul took me back the next week but it was one of the best lessons I ever learnt," says Henderson.

Sporting curly hair that skims his collar at the back, Henderson grew up over his father's shop on Church Street in Dublin and joined Associated as managing director two years ago. The Mail's operations in Ireland are based in plush offices in Ballsbridge, though elbow room is at a premium with editorial and advertising staff sharing an open-plan space.

Though circulations are falling, the newspaper sector is still big business. Around 600,000 dailies are bought every day during the week while on Sunday that rises to 1.1 million. Associated has spent more than €60 million grabbing a share of that market and Henderson insists that the British media giant is starting to see a return on its investment.

He says: "It costs a lot to set up a newspaper these days. Could we have done it for a less? Yes I think so. We have improved this business by 50 per cent over the last two years. Our business plan is on track to breaking even, helped by the launch last January of an Irish edition of Youmagazine in the Saturday paper.

"The annualised ad take for Youwent into seven figures fairly quickly and our 16-month business plan was realised within nine months."

One reason for the massive losses racked up by Associated in establishing the two Mailtitles in Ireland was CD giveaways and related advertising. "Promotions are important if they connect," says Henderson. "CD giveaways are very important because they give extra value and drive sales on the day. But this year we have done one-third less CD promotions compared with 2009."

Henderson's alternative promos include giving away a slimmed-down version of Hello!magazine once a month. Earlier this month, the Irish Daily Mailtargeted GAA fans with a free county flag. This entailed staff in the Mail's office having to pack the flags into polythene packs and then the circulation department making sure that every paper in every shop in every county had the right flag.

The promotion tied in with the Mail's announcement of its sponsorship of the 2010 GAA International Rules series. This is costing €500,000 and is part of a marketing budget that runs into a "multiple of seven figures", according to Henderson.

Despite Henderson's efforts at trying to maintain or grow circulation levels for the two Mailtitles, he concedes that advertising income is constantly under pressure. "As soon as the recession hit, advertising yields were driven down by two market leaders in the daily and Sunday markets. Their knee-jerk reaction to getting cash in the door has impacted everyone else.

“In Britain, Associated held the line and refused to discount rates. They just took fewer ads. In Ireland, we had to follow the market and those yields will never come back up. The newspaper advertising market for the first quarter of this year was back to 1998 levels.”

Another looming issue for newspaper publishers is the increasing cost of newsprint, with forecasts of a 15 per cent increase in raw material costs by the end of the year. Printing of the Mailnewspapers and magazines is sub-contracted to three printers on the east coast. With GAA county flags crowding his office, Henderson declares: "There are very few other newspaper groups which can say they print all their products in Ireland. Most newspapers send their magazines over to Wales to be printed."

Not a few observers wonder why Associated Newspapers ever bothered with the Irish market in the first place. Perhaps it was the 20 per cent profit margins enjoyed by Independent News Media, the Mail's mid-market rival. But such margins don't come overnight.

Says Henderson: "As a competitor, Independent is ferocious, intimidating, smart and an incredible operation. The Irish Independentis part of Irish life. I have a daily paper here that is only four years old and I'm trying to make it part of Irish people's lives. This business is all about breaking people's habits. If anyone can do it, it's us."