Explainer: What are circulation and readership figures and why does the SPH Media saga matter?

SINGAPORE — The recent news about SPH Media inflating circulation figures of its titles has cast a spotlight on the relationship between circulation as well as readership numbers and advertising rates.

This is especially since its chief executive officer Teo Lay Lim has written to advertisers to say that advertising rates were not linked to circulation figures but independent third-party readership data, namely from market research company GfK, according to national daily The Straits Times (ST).

This thus begs the question — why does the news matter?

SPH Media publishes ST and Lianhe Zaobao, among others.

TODAY takes a look at the difference between circulation and readership numbers, their relationship with advertising rates, and why this saga matters. 

WHAT IS THE DIFFERENCE BETWEEN CIRCULATION AND READERSHIP NUMBERS AND HOW ARE THEY TIED TO AD RATES? 

These are the definition of some terms that have come up in the last few days.

• Print Run

This refers to the number of copies of the newspaper that are printed and published at one time.

• Circulation

This is a count of how many copies of a publication are distributed such as through regular subscriptions or off-the-shelf purchases.

A SPH Media spokesperson said in response to ST’s queries that circulation numbers reflect the paid customer base, which is one of the key metrics tracked by media companies. 

But circulation and print run data are less commonly used in media evaluations, said experts.

Ms Elaine Poh, managing director and head of domestic business at Publicis Media, told CNA that advertisers and agencies might consider other factors such as the strength of the editorial content, the composition of readers against the target audience as well as the media environment that brings out the best in an ad message.

• Readership

It is an estimate of how many readers a publication has. Readership figures are usually higher than circulation figures because of the assumption that one copy could translate to multiple readers. Industry insiders said more than a decade ago, one copy could translate to four readers.

But with changing household sizes and the replacement of printed newspapers with digital copies, the numbers no longer correlate, said former SPH chief marketing officer Elsie Chua, adding that similar independent platforms are used to provide insights on digital audience now. 

Several former senior SPH staff who have over a century of experience combined working in the newspaper industry, both in editorial and marketing, said readership figures are the most important metric when it comes to determining ad rates as it is a better gauge for measuring effectiveness. 

Ms Chua said in a Facebook post on Tuesday that she had been asked if the marketing department guaranteed circulation in contracts with advertisers.

“The answer is no as the industry standard used to evaluate media reach by marketers and advertising agencies is based on data that is conducted independently by (market research firm) Nielsen,” said Ms Chua, who retired in 2018 after working in the company for two decades.

Ms Chua added that readership numbers are a better gauge for advertising effectiveness and offer “deeper insights into audience demographic and psychographic profiles”. 

Veteran journalist PN Balji, who has helmed several newspapers in Singapore over a journalistic career spanning four decades, said that the emphasis has also moved from circulation to readership numbers since the circulations in the newspaper business have been falling for years, though he did not elaborate on when this change happened. 

The former editor of The New Paper and deputy editor at ST recalled how market research firms in his time would gauge readership by showing people the masthead of the broadsheet and asking if they had read the paper that day.

“If they say yes, that’s considered one reader,” he told TODAY. 

WHAT ARE SOME INDUSTRY PRACTICES THAT COULD CONTRIBUTE TO HIGHER CIRCULATION NUMBERS?

Former ST editor and SPH marketing chief Leslie Fong said in a WhatsApp message that has been circulated that when a household pays for both a print copy and a digital subscription, the Audit Bureau of Circulation Singapore (ABC) allows that sale to be counted as two copies. 

The ABC, previously known as Media Circulations Services, was established in 1984 to provide independent audit and certification of circulation numbers to ensure that circulation claims are authentic and comparable.

SPH has said as recent as its annual report in 2021 that its total print and digital circulation numbers reported are in accordance with the rules set by ABC in 2016. 

Mr Fong, who later confirmed with TODAY the veracity of the message, added: “In some other countries, if the digital subscription covers an e-paper or PDF (Portable Document Format) version, the publisher can and often does claim a count of three. SPH kept it as two.

“So this is legitimate ‘double counting’, not cheating or inflating.”

SPH Media has said that the inflation was brought upon by "double-counting" of subscriptions across multiple instances. It also said that there were instances where copies were printed, counted for circulation and then destroyed.

Mr Fong, whose 46-year stint with SPH also included 15 years as editor of ST, as well as three years as editor of the Chinese-language Shin Min Daily News, said that since more than two decades ago, the ABC has accepted as legitimate that bulk sales to advertisers for free distribution can be counted in its circulation figures even if only half of the copies were picked up. 

“That bulk sale of, say, 1,000 copies of the ST to, for example, a shopping mall for free distribution to its shoppers be counted as 1,000 circulated copies,” he said.

This has been industry practice endorsed by every external auditor the company has used and every SPH main board led by the likes of former Cabinet Minister Lim Kim San or former president Tony Tan, Mr Fong said. 

Copies that were sent free to advertising agencies for their principals’ reference are also included in circulation numbers, he added. 

“Newspaper publishing is not a simple business,” he said.

ABC is jointly owned and operated by Singapore Advertisers' Association. TODAY has not been able to reach both organisations.

WHY DOES THIS SAGA MATTER? 

Advertisers base the amount they pay for their ads to appear in the publications on the size of the audience they reach, so inflated circulation numbers are a serious matter, say experts. 

The Singapore Exchange Group has said it is reviewing SPH Media's circulation information and an investor watchdog here said that if there has been any deliberate act to mislead the market, there would be no let up and appropriate action should be taken by the authorities.

Experts have spoken about how the saga could potentially erode the trust of SPH Media’s readers and business partners. 

Mr Balji said that as circulations in the newspaper business have been falling for years, the incident would hardly have raised any interest had SPH Media not been publicly funded. 

Circulation figures scandals are not new to the newspaper industry, especially in the West.

In 2011, the European edition of the Wall Street Journal was accused of artificially boosting its circulation figures through cut-price deals with a sponsor, though it was later cleared of the allegations after the United Kingdom’s Audit Bureau of Circulation found "no clear evidence" of the allegations. 

In 2007, American media group Tribune had to pay US$15 million (S$19.8 million) in a settlement with federal prosecutors after two of its newspapers, Newsday and Hoy, admitted to inflating circulation numbers.

The Dallas Morning News, one of the leading newspapers in Texas, was also found to have inflated circulation figures in 2004. The company agreed to hand back US$23 million to advertisers after its admission.