Tillotson shares statistical analysis calculations used by SNI in benchmarking

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Benchmarking helps newspaper management set goals, track success or failure, and provide objective standards for comparison, publishers heard during a session at the SNPA-Inland Annual Meeting led by Dolph Tillotson, president of Southern Newspapers Inc., and Tim Prince, vice president of Boone Newspapers and publisher of the Shelby County Reporter in Columbiana, Ala.

Tillotson said the value of benchmarking is that the information tracked is flexible; management can add to or remove standards, based on the needs of the company.

Tillotson shared a six-page handout offering the statistical analysis calculations that SNI uses, and he also is offering a blank Excel spreadsheet that can be used by other companies that want to implement something similar.

He said company-wide benchmarks at SNI are available by the second or third working day of each month – at least.  He said they are most effective if they can be used immediately.  "If you can take the numbers that you get from last month on the second day of the current month and really begin to apply those – in terms of how you act, how you behave, what you see, how you identify problems and how you attack your issues – it makes a huge difference."

And, he said SNI shares its benchmark numbers very widely within the company.  It's critical, he said, to share the numbers among those people on your team. 

Prince agreed, saying Boone Newspapers is very open and candid about how each operation is performing.  He said if papers within the company have a weakness, it's helpful for them to identify other properties within the company that are doing well in those areas; this gives them someone helpful they can talk with.

Tillotson added, "My personal philosophy is that there's a balancing act here.  There's more risk in not sharing the information than there is in sharing." Like Prince, he said if an SNI paper winds up near the bottom of a list among categories that they measure, they have a whole bunch of people above them that they can go to for tips and ideas that will help them improve.

SNI publishes a monthly benchmark report that identifies eight to 10 of the most significant benchmarks, among a much longer list of standards tracked. Tillotson said each publisher is asked to note in the right-hand margin of the report how they performed and give a bit of a narrative about what happened.  Perhaps they lost a major advertiser, or gained a bunch of new advertisers.  Maybe they shifted a major promotional effort from one month to another month.

Likewise, Prince agreed that it is important for corporate offices to give some sense of direction to the benchmarks that the company tracks. He encouraged corporate management not to overwhelm local publishers (especially new publishers) with too many benchmarks to chase, without giving them a sense of what the ownership believes is most important.

These are the benchmarks Tillotson identified as generally being considered most important:

  • EBITDA as a percent of revenue – generally 15-20 percent; some companies shoot much higher (28-30 percent).
  • Salary to revenue ratios – generally, 35 percent, including benefits; 30 percent without benefits.  For newspapers that don't have presses, minus five percentage points.
  • Ad rates – the mean rate earned is a key indicator.  Whether ad rates are growing or declining tells a great deal about sales and management practices.
  • Collections – 75 percent of accounts receivables should be current on the frst day of the month.
  • Cost as a percentage of revenue – if you total the following percentages, they come to 75 percent, leaving 25 percent for profit:
    • Editorial – 10 percent
    • Advertising – 12 percent
    • Composing – 3 percent
    • Circulation – 15 percent
    • Press – 15 percent
    • G&A – 20 percent
  • Sales costs should be about 12 percent of ad revenue.
  • Circulation costs should be roughly 50 percent of circulation revenue. Of that, 10 percent should be circulation salaries and 40 percent should be all other costs.
  • Other benchmarks kept by many companies: digital as a percent of revenue; magazine/niche publications as a percent of revenue; classified or small-space contracts in force month-to-month.

Benchmarks don't work, he said, when they aren't developed as a team, when the numbers are held too tightly by managers, when there is failure to develop an action plan around them, when there isn't a willingness to wait it out, and when there is a failure of courage to act on the findings.

"To make substantial changes in your operation requires a degree of courage," Tillotson said. "In journalism school, they talk about bravery to stand up against forces against free speech and free press.  What we don't talk about very often is how much courage it takes to be the guy or woman in the business office to make the critical decisions."

He encouraged publishers to approach benchmarks from a standpoint of what is best for the ownership, the employees and the community.  "Then, have the courage to act."

Download these materials from this presentation:

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