WEEKEND U.S.

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Martin Mathews
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Gannett is an internal news and information company operating on multiple platforms including the Internet, mobile, newspapers, magazines and TV stations.

1 Gannett is an internal news and information company operating on multiple platforms including the Internet, mobile, newspapers, magazines and TV stations. Gannett is an Internet leader with hundreds of newspaper and TV Web sites: CareerBuilder.com, the nation s top employment site; USA Today.com; and more than 80 local MomsLikeMe.com sites. Gannett publishes 83 daily U.S. newspapers, including USA TODAY, the nation s largest-selling daily newspaper, and more than 650 magazines and other non-dailies including USA WEEKEND. Gannett also operates 23 television stations in 19 U.S. markets. Gannett subsidiary Newsquest is the United Kingdom s second largest regional newspaper company with 17 daily paid-for titles, more than 200 weekly newspapers, magazines and trade publications, and a network of Web sites.

3 IVS Background ABC Approached by National Advertiser Regarding Feasibility of Insert Audit Program Why? Inserts were missing from newspaper copies delivered to homes of national retailer s executives Led to a partnership between ABC, Advertisers, Publishers and Newspaper Association of America Development of the Guide to Insert Process Improvement Developed by NAA, Advertisers and Newspapers Best practices/qualitative approach to insert accuracy Guidelines: 10 steps to improve FSI accuracy and security

4 Background ABC Board Member Advertisers, Buyers, and Publishers Discussed Need for Insert Program Advertiser s had need for quantifiable verification of insert delivery Why? Newspaper circulation is audited, FSIs are not What s at stake: one retailer runs 300 insert versions per week, as many as 30 versions per market, upwards of 17 in a single paper Advertisers held to Sarbannes-Oxley accountability standards

5 Background ABC Board Recommended Further Exploration of IVS Program Implementation of IVS Task Force to develop insert audit program (early 05) ABC Staff conducted beta test audits (July 05 Nov 05) Recommendations regarding business rules Report contents and format Board gave approval to the program (Nov 05) Service launched January 1, 2006

6 Beta Test Audits Eight Newspapers Participated in IVS Beta Tests Volunteer basis Circulation sizes ranged from 70,000 to over 1 million Why did they participate? Many had made significant upgrades to their post-press operations Many were already conduct their own internal QC testing Wanted additional stamp of credibility from ABC Wanted to further enhance the relationship with their advertisers

7 Beta Test Audits

8 Beta Test Audits Beta Test Case Study This newspaper handled 2.5 billion inserts last year Implemented comprehensive quality control systems Inventory control Spot checks Statistical analysis Adopted industry best practices (NAA guidelines) Conducts their own testing; regularly measured preprint accuracy/quality internally Distributes information to advertisers Improves communications with advertisers Print recommendations and spoilage guidelines Tips for advertisers to get the most of their inserts

9 Beta Test Audits Outcomes Beta testing confirmed that internal quality control procedures were working as designed Enhanced the newspaper s overall communications with advertisers Assisted ABC with fine tuning audit process and business rules

10 Current IVS Program IVS Program Conducted in Two Parts: Part one: Quantitative audit Measures insert delivery Conducted on a Sunday representative of normal insert load (publisher selects date) Cost: ranges from $9,000 to $20,000 plus auditor expenses Cost based on complexity of newspaper s distribution/operations

11 Current IVS Program IVS Program Conducted in Two Parts: Part one: Quantitative audit A proficiency score of 96% or greater = pass A proficiency score of 96 to 98% = 2-year report shelf-life A proficiency score of 98% or greater enables newspaper to undergo a qualitative (Process) audit to extend their report shelf life to 3-years

12 Current IVS Program IVS Program Conducted in Two Parts: Part Two: Process audit Reviews a newspaper s internal insert controls and processes Is for newspapers scoring 98% or greater on their Quantitative audit Extends the IVS report shelf life to 3-years Conducted during the newspaper s annual circulation audit Cost: $3,000

13 Current IVS Program IVS Report Combines findings of the Quantitative and Process audits Advertiser access via edata section of ABC website Findings reported in the IVS Analysis Tool

14 Quantitative Audit 2 Weeks Prior to Test Meeting with ABC audit management, advertising, production, and distribution staff of newspaper Obtain copies of Reports Circulation/Distribution Practices Production (Quality Control Reports) Advertising (Insert Scheduling, Number of Zones, etc). Review procedures and documents regarding shortages and/or damaged inserts Obtain addresses for distribution points (carrier contents, bundle drops) Pick-up location: distribution centers, street corners, etc. Obtain regular schedule of insert delivery (staging) times

15 Quantitative Audit 5 7 Days Prior to Test Date Acquire list of all unique insert packages scheduled for test date (to include list of inserts in each unique package) Acquire anticipated draw by route/distributor for test date 1 3 Days Prior to Test Date Select sample routes ( packages) Acquire list of known shortages/damaged inserts

16 Quantitative Audit Weekend of Test In collaboration with Publisher s personnel, acquire insert packages per sample design Field testing comprised of 5-15 auditors collecting samples of Sunday newspapers Each package is intercepted at the latest stage of the process prior to actual delivery to households and retail outlets

17 Quantitative Audit Week After Test Compare contents of sampled packages to schedule of inserts Compare errors (if any) to known shortages/damaged reports Verify schedules of inserts of advertiser orders Compile final report

18 Quantitative Audit Learnings Front-end meetings & communication critical to success Complexity regarding acquisition of insert packages wholly dependent on time window after staging occurs Involvement of Publisher s personnel throughout audit process strongly encouraged Outcome reliant on Publisher s record-keeping routines

19 Process Audit Qualitative Audit of a Newspaper s Internal Controls and Insert Processes Process audit conducted during newspaper s annual circulation audit Newspapers must complete Publisher s Statement of Insert Practices and Procedures in advance of audit ABC reviews publisher s claims on P/S and whether newspaper adheres to industry guidelines Audit findings are identified on the IVS Report

20 Process Audit Industry Established Guidelines Timely and Accurate Quantity Information for Advertisers Timely and Accurate Quantity Information for Advertisers Insert Zoning and Scheduling Procedures Insert Receiving Procedures Security Policy and Practice Prior to Insertion Quality Control During Insertion Procedures for Leftovers and Shortages Route Structure Integrity Draw Variability Policy Package Integrity in the Field Insuring Quality Delivery with a Non-employee Work Force

21 Status 81 Newspapers Participating in IVS Program developed for the top 150 newspapers Participants include Gannett, Tribune, McClatchy, Belo, Cox, Freedom, Hearst, Landmark, Times Publishing, Newsday, Washington Post Media, Lee, New York Times Co., and Journal Communications

22 INSERT VERIFICATION SERVICE PROCESS AUDIT PUBLISHER S STATEMENT OF INSERT PRACTICES AND PROCEDURES

23 A. Timely and Accurate Quantity Information for Advertisers Policies and procedures must be in place to ensure advertisers are updated monthly with accurate insertquantity requirements and project the quantities at least 90 days in advance of distribution, including significant draw increases and other unusual occurrences. In addition, there should be procedures to communicate to the advertiser any material deviations from the original ad purchase. Audit Bureau of Circulations

24 Timely and Accurate Quantity Information for Advertisers 1. Who / what department is responsible for creating forecasts? 2. Describe the methodology used to create forecast insert requirements. 3. Describe and provide an example of how forecasts quantities of inserts are communicated to prospective advertisers. 4. When are forecasts for insert quantities made available to prospective advertisers? 5. Do you participate in ABC s Preprint Projection Center? Audit Bureau of Circulations

25 B. Insert Zoning and Scheduling Procedures The proper controls need to be in place to ensure that the advertiser s request for zones are scheduled accurately from the insertion order to the packaging system. Audit Bureau of Circulations

26 Insert Zoning and Scheduling Procedures 1. What production program (software) is being used? 2. Who / what department is entering the advertisers order, including zone information, into the software system? Who maintains the original order? 3. What controls are in place to ensure the order is entered accurately? 4. What are the procedures to verify the packaging reports to the original advertiser order? Audit Process: Walk through the process of receiving and entering an advertisers order with a manager knowledgeable of the process, typically the preprint manager. Compare the advertisers order for a current insert to the packaging reports used to create the zoned packages. Audit Bureau of Circulations

27 C. Insert Receiving Procedures As the publisher receives inserts, the actual count and event date should be verified. The counts and event dates should be recorded and any shortages, overages, damaged or out of spec products must be promptly resolved. The advertiser must be notified if a prompt resolution, based on the advertisers original specifications, cannot be achieved. A record of these occurrences and their resolutions should be maintained. Audit Bureau of Circulations

28 Insert Receiving Procedures 1. What is the minimum and maximum number of days in advance of the insertion date that inserts can be received? 2. Inserts can be received at the following times (day & time): 3. Describe how the quantity of inserts received is confirmed. Visually inspect shipment Weigh a portion to determine amount on skid Verify amount by inserting machine Compare Number (skid totals) received to: Bill of Lading Shipper Invoice Packing Slip Manifest If a discrepancy in the amount shipped and the amount received exists, who is notified? (Check all that apply) Pre-Print Manager Advertising Department Publisher Advertising Manager Advertiser Circulation Department Printer Shipper Other If more than one checked, outline procedures. Audit Bureau of Circulations

29 Insert Receiving Procedures 4. Describe and attach a copy of the records maintained to document insert receipts. 5. Describe policies and practices related to damaged or incorrect inserts. 6. Describe the procedures to measure the inserts to insure the size is within published specifications. Is the advertiser and or printer notified that their insert does not met minimum specification? What are those correspondence procedures? Audit Process: Walk through the insert receiving process with a manager knowledgeable of the process, typically operations or production manager. Provide a copy of any written insert receiving procedures. Provide an example of all documentation maintained from one insert. Provide an example of notification to the advertiser in the event that inserts have been received. Be sure to provide details of how the discrepancy was resolved. Audit Bureau of Circulations

30 D. Security Policy and Practice Prior to Insertion Freestanding inserts received prior to issue date should be kept in a designed secure area prior to insertion with accessibility limited to authorized personnel only. Audit Bureau of Circulations

31 Security Policy and Practice Prior to Insertion 1. Describe the methods used to secure and store freestanding inserts prior to insertions. 2. Describe the inventory control tracking system used to manage the location and quantity of inserts. 3. Describe the disciplinary procedures applicable to employees that improperly handle inserts. Audit Process: Walk through the insert storage security with a manager knowledgeable of the process, typically operations or production manager Provide a copy of the disciplinary action policy of mishandling inserts and explain how employees are notified. Audit Bureau of Circulations

32 E. Quality Control During Insertion Insertion of advertising material at the publisher s plant, carrier and or distributor locations should be carefully supervised and monitored to maximize accuracy and security. Product audits by publisher personnel must be made after insertion to ensure product completeness and accuracy. Records of the audits should be maintained. Audit Bureau of Circulations

33 Quality Control During Insertion 1. Does the equipment track misses and doubles? If yes, what is done with that information? If no, how do you monitor insertion accuracy 2. Does the equipment provide for automatic corrections? If yes, what portion of errors is corrected? If no, is any attempt made to correct errors? 3. Provide examples of all management reports available. (examples: PCR report, ICON report, shift report) 4. Describe the frequency and methodology, including personnel involved and records maintained, used to conduct verification of insert content. 5. Describe the frequency and methodology, including personnel involved and records maintained, used to confirm insertion done manually by carriers. Audit Process: Walk through the inserting and quality control process with a manager knowledgeable of the process, typically operations or production manager. Provide example of quality control documentation. Audit Bureau of Circulations

34 F. Procedures for Leftovers and Shortages Identified During Insertion Policies and procedures must be in place to govern the handling of leftover insert material and what to do in the case of a shortage. All material shortages or overages must be reported to appropriate personnel, including the advertiser as soon as determined. Records of any variances warranting advertiser notification must be maintained. Audit Bureau of Circulations

35 Procedures for Leftovers and Shortages Identified During Insertion 1. Describe, in detail, the steps taken for situations when a sufficient quantity of inserts is not received and or when excess spoilage results in a shortage. 2. Describe, in detail, the steps taken for situations when a material quantity of excess inserts has been received. Audit Process: Walk though the inserting process with a manager knowledgeable of the process, typically operations or production manager. Provide any written procedures for notifying the advertiser. Walk through the notification process and obtain an example of written documentation with the responsible person, typically account manager Audit Bureau of Circulations

36 G. Route Structure Integrity Policies and procedures must be in place to protect route-structure integrity by limiting access to routing changes or performing route audits to ensure specified routes do distribute to the households as described in the advertising zoning plan. Compliance with the guideline should include, at a minimum, a written policy and or limited or protected access to system change. Audit Bureau of Circulations

37 Route Structure Integrity 1. What is your policy regarding aligning distributors / routes to advertiser zones? 2. Describe the controls and procedures in place to ensure proper alignment of all routes and advertising zones. 3. Who has the authority to modify the structure of routes? 4. Who has the authority to change advertising zones? What are the procedures to align routes when this occurs? 5. Are carriers / distributors permitted to have multiple routes? If yes, can the routes be in different advertising zones? Audit Process: Walk through the controls in the place with a manager knowledgeable of the process, typically circulation manager in conjunction with advertising. Audit Bureau of Circulations

38 H. Draw Variability Policy Publications must have a policy that outlines the publisher s practices governing draw increases and other unusual occurrences. This policy must include as much advance notification as possible and a commitment to engage advertisers and provide them an opportunity to react to special events such as intermittent days. On an ongoing basis, publishers personnel must systematically review/monitor account-volume levels. If significant draw increases, or other unusual occurrences occur, advertisers must be notified or variances that may result in shortages or leftovers. Audit Bureau of Circulations

39 Draw Variability Policy 1. How are advertisers notified about draw increases due to intermittent days and frequency conversions within the 120 days? 2. Is the advertiser notified about material draw fluctuations for reasons other than intermittent days and frequency conversions that require 120-day notification? If yes, what are the procedures to notify the advertiser. 3. Is the advertiser allowed to send extra inserts to accommodate the draw increase? 4. If the advertiser chooses not to send extra inserts, what are the procedures to accommodate the shortages that occur during draw increase? Audit Process: Walk through the process of notifying the advertiser of material draw variations with a manager knowledgeable of the process. Provide an example of the notification(s) Audit Bureau of Circulations

40 I. Package Integrity in the Field Policies and procedures must be in place to ensure the correct insert package is being delivered to the designated customers. Product checks must be made to ensure completeness and accuracy of the product being delivered to readers. The results must be documented and the documentation maintained. Audit Bureau of Circulations

41 Package Integrity in the Field 1. Describe the frequency and the methodology, including personnel involved used to conduct in the field audits of insert content. 2. Describe and provide an example of the records associated with the audit process. 3. Describe how the results of the in field audits are used by management. 4. If field audits are not conducted what controls are in place to ensure the consumer received the correct inserts? How do manual inserts differ from machine inserts? Audit Process: Audit Bureau of Circulations Walk through the process of confirming the correct insert package is received with a manager k l d bl f th t i ll ti d ti

42 J. Assuring Quality Delivery with a Non-employee Work Force Policies and procedures must be in place for dealing with nonemployees who have contact with inserts, such as truck drivers, delivery agents and independent carriers. There needs to be contractual language regarding how they are to handle inserts, security, accuracy reliability and should provide penalties for noncompliance. Procedures must be in place to be taken if a delivery error is detected or reported. This process must include steps to detect the extent of the problem, and notification procedure. Audit Bureau of Circulations

Assuring Quality Delivery with a Non-employee workforce 1. Describe the policies in place that prevent the misuse and unauthorized use of advertiser inserts after they leave the insert facility. 2.

43 Assuring Quality Delivery with a Non-employee workforce 1. Describe the policies in place that prevent the misuse and unauthorized use of advertiser inserts after they leave the insert facility. 2. Describe the methods by which the aforementioned policies are communicated and enforced. 3. Describe the delivery standards and insert handling policy for home delivery copies. 4. Describe the methods by which the aforementioned policies are communicated and enforced. Audit Process: Provide a copy of the contract that provides notification of delivery standards for all nonemployees. Provide a copy of any other method used to communicate delivery standards Audit Bureau of Circulations

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