Last Updated Mar 27, 2009 12:16 PM EDT
"It's not the majority" of newspapers, he told the Pontiflex CPL Summit in New York on Thursday. "The majority are still getting free-standing inserts in newspapers."
The problem, he said, is that newspaper circulation is declining to such low levels that clients are asking for new vehicles to deliver coupons.
"Every last one of them has come to us and said newspapers are declining at a massive rate, what else have you got?" Costello said.
He cited the recent disappearances of daily papers, such as those in Seattle and Denver, and the Detroit Free Press reducing the number of days on which it prints.
Costello also addressed Valassis' recent decision to pull coupons from the Cleveland Plain Dealer. That move set off a controversy among coupon cutters, many of whom prefer newspapers over online or shared mail coupons because, by buying multiple papers, the coupons can be doubled up at the checkout.
"Their circulation was declining pretty rapidly," Costello said. By shifting the coupons to shared mail, "they really could cover more of the audience."
"Are they the same coupons? Not always," he said. "Procter & Gamble does no online" coupon efforts because the company is not confident about the technology.
Overall, Costello said, "the companies are looking, where are we not getting the numbers? ... Newspapers are going to be good in some markets and bad in others."
To counter protests from coupon-cutters, Valassis put out a press release March 6:
Recent media reports and coupon enthusiast Web sites have erroneously reported that Valassis is pulling its RedPlum coupon booklet from all newspapers across the United States, when in fact newspapers still represent 90% of its FSI distribution.Separately: Valassis on March 20 announced it settled litigation with Fraser Papers over an alleged $1 million in unpaid bills. The terms of the settlement were not disclosed.
The statement contained this sentence from Fraser's COO:
"Fraser did not file this case because of any concerns about Valassis' ability to pay," said Jeff Dutton, President and Chief Operating Officer, Fraser Papers.
- See BNET's previous coverage of the in-store marketing wars:
- Valassis, Insignia Stock Jumps on News America Marketing Group Settlement
- Valassis CEO Got Big Raise Despite Company's Losses
- News America Marketing Group Wins Summary Judgment Against Whistleblower Robert Emmel
- News America Marketing Group Buys Floorgraphics Just Hours After Settling Spying Lawsuit
- News America Marketing Group Settles With Floorgraphics; Valassis, Insignia Likely Rejoicing
- Valassis May Not Be Able to Pay Debt; Litigation May "Materially Harm" the Company
- Trial: Did News America Marketing Group Break Into Floorgraphics' Computers?
- Valassis Stock Threatened With De-listing by NYSE
- Valassis' Plan to End Newspaper Coupons Outrages Middle America
- Valassis Suit vs. News America Being Conducted in Secrecy
- Valassis: Layoffs Will Continue as It Reduces Newspaper Coupon Business; It's All News America's Fault
- Valassis Writes Down $245 Million in Assets; Legal Bills Running at 10% of Profits
- Valassis Angers Blogger Moms by Yanking RedPlum Coupons From Newspapers
- Valassis Reduces the Cost of Fun for Employees
- Direct Mail Giant Valassis Is "Not Paying Its Bills"; Stock Is "Worth $0"
- Alloy Beats WPP, IPG et al in Network Efficiency Ranking
- The Cost of Valassis' Suit vs. News America Is Eating Its Profit