3 industry-wide ramifications post SPH Media's admission of circulation tampering

The recent revelation of circulation figures being tampered with by SPH Media has left many in the ad industry shocked and outraged. According to the company, circulation figures were inflated by about around 85,000 to 95,000 daily average copies across all titles. There was also double counting of subscriptions and destructed copies included in the count. 

The news was particularly damaging because Circulation numbers have long been the basis of deciding the cost of ad space on publications. While SPH Media Group’s chief executive officer Teo Lay Lim has clarified that circulation data is not used as a basis for SPH Media’s advertising packages and that their advertising packages are based on reach and readership, it is understandable that the industry is still concerned. 

In light of the incident, MARKETING-INTERACTIVE reached out to industry players (on and off the record) to find out how the news will not just impact SPH but also the wider media industry, as well as advertisers.

1. Loss of trust in SPH

As a national broadcaster funded by the government, SPH Media holds the trust of the nation which is why a blunder such as this is so much more significant as compared to if it were a smaller brand, according to Jacqui Lim, the chief executive officer of Havas Media Group Singapore.

 “As a national news provider, the industry and society uphold SPH to very high ethical standards as a trusted source of news. So, this incident will definitely raise eyebrows and erode the levels of trust advertisers and consumers have,” she said. However, she continued by affirming that:

SPH has a chance to bounce back particularly if they choose to remain accountable and transparent despite how “bizarre” it might seem to the public.

“Trust can be rebuilt if the response is one that shows willingness and sincerity to right the wrong,” she said. “The company also needs to assure advertisers that it is taking added steps to reinforce processes to ensure such incidents do not happen again,” she continued. 

A senior consultant who was also a former journalist with SPH, said brands, including government agencies, will seek answers from SPH Media. "The impression is that they have all been hoodwinked, and have spent more than they should because of the alleged fraud. Where possible, brands should seek make-good initiatives from SPH Media as goodwill, given the shocking revelations. SPH Media will need to work overtime now to rebuild the trust in the establishment. There needs to be a full and frank disclosure of the issue," he said. 

2. Advertisers could lose trust in brands on an industry level

Echoing Lim's sentiments, Ranganathan Somanathan, the co-founder and curator of RSquared Global Ventures, a business consulting service shared that the incident with SPH Media could signal distrust between advertisers and publications on an industry level. “After all, if SPH can fudge their numbers, what’s stopping other companies from doing the same?” he asked.  Advertisers will now start asking how the numbers presented by media owners are verified, and who is the governing body when brands state their numbers.

Meanwhile, MARKETING-INTERACTIVE understands that yesterday, SPH Media chief also sent out an email to trade partners on how its data on reach and readership is collected periodically through a survey panel that is statistically representative of the Singapore population. “This data is obtained from and verified by independent third-party research agencies, namely GfK,” said chief executive Teo Lay Lim, in a memo seen by MARKETING-INTERACTIVE.

On an industry level, according to Somanathan, the Audit Bureau of Circulations (ABC), is one of the main organisations that advertisers will turn to when it comes to confirming numbers. ABC is a not-for-profit organisation that audits the circulation figures of publications who are members of the ABC. “Questions will certainly arise when it comes to who the governing body is who verifies circulation numbers and attention will turn to organisations such as ABC,” he said.

3. Contract signing taking a longer lead time

Industry players MARKETING-INTERACTIVE spoke to say that in the short term future, given the cloud of uncertainty this incident has created, contract signing will possibly take a longer time as advertisers dot their i's and cross their t's. Lim explained that the incident brings light to the fact that advertisers and agencies should always reference back to third party verification and various sources of data points when making evaluations on media selection - something that the industry will further emphasise after the current revelation. 

 “There will likely be additional steps needed now for companies to prove that their data is accurate,” said Somanathan. “While I don’t think it will exactly slow processes down emmensely per say, additional checks will certainly be something on the minds of advertisers now”.

Besides additional checks, companies could also begin to increase their focus on the legal ramifications of platforms forging numbers. According to Channel News Asia who spoke to lawyers regarding the case, civil action can be taken against companies provided that the contract between the company and the advertising platform is intact.

As such, more companies might relook their contracts and consider tightening them up as they move forward. “Clauses on misrepresentation of data and consequences will likely be included to protect the value of the trading agreements, with claw back of advertising dollars in the event of inflating the data will coming into play,” concluded Somanathan.

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