Free newspapers look to be the winners in the 2006 advertising market, after high response rates to marketing campaigns gave advertisers confidence to devote more of their budgets on the new rivals to traditional mass dailies, according to an executive at one of the freesheets. The launch of Sing Tao News Corp's Headline Daily and property agent Centaline Group's am 730 in the summer of 2005 broke the monopoly of Metro Publishing Hong Kong's Metro Daily in the freesheet market. At the same time, the new players helped to expand the market for freesheets which have captured more than 10 per cent of total newspaper advertising revenue. 'Our overall advertising revenue should have kept about a 10 per cent growth rate in 2006, thanks to the amount of advertising dollars in the last quarter,' a source close to Metro Daily told Media Eye earlier this week. The paper, which has exclusive distribution rights within the MTR rail system, had an extremely quiet period in the first three quarters last year, the source said. Metro Daily distributes about 330,000 copies among the more than two million morning commuters. Headline Daily distributes more than 600,000 copies in the streets and in lobbies of selected residential estates. 'With our rival having double our circulation, I would be happy for us to have growth this year,' the Metro Daily source said. Headline Daily, with the largest freesheet circulation, should lead its competitors for last year's advertising revenue after earning HK$432 million in the first 10 months compared with HK$116 million in its first six-months of operation in 2005, according to researcher Nielsen Media. Gossips lose their punch The local gossip-magazine market is showing signs of consolidation and cost cutting as their ad rates tumble in a largely undifferentiated market. Next Media's flagship Next Magazine yesterday fired some editorial staff with management claims that they did not perform well last year, a source said. The dismissals followed last week's closure of two publications brought out by Robert Ng Hung-san's South China Group, a move that led to the sacking of about 20 workers, sources told Media Eye. The two magazines were the monthly Capital HMC, which had been directed at a trendy male audience and Feel 3, a supplement of 3 Weekly. 'There had been rumours since mid-December that two titles were to be closed and the axe fell on January 2,' said one worker who lost his job. The company asked him to stop working that day while his employment contract will be terminated next month. The women's gossip magazine market, which includes Next Media's Sudden Weekly and Emperor Group's Oriental Sunday, has had to cut ad rates to compete for advertising dollars as they all promote gossip or news that is similar to stories run in newspapers during the week. 'A full-page advertisement for a gossip magazine now costs as low as HK$6,000, compared with more than HK$10,000 several years ago,' an industry source said last week, adding that several larger circulation magazines, such as Next Media's flagship Next Magazine has cut rates by 25 per cent to strengthen their market share. The fall in the ad rate was also linked to the arrival of U Magazine which was started by Hong Kong Economic Times Group late in 2005 and has grabbed market share from existing titles, the source added.