Newsmedia Outlook 2009 - Earl J. Wilkinson

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Information about Newsmedia Outlook 2009 - Earl J. Wilkinson
Business & Mgmt

Published on October 5, 2008

Author: inma08


>> Earl J. Wilkinson Executive Director | INMA Newsmedia Outlook 2009 Converting Bandwidth to Innovation

Financial Crisis American political leaders, Democrats and Republicans, address the mounting financial crisis in Washington 14 days ago


Newspaper Industry Crisis   Market Cap Erased: U.S. publicly traded newspaper companies have lost 78% of market value since 2004   Classified Verticals Collapsed: Ubiquitous broadband access prompting collapse of classified verticals   Retail Declines: Retail advertising marketplace shifted to low-marketing big- box retailers   Circulation Declines Accelerating: Urban dailies have seen 1% annual circulation declines in 1990s accelerate to 3%-5% annual declines   Newspapers Losing Money: At least 19 of the Top 50 newspapers will lose money in 2008   Debt Loads Unbearable: Average debt-to-EBITDA ratios increased from 1.3 in 2004 to 3.1 in 2008; anything above 3 is considered dangerous   It’s Going To Get Worse Before It Gets Better: INMA network feedback: latest banking crisis could prolong downturn


Mental Bandwidth: Managing Complexity   Rising complexity in deriving economic value from media assets   How to generate enough transformational bandwidth to re- engineer media companies while simultaneously maintaining operations   How to get the right people and structure highly talented people toward company goals   How to expand (and manage) the ideas cultivation process   More market knowledge needed for product development and advertisers

Today’s Presentation   Get our arms around mental bandwidth issues and try to make sense of them   The 2009-2012 environment   From content to audiences   The rising value of the “context of content”   The role of innovation in your growth strategy

What 2009 Will Look Like

Environment   Economy: Soft economy through 2009, with growth returning in 2010   Marketing Communications: Long-term share shifts from advertising to direct marketing, public relations, events, promotions   Advertising: Structural shift from one-way communications to two-way communications, will negatively impact newspapers

Managing Risk Potential Upside Potential Downside   Acceleration of online   Acceleration of eyeballs to revenue growth the internet   Higher prices from online   Under-performing job growth advertising and retail sales   Faster rebound in job   Further deceleration of growth circulation volume   Stable newsprint prices   Faster-than-expected newsprint price increases   Lower access to capital through dropping profit margins

Mid-Term Outlook   Through 2012, traditional media will pay the bills, non-traditional media will drive growth   Classified advertising from print to online will accelerate with broadband growth: more with jobs and property, less with cars   Digital/mobile distribution accounts for 5% of media/industry spending, projected to be 11% in 2012 (will represent 24% of industry growth): PricewaterhouseCoopers   We don’t need digital to replace print; we need digital to fill the hole left by print declines   This will begin to happen in 2011 and could be an industry average in the U.S. by 2013 (Deutsche Bank)   Cost structure must be adapted to Digital Age; focus changing from content to distribution

Circulations Down 8% Paid Dailies in Western Democracies During Past Decade

Circulation Performance Paid Daily Circulation in Key Geographies Worldwide Since 1995

Circulation Winners, Losers Circulations decrease, 1997-2007 Circulations increase, 1997-2007 Others: unaudited, incomplete

Why Do They Grow?   All are “aspirational societies,” newspaper is linked to aspiration   All have rising middle classes   All have low advertising as a percentage of GDP   Brazil: The fast-emerging “quality popular” newspaper   India: Low-cost newspapers for fast-emerging classes, low-cost subscription canvassing, focus on an infusion of youth   South Africa: Finding the right formula of newspaper for young adults who never read a newspaper   China: Government-encouraged “market newspapers” exposing local corruption   Indonesia: Major players found niche in diverse society

News Diet Changing Evening News Buffet, 1945-1970 6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00

News Diet Changing Morning News Buffet, 1970-2000 6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00

News Diet Changing Diabetic News Consumer, 2000-Present 6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00

Complexity Accelerating Source: Mediaedge:CIA

Backvertising, Assvertising, Nailvertising

Lipvertising, Teethvertising, Headvertising, Fruitvertising


The Big Picture: Chasing Fragments   Consumers Fragmenting: Technology and abundance disrupting information consumption   Advertisers Chasing Fragments: Advertisers shifting to multi-media   Newspapers Regrouping: Newspaper business model changing as a result   Fast Change Rewarded: Companies changing faster rewarded, those changing slower punished

Culture Change: From Content to Audiences

Value Levers Audience Brand Content

Value Levers 90% 5% 5% Audience Brand Content

Value Levers 50% 25% 25% Audience Brand Content

Audience Management Strategic Suggestions from Forrester Research (June 2008)   Aggregate content to bring your audience to the newspaper first   Bring in all non-newspaper sources   Syndicate to engage audiences wherever they are   Newspapers using YouTube video channels   Use social technologies to reach audiences   Connect newspaper readers with each other   Allow readers to create their own blogs

Pricing Value Tiers Light Medium Heavy   Allow 30 free   Annual online   Subscriber to print articles per subscription newspaper month to be   £100/year   Maintain average consumed free daily rate of £1.00   Single-copy buyer – lower than single-copy price of print newspaper   Increased from £0.30 to £1.30

“What our business will be about going forward is the skillful management of the slow decline of the printed product and the accelerated growth of the internet.” -- John C. Mellott, Publisher, Atlanta Journal-Constitution Target Market Segmentation Print = Older Readers Online = Younger Readers

Future of Print

Future of Print Philadelphia Model (Quality)   Audience migrates from print to online   Raise print circulation prices and sell “quality audience” to “quality advertisers”   US$3 cover prices OK daily

Future of Print Norway Model (Quantity)   Audience migrates from print to online   Lower print circulation prices to maintain mass audience until inflection point …   Convert paid dailies to free dailies to maintain quantity audience

Future of Print Philadelphia Model (Quality) Norway Model (Quantity)   Audience migrates from print   Audience migrates from print to online to online   Raise print circulation prices   Lower print circulation prices and sell “quality audience” to to maintain mass audience “quality advertisers” until inflection point …   US$3 cover prices OK daily   Convert paid dailies to free dailies to maintain quantity audience

INMA Newsprint Survey What are the strategic drivers of your company’s use of newsprint?

INMA Newsprint Survey Key findings worldwide and regionally: ROI of print   65% worldwide said will use less newsprint in 3 years   89% of North Americans considering gradual format change vs. 33% of all others   42% of North Americans considering cutting back on publishing frequency vs. 20% of all others

Context of Content

The Crumbling Bundle   When newspaper moves online, the bundle falls apart   Each story, each section, each content section stands “naked in the marketplace”   Invisible system of subsidisation disappears   Subtle effects on journalism and story selection   Hard journalism adds to the print bundle, becomes hard to justify economically online

Fortress Newspapers Content Verticals Advertising Verticals News Classifieds Sports Local retail Business National Features The Newspaper Bundle

Fortress Newspapers Content Verticals Advertising Verticals Breaking news Property Investigative journalism Jobs Wire service news Cars Pack journalism Private-party Local sports Local retail National sports National Stock listings Matrimonials Weather Brand Puzzles Price-point Photography All categories The Newspaper Bundle

Content’s Declining Pure Value   Percentage of media-produced content shrinking in growing world of communications   Amount of free content available skyrocketing online and offline (editorial/classifieds)   Advertisers unwilling to fund certain disaggregated content   Obtaining content “frictionless”   Ease of access to content damaging perceived financial value to consumers   Consumers willing to pay far less for same product outside of print

Print Magazine’s Value in Digital Spaces   Print Magazine: 100% = print magazine   E-Paper: 47% of print copy’s value if an e-paper   Mobile Web: 35% of print copy’s value if a mobile- based web site   Computer Web: 19% of print copy’s value if a computer-based web site Source: PricewaterhouseCoopers

Value = Context of Content   Content becoming the “commodity backbone” around which contextual services can be delivered   CityAM’s bluecasts in London an example   Postal code mobile alerts   Metrics needed to determine value: Who saw it? How was it consumed? How many people viewed it?   Advertising-supported content would rise in value more people saw it   Certain content (stock tips) would drop in value more people saw it   Next-generation editors will be “content strategists” who decide which stories get told and what the best storytelling platform is   Book industry: print for long-form, e-readers for in/out reference   Print pays the bills and encourages long-form journalism   Re-take breaking news via online and mobile

Commercial Value of Platforms: Philadelphia Inquirer   Shifted high-value unique journalism to “print-first”   Breaking news nationally, widely covered local news, and commodity news would continue to be “internet-first”   Inquirer makes lion’s share of revenues from print advertising   Segmenting their content verticals and flowing them to commercially relevant platforms   Part of “quality journalism” for “quality audiences” drawing “quality advertisers” strategy of CEO

Movie Industry Value Chain Platform Experiences   Theatres for new releases   Digital theatres   Home video 3-6 months later   Multiplexes   Digital downloads and pay-   High-definition DVDs per-view   Mobile/internet platforms   Internet television   Home pay-per-view   Pay cable television   Events   Commercial television

“Some claim that content is King in the world of media. Our research indicates that content may only be Queen. It is the creation of an experience for the consumer that promotes true engagement.” – Anne Moser-Wellman, Author, “Running While the Earth Shakes,” Media Management Center

Experiences   Desire for participatory, interactive media experiences   Demand for content disconnected from devices and time slots   Everything an “experience”   Advertising OK if it’s relevant to the experience and to the individual

Music Experiences   CD   Buy a download   Wallpaper for mobile device   Mastertone   E-ticket   Music video   Become friend on social network   Sign up for subscription service   Justin Timberlake’s Futuresex/ Lovesounds: 115 products, 19 million units sold, 20% sales from CDs

“When somebody raises their hand and says, ‘I’ve got five minutes,’ you want to make sure you give them five of the best minutes they’ve ever had.” -- Scott Bowman, chief executive officer of MLB Advanced Media Experiences 1.  Attending game in person 2.  Broadcast television 3.  Radio 4.  Streaming video online 5.  Text messages 6.  Mobile device 7.  Satellite radio 8.  Cable/satellite television 9.  Internet/satellite radio 10.  Fan chat rooms 11.  Online graphical play-by-play

Reader’s Digest   Print magazine   Books   Music   Videos   Home accessories   Gifts   Insurance company   Financial services company

The Times Property: Cool In Your Code

The Times Property: Cool In Your Code

The Times Property: Cool In Your Code

The Times Property: Cool In Your Code

The Times’ Globrix: Aggregating Property Ads

The Times’ Globrix: Aggregating Property Ads

The Times’ Globrix: Aggregating Property Ads

Context of Content   Studyof platforms is yielding new thinking on value propositions   Howto create a browsable experience in print that maximises value to advertisers   Breaking news via mobile and online   Enterprise reporting/journalism in print   Consideration of reducing print frequency and channel energies into best browsing days


Converting Bandwidth to Innovation   Do we have the transformational bandwidth to manage our way out of today’s industry crisis? No, not yet   Management must create innovation “bubbles”   Being done at world’s leading companies   Innovation programmes beginning to take hold at traditional newspaper companies   Must create frameworks for innovation and ideas

Rewarding Innovation: Incubator of Experimentation At least 3 major companies use a centrally controlled innovation fund that customers can tap into to experiment with unproven media   Procter & Gamble   Johnson & Johnson   Unilever

Rewarding Innovation   Google: Engineers encouraged to spend 20% of time on their own projects   CNN: “Free-Thinking Fridays” where best ideas are shared   MSNBC: “Innovation Days” where people share ideas they are working on   Yahoo: “Hack Days” where developers share tech ideas with the rest of the company

Rewarding Innovation   Boston Globe (USA): innovation awards, cash   El Nuevo Dia (Puerto Rico): director-level bonuses “innovation office,” lunch-box meetings, innovation part of competence to reward   Mid-Day (India): quarterly Zagyom awards in each major area of operation   Zero Hora (Brazil): regular internal seminars with   West Australian (Australia): talent identification guest speakers and innovation process programme, project teams populated by up-and-   Jawa Pos (Indonesia): appoints younger 20- coming middle managers addressing specific something staffers to chair strategic and strategy issues programme committees, bonuses and promotions   Joong-ang Ilbo (South Korea): “Bottom-Up tied to performance Idea” programme via intranet   Die Burger (South Africa): pays employees a   The Globe and Mail (Canada): “Reimagination” 10% commission on profit generated from new project dividing hundreds of employees into initiatives horizontal teams focusing on industry issues   Bakersfield Californian (USA): 1% of revenues   E.W. Scripps Company (USA): Scripps put into “innovation fund” for incubator-like Entrepreneur Fund, brainstorming sessions, best projects; new initiatives treated as separate “start- ideas submitted to board of directors up” companies   The Telegraph (India): “Out of the Box”   Atlanta Journal Constitution (USA): hired a programme, submit innovative ideas to save money “director of culture and change” to encourage or grow revenue, cash prizes horizontal thinking   The Free Press (Canada): innovation committee across departments and processes to evaluate ideas, submissions rewarded

Open Innovation   Late 1990s, sales decline at Procter & Gamble due to lack of new products   Consultants advise that P&G culture of “not invented here” pervasive   Need to broaden sources of ideas and innovation   New CEO: By 2010, 50% of P&G new product ideas will come from outside of P&G   Translation: Need “master networkers”

Business Case for Networking Schibsted Corporate Conference: 22 September 2008, Stockholm 1.  Companies providing access to strong external networks attract better young talent 2.  Networks should be “strategic,” not just “nice to have” 3.  Managers with broad networks promoted faster, make 30% more money 4.  People with better external networks have better ideas 5.  Higher % of ideas accepted by people with diverse networks 6.  Most innovations come from networks, not individuals 7.  Build network diversity, not just size 8.  Build broad “weak ties” for new knowledge, narrow “strong ties” for emergencies and tough projects (goal: 100 “weak ties” outside of company, country)

Lead India   Launched campaign on Indian Independence Day in 2007 by The Times of India   Country advancing in spite of (not because of) its politicians   Encourages everyday people to become leaders   Multi-media campaign showing India as “half full,” not “half empty”   Wrapping The Times of India in this future

Islam File: Koran Giveaway   Promote 15-part pullout supplements in De Standaard on Islam   Gave away free Korans to coincide with special report   Involve readers in community discussions, important in Belgium because of Danish cartoons unrest   Single-copy sales up 138% on day of Koran giveaway

Free Prince CD   The Mail on Sunday aimed to create buzz among young readers and retail outlets   Free Prince CD   Sold out 2.8 million copies, including 600,000 new readers   Largest promotional uplift for a U.K. Sunday national daily

Stunt: All Eyes on (ST701)   Miss Singapore lives in a glass house for a week   Lives on materials that can be accessed through Straits Times’ ST701 micro-site   Keeps regular blog   Ancillary contests   ST701 web site traffic up 50% over 7-day period   Generated lots of buzz

Drive-Through Classifieds El Universal Creates Escape From Urban Chaos, Generates Revenues

Subscriber in Classifieds: HNA Nachrichten

Toward Magazines? The Power of Canada’s Globe and Mail Front Pages

Weight Club Aftonbladet Generates Millions From 200,000 Paid Club Subscribers

Expressen TV Online Video: YouTube Style With Quality News, Sports, Entertainment

Contest: Photo/Video Uploads   Dallas Morning News launches microsite for high school sports   Encourages students, parents, fans to upload photos and videos   Daily cash prizes for best photos   School with most uploads win US$10,000 cash prize for high school prom   129,004 photos, 5,497 videos uploaded

MediaLab for Advertisers   Philadelphia Inquirer created MediaLab to show advertisers the power of newspaper advertsing   Shopping channel QVC was shown power of print in national image campaign   Benefited Inquirer and other newspapers

Search Engine Marketing Campaign Drives Traffic   Houston Chronicle search engine marketing service that optimises traffic volume to an advertiser’s web site or physical site, as well as quality of sales leads   Campaign enhances Chronicle’s position as local online advertising resource   260% growth in customers   317% growth in SEM revenue

Online Template For Students To Produce Newspaper   Ekstra Bladet creates “The Newsroom,” internet-based editorial platforms where schools produce their own newspaper   Only known application of its kind in the world   Develop writing skills, participate in editorial meetings, lay out newspaper   Ekstra Bladet colour prints copies and delivers to schools (100 newspapers so far)


Hidden Assets   Highest success rates from legacy companies that have discovered “hidden assets” previously not central to past strategy   Diamond industry   Swiss watch industry   Scotch whiskey industry   Comic book industry

Since founding in 1939, Marvel’s value proposition was comic books

Shifted from comic books to licensing Marvel characters for film distribution

Hidden Assets for Newspapers   Audience: Brand-loyal readers who have never considered themselves a community   Journalists: Valued journalists trained only for broadcast communications   Money: Immense cash flows and capital budgets   Distribution: Infrastructure second only to the postal service   Advertising Sales Force: “Feet on the street” that even scares Google   Service: Making “smart” the “help desk” concept

Fundamental Challenges   Technology driving consumers to consume news on many platforms   Advertisers chasing consumers across platforms   “Newspapers” reinventing themselves as “multi-media companies”   Newspapers re-imagining their value proposition for Digital Age   Audience development   Value for advertisers   (Im)patiently waiting for business models to emerge

INMA: Harvester of Ideas Constantly In Search of Global Best Practices Europe Newspapers: 2,398 North America Newspapers: 1,577 Middle East Newspapers: 272 Asia Newspapers: 5,071 Africa Newspapers: 400 Latin America South Pacific Newspapers: 1,400 Newspapers: 89

INMA: Harvester of Ideas What INMA sees for the years ahead   2009 economic slowdown, 2010 beginning of recovery   Where there is disruption, there is opportunity   Change culture from “content” to “audiences” for growth   Context of content: Flow content to platform with most €€€   Inject innovation processes, become master networkers   More and more about managing complexity (bandwidth)   Prediction: will publish tomorrow; need ideas, networks

>> Earl J. Wilkinson Executive Director | INMA Newsmedia Outlook 2009 Converting Bandwidth to Innovation

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