Roundtable 2007 cohen
54
1 A Perspective on Newspapers in the Digital Age Bob Cohen President & CEO Scarborough Research ASTECH/INMA Roundtable on Strategic Marketing Vail, Colorado August 27, 2007
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Transcript of Roundtable 2007 cohen
1
A Perspective on
Newspapers in the
Digital Age
Bob Cohen President & CEO
Scarborough Research
ASTECH/INMA
Roundtable on Strategic Marketing
Vail, Colorado
August 27, 2007
2
Agenda:
Marketing
The Internet
Media
The Consumer
Newspapers
Strategic overview of media and marketing trends with implications for newspapers
3
Scarborough Research
●Comprehensive, syndicated annual survey of 81 local markets; national study (USA+)
●Annual sample of 220,000+ Adults (18+) ●Local market samples from 2,000-11,000 ●Continuous Measurement ●Measures demographics, shopping/retail
behavior, product consumption, entertainment/leisure, media usage
●Ratings service to the newspaper industry ●Accredited by the Media Ratings Council
●Valid, reliable, effective
4
MARKETING
5
The Marketing Environment
• Markets and brands are maturing, becoming more competitive
– Globalization, rapid pace of product innovation
• Increasing emphasis on ROI
• The Internet highlights improved model of feedback, accountability and efficiency
• Improved targeting of prospects
• Increasing advertiser/price pressure on media due to oversupply
– Media risks becoming ―inventory‖
• Increasing Automation
6
Marketers Are Challenged By the New Landscape
• Multi-channel/platform environment is more complex, as consumers have more choices
• More emphasis on managing the overall ―marketing mix‖
– Brands working across delivery channels
• Aggressively exploring new options
– Product placement; branded entertainment – Word-of-mouth (rediscovered) – Viral marketing, blogs; social networks – Non-traditional OOH (Out-Of-Home) venues: airports,
stadiums, in-store, malls, elevators, gas pumps – Wireless/mobile messaging – Online video – Consumer-Generated Media and CGLM
• Structure and role of advertising agencies being re-invented
7
Marketing: Accountability Leads to Focus on ROI Metrics • Seeking higher and more identifiable return on media investment
• Emphasis on ―engagement‖- with media, advertising creative and brands
• Useful orienting concept
• Re-examining consumers’ relationships with all media
– Time, involvement, participation, commitment
• Desire to improve on established metrics
• Emphasis on creating more effective ―consumer experiences‖
• Ultimate Objective: To link increased consumer engagement to sales
8
―Engagement is turning on a
prospect to a brand idea
enhanced by the
surrounding context.‖
-Advertising Research Foundation M14 Committee, March 21, 2006
9
― …Consumers’ decision making and buying behavior are driven more by unconscious thoughts and feelings…include ever-changing memories, metaphors, images, sensations, and stories that all interact with one another in complex ways to shape decisions and behavior.‖
-Gerald Zaltman, How Customers Think: Essential
Insights
Into the Mind of the Market
(Harvard Business School, 2003), pp.14-15
• Renewed emphasis on what consumers bring to advertising
• Relevant progress in field of neuroscience
10
Magazines, $13.6,
(5.5%)
Newspaper,
$45.8, (18.5%)
Radio, $20.1,
(8.1%)Out Of Home,
$7.1, (2.9%)
Broadcast TV,
$47.6, (19.2%) Direct Mail,
$61.6, (24.9%)
Cable TV, $26.2,
(10.6%)
Internet, $10.6,
(4.3%)
Yellow Pages,
$14.7, (5.9%)
Source: Universal McCann, 2007
Forecast for Advertising Expenditures by Media in 2007: ($247 Billion)
11
-1.0% -1.5% -2.0%
3.0%4.2% 4.9% 6.0%
29.0%
-0.05
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
Local
TV National
TV
National
Newspap
er
Syndicat
ed TV Overall Magazin
es Cable TV Online
Where is the Growth? Zenith Forecast: US % Change for Select Media
Zenith Media, December 2006
12
THE INTERNET
13
Our mission: To connect people
to their passions, their communities
and the world’s knowledge.
14
Our mission: To organize the world’s
information and make it universally
accessible and useful.
15
The Internet is Revolutionizing Media and Marketing • Still at a very early stage of development
(Web 2.0)
• Profound influence within a relatively short period of time
• Impacting how consumers are informed, entertained, shop and socialize
• Creating a ―flat‖ world (global competitive playing field is being leveled)
16
Broadband Connectivity Continues to Grow
Source: Scarborough Research, Scarborough USA+
Release 2 2006
Based on total adults who have accessed the Internet during the
past 30 days
Broadband is defined as having a cable modem or DSL
connection in the household
29 29
38 39
30
49 51
60 62
23
44
54
0
10
20
30
40
50
60
70
18 - 34 35 - 54 55 +
2003 2004 2005 2006
17
Source: Scarborough Research, Scarborough USA+ Release 2 2006;
Markets ranked by broadband penetration.
Broadband Incidence Varies Across Local Markets in the U.S.
0
10
20
30
40
50
60 Of Boston adults, 55% live in
a HHLD with a broadband
connection Austin
50%
Chicago
Phoenix 44%
Fresno
26%
Oklahoma
City 40%
NY
47%
18
Internet Users Go Online for Many Reasons
Based on consumers who accessed the Internet during the past 30 days
Source: Scarborough Research, Scarborough New York Release 1 2007 (March 2006 – February 2007)
Household/Personal
Tasks
News/Information
Entertainment
Consumer Shopping
90
49
44 39
31
26
25
24 22
21
21
20
19
17 16
16
7
7
6 5
3
Weather
News
Pay bills
Download music/listen to audio
Travel reservations
Financial info
Sports scores
Games
Download/watch video
Medical info
Auction site
Job search
Real estate listings
Blogs (read/contribute)
Automobile info
Download/watch movies
Casino-type games
Fantasy sports
Download video games
Download podcasts
19
Source: Scarborough Research, Scarborough USA+ Release 2 2002-2006 Based on total adults who accessed the Internet during the
past 30 days
Consumers are Gradually Spending More $$ Online
$465$454$446$410$384
$0
$100
$200
$300
$400
$500
$600
2002 2003 2004 2005 2006
Median Amount Spent on Internet Purchases Past 12 Months
20
Source: Scarborough Research, Scarborough USA+ Release 2 2004-2006 Based on total adults who accessed the Internet during the
past 30 days
Consumers are Gradually Spending More Time Online
5.915.545.07
0
2
4
6
8
10
2004 2005 2006
Median Time Spent Online
(Weekly)
Hours
21
Items Purchased Online
Within the Past Year
Based on total adults who accessed the Internet during the past 30 days Source: Scarborough Research,
Scarborough USA+ Release 2 2006
Consumers Are Buying Online Across Many Categories
2445
76769
1722
2525
64
255677889
21
272829
70
0
10
20
30
40
50
60
70
80
Any
Interne
t purc
hase
Airline
tick
ets
Book
s
Clothin
g or accessorie
s
Other
travel r
eservatio
ns
Toys or g
ames
Consum
er ele
ctron
ics
Hea
lth and
bea
uty ite
ms
Cultu
ral e
vent ti
ckets
Mov
ie tic
kets
Sportin
g ev
ent t
ickets
Sports
logo
app
arel
Pet s
upplies
Vehic
le
2003 2006
22
The Increasing Impact of „Search‟ • The Internet makes marketing
more efficient
• Search provides business with an efficient and less expensive way to find leads
• An increasing percentage of search is ―local‖
• We are increasingly searching to find that which we do not know
• Search will dominate on-line ad spending (Jupiter, 2006)
John Battelle, The Search: How Google and Its Rivals
Rewrote
the Rules of Business and Transformed our Culture
(Portfolio, 2005)
23
• New delivery platforms for content
• Adding new types of content
• Evolving into other realms: visual, oral, written
• Creating new dynamic relationships
• Emphasis on multi-platform
• Personalization opportunities
• Introduces new challenges and opportunities for branding
• More multi-tasking
• Impacting audience size and composition
Established Media Being Impacted by the Internet
24
MEDIA
25
Media is in Unprecedented Flux – A Period of Unsettling and Accelerated Pace of Change • Increasing innovation and experimentation
– New content, channels and media experiences
– New business models, partnerships
• Media organizations vary in their abilities to evolve and compete
– Legacy, culture, structure, resources and marketplace assessment
• Financial models changing
• Consolidation
26
Historically, Media Development in the United States has Evidenced… • Greater openness and transparency in the public sphere
• Higher levels of commercialization
• Greater decentralization
• Increasingly rapid extension and pervasive penetration of communication networks
• Greater receptivity to new products and technologies
–Paul Starr, The Creation of the Media: Political Origins of Modern Communications, (Basic Books,2004)
27
Source: Scarborough Research 1996-2006, Top 50 Markets
Newspaper Print Audiences Steadily
Declining, Especially Among Younger
Consumers
Read Any Daily Newspaper (Yesterday)
18-34 35-44 45-54 55-64 65+
40
60
80
100
20
1996 1999 2002 2005 2006
36.0 41.5 42.3
46.4
58.7
46.4 50.5
53.2
62.3 60.2 65.4
56.0
67.4 65.4 69.7 61.4
71.5 72.9 71.2 67.9
34.5
43.8
53.7
60.0
67.6
28
Source: Scarborough Research 1996-2006, Top 50 Markets
Average Daily Readership is
Declining at a Faster Rate than
Cume Readership
68.4
77.674.9
70
74
48.950.5
54.856.2
58.9
40
50
60
70
80
1996 1999 2002 2005 2006
Daily Cume Daily Average
- 9.2
(11.9%)
- 10.0
(17.0%)
29
All Established Media Are Experiencing Challenges of Shifting Audience Dynamics
21:1518:45
0:00
5:00
10:00
15:00
20:00
1:00
6:00
11:00
Winter 99 Winter 2007
Persons 12+
Source: Nielsen Media Research
Radio Time Spent Listening Annual Rating of Top-Rated TV Show
Source: Arbitron, Inc Winter 99-Winter 2007
16.4
35.0
0.0
10.0
20.0
30.0
40.0
1984-1985 2003-2004
Average Program Rating
30
The Historical Barriers to Human Communication are Rapidly Diminishing Geographical
Time
Money
Social Class/Culture
31
TiVo/DVR/
“SLING BOXES”
DIGITAL OUT-OF-HOME
ADVERTISING
SATELLITE RADIO HD RADIO HIGH DEFINITION TV
PDA‟s iPODS
And more “new” media delivery options continue to enter
the marketplace…
CELL/MOBILE
PHONES
APPLE iPHONE VIDEO GAMES
32
Source: Scarborough Research, Scarborough USA+ Release 2 2006 Based on total
adults
Younger Adults are Early Adopters of New Services
12 10 10 82
7 8 6 7 72 3 3 4 5
13
222425
72
1
1520
17
74
61
58
98
0
20
40
60
80
100
Wire
less S
ubscr
iber
Camera
/pict
ure tak
ing
Dow
nload
ring
tone
s
Insta
nt m
essagin
g
Pictu
re m
essagin
g
Interne
t
Dow
nload
video
gam
es
E-ma
il
Push To Ta
lk - 2
way
Stream
vide
o clips
18-34 35-54 55+
Wireless Features Currently Use
33
THE CONSUMER
34
―Keeping the consumer at the center of the decision-making process is key to identifying solutions to the challenges all of us face in a world that is increasingly more fragmented due to the multiple ways media are consumed.‖
-Jim Stengel, Global Marketing Officer, ―P&G‖
ANA Marketing Musings,
September 13, 2005
The Consumer
• World of greater instability, uncertainty and stress
• Globalization, a shrinking and inter-dependent planet (―the new normal‖)
• Economic anxiety, greater $ inequality
• Political polarization
• Increasing ethnic diversity
• Generational dynamics
• Technology as ―fact of life‖
• Environmental focus
35
• Need for community, connections and security
• Hunger for leadership and ―moral compass‖
• Ongoing emphasis on personal choice & control
• Need for ―filters‖ and downtime
• Counterpoints of fantasy, experimentation and status
Resulting In…… Consumer Trends……
36
Marketers and Media Need to Respond to Demand for
Relevancy
and Cut Through Clutter w/o Alienating Consumers
But Concerns About Intrusiveness of Marketing Remain High
According to The 2005 Marketing Receptivity Survey
by Yankelovich Partners
• 54% of consumers try to resist being exposed or even paying attention to marketing and advertising
• 69% are interested in products that block/skip/opt out of marketing and advertising
• 56% avoid buying products that overwhelm them with marketing and advertising
“INTEGRITY IN MARKETING IS NOT
OPTIONAL”
Advertising Age, July 30, 2007
37
US Dept. of Commerce Reported eCommerce (by Quarter)
$0
$5
$10
$15
$20
$25
$30
$35
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Source: US Department of Commerce
$ billions
2002 2003 2004 2005 2006
38
NEWSPAPERS
39
68%
68%
73%
75%
76%
77%
74%
76%
76%
79%
60% 65% 70% 75% 80%
Read Past 5
Week Days
Read Past 4
Sundays
Adults 18+ Luxury Vehicle* European Trip* * HHI $75K+ College Grad+
Newspapers Continue to
Appeal to Upscale
Consumers
Source: Scarborough Research 2006, Scarborough USA + R2
2006
*Model type of any domestic/foreign vehicle owned or leased
(HHLD)
**Places visited outside continental U.S. past 3 years
40
Integrated Newspaper Audience • Newspapers are Successfully
Extending their Audience Online –Online exclusive audience is meaningful
and often growing, young and affluent
–Potential for net increase in newspaper reach overall
–Significant increase in online revenue
• Key success factors – Integration into the overall business
strategy
–Unique and specialized content
–Relentless cross promotion
–Leveraging strong established local media brands
41
Website Involvement Extends Newspaper Reach
Source: Scarborough Research, Local Market Studies, R12007
66.0 66.9 67.879.1 82.1
21.7 22.0 25.214.9 14.112.3 11.1 7.0 6.0 3.8
0%
100%
NY Times Atlanta
Journal-
Constitution
Washington
Post
Chicago
Tribune
Denver
Post/Rocky
Mountain
News
% o
f Tot
al A
udie
nce
Print Exclusive Print & Web Dual Website Exclusive
% DMA* REACH: (27.1%) (53.2%) (65.7%) (48.8%) (57.7%)
*Designated Market Area (DMA): Nielsen Media Research
defined geographical area based on television signal strength
42
Source: Scarborough Research, Local Market Studies, R2 2005, R12007
Dual
Web Excl
Print Excl
38.9 35.6
48.1 44.6
19.5 17.8
5.3 5.9
3.1 4.6
1.9 3
2.3 3.3
10.1 11.7
17.2 16.5
5.6 7.3
6.2 6 39.8 38.6
0
10
20
30
40
50
60
70
80
AJC 2005 2007
Wash Post Chic Trib NY Times 2005 2007 2005 2007 2005 2007
Total Audience
Growing Website Audience is Helping to Offset the Decline in Print Readership
54.3 53.2
-1.1%
68.4 65.7
-2.7%
47.4 48.8
+1.4%
28.1 27.1
-1.0%
-1.7%
-1.2% -3.5%
-3.3%
43
…Continued
52.347.4 45.6
39.1
56.249.7 48.3
42.4
6.48.2 10.0
12.6
6.410.4 11.7
12.2
1.42.2 3.7
5.4
1.4 2.6 3.65.2
-20
80
2005 2007 2005 2007 2005 2007 2005 2007
% o
f Tota
l A
udie
nce
Print Exclusive Print & Web Dual Website Exclusive
*Designated Market Area (DMA): Nielsen Media Research defined geographical area based on television
signal strength
Denver Post/
Rocky Mountain News
Arizona
Republic Kansas City
Star San Diego
Union-Tribune
Source: Scarborough Research, Local Market Studies, R2 2005, R12007
60.1% 57.7% 64.0% 62.7%
63.5% 59.9% 59.3% 57.1% -2.4% -2.2%
-1.3% -3.6%
-4.9% -6.5%
-6.5% -5.9%
44
Newspapers are Expanding the Footprint of the Media Brand
• Similar to all established media
• Development of a portfolio of print, online & video products to better reach the marketplace
• Aggregate audience for a total portfolio may actually be growing
45
Newspaper
Website
Spanish Language
Publication
Specialty
Publication
Print Classified
Sections
Online Classified Advertising
Local
Community
Newspaper DAILY
NEWSPAPER
“Part of our opportunity is having multiple platforms to reach the audience in our market…One at a time, they can be niche target opportunities; together they can form the new definition of mass.” - Hyde Post, Vice President, Internet, The Atlanta Journal-Constitution
46
Free vs. Paid Newspapers: Context
• Non-traditional publishers (e.g. Metro International)
•Strategy — Compete with traditional newspapers to capture current readers and non-readers
• Traditional paid newspapers publishing free dailies:
•Strategy — Capture non-readers, extend their audience and attempt to upsell to the paid product
•Encourage young people to develop a reading habit
47
Free Newspaper Readers
• Demographics
• More likely to be male
• Younger
• Generally have lower incomes (but not low)
• More ethnically diverse
• Similar education levels
• Distribution points are a critical determinant of the audience composition
48
Free Dailies Increase Reach Among Adults 18-34
11.413.0 14.919.3
4.46.7 7.4
0
Dallas M
ornin
g New
s
DM
N/Q
uick
Chica
go Trib
une
Ch Trib
une/ R
edey
e
Metro N
ew Y
ork
Metro P
hilad
elphia
Metro B
oston
Ave
rage
Iss
ue R
eade
rshi
p
Source: Scarborough Research, Local Market Studies, R12007
Paid Newspapers
With Free Dailies Non-Traditional Free Publications
49 Source: Scarborough Research, New York Studies, R1 2006-2007
91.6 91.277.2 72.5 76.3
14.5 14.9 17.0 14.0
8.0 7.9 10.4 9.7
77.4
5.95.7
3.02.7
0%
100%
2006
DM
A
2007
DM
A
2006
Sub
way Co
mmuters
2007
Sub
way Co
mmuters
2006
Sub
way/M
anha
ttan
2007
Sub
way/M
anha
ttan
% o
f Tot
al A
udie
nce
Paid Exclusive Dual Free Exclusive
REACH: 60.1% 57.9% 61.2% 59.0% 67.8% 66.1%
Free vs. Paid: 2006-2007: Comparing Reader Groups in New York (Average Daily Readership)
50
The Relationship Between Free vs. Paid
• High levels of duplicated reading
• Free readers more likely to buy more than one paper
• Free newspapers’ exclusive readers are a relatively small group. No evidence (so far) that readers will ―trade up‖ to the paid paper.
• Free papers do not appear to cannibalize paid papers, suggesting a complementary relationship.
• Each local market will have its distinct issues and characteristics
51
Conclusion: Overall Implications For Newspapers • Understand print’s role in an evolving multi-media context
• Promote Total ―Integrated‖ Readership; sell across platforms
• Experiment, innovate, partner in different business models, assume greater risks
• Seek new ways of engaging readers, document these relationships to advertisers
• Position newspaper as part of a multi-media buy
52
…Overall Implications
• Leverage brand equity, community orientation, editorial authority
• Emphasize information with practical role, providing order and stability in people’s lives
• Value of good journalism may be less self-evident to some consumers – requires explanation and emphasis
• Environmental concerns likely to escalate
53
…Overall Implications
• Leverage Consumer Generated Local Media
–Likely to become a more important local/community factor, introducing new standards of journalism
–Even to ―hyper-local‖ level
–More two-way interactive relationships
• Tap into local networks to drive visitation to print/online papers
• Evolve appropriate business models
