Download - Newspapers and the Valassis NSA
An NTMC Webinar10/10/12
PROTECTING AND GROWING
SUNDAY PREPRINT BUSINESS
Only panelists audible todayType questions into the right-hand panel
indicate who your question is forBrief survey following webinarRecording will be posted on NTMC website
PHILIP BROWN
Executive Director
Newspaper Target Marketing Coalition
Four 10-minute segments followed by Q&A: Valassis NSA motivations and weaknesses Newspaper strengths and strategies What newspapers are doing protect their Sunday
insert business
DUFF HEYL
TMC Sales and Operations Manager
Arizona Republic
JIM HART, President Integrated Advertising Solutions
KEITH GILPIN,
Direct Marketing Consultant
SILVIA SCHENCKER, G. M. - Direct Marketing
Miami Herald
STEVE TEMPLETON, Managing Director
Los Angeles Times
Copyright 2012 Jim Hart
The Valassis NSAmotivations and weaknesses
NTMC Webinar 10/10/2012
Copyright 2012 Jim Hart
Agenda
• Financial Overview- What’s driving this?• How Markets will likely be selected• What will the program look like• The Bigger Threat• Tactics
Copyright 2012 Jim Hart
Motivation
Copyright 2012 Jim Hart
USPS
Copyright 2012 Jim Hart
Valassis
• Four components to their business;– Shared Mail– FSI Coupon Book– Neighborhood Targeted– Other (International, digital, etc.)
Copyright 2012 Jim Hart
Shared Mail Revenue/Profit
Copyright 2012 Jim Hart
From 2006 (ADVO) to 2011 (Valassis)
• Revenue down 7%• Profits up 506%• Margin up 540%
Copyright 2012 Jim Hart
Neighborhood Targeted
• An agency/placement service that uses:– Newspaper ROP– Newspaper Polybag and Sampling– Newspaper Inserts
• This segment of their business is the conduit to moving advertisers to shared mail
• They establish their analytics can improve ROI• Then move the retailer to Shared Mail
Copyright 2012 Jim Hart
Neighborhood Targeted Rev/Profit
Copyright 2012 Jim Hart
Implications
• This segment is a strong predictor of future Shared Mail revenue growth
• After a revenue jump in 2007, it had been relatively flat, dropped 22% in 2011
• Margins reflect significant pressure from other agency/analyst/placement firms
• Other agencies will not place pure shared mail at anywhere near the same rate as Valassis
Copyright 2012 Jim Hart
FSI- Coupon Book
• Was Valassis core product prior to ADVO acquisition
• Was inserted 100% into Sunday newspapers prior to acquisition
• Have shifted 8MM insertion to Red Plum Shared Mail
• Newspapers relationships with Valassis are often framed by fear of losing the FSI
Copyright 2012 Jim Hart
FSI Revenue and Profit
Copyright 2012 Jim Hart
Implications
• Revenue has fallen steadily since 2005• Down 36.4% from 2005-2011• Margins are off 70% during same period• These compound to a drop in profit of 81%
Copyright 2012 Jim Hart
Valassis Q2 Profit ($millions)
Shared Mail $52.3
NT -$2.4
FSI $7.3
Other $2.3
Total Segment Profit $59.5
Copyright 2012 Jim Hart
This is the strategy that created the current
shared mail cash flow
Copyright 2012 Jim Hart
SM
CB
NT
Copyright 2012 Jim Hart
SM
CB
NT
Copyright 2012 Jim Hart
SM
CB
NT
Copyright 2012 Jim Hart
This is the strategy could enable Valassis to establish a second
package
Copyright 2012 Jim Hart
SM
CB
NT
NSA
Copyright 2012 Jim Hart
Change your perception
• Disconnect the three main components of Valassis
• They leverage CB and NT to gain shared mail advantage
• Treat NT no differently than Vertis, Novus, ACG, etc.
• Treat the CB like an insert, certainly no differently than News America
Copyright 2012 Jim Hart
Market Selection
• HH penetration below 40%• Rates above ???• Mid-sized markets• Poor zoning• PIA Factor
– Is your FSI rate an outlier?
• Isolated broadcast markets
Copyright 2012 Jim Hart
What will the program look like?
• Saturation mail in select zips and CR’s• 50 to 60% HH penetration• Demographic profile
– Women 35 to 54– HH income above 50 to 75K
• More vertical than horizontal– Must get 5 or 6 per market to work
Copyright 2012 Jim Hart
4.1 Ounces
• Kmart• Sears• Walmart• Target• Bedmart• Michaels• ……and it’s limited to 10 pieces
Copyright 2012 Jim Hart
The BIGGER threat
• Rate brokering using the NSA as leverage• Can make a lot of money by leveraging the CB,
NT and the NSA without ever mailing a thing.
Copyright 2012 Jim Hart
TacticsCommunicate with the NAA and NTMC:•Monitor late-week RedPlum packages
– Who is in them? Do they qualify for discount?
•Are you converting from postal to alternate delivery to reduce delivery expense?•Is USPS giving preferential treatment in your market to Valassis deliveries?
Leveraging and Building on Newspaper Strengths
to be the Best Distribution Solution for our Customers
Subscribers Still drives a special connection with readers and a
higher value with advertisersOpt-ins
As valuable as subscribers to many advertisers A commitment without a required reader
investmentSunday delivery
For decades the preferred day to receive inserts Advertisers marketing plans built around Sunday
Product and solution diversity Red Plum remains essentially a one dimensional
solutionContent
Delivery costs Subscriber / opt-in delivery should still trump NSA
costs for Valassis
Compete by lowering TMC costs Replace or reduce USPS deliveries Alternate delivery advantages
Valassis saturation might require more inserts
Most Sunday inserters don’t want saturation Even ATZ’s may not solve the problem Newspapers focus on quality and accuracy vs. quantity
Develop strategies to maintain or grow Sunday paid deliveryReview and improve your opt-in program
Consider expanding the distribution footprint or penetration target as warranted
Evaluate your insert program rates Many papers may not have adjusted rates or
structures in months or years Are page count rates still relevant? How do your rates stack up against Valassis?
Expand integrated product solutions Digital, ROP, Community Newspapers Improved performance and value for clients
Ensure insert distribution meets client’s needs
Zips not zones for home delivery and single copy Sub-zip code targeting options on Sunday
Talk to your Sunday insert clients and agencies
What is their read on the Valassis NSA? Would they consider a move?
What can your paper do to enhance your relationship with these clients?
Valassis still makes it simpler to buy multiple marketsPossible ways to get newspapers on the same page:
Standardized distribution units, zips/subzips Standardized rate structures, volume vs
frequency based Centralized data warehouse Regional or national insert networks
-- Jack Welch
OR SOMEONE ELSE OR SOMEONE ELSE WILL!”WILL!”
At-Risk Assessment:Established at-risk account list
o sorted by high risk, medium risk and low risk
Most high risk are McClatchy corporate accounts
o target accounts must operate in at least 30 states
Working with McClatchy on ways to prevent these accounts from going to Valassis
Locally, what Miami is doing:Grow Sunday Select Opt-In Product
o increases planned in 2013 Re-analyzing current TMC product
o do we move more out of mail and into alternate?
o should we add more content? light news? and shopper-type advertising? build more local engagement?
Focus on local P&D growtho build better marketplace for TMC and Sunday
Select products
Perform client-centered risk assessment
real vs. perceived threats
Adopt “insight selling” as new approach
rebuilding value proposition
Shift focus from distribution to attention management
play offense not defense
Your feedback is useful and appreciated!
You will receive very brief survey following the webinar
THANKSTHANKS to all to all attendees and attendees and
panelists!!panelists!!