Download - Roundtable 2004 groves
Miles E. Groves
MG Strategic Research, Ltd.
Telephone: 202 256-5784
Email: [email protected]
Web: www.milesgroves.com
Information Strategies for Growth ASTECH InterMedia Strategic Marketing Roundtable
August 22 – 25, 2004
Newspapers: Facing the Challenge
• Circulation Uncensored
• Marketing Best
Practices
• Marketing Triangle
• Practices to Adopt
Circulation Uncensored
• Circulation trends worse
than reported
• Metro circulation under
intense pressure
• Ad rate negotiations
impacted
Circulation Uncensored
• Circulation Trends Worse – Structural shift from > 50% to <50% and “other circulation” – growth of
this category is accelerating
– Heavy discounted from 0.4% to 2.6% in 2 years
– Other circulation from 5.6% to 8.9% in 2 years
• Intense Circulation Pressure – More print news choices
– Greater broadband penetration
– National DNC list
• Advertisers Understand Difference – Not willing to pay for growth in “other circulation” despite positive
impact on readership
– Not willing to pay the same for 100 readers as 100 home delivery subscribers
Local Advertising Weakness
• Technology is changing how consumers go to market.
• The Web is gaining in importance.
• All local categories are experiencing structural change. The shift from retail channels that advertise to channels that do not is accelerating and those that advertise are reducing investments.
Local Advertising Weakness
• Retail shift from Display to Preprints introduces new dynamics.
• Retailers are beginning to explore Web channels more
• Classified growth is driven by local market strength and our ability to deliver reach. Our print reach is declining, but we have opportunities to leverage our Web reach.
Share Trend is in Decline
Newspaper Advertising Share
15%
17%
19%
21%
23%
25%
27%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
1990 to 2003
Impact of Protecting Share
Newspaper Advertising Volume
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
19901991
19921993
19941995
19961997
19981999
20002001
20022003
2004
1990 to 2004
$Mill
ion
s
Actual
Potential
The loss in share is measurable in terms of “missing revenue.”
$54 Billion is Cost for Past 10 Years
Revenue Gap
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
1990 to 2004
$M
illi
on
s
Instead of 17.9% share, we would have 21.9% share
Margins Rose From Under 15% to
22% in Past Decade Newspaper Operating Margins
10%
12%
14%
16%
18%
20%
22%
24%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
1990 to 2003
Industry is trading off potential revenue for higher margins
Time to Avert Crisis . . Maybe
• Invest in marketing technology and adopt business intelligence methodologies
• Measure performance and execution
• Adopt cross-channel marketing
• Expand local business model to include all marketing & communication channels
• Do not require that all channels have same profitability
• Promote better reach desired by advertisers
Best Practice: Components • Strategic Planning Process
– Research, Segmentation, Positioning, Gap Analysis, Targeting
• Product Development
– Core Editorial Enhancements, Web Extensions, New Products
• Customer Acquisition – Sales Channels, Pricing Strategies, Promotion
• Advertising Development – Inch Rate Analysis, Category Analysis, Sales Trends, Territory
Analysis
Best Practice: Components
• Customer Retention
– Renewal Programs, Customer Service, Satisfaction Surveys,
At Risk Advertiser Identification
• Distribution Capabilities
– Zoned Editions, Frequency, Single Copy Management, Web
Channel
• Execution
– Organization & Staffing, Education & Training, Performance
measures
Best Practices Framework
STRATEGIC
PLANNING PRODUCT
DEVELOPMENT
CUSTOMER
ACQUISITION
CUSTOMER
RETENTION DISTRIBUTION EXECUTION
INFORMATION TECHNOLOGY: ANALYSIS, FEEDBACK, CONTROL
Well designed information technology systems will link these
elements together, enabling better control and execution.
Avoid “Flying Blind” Syndrome • Centralize contact
Information
• Easy access to advertiser profiles and account histories
• Access to subscriber status and history
• Track performance indicators
• Revenue analysis
Business Intelligence
• Real-time analysis of data
• Drill-down from net paid summary level to
route- and outlet-level detail
• Identify exactly where audience and
advertising gains/declines exist
• Set performance benchmarks and exceptions
reporting
Operational Performance
• Department-level budgets
• Gains/declines at individual business level
• Starts/stops
• Churn, retention, tenure
• Customer service
• Individual account histories
• Customer profitability
Critical Questions to Answer . .
• Are we meeting our strategic and budget objectives?
• Where are gains and declines coming from?
• Where are the best opportunities for subscription growth?
• What is the impact of pricing on retention?
• What customer groups are most profitable?
. . to grow readership franchise
• What factors contribute the most to churn?
• Is the product/reader fit appropriate for high-opportunity customer segments?
• Where are the best opportunities for single-copy growth?
• How do we develop long-term relationships with readers?
• Which customer segments are most important to advertisers?
Critical Questions to Answer . .
• Are we meeting our strategic and
budget objectives?
• Where are gains and declines
coming from?
• Where are the best opportunities
for advertising growth?
• What customer groups are most
profitable?
• Are we getting maximum share of
ad budgets?
. . to grow advertising franchise • How are sales reps performing?
• What factors contribute most to
advertiser churn?
• Are we getting the most out of our
territories?
• Where are the best opportunities for
classified growth?
• Is average inch rate improving or
declining?
• Which reader segments are most
important to advertisers?
Critical Questions to Answer . . • Who is visiting our Website?
• What parts of our site get the most visitors? What parts are least visited?
• What content is most valuable?
• What ads are visitors viewing and clicking?
• How can we induce visitors to register with our site?
. . to grow web franchise • What products/services are they
consuming/buying?
• What marketing activities drive site traffic?
• How do we develop profitable relationships
with customers?
• Which customers are most important to
advertisers?
• How profitable is our Website?
Marketing Triangle
Best Practices
CRM/BI
Technologies Knowledge
Transaction Data Market Data
Research Data
Knowledge Resources
Data Fusion
Consumer Research
Transactional Data
External Research
Segmentation
Household Demographics
Knowledge Base
Household Level Database
Web Site Database
Registration
Marketing Technologies
Knowledge
Base
Business Intelligence
Customer Relationship Marketing
Decision Support Systems
Database
Technologies
Better Business Decisions
Campaign Management
Circulation Development
Advertising Development
Direct Marketing
Cross-Channel Marketing
Practices to Adopt
• An enriched household marketing database is critical to support circulation marketing, editorial development, and advertising efforts.
• Consumer research designed to support segmentation strategies for acquisition and retention, channel development, advertising support.
• Use of business intelligence tools to create critical alerts of service issues, identification of at-risk subscribers, dashboard development, and other metrics to aid the support of the community franchise.
Practices to Adopt • Adoption of data-fusion applications to operationalize
market research to that survey research can be leveraged at the household level for circulation, editorial, and advertising development.
• Market Research professionals become key members of the consumer marketing team as their expertise is applied to aid strategy development and solve tactical challenges. They move from advertising presentation support to analytical marketing support.
• Campaign management applications to support marketing efforts and experimentation. The complexity of markets requires segmentation strategies and the ongoing measurement of those strategies.
Practices to Adopt
• Evaluation of how departments and processes that support the customer relationship are organized to determine whether manufacturing focused structures are effective in an information oriented consumer marketing environment.
• Application of consumer research to support segment pricing strategies. It is important to understand the concept of value at the segment level and price is a component of a reader’s value perception.
• Use of optimization applications and tools to identify and re-tune the acquisition blend. This brings together the cost and retention in terms of offer and source. The resulting mix is what determines the cost of the next circulation unit.
Grow the Franchise!
• Recognize that the future is cross-channel marketing.
• Invest in business intelligence technologies.
• Adopt information strategies that will help focus on franchise growth.
• Measure execution.