Keys to Growing Online Advertising Revenue workshop handouts

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Advertising expert Chuck Nau used these handouts during his one-day session focused on online advertising for community newspaper publishers. The workshop was hosted by the Texas Center for Community …

Advertising expert Chuck Nau used these handouts during his one-day session focused on online advertising for community newspaper publishers. The workshop was hosted by the Texas Center for Community Journalism and underwritten by the Texas Newspaper Foundation.

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  • 1. Advertising in 2008 and First Half 2009 ... An Overview Ad Spending in 2008 DOWN 4.1% (to $ 141.7B) vs ‘07 Newspapers were DOWN 10.0% in ‘08. - TNS Media Intelligence December ’08 & May 2009 Ad Spending in First Quarter 2009 Declined 14.2% (to $30.8B) vs 2008 - TNS Media Intelligence May 2009 Ad spending in the Second Quarter of 2009 was off 13.9 % vs ‘08, Fifth Consecutive Quarter of Year-over-Year declines. Total Advertising Expenditures ($60.87B) in the first six months of 2009 DOWN 14.3% vs ‘08 - TNS Media Intelligence September 16, 2009 Internet display (+6.5%) and FSI’s (+4.6%) were the only media to achieve expenditure growth in the first half of 2009. Online publishers also capitalized on a spending surge from wireless telecom operators. Newspapers were DOWN 24.2% and Magazines were DOWN 20.9%. Total spending in Radio was down 24.6% due to ongoing weakness in automotive, retail and local services. Per IAB Report, 2008 Internet Ad Revenues totaled $23.4B UP 10.6%. Retail, financial services, computing and automotive were top categories. Per IAB Report, First Half ‘09 Internet Ad Spending dropped 5.3%to $ 10.9B ... Expected to decline for full year. - MediaPost October 8’09
  • 2. Internet Advertising Resources - Borrell Associates Inc. Research (borrellassociates.com) - comScore (comscore.com) - eMarketer (eMarketer.com) - (IAB) Interactive Advertising Bureau (iab.net) (Price/Waterhouse/Coopers) - MediaPost (mediapost.com) - MORI Research (moriresearch.com) - Nielsen/Net Ratings (nielsen-online.com) - National Newspaper Association (nna.org) - Newspaper Association of America (naa.org) - Pew Research and American Life Project (pewresearch.org) - TNS Media Intelligence (tns-mi.com) - Texas Center for Community Journalism (tccj.tcu.edu) - Texas Press Association (texaspress.com)
  • 3. Internet Ad Spending Formats • Search .... 45% • Display ... 33% (Banner - 21%, Rich Media* 7% Digital 3%, Sponsorship 2%) • Classifieds ... 14% • Lead Generation ... 7% • email ... 2% * (e.g. Interactive, Sight Sound, Video) Interactive Ad Bureau & MediaPost April 2009 Interactive Advertising Bureau shows that only 38% of online advertising was sold through a CPM pricing model 58% sold on a performance basis. Remaining 4% classified as hybrids deals.
  • 4. Digital Immigrants versus Digital Natives Immigrants _____________________ PRINT FILM/VIDEO WEB Natives __________ WEB VIDEO/FILM PRINT
  • 5. Radio took 38 years to reach 50 million listeners! To reach 50 million viewers TV took 13 years! Internet took just four years to reach 50 million users! To reach 50 million users iPod took just three years! Facebook took just five years to reach 50 million users! - Google did not exist a more than decade ago. (More than 31 Billion Searches on Google every month) - Six years ago, no one had heard of MySpace (MySpace has MORE than 200 Million Registered Users) (Fifth Largest Country in the World? MySpace if it were a country!) - Facebook is just five years old - YouTube is not quite four. - “Did You Know?” 2008 - Compiled by Fisch/McLeod/Brenman
  • 6. Paper Chase ... 40% Of Net Users Visit Newspaper Sites In every month of the Third Quarter 2009, newspaper web sites attracted more than 74 Million unique visitors on average (+8.5% over ‘08) (40% of all Internet users). Newspaper Association of America, citing research performed by Nielsen Online. This is the most unique visitors recorded since the NAA and Nielsen began tracking newspaper Web site audiences in 2004. The previous record was 73.3 million in the first quarter of 2009. Taking a somewhat longer view, the long-term growth of newspaper Web site audiences has been substantial. This year's third-quarter figure of 74 million represents an increase of 82.2% over 40.6 million unique visitors in the third quarter of 2004. Active reach increased from 27.6% of all U.S. Internet users to about 40%. (- Erik Sass MediaPost October 26, 2009) Time spent on newspaper web sites averages about 38.5 minutes per month.
  • 7. ‘Newspapers Web Site Users Are Power Users ...’ Newspaper Web site users remain Power Users ... Compared with Internet Users WHO DO NOT VISIT newspaper sites. Power Users go online more frequently, spend more time online and are demographically more desirable (younger,better-educated and more affluent) to advertisers. • Much more interested in news content, entertainment content and various online services than nonusers of newspaper sites. People who visit newspaper websites on an average day are more likely to make online purchases, and make greater use of the Internet for advertising, shopping information and various types of news and information than nonusers of newspaper sites. - Newspapers and newspaper web sites users are the top choice among affluent, college educated homeowners who read every issue or almost every issue of their newspaper, and go online more frequently, spending more time online and are more likely to have high-speed Internet access. - Newspapers and newspaper web sites are the primary source of local community news and advertising. - Newspaper Web site users are PowerUsers ( 2006 MORI Research ‘Power Users Newspapers Online Audiences in a Broadband World’.)
  • 8. Print Newspaper Ads Drive Online Traffic And Purchases! In a Study Commissioned by Google and Conducted by Clark, Martire & Bartolomeo in October ‘07 and released in April ‘08. Among individuals who research products and services after seeing them advertised in newspapers, 67% use the Internet to find more info, and nearly 70% percent of them actually make a purchase following their add’l research. Among Newspaper Readers Who Use the Internet ... • 56% researched or purchased at least one product they saw advertised in the newspaper in the previous month. • 48% of them visited a store ... 71% visiting a store are likely to make a purchase ... 23% called a store ... 23% asked a friend. • 72% of those who responded to a newspaper ad and used Google to search are likely to make a purchase. Print newspaper advertising is incredibly effective in motivating consumers to make a purchase and drive people to conduct additional product research online.
  • 9. Print Newspaper Ads Drive Online Traffic And Purchases! Consumers' exposure to advertising messages across mediums influences their subsequent research and purchasing behavior... Newspaper advertisements drive readers to the Web, where they search, find and obtain products... "   Overall, 30% of Internet-using newspaper readers went online to research at least one product that they saw in the newspaper, researching nine on average. The majority of respondents felt that newspapers are more useful than the Internet ... • Learning about Promotions ... 68% Rated Newspapers Very Useful. • 54% Rated Newspapers Very Useful ... When Deciding Where to Buy. • When to Buy - 43% Rated Newspapers Very Useful. Print newspaper advertising is incredibly effective in motivating consumers to make a purchase and drive people to conduct additional product research online. - Clark, Martire & Bartolomeo Study Commissioned by Google October 2007
  • 10. Short Quiz The following quiz consists of four questions and will help you determine whether you measure up to be a professional! • How do you put a giraffe in a refrigerator? This question tests whether you tend to do simple things in an overly complicated way. The correct answer - Open the refrigerator, put in the giraffe, close the door. • How do you put an elephant in a refrigerator? This question tests your ability to think through the repercussions of your previous actions. The correct answer - Open the refrigerator, take out the giraffe, put in the elephant and close the door. • The Lion King is hosting an animal conference. All animals attend except one. Which animal does not attend? This question tests your memory. The correct answer - The elephant. He is in the refrigerator. You just put him in there. Ok, even if you did not answer the first three questions correctly, you still have one more chance to show your true abilities. • There is a river you must cross but it is inhabited by crocodiles. How do you manage it? This question tests whether you learn quickly from your mistakes. The correct answer - You swim across. All the crocodiles are attending the animal conference. - Anderson Consulting Worldwide
  • 11. Why Advertise on a Newspaper Website?? It’s All About Value ... Where’s YOUR Newspaper’s Website Value? • PURCHASING POWER ... A greater percentage of newspaper web site users purchase more often online compared with general web site users. Like newspapers ... Newspaper websites have higher demos! • REINFORCEMENT and Reference ... 65% of online newspaper users also read the newspaper in the past seven days, repetition increases awareness. • MEDIA MIX ... Recent studies have shown the power of online, when included in a mix with traditional media, to elaborate the brand message. Newspaper print & online products combined have the highest penetration & most desirable audience of any other local medium. - 2002/2004/2206 ‘Power Users’ MORI Research
  • 12. Newspapers Still Send Consumers To The Store! Reinforcing the Google findings is a new study in which early data from MORI released in August ‘09, found that 59% of adults identify newspapers as the medium they use for planning, shopping and purchase decisions. In the MORI study entitled “American Consumer Insights” 73% of adults indicated that they regularly or occasionally read newspaper inserts. Additionally, 82% of the surveyed adults indicated that they have been spurred to action by newspaper advertising in the past month. • 61% clipped a coupon • 50% purchased something • 33% visited a web site to learn more • 27% tried something for the first time AGAIN ... After Seeing Newspaper Advertising!!
  • 13. • Key Ways to Generate Online Revenue ... On YOUR Newspaper Web Site! The opportunity for online advertising growth is local, NOT national. • Become THE local web marketing consultants in your community. • Target Non-Print advertisers .... • Pursue Long Term Commitments (3 - 6 - 12 Months) • Develop New Web Site Prospects? • Offer Local Businesses Video Options (Retailers, Real Estate, Churches, Schools) • Set Your Online Ad Rates to Reflect Value ... Pricing per month, Price Differently Within Your Web Site Obits should yield a premium rate! • Implement IAB [Interactive Advertising Bureau] Standard Sizes for all advertising • Develop or Enhance Your Self-Service Ad Placement Capability
  • 14. Early data also reveals that other media, as reported by MORI, trailed well behind newspapers as the primary medium for checking advertising. The closest competitor, the Internet, trailed newspapers by 20 percentage points, direct mail gained a 14% response in the survey, and television was cited by only 8% of respondents. Primary Medium for Checking Advertising 2009 Medium % of Respondents Newspapers 41% Internet 21% Direct Mail 14% Television 8% Catalogs 6% Magazines 3% Radio 2% Newspapers Still Send Consumers To The Store! - MORI study “American Consumer Insights” August 2009
  • 15. How Much Should a Retailer Invest in Dollars on Advertising? ... depends on a number of factors! • Business Location - High traffic area? Low traffic area? The lower the traffic, the more rural or out of main street flow the larger dollar investment in advertising required. • Top of Mind Awareness - A new business as opposed to an established business with awareness, familiarity and trust will need a larger dollar investment in advertising. • Competitive Market - Businesses in a market with a number of competitors will need a larger dollar investment in advertising as opposed to those one of a kind business in a market. • Price vs Value - A business that guarantees lowest price or features continual sale efforts will need a larger dollar investment in advertising to continually reinforce this message. When you advertise price, or if you are only selling price ... you have to continue to lower the price, or come up with enhanced incentives, on an ongoing basis in order to continue building your customer base. Most retailers set their investment in advertising dollars based on a % of sales.
  • 16. Online Retailers Continue to Ring Up Impressive Sales ... The smallest U.S. businesses are less receptive to banner ads in favor of search engine ads, online directory listings, and streaming video. The 14.6M smallest U.S. businesses account for $6.9B in locally generated, locally targeted interactive advertising in 2008, more than half the U.S. total. - Borrell Research - March ‘09 PerWebvisible and Nielsen research, only 44% of small businesses have a website and finds an accelerating trend toward online media for local search. A significant disconnect between the way small business owners act as consumers vs. the way they market their businesses online. The survey also found that search engines are the most popular source for finding local information: • 82% use search engines • 57% use Yellow Pages directories. • 53% use local newspapers • 49% use Internet Yellow Pages • 49% use TV • 38% use direct mail - MediaPost Research Brief - February 13’09
  • 17. Coupons ... Don't Count! Coupons are a promotional tool in the form of a price reduction, and to promote a specific product or promotion within their store for a limited time basis. Coupons are a call to action to motivate potential buyers to act now. Coupons should NOT be used by a retailer or potential advertiser to count response in a particular media vehicle ( ... direct mail, Internet, magazine, newspaper). If a retailer or potential advertiser wishes to count or TRACK response to a particular ad or a series of ads, the retailer should monitor a variable over a given time period. (Total number of transactions, Sales totals for ALL inventory, Sales totals for ADVERTISED item(s) or Revenue) In this manner, the retailer is able to observe any revenue shifts due, in part, to their advertising investment. Many variables may affect the response to a retailer's coupon offer ... Be sure to ascertain what marketing strategy they want to accomplish by using a coupon. Online coupons represent only 1% of the 2.6B coupons offered annually in the U.S. ComScore Data showed that most consumers still get their coupons from paper sources ... Coupons from Sunday fliers (42%), InStore coupons (39%), Manuf coupons (38%), Direct Mail 33%. Less than 30% of consumers claim to go online to find coupons. - eMarketer March 12’09
  • 18. Local Weekly Papers Continue To Be Read by Community Residents A National Newspaper Association survey co-sponsored by the Missouri School of Journalism found that 81% of respondents read a local weekly paper each week spending an average of 40 minutes with the paper. Almost 75% also indicated that they read ‘most or all’ of the newspaper. Additionally, selected survey findings included ... • On average, weekly newspaper readers, passed along their paper with 2.3 readers. • Nearly 40% of those surveyed community readers retained their newspaper for more than a week. • 47% of community newspaper readers indicated that there are days they read the newspaper as much for the ads as for the news. • Searching for Local News Online ... 63% found it on the local newspaper's web site, compared to 17% for sites such as Google, Yahoo, or MSN and only 12% searched a local TV station web site. - National Newspaper Association October 2009
  • 19. Why Advertise on a Newspaper Website?? It’s All About Value ... Where’s YOUR Newspaper’s Website Value? • FREQUENCY ... The online newspaper website user spends almost twice as many hours online than the general user. Newspaper visitors return to the site several times per day! • CREDIBILITY and CONTENT ... Web users agree that online advertising is more believable from a trusted website, like the local newspaper. In most markets ... The newspaper website is the dominant local media site • TARGETED ... If you want to focus on a particular backyard, advertising on a local newspaper website is more personal, and more relevant because it is LOCAL.
  • 20. A Word About Misleading Website Traffic Numbers ... Hits ... This statistic is worthless. A ‘hit’ is nothing more than a request to a Web server for a file. The problem is that a single webpage can include dozens of file (the page itself, plus every style sheet, logo, graphic file, photo...). Double the graphics on a page and you double the number of hits for a site. Page Views ... Better than ‘hits’, but still easily manipulated. The trouble with page views is that a huge % of traffic online comes not from human, but automated agents (search engine spiders, spammers’ robots, clipping service agents). Unique Visitors ... This is a better test of a site’s traffic. A spider might view 1,000 pages when it comes to a website, but it will count as only one visit. Be sure to filter automated agents from your unique visitors report ... best apple to apple metric for comparing website popularity. Click - Throughs ... Most display ad click throughs come from a very small number of consumers per ComScore study. The heavy clickers (25 to 44 years old 2/HH income under $40,000 ... online 4x as much as non-clickers, but were not big spenders) surveyed represented just 6% of the online population, but made one half of all display ad clicks. - eMarketer February 28’08
  • 21. Seizing the Advertising and Marketing Opportunities ... In a Challenging Economic Environment What strategy might you suggest to assist your client in seizing the opportunity presented by a economic downturn? • Stress BENEFITS. Talk VALUE ... • Capitalize on local AWARENESS and FAMILIARITY ... The best advice and the best value ... Always come from someone you KNOW! • Maximize COMPETITIVE ADVANTAGES. • It’s all about LONG TERM. Coach your advertisers to plan and prepare for growth when the economic uncertainty ends. • Don’t sell an ad. Sell an IDEA, a CAMPAIGN.
  • 22. Some Closing Thoughts ... “Do One Thing Every Day That Scares You.” - Eleanor Roosevelt “The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.” - Martin Luther King, Jr. “The Chinese use two brush strokes to write the word 'crisis.' One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger - but recognize the opportunity.” - John F. Kennedy “We make a living by what we get, We make a life by what we give.” - Winston Churchill ... and last, but not least “Time’s fun when you’re having flies.” - Kermit the Frog
  • 23. Thank You! Chuck Nau Murray & Nau, Inc. (425) 603 - 0984 email - murnau@nwlink.com