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It’s Secular
There’s Inelasticity
Get Transactional
2005.0 2006.0 2007.0 2008.0 2009.0 2010.0
0
10
20
30
40
50
Newspaper Industry Advertising Revenues
It’s Secular
$24.8
$34.7
$42.2
$46.6$47.4
BillionsOfDollars
YEAR
Source: Newspaper Association of America
-1.7%
-9.4%
-17.7%
-28.6%
-10%?
It’s Secular
Newspapers / Mags
Yellow Pages
Other
Billboards
Radio
Television
Direct Mail
Internet
-1000 -500 0 500 1000
Budgets continue to shift out of print and into Internet…
Ad share shift (in bps) from 2 years ago to two years from
920
60
50
0
0
(40)
(210)
(770)
Source: Morgan Stanley Research
same
There’s Inelasticity
7-Day Subscription Elasticity
40%
less
more
-12%
VOLUME
PRICE
There’s Inelasticity
• Prior to the home delivery price increase, we strategically began to down
size our TDMN audience.
– Eliminated all outbound telemarketing for new starts
– Eliminated all “Billed/Prepaid” new starts through any pressure
channel
– Introduced mobile handheld technology in all pressure channels and
accepted EZpay only starts from all vendors.
– Reduced all consumer facing discounts to 15%; increased save
discounts to 25%.
There’s Inelasticity
• In May of 2009 TDMN increased NDM 7-day rates 43% and ONDM rates 100%.
Below are 4 critical factors to consider prior to pricing:
1. Dramatically reduced churn as the result of acquisition changes made in fall of 2008. Overall
churn reduced 34% (from 61% to 41% in 7 months).
2. Engaged the Modeller's in an exhaustive pricing study to determine “pricing cliffs” and the impact
content has on a consumers willingness to pay and a consumer perception of value.
3. Launched a live market pricing test with 1,500 subscribers 3 months prior to the market wide
pricing. In the live market test we tested 3 unique rates and measured attrition results on the 3-
rates.
4. In conjunction with the price increase we increased price to all new subscribers from $30.00 to
$33.95. 19% of the current TDMN base is on the “new” subscriber pricing schedule. We did this to
reduce attrition in future price increases.
Impact of Price on Quality Audience
TDMN March '06 Sept '06 March '07 Sept '07 March '08 Sept '08 March '09 Sept '09 Feb '10
% Change
March '06 - Feb '10
Tier One 45.4% 46.4% 46.5% 46.3% 46.4% 47.8% 47.9% 48.2% 49.1% 3.7%
Tier Two 28.5% 28.3% 27.9% 27.5% 27.3% 27.3% 27.2% 32.0% 32.1% 3.6%
Tier Three 15.3% 14.8% 14.3% 13.8% 13.5% 13.5% 12.4% 13.3% 12.8% -2.5%
Tier Four 10.8% 10.4% 11.3% 12.4% 12.8% 12.4% 12.5% 6.5% 6.0% -4.8%
Total 100% 100% 100% 100% 100% 101% 100% 100% 100% 0%
There’s Inelasticity
• Do the math:
100,000 subscribers x $3.00/per week x 52 weeks = $15,600,000
88,000 subscribers x $4.20/per week x 52 weeks = $19,219,000
Circulation Revenue = + $3.6 million / + 23%
There’s Inelasticity
p 8
• It’s rarely about price alone, though almost always about Value for the
Price
• Let content drive circulation revenue – it’s quite possible that over the
years we’ve “cut to the quick” and inadvertently helped readers become
more price sensitive
• Marcom is Queen, but Content is King
– Marketing communications that point out all the great things you’ve
done, are doing, and plan to do can help reduce elasticity/defection
– A blend of real changes and improvements in content and letting
people know about them is best
There’s Inelasticity
p 9
• Now is the time to put good, solid content back in your news products because
it improves brand image and equity, reduces churn, improves elasticity and
can be a significant source of increased incremental revenue.
– Hire more writers and staff
– Focus on the right type and amounts of content readers want most
– Charge the right people the right amount for it
– Deliver it in the right platform that readers want
There’s Inlasticity
• Your newspaper price is the consumer’s baseline
• Consumers will expect to pay less for digital distribution
• Emerging subscription revenue opportunities in e-editions,
e-books, e-pads & apps
• Comment: Industry move to “paid at any price” is a mistake.
Devalues the product.
Get transactional
Get Transactional
• Do the math:
10 million PV’s/month x
$10 CPM x
3 ad units per page x
100% sellout =
$3.6 million per year
ROI
Targetability
Price
Reach
Relationship w/ Sales Rep
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Respondents continue to focus on targetability and ROI in directing ad dollars
Get transactional
21%
Source: Morgan Stanley Research
57%
58%
72%
84%
Most
importan
t factors
in local
ad buying
*More than one factor could be chosen as #1
Other
Yellow Pages
Billboards
Radio
Direct Mail
Television
Newspapers / Mags
Internet
0% 10% 20% 30% 40%
Of the mediums you use, which is the most effective?
Get transactional
39%
Source: Morgan Stanley Research
27%
26%
21%
14%
9%
6%
4%
Get transactional
• Inventory is exploding
• Consumer purchases less
volatile than ad spend
• ROI
• CPM’s under pressure
• Ad dollars moving online
What’s Ahead?
• Mobile
• Preprints going digital
• Right content on each device for every
customer. And GET PAID!
• Reorganize

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Moroney

  • 2. 2005.0 2006.0 2007.0 2008.0 2009.0 2010.0 0 10 20 30 40 50 Newspaper Industry Advertising Revenues It’s Secular $24.8 $34.7 $42.2 $46.6$47.4 BillionsOfDollars YEAR Source: Newspaper Association of America -1.7% -9.4% -17.7% -28.6% -10%?
  • 3. It’s Secular Newspapers / Mags Yellow Pages Other Billboards Radio Television Direct Mail Internet -1000 -500 0 500 1000 Budgets continue to shift out of print and into Internet… Ad share shift (in bps) from 2 years ago to two years from 920 60 50 0 0 (40) (210) (770) Source: Morgan Stanley Research
  • 4. same There’s Inelasticity 7-Day Subscription Elasticity 40% less more -12% VOLUME PRICE
  • 5. There’s Inelasticity • Prior to the home delivery price increase, we strategically began to down size our TDMN audience. – Eliminated all outbound telemarketing for new starts – Eliminated all “Billed/Prepaid” new starts through any pressure channel – Introduced mobile handheld technology in all pressure channels and accepted EZpay only starts from all vendors. – Reduced all consumer facing discounts to 15%; increased save discounts to 25%.
  • 6. There’s Inelasticity • In May of 2009 TDMN increased NDM 7-day rates 43% and ONDM rates 100%. Below are 4 critical factors to consider prior to pricing: 1. Dramatically reduced churn as the result of acquisition changes made in fall of 2008. Overall churn reduced 34% (from 61% to 41% in 7 months). 2. Engaged the Modeller's in an exhaustive pricing study to determine “pricing cliffs” and the impact content has on a consumers willingness to pay and a consumer perception of value. 3. Launched a live market pricing test with 1,500 subscribers 3 months prior to the market wide pricing. In the live market test we tested 3 unique rates and measured attrition results on the 3- rates. 4. In conjunction with the price increase we increased price to all new subscribers from $30.00 to $33.95. 19% of the current TDMN base is on the “new” subscriber pricing schedule. We did this to reduce attrition in future price increases. Impact of Price on Quality Audience TDMN March '06 Sept '06 March '07 Sept '07 March '08 Sept '08 March '09 Sept '09 Feb '10 % Change March '06 - Feb '10 Tier One 45.4% 46.4% 46.5% 46.3% 46.4% 47.8% 47.9% 48.2% 49.1% 3.7% Tier Two 28.5% 28.3% 27.9% 27.5% 27.3% 27.3% 27.2% 32.0% 32.1% 3.6% Tier Three 15.3% 14.8% 14.3% 13.8% 13.5% 13.5% 12.4% 13.3% 12.8% -2.5% Tier Four 10.8% 10.4% 11.3% 12.4% 12.8% 12.4% 12.5% 6.5% 6.0% -4.8% Total 100% 100% 100% 100% 100% 101% 100% 100% 100% 0%
  • 7. There’s Inelasticity • Do the math: 100,000 subscribers x $3.00/per week x 52 weeks = $15,600,000 88,000 subscribers x $4.20/per week x 52 weeks = $19,219,000 Circulation Revenue = + $3.6 million / + 23%
  • 8. There’s Inelasticity p 8 • It’s rarely about price alone, though almost always about Value for the Price • Let content drive circulation revenue – it’s quite possible that over the years we’ve “cut to the quick” and inadvertently helped readers become more price sensitive • Marcom is Queen, but Content is King – Marketing communications that point out all the great things you’ve done, are doing, and plan to do can help reduce elasticity/defection – A blend of real changes and improvements in content and letting people know about them is best
  • 9. There’s Inelasticity p 9 • Now is the time to put good, solid content back in your news products because it improves brand image and equity, reduces churn, improves elasticity and can be a significant source of increased incremental revenue. – Hire more writers and staff – Focus on the right type and amounts of content readers want most – Charge the right people the right amount for it – Deliver it in the right platform that readers want
  • 10. There’s Inlasticity • Your newspaper price is the consumer’s baseline • Consumers will expect to pay less for digital distribution • Emerging subscription revenue opportunities in e-editions, e-books, e-pads & apps • Comment: Industry move to “paid at any price” is a mistake. Devalues the product.
  • 12. Get Transactional • Do the math: 10 million PV’s/month x $10 CPM x 3 ad units per page x 100% sellout = $3.6 million per year
  • 13. ROI Targetability Price Reach Relationship w/ Sales Rep 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Respondents continue to focus on targetability and ROI in directing ad dollars Get transactional 21% Source: Morgan Stanley Research 57% 58% 72% 84% Most importan t factors in local ad buying *More than one factor could be chosen as #1
  • 14. Other Yellow Pages Billboards Radio Direct Mail Television Newspapers / Mags Internet 0% 10% 20% 30% 40% Of the mediums you use, which is the most effective? Get transactional 39% Source: Morgan Stanley Research 27% 26% 21% 14% 9% 6% 4%
  • 15. Get transactional • Inventory is exploding • Consumer purchases less volatile than ad spend • ROI • CPM’s under pressure • Ad dollars moving online
  • 16. What’s Ahead? • Mobile • Preprints going digital • Right content on each device for every customer. And GET PAID! • Reorganize

Editor's Notes

  1. <number>
  2. <number>