Why rifles are better than shotguns when it comes to subscriber acquisition
13 May 2013 · By Jim Fleigner
“How should we allocate our acquisition budget among our channels?”
On the surface, it appears to be a reasonable question from circulation executives.
Many newspapers manage their acquisition budgets and strategies at the channel level because it is intuitive, simple, and transparent.
Perhaps as importantly, managing by channels is probably the way acquisition activity has always been managed, so the familiarity and comfort level in continuing to manage by channel is high. After all, this is why newspapers hire channel managers.
And yet, the question cannot be answered nearly as simply as it was asked, namely because acquisition dollars should not be allocated exclusively among channels.
Why? Because such an approach undercuts one of the key principles of strategy development and is inconsistent with true optimisation of subscriber acquisition performance.
The Matching Principle
A fundamental tenet of strategy development is the Matching Principle: Allocate investment resources in those segments that are most attractive in terms of their potential to generate a sufficient rate of return, and avoid segments that are least likely to generate a sufficient rate of return.
After all, most companies do a great job of employing the Matching Principle when compensating employees, as they pay the most compensation to their highest earners to prevent them from leaving for greener pastures.
Companies should employ the same principle when it comes to all investment decisions – invest the most where the prospective returns are highest.
Rate of return is driven by three factors:
- Acquisition investment.
- Net margin per week.
- Weeks retained.
Thus, those segments that offer the best combination of lowest cost per start, highest weekly net margin, and most weeks retained are the segments with the highest rate of return. And these are the segments that warrant the greatest emphasis and investment per the Matching Principle.
One way to demonstrate this visually is through a Net Margin & Retention Scatter (top right of this article), where each quadrant represents a different degree of attractiveness.
The green quadrant is the most favourable (thus warranting the most investment); the red quadrant is the least favourable (thus warranting the least investment); while the yellow and orange quadrants possess a mixture of favourable and unfavourable characteristics, which make a determination of optimal investment more nuanced and conditional.
For decades, it was simple for a newspaper to apply the Matching Principle to its acquisition strategy. Because all starts were highly likely to generate a favourable net margin and retention (i.e., they were homogeneous in this regard), they would all appear in the green quadrant, regardless of how the starts were segmented.
This meant that the optimal acquisition strategy reduced to “sell as many starts as possible in as many channels as possible, because 100% of them are profitable regardless of their characteristics (e.g., delivery frequency, payment method, term, ZIP code, etc.).”
As a result, the need for newspapers to track performance simply boiled down to this: “How many starts did we sell?”
It was understood that more starts equaled more incremental net margin and higher rates of return. No prioritisations needed to be made. It was the “shotgun” approach — aim at the broadest target and blast away with the same strategy.
And it worked when all starts were effectively homogeneous.
Today, worldwide, the market could not be more different.
...[more]Research gives merit to both digital-first and subscriber-first strategies
09 April 2013 · By Gary Meo
There has been much debate about print versus digital.
Many argue that print is the past and digital is the future. Others argue that loyal print readers, who are willing to pay higher subscription prices, will be around for a long time.
This debate is reminiscent of the fable about the traveler and the ass.
A traveler in need of transportation hired an ass to convey him on his trip. The day being very hot, the traveler stopped to rest and sought shelter from the heat in the shadow of the ass. The shadow provided protection for only one, and as the traveler and the owner of the ass both claimed it, a dispute arose between them as to who had the right to the shadow.
The owner maintained that he had rented the ass only, and not his shadow. The traveler asserted that he had, with the hire of the ass, also hired his shadow. The quarrel proceeded from words to blows, and while the men fought, the ass galloped off.
The moral of the story is that when quarreling about the shadow, we often lose the substance.
The debate is not between digital and print. That’s quarreling about the shadow.
We must embrace the truth about today’s media audiences: they want what they want, when they want it, however they want it. That means that our content must be available on the platforms our readers want – in print, online, and on mobile devices.
The answer to the question of print or digital is a resounding “yes.”
Passionate print readers
Scarborough conducts syndicated consumer behaviour surveys in 77 U.S. markets – and the total U.S. – and is the primary source for newspaper audience information. Much of the information included here is from Scarborough’s most recent surveys.
For many newspapers, print still provides the largest portion of overall audience.
Each week, 61% adults in the United States age 18+ read a newspaper in print. That’s more than 144 million adults.
While the print audience has declined considerably over the past five years, it is still a very large audience: larger, in fact, than the U.S. adult television audiences of the Super Bowl, the World Series, or the Academy Awards, our research shows.
...[more]Star Media Group’s unconventional ways of filling the revenue gap
11 March 2013 · By Ed Greenspon
In the summer of 2010, John Cruickshank, president of the Star Media Group and publisher of the Toronto Star, invited me to join his operation.
That, in itself, wasn’t so strange. I had been in the newspaper business 30 years, moving from a tiny daily in a town of 15,000 to editor-in-chief of The Globe and Mail, Canada’s top national newspaper. And I had worked for John almost 20 years earlier, as one of his two deputies when he was The Globe’s managing editor.
What made the invitation unusual was that John was looking for someone to develop new business opportunities to help fill the opening revenue gap from print advertising’s decline.
As all editors operating in the past dozen years understand, the classic role of producing and projecting great journalism jostles for attention with the macro challenges of new product development, cultural change, and process efficiencies. Editors are well acquainted with the front lines of the industry’s battles.
Still, putting a journalist in charge of finding new ways to make money could be construed as, let’s say, a brave move — though apparently not to John. He reasoned that we would continue, in one form or the other, to be in the content business. So a thorough understanding of content was a prerequisite for business success.
Today, our Strategic Investments and New Ventures unit is running six businesses, five of them launched in the last year-and-a-half.
Together, they employ about three dozen journalists, plus sales and marketing staff, and behave like start-ups. They can draw on corporate support in areas like research, promotions, finance, and human resources, but are otherwise mean and lean – and very focused.
These businesses operate outside the core of the mothership, but adjacent to it. Our job is not to replicate what other units are doing; they are obviously better positioned to build off their bases. Other than at a strategic planning level, we have no involvement, for instance, in thestar.com’s coming metered digital system.
Instead, our mandate is to experiment with net new businesses that would exist only because of our unit’s presence. We are influencers and implementers of strategy — seeking out new opportunities, examining those that come in the door, and creating opportunity from within.
What we’re doing and how we’re doing it speaks to the innovative character that has made the 120-year-old Toronto Star the largest newspaper in Canada for generations, bigger than even the two national newspapers.
The Strategic Investments and New Ventures team is very small. There’s me; Dean Ostilly, who spent six years in management consulting and has an MBA from Kellogg School of Management; and Dev Saxena, a business graduate who recently joined us from a venture capital firm. One journalist, two business specialists — a fair fight.
Our first major initiative emerged from a conversation with the advertising department: We asked it to identify where the company should be making money but was not.
Beauty and fashion stood near the top of their list. The Star had a small and declining share of that market. The reasons, according to the advertising executives, were that we lacked environments that were either predictable or beautiful enough. We also lacked deep relationships with fashion and beauty marketers.
After some investigation, we identified a small, digital beauty magazine called The Kit. It was less than a year old and had been launched by several veterans of the women’s magazine industry forcibly liberated during the recession.
Ultimately, we purchased The Kit and took aboard its key people, seeking to bring its expertise and entrepreneurialism together with The Star’s reach and reputation. We invested in a new Web site and reverse-engineered The Kit into print on glossy stock that had to be outsourced.
We entered into an agreement with Postmedia, an historic rival, to distribute The Kit in major Canadian cities beyond Toronto and have exploited a plethora of partnerships to enlarge its digital footprint.
In its first year, The Kit made money. A high proportion of revenues come from digital, but the majority come from print, where we can draw upon deep pools of knowledge for high-end, custom content work.
The Kit has all the go-go culture of a start-up, coupled with the propellant power of The Star. Ultimately, we see the future of The Kit lying with the original digital magazine, in which we continue to invest.
To suggest our unit has followed a direct path over its first couple of years would be bending the truth. After some trial and error, we have organised ourselves around three strategic insights:
- Consumers increasingly engage news and information in verticals.
- Marketers are seeking services beyond just advertising.
- Our content and content capabilities need to engage consumers on whatever platforms they frequent.
These buckets slosh over one another to some extent, as is the case with The Kit. Still, these principles anchor our choices and help keep us on strategy.
Insight #1: Information has become verticalised.
We used to talk only about the need to aggregate audiences. Now we speak increasingly about segmenting audiences — and how they segment themselves.
Consumers increasingly access information in deep vertical shafts rather than the broad but shallow bundles of yesteryear. This behaviour is amplified by digital.
Recognising the debundling of the print package (or the broadcast news one for that matter) is nothing new. But what opportunities does the changed behaviour of news and information consumers generate?
...[more]Sink or swim: embracing and benefitting from news media industry change
11 February 2013 · By Mike Jarvis
The times, they are a-changin’.
Famous words from the great bard himself, Bob Dylan. And never a truer sentiment for these troubled times than his words, “You’d better start swimming or you’ll sink like a stone.”
Sad to say many around us have failed to understand the significance and importance of these words to our industry and have already sunk without trace in the digital whirlpool.
Before attempting to answer the question, “Is there a future for newspapers,” I think we must try to understand just how “the times they are a-changin.”
I have been involved in the media industry since the late ‘60s, and at no time since then has there been such a challenging set of dynamics affecting the very structure of our business. Media fragmentation, the demise of the traditional media, the digital revolution, and the death throes of the media planner/buyer and media owner relationship are just a few that deserve attention.
Media fragmentation
Fragmentation first shook the foundations of the media business with the explosion of commercial TV and radio stations across Europe in the ‘70s and ‘80s, sadly an explosion that was not matched either by the quality of programming or the development of research tools to help the media planner understand who was watching what and when.
More recently, fragmentation has hit the digital world with a massive growth in the availability of opportunities, one which I am glad to say is being better served by research tools that provide — or at least attempt to provide — a degree of accountability for the advertiser.
Digital revolution
To demonstrate this growth, in 1995 global IT publisher IDG estimated there was, at that time, some 23,500 Web sites worldwide with some 39.6 million users, yielding an average of 1,985 users per site. By 2010, this had increased to 255 million Web sites with 1.96 billion users, averaging just 7.7 users per site.
Dramatic? Yes. True? Yes!
Unsurprisingly, this growth in digital media opportunity has resulted in a tremendous shift in advertising expenditure across Europe.
In numerous countries, digital spend (including search) now exceeds 20% of total ad spend, matching and even out-performing that of TV. Newspapers have suffered most severely with many failing to address the new digital age. Last year, in the UK we saw many dramatic headlines in the press: “Death bell sounds for local daily newspapers” in The Times and “Losses are mounting as newspapers struggle to find the right balance between print and digital” in The Sunday Times.
Most sadly on the global platform, we saw just before Christmas the publication of the very last print edition of Newsweek magazine, although it survives in digital form.
Digital is here to stay and it continues to permeate all aspects of life, most notably how we communicate and consume our media.
During the 2012 summer Olympics, we saw a huge surge in the use of digital media in all its forms — outdoor, mobile, social. I am sure that one of the lasting legacies of the Olympics will be continued growth in the use and development of these new media to create ever more powerful and personalised interaction between advertiser and consumer.
...[more]Edible newspapers and 9 other creative ideas from Axel Springer
14 January 2013 · By Stefan Wiemann
“The best is yet to come,” writes Mathias Doepfner, CEO Axel Springer, in an essay about the print crisis in Germany published at the end of November 2012.
There is a huge opportunity to overcome the media crisis through creativity and the will to change. I want to share 10 ideas our company developed during the last few years.
1. First special print issue in 2008 — BILD am FEIERTAG.
Everything started several years ago, when we had the idea to create a very special issue for the Day of German Unity (commemorating Germany’s reunification). This national holiday occurs on October 3, when usually no newspapers or magazines are published in the entire country.
At the beginning of 2008, Axel Springer Media Impact and one of Germany’s largest car companies, Volkswagen, thought about a special issue of BILD, Europe’s largest newspaper, published on this day. We developed the issue together with the editorial team of BILD.
Volkswagen used the special issue to launch the introductory campaign of the new Golf VI. The issue became a great success – and not only in business terms. It won several prizes, including the German Media Prize in 2009 in the print category. The so-called Bild am Feiertag (Bild on a national holiday) had a circulation of 1.2 million copies. It was the only newspaper to be published and available at kiosks around the country on this day.
From this day forward, special print issues became a relevant product in terms of advertising and image for Axel Springer.
2. Toward new technologies — 3D Bild.
2010 was the year when 3D made a comeback. Several electronic companies produced 3D TVs for the worldwide market. There was hype around 3D.
The question was how Axel Springer could participate in this trend as a media company.
We decided to produce a newspaper completely in 3D. On Saturday, August 28, 2010, the 3D Bild appeared in Germany. For the occasion, 5.5 million pairs of 3D glasses were produced and delivered with the newspaper. We also cooperated with the TV-channel ARTE, which broadcast 3D films the same day.
Readers also had access to many articles, videos, and specials on our Web site in 3D. The advertising prices in the print issue were 10% above average due to the technical requirements.
It was the first time in Germany that a daily national newspaper was produced in 3D – both editorial and advertising.
3. Big, bigger, biggest newspaper ever — XXL Bild.
What could come next after the 3D Bild?
At the end of 2010, we established a regular discussion on special print issues for our titles and met in so-called “creative workshops” with the editorial teams. We discussed new ideas and ways to create special issues in small groups of five to seven people from the editorial and advertising divisions.
What about an edible newspaper (e.g.,for environmental issues), a newspaper that glows in the dark, or a newspaper that doubles its size? And what about the biggest newspaper ever?
XXL-Bild was born.
In 2011, we produced the Bild newspaper at double its normal size. Each page had a length of 77.7 centimeters (30.59 inches). This was the world’s biggest daily newspaper ever, and we won our first entry into the Guinness Book of World Records.
We set the advertising prices at 30% above average, and sold the newspaper’s entire advertising space.
4. Exkursus “creative workshops.”
The “creative workshops” held in conjunction with the editorial team have become a constant source of new idea generation.
My team develops ideas in advance as a basis for discussion in the workshops. What are the new trends? What is the unique selling proposition of the title? What would we like the brand to do?
...[more]
Dawn McMullan is the editor of the Keynote Blog and senior editor for INMA. If you are an INMA member and would like to contribute a keynote blog, 
