Building a Sustainable Audience Monetization Model

Building a Sustainable Audience Monetization Model

(in the post-meter era)

Daniel L. Williams | Chief Executive Officer | Leap Media Solutions

2014 PNA Annual ConventionPittsburgh, PA | November 5-7, 2014

About Leap Media Solutions

OVERVIEW

• Founded in 2012

• Based in Old Saybrook, CT

• Full-service marketing solutions provider

• Shared resource management

• Aurora (CO) Media Group & The Day (New London, CT)

CLIENT COALITION

The Day Publishing CompanyDigital First MediaHartford CourantErie Times-NewsThe Frederick News-PostThe Bakersfield CalifornianAurora Media GroupGreeley TribuneNH Union LeaderAlbuquerque JournalColorado Springs GazetteCedar Rapids Gazette….and 13 other daily publications

PNA Annual Convention | November 5-7, 2014

Audience Monetization(Historical and Strategic Context)


Newspaper Revenue Trends (2008-2013)

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5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

201320122011201020092008

Print Ad Revenue Digital Ad Revenue Subscription Revenue

Source: Inland Press Association


To survive, we must derive more revenue from consumers to offset advertising declines


Paid content models: the new rage…


Price Elasticity? Only a small audience will pay

meaningful dollars

Small audience weakens our appeal to advertisers

Small audience undermines BIG Data…and little data

Small audience erodes the value of the brand

Subs

crib

ers

Cost

The slippery slope of paywalls


“Now that roughly a third of the nation’s newspapers are charging for access to their web and mobile content, the early evidence suggests that digital audiences aren’t nearly as enthusiastic about paying for news as publishers are about charging for it.”

- Alan MutterNewsosaur

What we know today


Price Elasticity? Only a small audience will pay

meaningful dollars

Small audience weakens our appeal to advertisers

Small audience undermines BIG Data…and little data

Small audience erodes the value of the brand

The continuous pressure to raise subscription prices compromises our competitive advantage of efficiently connecting local merchants with high-potential consumers

Subs

crib

ers

Cost

The slippery slope of paywalls


ONE COMPANY’S JOURNEYThe Day Publishing Company


Three year brand repositioning (2010-2012)

“A hub of distributed content and conversation with a local connection from a trusted source.”


Four strategic imperatives

1. Unify the content management and digital publishing infrastructure

2. Derive a fair value from proprietary content and services

3. Create a customized user experience, with single sign-on authentication

4. Build synergistic business model that regards customers as strategic assets


Stakes in the ground

We will preserve our direct relationship with the reader

We will be ubiquitous in the market

We will create a “blue ocean strategy” rendering the competition irrelevant


High-level objectives

Create a customer intelligence infrastructure to drive strategy


Technology: customer intelligence infrastructure


CUSTOMER INTELLIGENCE

SYSTEM

Address

Demographics

Subscribers

Registered Users

Periodicals

Newsletters

Deals

Contests

Rewards

Merchants



Achieve meaningful growth in audience and engagement


Metering: a tactic supporting the strategy


Rewards: create value for our members


New affinity groups enable relevant targeting





Reduce operational expense through intelligent marketing


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Higher Retention, Harder to Acquire

Lower Retention, Harder to Acquire

Higher Retention, Easier to Acquire

Lower Retention, Easier to Acquire

Incremental penetration may be costly. Not sensitive to price, so raise prices instead.

Discounting or pricing with migration to full price.Worth spending more to acquire.

Move marketing $ elsewhere, or micro-target based on desirable characteristics.

Early, consistent engagement and reinforcement of value

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Low--------------------------------------------Ability to Attract-------------------------------------------High

Not all customers are created alike


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Higher Retention, Harder to Acquire

Lower Retention, Harder to Acquire

Higher Retention, Easier to Acquire

Lower Retention, Easier to Acquire

Incremental penetration may be costly. Not sensitive to price, so raise prices instead.

Discounting or pricing with migration to full price.Worth spending more to acquire.

Move marketing $ elsewhere, or micro-target based on desirable characteristics.

Early, consistent engagement and reinforcement of value

Low

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Marketing investments can be optimized





Reduce operational expense through marketing automation

Deliver new revenue to offset traditional advertising declines


E-commerce / product marketing


Managed service for United Way of Southeastern Connecticut to identify and

target HHs most likely to donate to charitable organizations.

Revenue and strategy development as a service


Strategic target marketing

Multivariate testing to optimize results

Individually-tailored donor message

QR code and fulfillment tracking


AUDIENCE GROWTHResults


Registration requirement expands “known” audience

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Registered Users (5-year trend)

Registered usersof theday.com


Bundled content model stabilizes subscriber levelsJa

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Individual Paid Subscriptions (5-year trend)

Active subscriber households

U.S. trend = (7%) annual decline


All-access content + rewards drive activationJa

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Membership Activation (5-year trend)

Fully-activatedMembers


U.S. trend = (7%) annual decline



Fully-activatedMembers

30.0%

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0 wks 4 wks 8 wks 13 wks 26 wks 39 wks 52 wks

Annual % Member Retention (5-year trend)2009 2010 2011 2012 2013

Retention Lift

Result: higher value + targeting drives retention gains


Retention among fully-activated* members is 220% higher than print subscribers

*fully activated = paid print + digital connected


REVENUE GROWTHResults


Print subscription revenues (2008 – current)

2008Q1

2008Q2

2008Q3

2008Q4

2009Q1

2009Q2

2009Q3

2009Q4

2010Q1

2010Q2

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

Subscriptions


Audience revenue diversification (2008 – current)

2008Q1

2008Q2

2008Q3

2008Q4

2009Q1

2009Q2

2009Q3

2009Q4

2010Q1

2010Q2

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

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2012Q2

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2012Q4

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2013Q2

2013Q3

2013Q4

2014Q1

Subscriptions Contests



2008Q1

2008Q2

2008Q3

2008Q4

2009Q1

2009Q2

2009Q3

2009Q4

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2010Q2

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Subscriptions Contests Deals



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2008Q2

2008Q3

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2009Q3

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2010Q2

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Subscriptions Contests Deals Sponsored Content



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Subscriptions Contests Deals Sponsored Content Digital Subs


Audience revenue comes in many forms

EXAMPLE LMS CLIENT 2010 2011 2012 2013

Print Subscription Revenues --- --- --- ---

+ Digital Advertising Revenue + + + +

+ Digital Content Revenue + + + +

+ Contest Marketing Revenue + + + +

+ Daily Deals Revenue + + + +

+ E-Newsletters Revenue + + + +

+ Ad Campaign Services Revenue + + + +

Total Annual Audience Revenues 5,945,000 6,440,500 6,930,500 7,460,000

Total Consumer Records (TCR) 20,132 32,249 48,975 58,642

Total Average Revenue/TCR $295.30 $199.71 $141.51 $127.21


Average revenue per consumer record is

shrinking…that’s bad, right?


Incremental revenue per “TCR” is substantial

EXAMPLE LMS CLIENT 2010 (Baseline) 2011 2012 2013

Print Subscription Revenues --- --- --- ---

+ Digital Advertising Revenue + + + +

+ Digital Content Revenue + + + +

+ Contest Marketing Revenue + + + +

+ Daily Deals Revenue + + + +

+ E-Newsletters Revenue + + + +

+ Ad Campaign Services Revenue + + + +

Incremental Audience Revenue Growth 5,945,000 +495,500 +490,000 +529,500

Incremental TCR Growth - +12,117 +16,726 +9,667

Incremental Revenue per TCR - +$40.89 +$29.30 +$54.77


Audience data has become a new “currency of exchange”


Evolution of Audience Monetization (Past)

40 Cove RoadStonington, CT 06371

Telemarketing StartOctober 3, 2010

Active Mon-Sun SubscriberEnrolled in EZ Pay since 2011

$653.10 in subscriptionrevenues in past 3 years

Wet paper deliveryComplaint last Tuesday

Address-based


Evolution of Audience Monetization (Present)

Address-based

60 years old – member58 years old - member

HH Income > $150,000Homeowners

$780.16 in ConsumerRevenues since 2009

Six daily deals Purchases since 2011

Two-week vacationevery July since 2009

Signed up for mobilebreaking news alerts

Registered for weeklyBusiness e-newsletter

Reads Grace and Sound &Country magazines online

Acxiom Lifestage:15M – Mature Wealth

Indexes high foronline purchasing

Twelve activations on rewards site since 2012

Indexes high forInterest in Community

Active Daily subscriber Registered on website

User-based


A new paradigm…


…the audience monetization hierarchy

Anonymous

Registered

Member

Monetization:• Page views• Single copy

Monetization:• Page views• Subscription• Deals• Contests• Metering

Monetization:• Page views• Subscription• Deals• Contests• Metering• Membership• Clubs• eNewsletters• Affinity Content• Brokered services• Content Marketing• Others…


Dan Williams, Chief Executive OfficerLeap Media [email protected] | 860.710.5942www.leapmediasolutions.com
