BizcampBe 2011 – Market Research & Case Study

Pieter Dubois (duboisp@myonline.be)

Why do market research?

Why not just, you know … build stuff? Survivor bias – “It worked for Twitter, no?” Building solutions looking for a problem

Is there a market … and if so, what is it? Who are your customers … really? What competitors are you up against? Will your company make money in this market? Market research answers these questions

Primary Vs. Secondary Market Research

Primary: Direct feedback from end-users How: Interviews, A/B testing, Surveys, Adwords

You generate data. Hard work but rewarding. Get out! Secondary:

Analyst reports Expensive Almost but not quite what you need

Scour the Internet Gold digging through trash Google is your friend. Try also Brekiri.com

Value Source

Population 305 million US Census

Working Population X 50.5% Dept. of Labor

Changing Jobs Annually X 15% Assumed

Using Online Job Postings X 50% Assumed

Willing to Pay $50 for Posting

X 20% Assumed

Market Size in Revenue = $115.5 million Brekiri.com

Market Sizing

Top Down: Starting from population numbers, industry size, geographies … casting a wide net Narrowing down to market size by assumptions

Market Sizing

Bottom up: Starting from individual company numbers, country data, visitors, links clicked, segments … Aggregating up to market size using 80/20 rule Gives a view on unit economics like revenue/user Gives insight on who your customer base is

Example Mint.com (http://vimeo.com/6959602) 20m-65m users x $30/user CPM/yr = $0.6-$1.8B

Focus on your segment of the industry you are in

Addressable Market

This is the market that is available for capture by you Example:

You make canned dog food … in Belgium WW food market is $100 billion Belgium has 2% of the WW market Only 10% dog owners buy dog food 50% of sold dog food is canned

Addressable market is $100m, or 1 ‰ of market

Other considerations

Triangulating Reconciling top down/bottom up market sizes If similar – OK, otherwise redo.

Industry growth rates

Growing: lot of competition & innovation. Stable: Consolidated. How to create space for you? Dying: Cash flow generation is important.

Never say the market doesn’t exist

You’re probably not that original Expensive to educate your customers Competition shows there is a market

Case Study – The Digital Content market

Scavenging for Data

Press articles often contain conclusion of studies

Looking at drivers for Digital Content

Broadband, PC and mobile drive growth

0

10

20

30

40

50

60

70

80

90Netherlands

Denmark

Canada

Australia

United States

Japan

United Kingdom

Germany

Finland

New Zealand

France

%

Mintel Oxygen, comScore, Internet World Stats, Point Topic, Plunkett Research, Ebay, PayPal, eMarketer, Mastercard, Eurostat, Price Waterhouse Coopers, the OECD, Research and Markets, IFPI, IDC, Strategy Analytics, WikiPedia, Lazard Capital Markets, World Association of Newspapers, eMarketer, Outsell Inc., Piper Jeffrey, InStat, Business Insight, GroupM, Universal McCann, JP Morgan, Datamonitor, Euromonitor, Duncan William and Javelin Strategy & Research

e-book sales US, 0.35

Virtual goods, 2.2

Online Video Games, 11

Online Film & Video, 1.2

Online Music, 4.2

Online news, 6

World-wide digital goods market 2008 ($25 billion)

e-book sales US, 9

Virtual goods, 6

Online Video Games, 24

Online Film & Video, 8.5

Online Music, 13.75

Online news, 8.5

World-wide digital goods market 2013 ($70 billion)

Compare with parent Market

E-Commerce vs. Digital Goods

USA34%

Europe46%

Asia20%

2011 WW e-commerce Market($870 billion)

USA45%

Europe39%

Asia16%

2008 WW e-commerce market ($530 billion)2008 $530B

2011 $870B

2008 $25B

2013 $70B

E-Commerce

Digital goods

Online News 6 -> 8.3 E-Books 0.35 -> 9 Virtual goods 2.2 -> 6 Online Video Games 11 -> 24 Online Video 1.2->8.5 Online Music 4.2 -> 13.75

All data comes from different sources

Digital goods is only 5% - 8% of e-commerce

“Dude, don’t boil the Ocean. Choose a target market”

Adeo Ressi – Founder Institute

Online Newspapers …. starting in Belgium … Then in Western Europe

Newspaper Industry

50-80% of revenues are from advertisements

25% Offline Ad Revenue

Only

10% Online Ad Revenue

Online vs. Offline

$6B

0%

10%

20%

30%

40%

50%

60%

6%

32%

19%

52%

12%

34%

40% Via Search

Google & Yahoo

60% Online Ad Revenue

Belgian Newspaper Industry

Concentrated Market

No individual Digital Content figures available

Top-down doesn’t bring us further …

Online Usage Patterns

Bottom Up Analysis – Finally

Kranten Visitors Page Requests Visitors Page Requests Visitors Page Requests

Daily Monthly (extrapolated) Yearly (extrapolated)

De_Morgen 93,910 518,670 2,817,300 15,560,100 34,277,150 189,314,550

De_Tijd_Website 123,636 873,091 3,709,080 26,192,730 45,127,140 318,678,215

DH.be_Website 132,149 1,193,217 3,964,470 35,796,510 48,234,385 435,524,205

Gazet_van_Antwerpen_Website 114,088 648,939 3,422,640 19,468,170 41,642,120 236,862,735

GRENZECHO.net 4,380 37,490 131,400 1,124,700 1,598,700 13,683,850

Het_Belang_van_Limburg_Website 99,776 638,619 2,993,280 19,158,570 36,418,240 233,095,935

HLN.be—7sur7.be_Website 577,989 5,415,047 17,339,670 162,451,410 210,965,985 1,976,492,155

L’Echo_Website 35,671 258,623 1,070,130 7,758,690 13,019,915 94,397,395

La_Libre.be_Website 68,941 382,782 2,068,230 11,483,460 25,163,465 139,715,430

LeSoir.be_Website 153,612 1,046,322 4,608,360 31,389,660 56,068,380 381,907,530

L’avenir_Website 74,832 477,193 2,244,960 14,315,790 27,313,680 174,175,445

Nieuwsblad_Website 359,958 2,150,925 10,798,740 64,527,750 131,384,670 785,087,625

Standaard_Website 260,266 1,552,923 7,807,980 46,587,690 94,997,090 566,816,895

Standard_Sudpresse 15,021 78,486 450,630 2,354,580 5,482,665 28,647,390

Sudpresse_Website 28,811 174,831 864,330 5,244,930 10,516,015 63,813,315

Totaal 2,143,040 15,447,158 64,291,200 463,414,740 782,209,600 5,638,212,670

Average 37,948 371,487 4,286,080 30,894,316 52,147,307 375,880,845

www.cim.be

Calculation of Belgium and Western-Europe

Belgian addressable market is 60-80 million Euro Average rule: # page requests * 0,15 Euro * 10% readers 80-20 rule: 10% readers * 1 Euro day pass

West-European market online news: 2.3 billion Euro

Through proxy of Belgian offline market Belgium online market is 6.5% offline of 900m Euro

6.5% of 33.5 billion Euro + 60m Euro = 2.3 billion Euro

Land Oplage Oplage opbrengst Reclame opbrengst Totale opbrengst

Frankrijk 8.8 miljoen 2,640 miljard 1,785 miljard 4,4 miljard

Nederland 4.4 miljoen 1,320 miljard 1,771 miljard 3,1 miljard

Engeland 19 miljoen 5,7 miljard 5 miljard 10,7 miljard

Duitsland 24 miljoen 7,2 miljard 8,45 miljard 15,65 miljard

What is our fair market share?

Assume 10% readers prepared to pay Recall 19% WTP & 27% make 82% of page requests.

Assume 25% of pages payable Assume only those 27% loyal readers pay. Assume 0.1 Euro is the price per page Assume 10% profit margin Assume 10% market share (15 newspapers) 82% of 375million average page requests/year x 25% paying x 0.1 Euro per page x 10% profit margin x 10 % market share = 1.15 million Euro in Belgium In Europe = 2.3b Euro x 10% x 10% x 25%= 5.75m Euro

Conclusion

You won’t find your numbers pre-canned Assumptions make conclusions uncertain But will give you ball park figures that you can act on