digital media commercial realities - entrepreneurial journalism (melbourne university maste

Digital Media Commercial Reali1es Presented to Entrepreneurial Journalism class at Melbourne University, Master of Journalism

8/10/2012

Sam Granleese

Strategy & Insights Manager @ Carsales.com Ltd

TwiKer @granleese .. www.samsmojo.com

Introduc1on

The Market The Products The Opera1on The Ques1ons

The Market

Two Sided Marketplace

Umair Haque, Havas Media Lab:

“Supply coordinates demand on both sides of a two-‐sided market and sets equilibrium prices. Unlike in other markets, in the media marketplace, a=en>on is a cri>cal part of the value chain, because it is demanded by adver>sers and supplied by consumers. On the other side of the two-‐side market, produc>on is demanded by consumers and supplied (funded) by adver>sers.”

Media Audience Adver1ser

Demand

Supply Demand

Supply

Produc1on

ABen1on

‘Media ABen1on’ in Australia

21:54

05:24 04:12

15:30

09:48

03:30 02:12

Internet via desktop Internet via tablet Internet via mobile Broadcast TV Radio Newspaper Magazine

Average 1me spent with media per week (Hours & Minutes)

Source: Nielsen 2012 Australian Online Consumer Report

Digital channels dominate media 1me

Expenditure of the total online adver1sing market

$3.14 Billion Market FY12

Source: IAB/PwC Online adverUsing expenditure report FY2011-‐12

Online adver1sing marketplace by type

Search (Google) dominates online adver1sing


Search adver1sing growth per year

Search adver1sing growth per year

Search adver1sing s1ll has highest growth of digital media type


Classified adver1sing growth per year

Classified adver1sing per year

Classified market maturing, dominated by 3 companies


Display adver1sing growth per year

Display adver1sing growth per year

General adver1sing s1ll growing at higher rate


Niche Display Adver1sing?

Ad agencies are es1mated to make up over 83% of display ad revenue in 2012.

This is how it breaks down..

•  $318 MM (45%) top 4 ‘content publishers’ (Nine, Yahoo!7, Fairfax, News)

•  $89 MM (12%) -‐ Independent publishers represenUng themselves in the market

•  $138 MM (19%) -‐ Ad networks (represenUng others or via technology exchanges)

•  $169 MM (36%) – Spend on other (Social media, display ads on classifieds, video adverUsing

At least a $271 MM market and growing..

Source: Standard Media Index, June 2012.

Evolu1on of online niche publica1ons

EvoluUon from periodicals / magazines / newspaper columns (opinion)

•  Trade sectors sUll have a future.. but periodical entrants to the market are becoming easier as exisUng magazine publishers failed to keep up quality content.

•  Larger groups, such as ACP and Pacific going through period of consolidaUon.

What are the ver1cals that adver1sers want to target online?


The Product

Revenue Sources

Audiences "pay" for content in the following ways:

•  ABen1on or permission (for adverUsing)

•  Delivery or "gefng the content" (cover charge, subscripUon fee).

‘Media ABen1on’ in Australia

Online has poor compara1ve yield

$2.61 Billion

$3,63 Billion $3.69 Billion 31.5

15.0

3.4

0

5

10

15

20

25

30

35

Internet Broadcast TV Newspapers

Media Spend v Consump1on (hours per week)

Ad Spend MM** (LHS) Hours Spent Per Week* (RHS)

* Source: Nielsen 2012 Australian Online Consumer Report (includes Smartphone/Tablet). ** PwC media and entertainment outlook 2011 -‐2016

A third of media in Australia is priced in direct response

CPM = Cost-‐per-‐thousand ads displayed. Adver1ser pays for tenancy on a page.


A third of media in Australia is priced in direct response

USA dominated by DR, which has commodi1sed adver1sing inventory and driven yield down.

Standardised adver1sing sizes – language defined on pixel space

Commodity Risk vs Prac1cality

728x90

300x250

Standardised adver1sing sizes – language defined on pixel space

Commodity Risk vs Prac1cality

728x90

300x600

(also “skyscrapers” which are 120x600 or 160x600)

Other popular ad units

Bought on sponsorship pricing, but evaluated on CPM / reach / frequency. •  Expanding rich media (over the page, push-‐down) •  Background skins •  Video adverUsing •  ‘Integrated adverUsing’ – i.e. Finance calculators, flight booking searches, etc.

Non-‐Standard Products

•  Special Reports / Whitepapers / eBooks •  Custom Research •  Syndicated WriKen /Video content •  Branded Content •  Email-‐based Short Courses •  Events/Webinars/Webcasts •  Talent / Speaking •  Custom branded secUons (‘secUon made possible by’) •  Special tools, calculators, research or buying guides. •  Sponsor posts •  CompeUUons/PromoUons through social media

How is your publica1on relevant?

Does publica1on genuinely fit into the consumer lifecycle between the adver1ser and its audience?

The Opera1on

Pricing

1.   Pricing power: Understand supply/demand of your niche and its audience. If there is too much supply of compeUUon you will have no pricing power. Price /demand is very elasUc.

2.   Start Simple: Charge different rates for different sized ads, and add premiums to more valuable placements, but keep it simple.

Build in margin to your pricing to allow you to offer long-‐term booking or sponsorship incenUves, but be careful.

3.   Guidelines Rate Range (CPMs) Goal Yield (CPM) 300x250/600s $25-‐$40 $15 728x90 $18-‐$25 $10 Large Formats $50-‐$100 $50 NewsleKer 300x250 $15-‐$20 $10

Custom execuUons $2-‐$10 per person $5 per person

Pricing (con1nued)

4.   Sell-‐through-‐rates

Custom products are where most niche publicaUons make a point of difference, but banner ads are sUll where most revenue will be generated.

Your break-‐even point should be based off a sell-‐through-‐rate that will scale up as your audience and ad inventory levels grow.

Good rule of thumb for a startup niche publicaUon:

Up to 30,000 audience 50% sell-‐through Up to 200,000 audience 35% sell-‐through > 200,000 audience 20% sell-‐through

Product Mix

1.   No straight rules. Test and learn approach:

Try half and half approach.

50% banner / “ads on the page” adverUsing 50% custom products (i.e. webinars, special reports, etc).

2.   Pay to view / premium subscrip1on product:

What can you offer that 5% -‐ 10% of your audience will pay for?

If you want to try this approach, part of it needs to be in place when you launch to set expecta>ons. Price to access becomes part of the media brand very quickly.

Data

Know your audience beBer than your adver1ser does

If you don’t know:

•  Demographics (who?) or context (where?) •  Internet Usability (what/where?) •  Permission (reason for interacUon?) •  Content point of difference (why do they visit you?) •  Content InteracUon (how?)

Then find out by:

•  Sign up to newsleKer -‐ on homepages, navigaUon, via markeUng, events ,etc •  Run surveys or research through your databases (i.e. Survey Monkey, loyalty program) •  Real conversaUons with readers (inc. social media) •  Pay for research if you can’t get it yourself •  Test and learn (agile approach).

Selling Model

Scaled representa1on

1.  Employ an agency-‐selling ad network (usually split 50-‐50 up to 30-‐70 in their favour)

2.  Sell custom products yourself (take incoming queries, pitch to prospects, form content sharing partnerships, etc.)

3. Take sales in-‐house, employ team: •  First $600,000 annual revenue -‐ 1 x Sales Person and 1 x ad operaUons (tech) •  Add salesperson for every $600k unUl you pass $2-‐$3 MM revenue •  1 x ad operaUons required per $2 -‐ $3 MM revenue.

4.  Form working relaUonships with main adverUsing clients. Ad agencies are fickle, have high-‐staff turnover.

5.  Media expenditure is very seasonal in Australian calendar year, parUcularly with certain sectors (B2B, consumer retail, finance, etc).

The par1es involved in online adver1sing

•  role: guide agencies on business objecUves and arUculate required KPI’s

•  goal: increase ROI or brand metrics, derive best possible outcomes from digital adverUsing campaign

CLIENT


MEDIA AGENCY

CLIENT

•  role: develop an adverUsing strategy and media plan

•  goal: achieve campaign KPI’s set by the client in the most efficient manner


CREATIVE MEDIA AGENCY

CLIENT

•  role: develop creaUve to achieve client KPI’s

•  goal: create highly effecUve execuUons on Ume and within budget


PUBLISHER CREATIVE MEDIA AGENCY

CLIENT

•  role: facilitate the delivery of successful campaigns

•  goal: achieve operaUonal effecUveness delivering campaigns on Ume and to specificaUon execuUons


AD SERVER PUBLISHER CREATIVE MEDIA AGENCY

CLIENT

•  role: provide the playorm that assists with the facilitaUon of campaign execuUon and reporUng analyUcs

•  goal: deliver successful campaign execuUon and provide campaign analyUcs for media agencies


CLIENT

MEDIA AGENCY

CREATIVE

PUBLISHER

AD SERVER


MEDIA AGENCY

CREATIVE PUBLISHER AD SERVER

banner ad code

Ques1ons

Thanks

8/10/2012

Sam Granleese Strategy & Insights Manager @ Carsales.com Ltd TwiKer @granleese .. www.samsmojo.com

digital media commercial realities - entrepreneurial journalism (melbourne university maste

Documents

online adver1sing marketplace

media aben1on

display adver1sing growth

media marketplace

search adver1sing growth

year source

australia media

classied adver1sing