digital media commercial realities - entrepreneurial journalism (melbourne university maste
TRANSCRIPT
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
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
Source: IAB/PwC Online adverUsing expenditure report FY2011-‐12
Search adver1sing growth per year
Search adver1sing s1ll has highest growth of digital media type
Source: IAB/PwC Online adverUsing expenditure report FY2011-‐12
Classified adver1sing per year
Classified market maturing, dominated by 3 companies
Source: IAB/PwC Online adverUsing expenditure report FY2011-‐12
Display adver1sing growth per year
General adver1sing s1ll growing at higher rate
Source: IAB/PwC Online adverUsing expenditure report FY2011-‐12
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?
Source: IAB/PwC Online adverUsing expenditure report FY2011-‐12
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.
Source: IAB/PwC Online adverUsing expenditure report FY2011-‐12
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?
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
The par1es involved in online adver1sing
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
The par1es involved in online adver1sing
CREATIVE MEDIA AGENCY
CLIENT
• role: develop creaUve to achieve client KPI’s
• goal: create highly effecUve execuUons on Ume and within budget
The par1es involved in online adver1sing
PUBLISHER CREATIVE MEDIA AGENCY
CLIENT
• role: facilitate the delivery of successful campaigns
• goal: achieve operaUonal effecUveness delivering campaigns on Ume and to specificaUon execuUons
The par1es involved in online adver1sing
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