Marketing Weblog

Desde el retail

El continuo incremento en la exposición a mensajes publicitarios a la que se enfrenta el consumidor se produce en gran medida por el crecimiento en los medios no convencionales que año tras año consolidan su peso en relación a los medios tradicionales (infoadex 2008).

Llegar al consumidor, actuar sobre su proceso de compra, afectar a su relación con la marca, e influir en la percepción del valor se convierte para las empresas en un desafío continuo, agravado por la contracción actual de mercados y el creciente foco de la competencia sobre el eje asociado a precios.

Un segundo factor se centraría en los cambios producidos en el propio proceso de compra de los consumidores, donde los modelos de fidelidad a la marca por parte del consumidor se revisan en cada decisión de compra en lo que McKinsey ha llamado el nuevo “consumer decisión journey”. Según este, el consumidor abre la posibilidad de evaluar distintas opciones de productos con independencia del nivel de satisfacción obtenido en una compra anterior.

A partir de los factores descritos (revisión profunda de las herramientas de comunicación y cambios sustanciales en el proceso de compra) estamos empezando a asistir a un fuerte desarrollo de los medios  de comunicación con el cliente en el punto de venta. Medios entendidos en el más amplio sentido de la palabra, como circuitos contratados por el anunciante para hacer llegar su mensaje de marca al cliente final en periodos de tiempo determinados. Este desarrollo se centraría en la generalización de circuitos de televisión, radio y diversos soportes interactivos con el fin de influir sobre el cliente en el momento más próximo a su  decisión de gasto.

Tecnológicamente estos nuevos medios permiten la segmentación de tiendas en función del cluster al que pertenecen, la adaptación de mensajes por zonas dentro de la tienda, su adecuación a la tipología de compra del producto (abastecimiento, reposición, impulso), el momento del día y los perfiles de clientes predominantes en cada uno de esos momentos, así como su integración en campañas nacionales con otros medios. Permiten también una mejor gestión de coberturas y frecuencias y, sobre todo, la emisión de los mensajes más adecuados al momento de compra, como son aquellos que tratan de maximizar la percepción del valor del producto y generar confianza.

Siendo ese su potencial, el resultado final dependerá de la aplicación que de estos nuevos medios se haga. En el peor de los escenarios participarán en el actual proceso de  saturación publicitaria, invadiendo a través de continuos mensajes visuales y sonoros un nuevo territorio privado del consumidor y potenciando así la pérdida de credibilidad e imagen de las marcas.

En el mejor de los casos, y dependerá en gran parte de la distribución y del papel activo o no que esta juegue, se pueden convertir en un elemento más de desarrollo de la experiencia de compra del consumidor (y por tanto del posicionamiento, diferenciación e imagen del detallista), a través de la difusión de contenidos y servicios que participen tanto en hacer el acto de compra más agradable (ya sea facilitando una compra más rápida o de ocio) como facilitando la decisión del cliente.

Mientras tanto, según un reciente estudio de Nielsen, los medios que tienen más credibilidad para los consumidores en relación con su comportamiento de compra y generación de fidelidad son la recomendación de conocidos y la opinión de otros consumidores en la red (Nielsen global online consumer survey 2009).

 ¿Curioso? 

Saludos muy cordiales.

Experts agree: Mobile is the next big thing! So, let’s have a look at some numbers with Susanne Flugm, our German student in the Master in Digital Marketing…

In 2007 “the number of mobile cellular subscribers surpassed the 3 billion mark, [which is] close to 50 percent of the world’s population.”.

Almost one third of all mobile subscribers do come from the BRIC economies Brazil, Russia, India and China. And this is just the beginning … In 2009 ITU reports that there are over 4 billion mobile subscriber globally, which equates to a penetration rate of 61.1%.

In Europe the highest mobile penetration rate (in percentage) can be found in Italy, whereas Germany is the leader in terms of numbers with 93 million subscribers.

Nothing is more obvious than the growing global importance mobile devices will have in the future. But all those numbers do not mean that much to the role of music in conjunction with the mobile world. Which influences does this development have on the consuming process of music and the usage of the device in general? Are there new possibilities to promote or distribute artists in the future? Time to bring some light into the mobile music evolution.

It’s not easy to find some references analyzing the relationship between the mobile and the music industry, however there is an interesting study called AT Kearney Mobinet Study from 2005. It shows that we are faced against a constant increase of about 53% of data-enabled multimedia phones. Even though most of the subscriber still use their devices to make voice calls, other functionalities become more and more important, in particular …

* to browse their operator’s portal,
* to browse the internet,
* to access mobile email,
* to download music,
* to stream music.

Especially the last two ones are of interest, when we think about new possibilities to consume, to distribute or to advertise music. Today, 33% of younger consumer are using their multimedia phones to download music, which represents a growth rate of 57%.

Music is one of the status symbols to differentiate from others and express the individual identity. Between 60% and 80% do consider music and mobile phones as essential items, whereas just up to 20% of the monthly budget is actually spent on both (ITFacts.biz).

We deal with a type of consumer whose greatest barriers to not use any kind of multimedia service are costs (27%) as well as poor content (35%). Approximately 75% do see the reason for downloading in the fact that it saves money.

In conclusion: People do need music and they do want to use it on their mobile devices. The numbers and graphs are highlighting two major trends, which we have to keep in mind thinking about the mobile music evolution:

(1) The continuous (and growing) importance of music towards self-expression.
(2) The changing consumer behavior towards maturity and independence.

Both aspects are based on the current technological developments. The future challenge is to balance them in order to develop a sustainable business or marketing model to the benefit of the consumer. From my point of view there are some crucial points to be considered, if we want to meet the overall trends:

* Price > The digital medium causes a different perception of price. Flexibility will be key to gain consumer’s interest!
* Relevance > The digital medium causes a variety of products. Customization will be key to attract consumer!
* Freedom of choice > The digital medium causes a different power structure. Opt-in will be the key to leave the choice to the consumer!
* Experience > The digital medium causes engagement and interaction. Emotional involvement will be key to increase consumer experience!

There are a few business models currently coming up: The iPhone is a best-practice example, which combines style of the device and availability of the content and brings them into a working system. Nokia tried to break into this market launching its Nokia Comes With Music service not long ago. But it remains to be seen, how successful those concepts will be in the long run.

However, I am sure that music can be an important part of enhancing the mobile music consumption. Let’s see who will make the grade …

I would love to discuss the future of business models

Best

Manuel A. Alonso Coto

Wolphram Alpha is a new searcher that delivers answers as a result. You may think, well, this is what Google does. Not really, Google delivers links related to your search, while Wolphram delivers answers, Google delivers the most relevant result and Wolphram delivers the most suitable answer. Imagine you want to know when Zapatero was born, you go to Google and type: “when was Zapatero born?” then you get this, a lot of links coming from everywhere talking about something related to Zapatero and his birth. Ok, now go to Wolphram and type “when was Zapatero born?” you get this, just the date, just the thing you want to know.

This is something similar to the semantic web, where the answer is not based on the words but on the meanings, because Wolfram Alpha doesn’t crawl the web for its answer as Google does; rather, it searches its own huge database of factual data to find the correct information. This is what Stephen Wolphram began to develop in 2002, starting from a mathematical program he had previously developed and complemented with new calculations and algorithms.
And now? what is Google going to do? Well, it seems like they have already started to move and have developed new tools like The Wonder Wheel which relates searches in a fractal way, or Google Squared which collects facts from the web and presents them in an organized collection. Let’s go on with our experiment, have a look at what we got out of The Wonder Wheel and what we got out of Google Squared, where I had to ask in two different ways. It is clear that the answers are not the same, Googles delivers a lot of documentation and opinions while Wolphram Alpha delivers an accurate answer.

But will Wolphran really challenge Google?

No, Stephen Wolphran himself thinks his searcher was created to be “highly complementary” of other searchers rather than a direct competitor since “we deal in fact-based information, not opinion”. As we have seen in our experiment, you cannot ask the same questions to one and another searcher: if you want to know just the date when Zapatero was born you ask Wolphram but if your looking for deeper information about Zapatero, then you just have to go to a “traditional” searcher. And it is here where Wolphran can create a unique place for it, in this part of the search where people need factual data, concrete figures, where people seek a simple answer to continue further research and discovery. So in my opinion, the kind of results Google delivers will never be substituted by Wolphran.

And this is indeed the best answer we, the users, can get from our searchers: to have the most adequate searcher for the most adequate question!

Thanks to Elena Ibañez for posting about this! Any thoughts?

Best

Manuel A. Alonso Coto

In March this year Google has announced the launch of a Beta test for an “Interests-Based Advertising” program trough which Google will start delivering advertisement to users based on users profiles and previous behaviour in the web.  This announcement is nothing but the much delayed entry of Google in the Behavioural targeting arena, a space where Google’s competitors have already entered for some time, but, first things first, what exactly is behavioural targeting?

Behavioural targeting is a growing jargon in the internet world used to describe a technique used by advertisers, publishers and advertising networks to increase the effectiveness of its ad campaigns by using information of the users’ browsing behaviour to decide which ads are more relevant to that specific user. That information can include the sites that a user has visited, the pages he has seen or the past search behaviour of that user. When talking about behavioural targeting it is also important to distinguish between 2 types of behavioural targeting: Onsite Behavioural targeting and Network behavioural targeting:

Onsite Behavioural Targeting consists in applying behavioural targeting techniques to websites with the objective of increasing the site’s conversion efficiency by delivering the right content to the right user, and it can be done in 2 ways: 1) By using website analytics to divide the website visitors into different user profiles and then deciding on the best content to deliver to each of those profiles (users will then be identified by a cookie and the content will be delivered to them based on a pre-determined set of Rules) and 2) By using self-learning BT systems, which consistently monitor users behaviour and conversions onsite and learn what are, for each behavioural pattern, the best conversion possibilities. The content delivered for each user will then be determined by the user behavioural pattern and the content that is most likely to generate a conversion for that behavioural pattern.

Network behavioural targeting: Advertising networks due to their nature can leverage the vast catalogue of publishers and websites to develop a rich profile of the internet users and monitor the users browsing behaviour and deliver more relevant advertising to the users based on that information. This is normally done by storing a cookie in the users browser that will track the websites, and pages the user visits, within the network. With that information the network will then be able to profile those users interests and deliver him more relevant ads.

With the launch of Interest based advertising Google’s objective is to increase the relevancy of the ads it delivers in its AdSense content network and in Youtube and thus increase the value it delivers to the Advertisers, since it allows them to more efficiently connect to a base of people who are interested in their products, and to the publisher sites since, by more efficiently connecting advertisers and users, they will increase their advertising revenues. The bottom Line: Google’s final goal is to increase its advertising revenues.

Up until now, Google has been delivering advertising mainly based on the context, for example in its search Engine Google delivers ads based on what the users are searching in that specific time and in it’s AdSense content Network and Youtube Google delivers ads based on the content of the page the user is visiting at the time, so, up until now Google has been delivering advertising based on the users’ interests in a specific moment.

With the “Interests-Based Advertising” model Google uses the Double-click cookie, which is installed on users browsers when they visit a Google Content Network partner site, to track the users online activities within the content network. With that information Google associates that user with specific interest categories (based on the websites and pages the user has visited) and, from than on, whenever the user visits a Google Content Network site or YouTube, Google will recognise the user trough the Double Click Cookie and deliver the user ads that are relevant to his identified interests. Another possibility Google is offering with this model is for advertisers to deliver ads, on the Google Content Network and YouTube, based on the user’s previous interactions with that specific advertiser, for example if a user has visited the a specific telecoms company website, that company will be able to deliver special offers ads to that users within Google Content Network and YouTube (also counting on the Double Click cookie to recognise the users).

The interesting thing about Google’s Interest based advertising is not the innovation character of the use of Behavioural targeting in advertising networks, in fact, several major players like Yahoo and Microsoft have been using BT for quite sometime, what is really interesting about Google’s Interest Based advertising is the way Google is approaching BT. There is a reason why Google has only now launched a BT initiative, in the past Google has been extremely wary about using BT in its ads. When, in 2007, Google announced they were testing a new advertising feature that delivered ads based not only on the specific search term in the users queries, but also on the immediately previous search, Susan Wojcicki, Google’s VP of product management for advertising stated that Google was “shying away ” from the industry race for BT, she added this test would be restricted to searches performed in one session, nothing would stored or remembered. The reason behind this was simple, even though BT has been seen as a great revenue generator for advertising networks, it also poses serious privacy concerns for the users, in fact, research from several sources like Truste, a non-profit organisation dealing with online safety and privacy, indicate a great deal of user discomfort with the monitoring of their online activities. Truste has indicated in a report that 71% of the people are aware that their browsing activity is monitored in order to deliver them more relevant ads and that 57% are not keen to have their browsing activities monitored even if the information collected is not personable identifiable information.  On another hand, this report also indicated that the vast majority of users did not like irrelevant ads considering them intrusive and annoying. 

Google, couldn’t afford to keep avoiding behavioural targeting, it was a great revenue generation opportunity and its major competitor where already using it which could lead them to doing to Google what Google did to Overture by providing more targeted and relevant ads to its users. On the other hand, Google’s user centric approach has always been a key factor for Google success, more than that, Google’s enormous user base was key factor to guarantee its leadership in the market and its advertising revenue stream, the major source of income for the company. Google couldn’t afford to loose its “Do no Evil” image and risk loosing users due to the problems related to privacy that could rise from behavioural targeting schemes.

What Google did, and that is where Google innovated, was to build its Interest based advertising scheme with a great focus on the users and their privacy concerns by basing it in 3 core pillars: Transparency, Choice, and Control.

Google is delivering on the transparency promise by having in all its ads a link Google ads that links to an area where users have access to all the information about how Google serves ads, and by having inside Google.com detailed information in plain language, simple to understand and in a user friendly way (using videos, simple FAQ’s) about the Interest based advertising in an area dedicated to users “Ads preferences” and by having a Google Youtube Channel specifically dedicated to privacy issues where users can go to now learn how Google deals with privacy in a user-friendly and engaging way.

The other key pillar Google defined was Choice, the choice the user must have to decide which ads are delivered to him, and in order to give users that power,  Google created the Ads preferences Manager, a tool for users to view what interests are associated to them and add or delete interests to that list. With this Google is not only providing the user with a choice, it is giving users a way to help Google perfect the system.

Finally Google also provided users with a way for them to fully Control whether or not they are targeted by Interest based ads by providing them with an opt-out tool that will install a cookie on the users computer that will prevent that user from being tracked, in addition to that Google as also created an Opt-out plugin users can install that will permanently opt-out those users even if they clean the cookies on their computer.  The image below

By directly and clearly tackling with the users fears of privacy intrusion and questions about the use that is done with their data, Google is establishing a new pattern for the way BT is done and also fully applying the User Centric approach it has accustomed its users to and was in the basis of it success, more than that Google is reinforcing its “Do no Evil” positioning by raising the standards used for dealing with users privacy online. In my opinion other players will be forced in the future to follow this strategy, if not by industry regulators or legislation, by the users themselves, in the meantime, we must wait for Google’s beta test to end and spread it to more advertisers to really start to learn the real results of this model and its implications for advertisers, publishers and Google. 

Thanks to our Portuguese student of the Master in Digital Marketing, Filipe Andre Gomes de Faria, for this brillian post. We leave you with some interesting links regarding this issue: 

http://www.scribd.com/doc/18442870/-Interest-Based-Advertising-Slides

http://searchengineland.com/google-introduces-interest-based-advertising-beta-16855 

http://www.scribd.com/doc/17231195/Interest-Based-Advertising-What-People-Are-Saying

http://www.digital-media.net.au/article/google-launches-behavioural-targeting/472990.aspx

Best

Manuel A. Alonso Coto

Anytime that you have a licensable or open platform, especially one that is free (see the following figure), you should be able to address a larger share of the market. For that reason, Google’s Mobile Ads distinguish the iPhone as a specific platform of interest and leverage the iPhone’s high-end audience with its key demographics and targets over 400 million mobile internet users.

Then, even if it has less applications than Apple (10,000 applications for Google, 76,085 applications in the Apple App Store), Google is better in the Software Development Kit point of view. Indeed, Apple is based on closed standards, which makes more difficult to integrate others applications, while Google has been developed on open standards which enable the integration of all kind of applications.

The Google Android application platform has a lot of similarities to the iPhone, but is still unique in a few ways.

Apple is building out the infrastructure to enable mobile developers to make money (through the Apple iTunes store).  Google will most likely use advertising to enable mobile developers to make money.

Mobile developers really need both models to be successful.  For people building high cost high value applications and services, the Apple model with “one click” purchasing will be very attractive. For people building lower cost lower value applications and services, the Google model with transparent advertising will be very attractive.

Thanks to Anne Camille, our French student in the MAster in Digital Marketing for her contribution to this debate… What about yours?

Best

Manuel A. Alonso Coto

Paul Mato, one of our students in the Master in Digital Marketing analyzes this controversial issua for us…

HOW CAN I (BRAND) GET THE BEST FROM FACEBOOK?

It’s time to analyze marketing posibilities on Facebook…

First of all I’d like to empahsize on the implications for a brand being introduced on Social Media marketing. What I’m meaning telling this is not about the tools but the communication proccess itself.

Facebook marketing means conversation. And what does it mean? When a company introduce itself into Facebook opens a window to let users talk about the brand into the brand space. This could be hard to be understood for the old marketers which always had the control about what is being said on their space but the future comes on this path. Let your consumers give their opinion and take them into account. All this means strategic and structural changes for a company which will need not only think about what to say but also how to talk to the consumer, how to manage the conversation and even give them a feeling of being heard.

After establishing this new statement for the communication I’m going to explore what by today are being watched as the most succesul ways of marketing on Facebook. As you may already noticed (not much people seems to do it) there are traditional banner displays on the right side of the site. I said that not much people seems because there is an average CTR of  0,04% what is a very low rate. So I’ll be not paying muh attention on it although by these days is the most profitable model for Facebook. Anyway the social network is improving its posibilities as we could lastly heard about the development of an allowance to introduce rich media banners in which could be made a direct response.

About the, in my opinion, more brand profitable tools we find “Facebook pages” in which the brand can interact as an individual user, speaking and sharing with their friends all sort of things. Facebook pages allow their administrators to publish links or videos, status updates… at the end as it was a personal user. Nowadays it can be even embedded rich media spaces where the interactivity posibilities are much higher and the user experiences get richer. Facebook pages are working as our brand site in which we can receive stats giving information not only about how many clicks were made but demographics, media consuming…  The posibilities to spread the message thanks to Facebook groups is increasing every day as Facebook becomes more popular.

 Another increasing tool are Facebook applications. FB created an API in order to let everyone to make their own applications. AS we’ve seen there are lots of unuseful apps that are invading users walls but despite all this invasive test, games an so on there are some of them which gain a position into user and consumers mind. The quid of apps is to give useful and enjoyful tools that in one hand is covering a necessity are just enjoying time while the brand is gaining brand awareness and engagement with each of its users.

So, in conclusion, there are no limits for marketing on Facebook (and each day appear new creative ways to take its advantage) while you maintain the respect and and user behaviour. Many companies tried to just be there because the consumer is in there and at the end it was a completely anticampaign. My recommendation would go for stating a ver thinkful strategy before going online with a Social Media campaign and don’t forget what are the users expecting from you. Maybe it could be as easy as think on your customer as your user and it’ll be easier to understand this new scenario.

To finish this post with a smile on your face I’d like to share with you this spot that although it’s not completely related to this stuff I think it’ll  help to understand (under hyperbolic code) what Social Media is meaning this days:

Enjoy it!!! Best

Manuel A. Alonso Coto

There is a new star coming up… Actually it is not new, but old. It is just that marketers did not pay much attention to it outside of US. Up till now… And as we always do, we consult the numbers:

Advergaming offers a different approach to marketing and reaching another demographic with the following advantages:

• User engagement
• Brand integration
• Measurability
• Two way communication

But what is really advergaming and what are the types of this channel? A good explanation of the subject at hand can be found here. And the channels are:

• Console gaming
• Computer gaming
• Online gaming
• Mobile gaming

All these channels can be used as an additional tool to build brand equity and brand awareness.

But what are the keys for successful advergaming? For the purpose of answering this question, I will be taking Turbo-Ice.com a branded game website that BrandGames created for Dunkin’ Donuts’:

• Do not forget that not only kids and particularly males ones are playing games!

• Do not forget that your goal is to engage the user with the “brand experience”! – the Turbo Ice Coffee is in the focus of the game
• Virality – foster easy share with friends and peers
• Language – speak to the targeted demographics in their own language
• Instructions – lay down the rules and functionality in a understandable way
• Technology – remember that not everyone has the latest versions of hardware or software. Make it accessible to as many people as possible.
• Uniqueness – offer something new, fun and emotionally engaging
• Monitor, gather consumer data and analyze… And most importantly take an approach that makes the user happy – lucky draw for answering a questionnaire for example

And other points not touched by this game, but also essential:

• Availability – offer multiple platform access – console, mobile, online and offline (BurgerKing Games)

• Interactivity – let the user select their own characters, scene setting and control on story development.

Did I miss anything? Let’s blog about advergaming!

(Post by Bobby Kiprin, MDMK 2010)

Best

Manuel A. Alonso Coto

Hola a todos:
No quería dejar pasar la ocasión de compartir con todos vosotros esta espléndida campaña de marketing de guerrilla. No desvelaré nada más pues si no el vídeo pierde su capacidad de sorpresa:

Ahora que sí ya lo habéis visto, podemos comentar la capacidad de creación de recuerdo de marca que, a un precio mínimo, tienen estas campañas. Sólo un ejemplo de los muchos que veremos en el Seminario de Marketing de Guerilla que celebraremos el 14 y 15 de octubre en IE http://execed.ie.edu/OpenPrograms/ProgramasAbiertosDetalle.aspx?id=1269 y alrededor del cual estamos organizando un concurso que premie la propusta de comercialización “guerrillera” más creativa para el mismo…

Abrazos

Manuel A. Alonso Coto

In the digital world, numerous businesses have emerged around the delivery of video content via broadband.  Why? Online video is on an upward trajectory.  The digital citizens and immigrants are demanding consumers who look to receive information whenever they want, wherever they want. Can you blame them? Web 2.0 has put the power in their hands and it is up to us as marketers to put the ball in their court.

Throughout the years we have seen and will continue to see a consistent increase in online video viewers.  That is because Internet users see IPTV as a haven for:

The 5 Online TV Pull elements

·         More Choice of programs

·         Content upon instant request

·         More Interactivity

·         More Tailored Programming

·         More localized content

All this has been made possible outside conventional satellite, digital cable and terrestrial broadcasts.

As a result of this trend and demand from online users (VOD), companies like the following were founded and have become popular:

Various Online TV Business Models

Technology Suppliers

This model is used by companies whose primary function is to deliver a portion or all of an online video distribution.  The services include a “build your own” course providing content management software, SDN services, and advertising support technology mainly to large media organizations.

Aggregators

The companies that use this model are the major cable providers such as Comcast or Verizon who provide IPTV services in selected areas.  Internet portals such as AOL, MSN, Yahoo!, Apple’s iTunes, Amazon and Real Networks are a part of this business model solution as they support downloads of TV shows and video streaming.

Social Networks and Consumer and consumer sharing sites

Companies like YouTube, Metacafe, MySpace and MSN video SOAPBOX boast the business model that provides a forum for consumer to post Consumer Generated Content (CGC). 

Broadband Media Distribution

This business model involves a combined platform of services with media distribution elements to create a new way for publishers to reach and build audiences.  BrightCove is a perfect example of this model in which their approach targets makers, sharers, watchers and sponsors.  Other users of this model include Revver (www.revver.com) and the Roo Group (www.roo.com).

So which is the best?

Google’s YouTube has dominated the UGC market by logging 20 million unique visitors with video streams accounting up to 60% of all videos watched online. Here, personalization and user’s own viral content take precedence as anyone can upload, share, browse, search and rate videos. Now while Google continues it dominance, BrightCover plans to expand its broadband video distribution systems to professional publishers, content creators, advertisers, watchers and sharers thus hitting the sweet spot on the Internet’s TV space.

However, the TV model that will prevail would be that which implements solutions including the 5 online TV pull elements mentioned earlier.  BrightCove is pretty close but it lacks a UGC style lead by Google’s Youtube who then lacks the professional services supported by BrightCove.  It will not surprise me however, if Google bulldozes its way into the broadband media distribution establishing itself is a broadband media distribution and CGC hybrid.

Thanks to Carlton L. Bennett Jr for this splendid conlusions of what we have ben duiscussin lately in our classes. Your thoughts, my friends?

Best

Manuel A. Alonso Coto

As a starter for the debate we’ll be holding about the future of media while on London for our residential period, I have asked a US student, Eduardo Ferreira, to give a thought to the pros and cons of New York Times going exclusively online on work days…

As the nation’s greatest journalistic institution, the Times seems like it should be impervious to the newspaper industry’s problems. But it’s anything but, as we’re seeing.   It is currently an institution plagued by financial woes including mounting debt obligations, depleting cash flows, and loss in stock value.  A large contributor to the company’s financial problems has to do with a significant drop in advertising expenditures, and paid circulations. 

Advertising

Advertisers

A recent study published by Nielsen showed that Advertisers collectively cut budgets by more than $10 billion during the first half of 2009, sending total spending down 15.4 percent to $56.9 billion, of which national newspapers including the NY Times assumed a -22.8 percent drop. 

Consumer Preferences

A Pew news consumption survey reported that only a minority of Internet users (23%) visited newspaper websites. Instead, websites that include quick updates of major headlines, such as MSNBC, Yahoo, and CNN, dominate the web-news landscape. Most users say what distinguishes web news is its format and accessibility ­ the ease of navigation, speed with which information can be gathered, and convenience “at my fingertips.”  

Architectural Design

Despite the reduction in advertising expenditures the suggestion is that online newspapers have done a poor job compared to other news sources in meeting the accessibility and convenience expectations of online users.  This may be a key underlying reason and factor as to why advertising revenues from online newspapers have been below expectations and trending unfavorably.  Andy Rutledge on his blog posting “Online Newspapers are 99% Bad“ notes that Given the fact that online newspapers are supposed to attract huge numbers of readers and ad consumers, why is it that almost all of them are examples of the worst the web has to offer in the way of readability, design, layout, usability and information architecture? Even the best of them are relatively poor examples of these important factors.

Circulations

The latest news consumption study confirms the sluggish circulation figures reported by most newspapers.

Four-in-ten Americans reported reading a newspaper “yesterday” in the survey, down

•  From 50% a decade ago. And the drop-off is even more severe over the longer term. A 1965 Gallup survey found fully 71% reading a paper on the previous day. By far, most newspaper readers are still reading the print version ­ on a typical day fully 94% read it in print, while 14% read it on the internet (some do both). Put in other terms, if internet newspaper consumption were removed from the long-term trend and we looked at only the share reading the print version of the newspaper, the proportion who read yesterday would drop only a few points to 38% overall.

• While the availability of newspapers online has not significantly increased newspaper readership, it has stemmed the losses, particularly among young readers. Currently, 29% of people ages 18 to 29 read a newspaper on a typical day ­ either in print or online. This is fewer than in any other age group, but no lower than a decade ago. By comparison, newspaper readership has dropped over the past decade in all other age groups, even when online readership is figured in.

• Newspaper websites make up for much of this loss. In fact, the very youngest adults surveyed ­ those ages 18 to 24 ­ were slightly more likely to have read a newspaper this year than a decade ago, due in large part to their increasing use of online newspapers.

Circulation Drop on Weekends

Among the nation’s largest newspapers most have reported declines in overall but especially paid circulation on Sundays.  An analysis of 88 major papers showed that:

·         In the last two years, about half had seen no significant change in combined print and online readership, or showed an increase.

·         2.6 percent decline in paid weekday circulation from the year-earlier period for more than 500 newspapers whose figures were available, and a 3.5 percent drop on Sundays for more than 600 newspapers including the NY Times.

·         New York Times, which shed less-profitable circulation and increased some prices in the last year, lost 4.5 percent of its weekday circulation (to less than 1.04 million) and 7.6 percent of its Sunday circulation (to 1.5 million).

Which are the conclusions we should get to?

Traditionally newspapers relied on three revenue sources: newsstand sales, subscriptions and advertising. The easy Internet ad dollars of the late 1990s enticed newspapers to put all of their content, plus a whole lot of blogs and whistles, onto their websites for free. But the bulk of the ad dollars has ended up flowing to groups that did not actually create much content but instead piggybacked on it: search engines, portals and some aggregators.  This talks to the newspapers inability to monetize its online business model.  Online has attracted a significant number of readers but advertisers have generally not considered an online reader to be as valuable as a print reader. There appears to be a growing cannibalization where the growth in online readers has been at the expense of print. Most of the users that seek news outlets online prefer other news sources citing convenience and usability as main differentiating factors.  Weekend circulations especially on Sundays continue to trend unfavorably.  As a result, a shift in strategy where the NY Times would only be available to online readers from Monday to Thursday seems feasible in today’s economic downturn.  I can see this reducing the rate of cannibalization especially on the weekends that currently represents the NY Time’s greatest drop in circulation, generate savings by not incurring the costs of publishing content on the weekends and employ this period to improve the convenience and usability of the site.

Please, feel free (as long as you share your arguments) to agree or disagree with us…

Best

Manuel A. Alonso Coto