Metro Division Strategy Update. Macquarie Online Conference - November 2012

Transcription

1 Metro Division Strategy Update Macquarie Online Conference - November 2012

2 Our strategy is to transform Fairfax from a print classifieds model to a multi platform business

3 We are conducting this transformation from a position of strength $Millions % of Total Group Revenue Group Digital revenue FY07 FY08 FY09 FY10 FY11 FY12 9% 9% 11% 12% 13% 17% Metro Digital Revenue Other Digital Revenue Strong digital growth with total group revenues up 20% in FY12 to $395.7m. Leading market share in digital with the No 1 and 3 news sites in Australia. Metropolitan Media digital revenue includes Australian metropolitan news sites, online classifieds and transaction sites on tablet, mobile and online platforms. Metro Digital CAGR of 13% over the last 6 years and 19% increase in the current year to $251m. Metro Digital does not include ACT, FRG and Communities.

4 Over the last 5 years our metro audience reach has grown by 30% to over 7 million people Market Total People who access the Internet at least monthly has grown from 73% to 90% of the population Fairfax Audience by Media Type % of population (000s in brackets) 33% (5,540) 38% (7,173) 30% Growth People who read a newspaper in the last 7 days has declined from 80% to 64% Reach (000 0s) Source: Roy Morgan Data March 2012 v March Fairfax Metro Print = SMH M-Sun net & AGE M-Sun net, GW, SL, TSM, TMM. Fairfax Digital = Any Fairfax site visited in the last 4 weeks. Note: Online audience estimate is regarded as very conservative

5 Our audience-focused strategy capitalises on this growth Metro Media Strategy FY12-FY14 Audience-focused independent journalism across platforms, driving diversified profits Create quality content across platforms Monetiseaudiences across platforms Develop diversified profit streams around interest categories Optimise print to enable transition to new platforms Develop deeper understanding of our audiences Drive performance through aligned incentives and active performance tracking Attract, retain and grow talent across the business Invest in critical technologies to support and enable strategy execution 5

6 We have broken down the silos to facilitate this audience focus Past SYD MEL DIG Present SYD MEL DIG Sales Sales Sales Editorial Editorial Editorial Mktg. Mktg. Mktg. Finance Finance Finance HR HR HR IT IT IT Sales Editorial Mktg. Finance HR IT 6

7 We have taken significant actions to make our newspapers sustainable into the future Outsourced sub-editing Redesigned the Sun herald Audience-focused independent journalism across platforms, driving diversified profits Managed circulation for profit rather than volume Create quality content across platforms Monetiseaudiences across platforms Develop diversified profit streams around interest categories Approved printing plant rationalisation Increased price of printed products Compact Optimise print to enable transition of Metro to new platforms Develop deeper understanding of our audiences Drive performance through aligned incentives and performance tracking Attract, retain and grow talent across the business Invest in critical technologies to support and enable strategy execution 7

8 Making sure our last newspaper doesn t cost $100m MOSTLY FIXED MOSTLY VARIABLE Reorganised structure + Closure of Chullora and Tullamarine Staff Costs Promotion Printing Production Distribution Other costs Depreciation 8

9 Implemented a Cross-platform Editorial Model Audience-focused independent journalism across platforms, driving diversified profits New editorial leadership team appointed Platform and topic focus increased Create quality content across platforms Monetiseaudiences across platforms Develop diversified profit streams around interest categories Digital-first work practices introduced Integrated story planning across platforms Social media and analytics included in story selection Reduced duplication and waste Optimise print to enable transition of Metro to new platforms Develop deeper understanding of our audiences Drive performance through aligned incentives and performance tracking Attract, retain and grow talent across the business Invest in critical technologies to support and enable strategy execution 9

10 We have reorganised editorial operations to followthe-sun with our audience Engagement Throughout The Weekday 10

11 And we are already starting to see the impact of these changes in our coverage Feeding The Fire - Most-Viewed Stories on Oct 10, 2012 Our new editorial operating model allows us to maximise interest in a story and cover it from multiple angles e.g., Gillard s misogynist speech: The first story to deliver strong interest was Peter Hartcher s oped The next instalment was Stephanie Gardiner s international reaction to Julia badass Gillard We then published the story about Abbott s Died of shame phrase This was followed by Paul Sheehan s oped Online coverage was reinforced in print with a mix of new and reverse-published content on the 11th 11

12 Fully Integrated Advertising and Consumer Sales Audience-focused independent journalism across platforms, driving diversified profits National Ad Sales team created Women, Business and F&W Networks launched National Marketing team created Create quality content across platforms Monetiseaudiences across platforms Develop diversified profit streams around interest categories Centralised circulation and retail marketing New customer loyalty and recognition programs Digital subscriptions Optimise print to enable transition of Metro to new platforms Develop deeper understanding of our audiences Drive performance through aligned incentives and performance tracking Attract, retain and grow talent across the business Invest in critical technologies to support and enable strategy execution 12

13 Our integrated sales approach is being received well Metro Block Market Feedback #1 ranked media sales team in Australia 1 Net Promoter Score growth for both Print and Digital 1) Media-I survey 13

14 Paid Digital Subscriptions sneak preview Should we charge? Research suggests a portion of our audience is willing to pay Industry moves are eroding the ethos everything on the web is free Content online is increasingly the same as in print Online ad revenue alone cannot offset print declines What should we charge for? Our core proposition quality independent journalism Our flagship products across all major platforms Access to new and innovative digital products (e.g., ebooks) Access to a loyalty program that we are investing to build Why a meter? Protects our highly successful ad-supported digital business Emerging as the de-facto standard for publishers globally Is egalitarian in terms of editorial representation Gives us flexibility in terms of how loose / tight we want the meter to be 14

15 Package Architecture Web-only (Desktop, Mobile, Tablet) + + Entry-level price point for website access across all devices Tablet-Only (App) All digital + + Standalone access for fans of our awardwinning tablet app An all-you-can eat digital degustation of unlimited website and app use 5 packages providing a mix of simplicity and choice Digital + Weekend Our best-value offer, bringing the best of both print and digital Digital + Full Week The complete experience from A to Z 15

16 Implemented Communities of Interest Approach with Multiple Revenue Models Events expanded Audience-focused independent journalism across platforms, driving diversified profits Food & Wine vertical established Travel vertical established New Food & Wine website developed Create quality content across platforms Monetiseaudiences across platforms Develop diversified profit streams around interest categories Restaurant bookings partnership commenced Wine sales partnership commenced Last-minute hotel bookings offer for mobile audience Samsung and Sony Smart TV apps developed Optimise print to enable transition of Metro to new platforms Develop deeper understanding of our audiences Drive performance through aligned incentives and performance tracking Attract, retain and grow talent across the business Invest in critical technologies to support and enable strategy execution 16

17 Communities of Interest Food & Wine Example

18 Implemented our differentiated strategy of managing circulation for profit YOY Change in Circulation: FXJ vs NWS M-F SAT SUN -10% -8% -6% -4% -2% 0% 2% SMH DT -10% -5% 0% 5% SMH DT -15% -10% -5% 0% 5% SMH DT 18-16% -14% -12% Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12-18% -16% -14% -12% -10% -8% -6% -4% -2% 0% 2% Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Age HS -20% -15% Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12-16% -14% -12% -10% -8% -6% -4% -2% 0% 2% Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Age HS -25% -20% Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12-20% -15% -10% -5% 0% 5% 10% Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Age HS

19 Readership Share: FXJ vs NWS M-F SAT SUN 10% 20% 30% 40% 50% 60% 70% SMH 10% 20% 30% 40% 50% 60% SMH 10% 20% 30% 40% 50% 60% 70% SMH Cuts have had absolutely no impact on readership 0% 10% Dec-07 May-08 Oct-08 Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 SMH DT 0% 10% 20% 30% 40% 50% 60% 70% 80% Dec-07 May-08 Oct-08 Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 AGE HS 0% Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 DT 0% 10% 20% 30% 40% 50% 60% 70% Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 AGE HS 0% 10% Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 DT 0% 10% 20% 30% 40% 50% 60% 70% 80% Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 AGE HS 19

20 But most importantly, circulation yield and even total circulation revenue are increasing YOY 20

21 Once again, the results can be seen in terms of the increase in our share of total advertising Fairfax Metro 65% FFX Metro Media Market Share v News, All Platforms 6-month rolling average 60% 55.1% 55% NWS 50% 45% 44.9% 40% 35% 30% % 48.0% FFX

22 Meanwhile our classified and transaction brands continue to establish leadership positions in mobile Proportion of traffic in the category coming from mobile devices Across Marketplace Brands Y.o.Y. Growth Real Estate +199% 43% YoY 115% Dating 31% +168% YoY 53% Employment 30% +199% YoY 35% Automotive 26% +298% YoY 70% Travel 18% +171% YoY 135% 22

23 The Domain example proves just how important mobile devices have become The goal: Get Domain in every single person s pocket. Be synonymous with mobile The opportunity: differentiate our brands through mobile services, growing engagement and yield Domain will continue to build on the success of its mobile story to date: Over 1,000,000 Smartphone app downloads since June 2009 Over 375,000 ipad app downloads since July 2011 Over 43% of all traffic now sourced from mobile products Consumers are more engaged with our mobile services than our websites: 330% more property searches per user 350% more property views per user 250% more enquiries to agents per user 23

24 Key Takeaways We are reducing our costs and making them variable to ensure that newspapers remain profitable for as long as possible At the same time we are decreasing our reliance on print revenues by introducing a wide range of paid products and embedded transactions across our digital properties Our editorial team is leading the charge on customer centricity with a radical new operating model that fosters collaboration to create better, faster and more relevant content Our sales team is making it easier for agencies and clients to work with us, and creating innovative opportunities to reach the massive Fairfax Metro audience more holistically And finally, we have completed the significant 18-month change management effort to break down the silos and merge our disparate businesses into a single division with a clear purpose and strategy