Strategic Transformation to Drive Growth SNA Fall Publisher

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Strategic Transformation
To Drive Growth James S. Gold VP/Marketing
New York Times Regional Media Group SNA Fall
Publisher Ad Directors Conference Philadelphia,
Pennsylvania 10.04.07
2
Today

• The Growth Imperative
• Current Landscape Media Fragmentation, Revenue
  Erosion, Sinking Valuations
• Strategic Transformational Change
• Balanced Management Approach The Ambidextrous
  Organization
• Triad Management Principle
• Transformational Change _at_ NYTRMG

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The Growth Imperative
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Strategic Context The Growth Imperative

• Growth is Fundamental and Elusive
• Continuous Waves of Transformational Competition
• Relentless Decline in Circulation and Penetration
• Classifieds Under Siege
• Growth Potential Modest vs. Dot Com Media
• Public Companies Beating on the Street

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The Growth Imperative ChallengesUS Market
Penetration Relentless Erosion
Frame of Reference Timely News
Information Point of Differentiation Most
Current Complete Source
For decades, new media players, fueled by
technological innovation, challenged
newspaperspoint of differentiation and have
continually eroded market share.
Source NYTRMG Marketing
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The Growth Imperative ChallengesUS
Circulation/Penetration
Number in Millions
Source Editor and Publisher Yearbook data U.S.
Census Bureau
While US Households continue to grow, paid
circulation and penetration falls. Increasingly,
a once powerful mass medium appears to be
evolving into an ageing niche player.
Source NAA
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The Growth Imperative ChallengesUS Newspaper
Print Ad Revenue Trend 1996-2006
Billions
Total Print (National, Retail Classified)
Advertising growth remained strong through the
advent of the Internet. While recent troubles
are both cyclical and secular, how deep is the
secular change?
Source NAA
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The Growth Imperative ChallengesUS Classified
Revenue Trend
Billions
Classifieds, now under siege from online players,
is the site of much of the revenue
erosion. Automotive revenue has declined for 15
consecutive quarters.
Source NAA
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The Growth Imperative ChallengesUS Automotive
Trend
Billions
2004
2003
2005
2006
2007
Losses are most significant in Automotive and
seem largely secular driven by industry
competition, pure-play Web and Disintermediation
Source NAA
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The Growth Imperative ChallengesUS Newspaper
Stocks The Street Curbs Its Enthusiasm
U.S. Newspaper Stock Performance change from
2004 to 2005
E.W.Scripps
KnightRidder
DowJones
McClatchy
Belo
Lee
JournalRegister
MediaGeneral
Wipes
Gannett
Tribune
New YorkTimes
Journal
And the growth achieved beyond the Core has not
outweighed the fundamental erosion within it
The Street has remained largely unimpressed.
Source Yahoo Finance, Merrill Lynch research
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The Growth Imperative ChallengesPublic
Companies Investor Impatience
Holding Period of Average Stocks
Years
Once satisfied with dependable dividends, strong
cash flow and solid (if modest) growth, investors
increasingly want dramatic revenue and earnings
growth that is reflected in the share price.
Source Bain Company (2005)
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The Challenge
The biggest strategic issue facing newspapers in
2007 involves implementing meaningful change, or
breaking the cages of convention. -Len Kubas,
Kubas Consulting, 2007 INMA Outlook
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Advertising
Classified
Creative
Editorial
Circulation
Strategic TransformationRe-Engineering the
Organization for Immediate and Sustained Growth
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Strategic Transformational ChangeBusiness
Analysts Key Principles

• Long-term success inevitably requires that
  leaders reallocate resources away from mature and
  declining businesses toward emerging growth
  opportunities.
• The key to sustained profitable growth is the
  ability to recombine and reconfigure assets and
  organizational structures as markets and
  technologies change.
• -Teece, Explicating Dynamic Capabilities The
  nature and microfoundations of (sustainable)
  enterprise performance (2006)

Simply being successful at developing new
products in a declining market or technology
does not guarantee success. -Mitchell Singh,
Organizational Change (1993)
Asset orchestration is how organizations evolve
to maintain ecological fitness Exploitation is
about efficiency, increasing productivity,
control certainty and variance reduction.
Exploration is about search, discovery, autonomy,
innovation and embracing variation
Ambidexterity is about doing both. -OReilly
III Tushman, Ambidexterity as a Dynamic
Capability Resolving the Innovators Dilemma
(2007)
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Strategic Transformational ChangeAmbidextrous
Management Key Principles

• The ability to simultaneously exploit and
  explore.
• To configure and reconfigure organizational
  resources
• To capture existing and new opportunities
• To simultaneously pursue mature and emerging
  strategies
• To gain greater efficiencies in the mature
  business and
• ...to sharpen the organizations ability to
  innovate

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Strategic Transformational Change
Re-Engineering The Organization Triad
Management Principle
Shared Resources
Open Technology
Strategic Partnerships
Local Management
A new management approach allocates traditional
and key emerging expertise and resources to
maximize return, encourage innovation and
accelerate growth
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Strategic TransformationCirculation gt Audience
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Strategic Transformational Change Circulation gt
Audience
Evolution of Customer Insight The CRM Pyramid

• Marketing Database builds Consumer Insight and
  begins the process of treating customers as
  Strategic Assets which implies investment and ROI.

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Strategic Transformational Change CRM Stage
One Demographics
Anna
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Strategic Transformational Change CRM Stage2
Life Stage Profiles
Mature Years 59 of Market

• Life Stage Profiles identify Communities of
  Interest and position the company to transition
  from mass marketing to 1-1 customized content and
  messaging

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Strategic Transformational Change CRM Stage 2
1-1 Relational Management
Young Digerati

• Consumer Profile
• Former 7-day Subscriber
• Busy, professional couple
• MarCom Objective
• Weekend Subscriber, Online

• Each market is segmented. Strategic objectives
  are assigned to each segment that form the basis
  for all marketing communications. Campaigns
  targeted to specific households

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Strategic Transformational Change CRM Stage 3
The Learning Relationship
Rewards Programs
Online Registration
Acquisition
Surveys
Contact Center
Billing Renewal
Contests
Third-party demographics plus proprietary
attitudinal and behavioral information builds
foundation to have unequaled customer insight a
competitive advantage and key strategic asset
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Strategic Transformation Solo Brand gt Portfolio
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The Growth Imperative ChallengesTraditional
Marketing Model The Solo Brand
LocalManagement
Organized to serve single brand
Single mass brand
Serving all consumer and advertiser segments
The traditional newspaper management model
maintained a solo mass brand intended to serve
all consumer and advertiser segments.
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The Growth Imperative ChallengesEvolving
Marketing Model The Brand Portfolio
LocalManagement
Organized to serve dominant core brand plus
subordinate brand extensions and new brands.
Core consumer and advertiser segments
Dominant core brand, plus brand extensions, new
brands
New geo-demographic and advertiser segments
The Brand Portfolio management approach developed
to achieve mass reach through the aggregation of
multiple brands each one assigned to a specific
segment. Together, a company could achieve a
total audience reach.
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NYTRMG Brand PortfolioSpecial Sections,
Community Weeklies, Magazines and Digital
Verticals
30 Brands in 3 Years Introducing new brands
within and outside the Core brand extends reach
and increases audience engagement

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Strategic Transformational Change
Brand/Audience Segmentation Map
Younger Years 31 of Market
Family Life 10 of Market
Mature Years 59 of Market
Editors and Brands focused on developing
relationships with specific market segment vs.
product development
Source NYTRMG Marketing
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Strategic Transformation Sales gt CRM
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Customer Relationship ManagementManaging
Customers as Strategic Assets
Web-based CRM connects each rep and all customers
to a network of support
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Strategic Transformation Classifieds gt SMB
Services
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Strategic Transformational Change Classifieds gt
SMBS
Subscriptions
Search/SMB
CRM/Cross-Marketing
Classified
Outsourced Contact Center Representative enabled
to cross-market products and pass leads to local
ad management
Local Sales Representativereceives qualified
leads on their desktop

• Local sales reps focus on major accounts while
  strategic partner manages most inbound calls,
  new business development, cross-marketing brands
  and SMB relationship management.

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Strategic Transformation Print Ad Building gt
Multi-Media Strategy Creative
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Strategic Transformational Change Print Ad
Building gt Multi-Media Strategy Creative
Networked print digital ads, spec ads and
traffic management
SalesForce.com /TBD
Outsourced Contact Center Representative
Local Sales Representative
Local Creative
Creative Center
Offshore Production Center

• A network of copywriters and designers manage all
  advertising for the Group. An ad from any market
  might be built by another markets team, a
  regionalized site or offshore.

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Strategic Transformational Change The New
Organizational Model
Digital Content
Circulation
News
Creative
Production
Advertising
IT
Digital Advertising
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Summation

• Growth is Fundamental Elusive
• Must be Immediate Sustained
• Strategic Organizational Transformation
• Ambidextrous Organization Exploit Explore
• Gain Efficiencies in Mature Business
• Sharpen Innovation Capability in Emerging
  Business
• Ambidextrous Management Create Competitive
  Advantage
• Competitive Advantage Fuels Growth

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In Closing

• Be competitive rather than trying to hold on to
  what was.
• -Lauren Fine, Merrill Lynch, 2007 INMA Outlook

If you dont like change, youll like
irrelevancy even less. -Claire Bennett, Dell,
2007 INMA outlook
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Thank you.

• James S. Gold Vice President/Marketing New York
  Times Regional Media Group james.gold_at_nytrng.com