newspaper advertising: behind the numbers

Newspaper Advertising: Behind The Numbers

November 2, 2011

1 © 2011 Kantar Media www.KantarMediaNA.com

1. Media Monitoring Coverage

2. Newspaper Ad Metrics

3. Digital Advertising

4. Key Category Trends

Today’s Agenda


Media Monitoring Coverage


4

We Track a Diverse Range of Media

© 2011 Kantar Media www.KantarMediaNA.com

TV

Network (5)

Cable Nets (68)

Local Cable (2

DMAs)

Spot TV (1,003)

Spanish Net (8)

Syndication

Media Coverage

Radio

Network (5)

Local (32 DMAs)

National Spot

(205 DMAs)

Plus…

National & Local

Magazines (>300 pubs)

Outdoor (210 DMAs)

Internet Search (Google)


Newspaper Monitoring

6 © 2011 Kantar Media

Media Type

Local 142 pubs in 63 DMAs

Hispanic 52 pubs in 18 DMAs

National 3 national pubs

What’s Included

ROP display & inserts

All zones & sections

Excludes agate type classified advertising

NEWSPAPER PRINT EDITIONS

www.KantarMediaNA.com

NEWSPAPER PRINT EDITIONS

NEWSPAPER WEB SITES

Media Type

Internet Display >300 local paper sites

7

Newspaper Monitoring

What’s Included

Display ad units

Static images + rich media

Media Type

Local 142 pubs in 63 DMAs

Hispanic 52 pubs in 18 DMAs

National 3 national pubs

What’s Included

ROP display & inserts

All zones & sections

Excludes agate type classified advertising


8

We estimate ad expenditures based on rate card costs

www.KantarMediaNA.com © 2011 Kantar Media

• English language Local Newspapers

• “Newspapers” = Print editions

• “Digital” = Web sites

• “YTD” = January-August period

• All data from Kantar Media unless

otherwise noted

Today‘s Rules


Newspaper Ad Metrics

10 10 © 2011 Kantar Media www.KantarMediaNA.com

-4.1%

-12.3%

6.5%

1.8%

-11.7%

-20.2%

-4.6% -3.6%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

2008 2009 2010 Jan-Aug '11

All Media

Newspapers

11

Ad Spend Growth Rates Total U.S.

Source: Kantar Media


Media Projected 2011

Ad $ vs. 2006

Outdoor 110%

Television 104%

Magazines 84%

Radio 75%

Newspapers 62%

Some Media Still Trail Their Pre-Recession Peaks




Anatomy Of A Decline

1. Circulation losses

– Affects pricing power

2. Shrinking pool of advertisers

– Down 8% since 2007

3. Continuing advertisers buying less

space

– 19% decline in annual inches from 2007 to

2010 for common advertisers


14

Erosion Is Continuing Into 2011

January - August

© 2011 Kantar Media

• Total # of advertisers: down 9.8%

• Total ad spending: down 3.6% – Down 6.0% for continuing advertisers

• # of inches down 5.9% − Down 7.0% for continuing advertisers



How does newspaper performance

compare to local TV stations?


Newspapers TV Stations

ALL ADVERTISERS

Total # of Advertisers -9.8% -1.3%

Ad Spending -3.6% -2.2%

Ad Volume (Inches/Seconds) -5.9% +1.4%

CONTINUING ADVERTISERS

Ad Spending -6.0% -2.8%

Ad Volume (Inches/Seconds) -7.0% +0.7%

16

2011 vs. 2010 January - August




Digital Advertising


Newspaper industry reporting shows online ad growth has

resumed and its share of total ad revenue is expanding

18

Online Ad Revenue

0%

2%

4%

6%

8%

10%

12%

14%

16%

2006 2007 2008 2009 2010 H1 11

Online % Share

18.8%

-1.8%

-11.8%

10.9% 9.3%

-20%

-10%

0%

10%

20%

30%

2007 2008 2009 2010 H1 11

Online Growth Rates


Source: Newspaper Association of America


Source: Newspaper Association of America

-20%

-10%

0%

10%

20%

30%

40%

2007 2008 2009 2010 H1 2011

Online Ad $ Growth Rates

Newsp Sites

All Display

Online ad growth rates for newspapers are consistently 10-15 percentage points below the industry average

Sources: Newspaper Association of America; Internet Advertising Bureau


• National sample of 20 newspapers and their web sites

– Q2 2011 vs. Q2 2010

• Side-by-side comparison to identify digital-only brands

• Findings

– 3/4ths of online ad $ growth coming from digital-only brands

– Online spend by digital-only brands growing 2x faster than joint brands


Digital-Only Brands Lead Online Ad Growth

Growth in web site ad revenues is being driven by digital-only

brands that do not buy space in the print edition


Category % Change

Amusements/Events +4.4%

Auto Dealers +4.5%

Media +8.8%

Medical Services +21.1%

Real Estate +13.4%

21

Leading Categories

Digital Spend - YTD 2011


Expanding



22

Leading Categories Digital Spend - YTD 2011

Category % Change

Travel & Tourism -9.2%

Auto, Factory -29.9%

Financial Services -14.7%

Education -14.2%

Telecom -23.3%


Expanding Contracting

Category % Change

Amusements/Events +4.4%

Auto Dealers +4.5%

Media +8.8%

Medical Services +21.1%

Real Estate +13.4%




Web Site Ad Clutter

• A concern for advertisers

• We count the number of display ads on

each page

• Ad clutter on newspaper sites is:

– Trending upward

– 15-20% above the norm

– Higher than local TV & radio sites


Site Category 2008 2009 2010 Jan-Aug

2011

All Web Sites 2.35 2.28 2.54 2.58

Newspapers 2.68 2.65 2.99 3.15

Radio Stations 2.88 2.56 2.87 3.03

TV Stations 2.63 2.45 2.67 2.76

24

Web Site Ad Clutter

Display Ads Per Page




• We track 32 ad networks

• % of site ad impressions sourced

from networks vs. publisher direct

– Remnant versus premium inventory

– Supply versus demand

• Ad impressions on newspaper sites

are skewed towards networks

25

Ad Networks

Newspaper’s Web Sites


Ad Netwk

Share

Publisher

Direct Share

All Sites 24% 76%

Newspapers 33% 67%


Ad Category Trends


Key Product Categories

• Automotive

• Retail – Department Stores

• Retail - Home Furnishings &

Improvements

• Hospitals & Medical Clinics


The Auto Rebound


Automotive ad spending has rebounded…


$10

$12

$14

$16

$18

$20

$22

'01 '02 '03 '04 '05 '06 '07 '08 '09 10 11(e)

Bil

lio

ns

AUTOMOTIVE AD SPENDING: ALL MEDIA

……To 2001 Levels




Newspapers have lost the most ground


$0

$4

$8

$12

$16

$20

$24

'01 '02 '03 '04 '05 '06 '07 '08 '09 10 11(e)

Bil

lio

ns

All Media

Newspaper

Total Automotive Ad Spending




Auto Segment 2004 2011 (est)

Factory $100 $84

Dealer Associations $100 $53

Local Dealers $100 $60

GRAND TOTAL $100 $72

33

Relative Rate Of Ad

Local Dealers - Newspapers

$52




2004 2010 H1 2011

Local Dealers 69% 77% 84%

Dealer Assn Groups 19% 9% 8%

Factory 12% 14% 8%

TOTAL AUTO 100% 100% 100%

34

Auto Spending in Local Newspapers is Concentrated Around Local Dealers

Distribution of Automotive Ad Spend




0% 10% 20% 30% 40% 50% 60%

Other

Radio

TV

Newspaper

H1 2011

2010

35

Auto Dealers – Media Channel Allocation Top 25 DMA’s

Newspaper share has grown in 2011




14.6%

21.8%

1.0%

19.2%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

All Media Newspaper Spot TV Other

H1 2011 vs H1 2010

36

Auto Dealers

Top 25 DMAs



Newspaper share gains tie back to above-average spending growth rates


37

Dealer Affiliates Top 25 DMAs


+38.4% +20.6% -36.7% +41.0% +28.8% +3.9%

Newspaper Ad Spend: H1 2011 vs. H1 2011



Among local dealers and associations,

search spending is twice as large as

display spending

38

Digital Auto Budgets

Display vs. Search


How Important Is Local Cable TV?

• Boston and San Francisco

– Cable system and primary paper covering

same geography

• Q1 2011

• Base: Local auto dealers

– Dealer association groups and factory

excluded

Dual advertisers account for 10% of the

newspaper’s total dealer spending Source: Kantar Media


Retail: Department Stores


41

Background

Department Stores


• A decade of declining sales

– Down 10% in past 4 years

• Consolidation into 7 major brands

– 85% of category total ad spend

• Budgets shift towards national media

– At the expense of newspapers


Total Ad $ Newspaper Ad $

+18.0% -4.6%

+10.3% -23.0%

-5.6% -13.1%

-14.9% -23.3%

-24.5% -10.6%

-49.9% -19.7%

Jan-Aug 2011 vs. Jan-Aug 2010


Major Brands Have Cut Newspaper Budgets



• Newspaper share of budget

varies widely

• National chains forego ROP

in favor of inserts

– Except Macy’s

Newspaper

% of Ad $

Inserts % of

Newspaper

Macy’s 44% 16%

Kohl’s 31% 98%

JC Penney 19% 96%

Sears 23% 95%

Target 16% 85%

Wal-Mart 5% 75%

12 Months Ending Aug 2011



Newspaper Advertising

Department Stores


FSI spending declines are

due to fewer insertions


Retail: Home Furnishings & Improvements



Background Home Furnishings & Improvements

• Category definition

• U.S. retail sales up 6% from 2009

– But still 15% below 2006 peak

– Less spending on discretionary big

ticket projects

• Housing market correlation

• 24% fewer advertisers vs. 2007


47%

21%

13%

19%

Share of Local Ad Spending: 2011 YTD

Furniture Home Centers Bedding All Other

47

Primary Segments

Local Media Ad Spending




47%

21%

13%

19%

Segment Share: 2011 YTD

Furniture Home Centers

Bedding All Other

Total Local $ Newspaper

Furniture +2.2% -7.3%

Home Ctr -13.1% -15.3%

Bedding +16.0% +22.8%

Other -0.5% -1.6%

Jan-Aug 2011 vs. Jan-Aug 2010


Primary Segments Local Media Ad Spending


$8.2

Jan-Aug '10 Jan-Aug '11

Newsp Ad $




Local media budgets for big box

home stores have been challenged


10%

7%

12%

71%

% Share: Jan-Aug 2011

Home Depot Lowes

Menards All Other

2010 vs

2007

2011 YTD

-46.1% -31.8%

-43.7% -64.7%

+10.6% +3.8%

% Change In Local Ad Spend



Home Centers & Hardware Stores Local Media Ad Spending



$234 $197 $199

$88

$58 $15

$79

$43

$10

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

2007 2009 2011 e

New

sp

ap

er

Ad

$ (

MM

)

Lowes

THD

Remainder



Home Depot & Lowes Newspaper Budgets in Free Fall

Remaining Advertisers Have Stabilized



Furniture Stores Local Media: Jan-Aug 2011

• Media spend flattening after 2010 gains

• Spot TV growth outpacing newspaper

growth in majority of markets

− Newspapers losing share

• 7% fewer newspaper advertisers

– Lapsed advertisers have maintained spending

levels in other local media

– New advertisers have smaller ad budgets

compared to lapsed group


53

Newspaper Spending Increases 2011 YTD

+10-20%

Indianapolis

+20-30%

Greenville

Phoenix

Pittsburgh

San Diego

Seattle

Wash DC

> +30%

Baltimore

Cincinnati

Hartford

Sacramento

St Louis




54

Newspaper Spending Declines 2011 YTD

(10-20%)

Chicago

L.A.

Nashville

New York

San Antonio

W Palm

(20-30%)

Detroit

Miami

Norfolk

(30-40)%

Denver

Kansas City




Hospitals & Medical Clinics


Background

• An aging and less healthy population

• A growing appetite for health information

• A crowded and competitive market for

medical service providers

– Establishing a brand identity with consumers

• Geographic “service areas” are expanding

– Implications for the media advertising mix


• Double digit growth rates

− Newspapers outperforming

• Growth currently strongest in NE

markets

Ad $ Growth vs. Prior Year

2009 2010 YTD ‘11

Total -10.8% 11.9% 18.8%

Newsp -14.9% 13.6% 22.8%

14.3%

19.5%

14.9%

25.9%

West

Central

Southeast

Northeast

0% 10% 20% 30%

Growth Rate: 2011 YTD



Hospitals & Clinics

Local Media Ad Spending



• Budget increases from recurring advertisers

• $ from new advertisers exceed $ from lapsed advertisers

Local Newspaper Advertising (40 Selected Markets)

2 Yr Advertisers Jan-Aug ‘10 Jan-Aug ‘11 % Change

# of Advtsrs 2,552 2,552 ---

Spend (MM) $126.7 $143.3 +14.0%

1 Yr Advertisers

# of Advtsrs 3,438 3,244 -3.2%

Spend ($MM) $39.4 $59.3 +50.9%



Hospitals & Clinics

Newspaper Spending Growth


Newsp 51%

TV 19%

Radio 14%

OOH 13%

Web 3%

Newsp 30%

TV 29%

Radio 22%

OOH 17%

Web 3%

Established Advertisers (27 Selected Markets)

New Advertisers (27 Selected Markets)

59

Local Media Mix – YTD 2011

Established vs. New Advertisers





Recap


61

What Do These Ads Have in Common?


• Key metrics for print edition advertising remain weak

• Digital ad spending growth coming from digital-only brands

• Newspaper web sites and ad networks

• Key categories

– Spending surge from local auto dealers is benefitting newspapers

– A weak environment for key retail advertising segments

– The growth opportunity from healthcare providers

Recap


newspaper advertising: behind the numbers

Business

kantar media source

kantar media unlessotherwise

rich media

media monitoring coverage2

online ad growth growth

ad expenditures

newspaper ad metrics3

online ad growth rates