10TH OCTOBER 2017

FIPP Congress 2017

Next Gen Operating Models for Tomorrow’s Media

Antonella Mei-Pochtler

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Multiple 'Evolutionary Trends' are at play

Source: eMarketer, Reuters Digital News Report 2017, PQ Media Research, Forbes

Online top source of news & info (2x print)

Mobile screen time will be 6+ hours/ day by 2018

Time spent doubled in 4

years (2012-16)

Monetization unclear

Google FB, Instagram,

Blogs, Aggregators

+ Amazon, Telcos, ISPs

Changing revenue mix (ad vs. sub)

Divestiture, dismantling traditional partnerships

Changing

customer

habits

Digital

video

boom

Rise of oldand new platforms

Supply side is changing

Major shift of profit pools (within and from) publishers to platforms and tech enablers

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Across markets, online is now the dominant source of news & info

Source: Reuters Digital News Report 2017

34

Population using for news (%)

Print

Online 60

25

71

41

74

26

85

29

86

26

95

Germany France UK Denmark GreeceSlovakia

50:50 60:40 30:70

Two consumption shifts taking place – from print online and within online mobile

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Platforms have data but do not (yet) offer reliable context

~2Bn

Users

~2 Tn

annual

searches

Billions of data points captured every day… Leading to some hits..

• 60% of global digital ad revenue pool captured by

Google and Facebook

• Ability to serve personalized content/ ads based

on user behavior

And misses…

• User fragmentation

• Ability to control 'fake news'

• 'Editorial authority'

• Meaningful relationship with readers/ subscribers

Source: Enders, BCG Analysis

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Threat of extinction is real for many physical titles/ genres

Note: Number of magazines different in each (taken for all magazines provided by IVW), Women's – 59 (monthly +weekly), current

events – 16, children – 39, TV Channels – 29, Home & Garden – 28, Economic & finance – 21, Food -14, Cars & Bikes – 24, Sports - 31

Source: IVW Germany

Endangered Threatened Survivors

0

5

10

15

20

-15%-15%

-16%

Tota

l cir

cula

tion (

Mn)

ChildrenCurrent

Events

Women’s

-19%

-15%

Home &

Garden

Economics

& Finance

Food

-6%

TV

Channels

-1%

SportsCars &

Bikes

-23%

-23%

2016

2012

Germany

More niche products/ genres, linking with offline e.g. club memberships

Revenue decline for some titles even more steep

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Magazines need to 're-invent' their role/relevance and become 'MagNets'

Passage of Time

Engagem

ent

and R

each

Interest-based

community

Advertising platform

with sharp targeting

Rise of horizontal

communities/

social networks

Resurgence as

MagNet System

Magazine decline

From … Storehouse of “information” To … System of 'individualized engagement'

Can publishers drive reach & individual

engagement with high trust but at lower cost?

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Burning questions on every magazine publisher’s mind

What are the attractive opportunities to

pursue — size of revenue & profit pools?

What are my strengths — community,

content, brand, scale?

How do I prepare for the transition?

What capabilities will I need to build to

profitably pursue these opportunities?

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We identified five potential “evolutionary” pathways…

Global Market size

(2016)

Physi

cal Engagem

ent

Distance from the core

2

3

Digital Engagement

4Agency Services

(Insights, Strategy, Creative, Execution)

Online Branded

Content

5

Brand Activation

(Events, radio, out-of-home, Clubs)

Commerce

(E-comm,

Lead Gen,eClubs)

$2.5+T

$15-20B

$80-100B

$80-100B

0 $60-70 B

Digital

Publishing

1

$15-20 B

Print

Magazine

Note – Branded Content – Premium Branded content market in 2017 for top 5000 publishers, Core – digital Circulation and digital ad (2015),

Brand Activation– Revenue for advertising excluding tv, print, digital , Content creation – Ad agency market size

Source: eMarketer, Polar, Zenith, Ovum, Magna, HIS, IBIS world

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…with dramatically different capability requirements

Print DigitalAgency

Services

Branded

ContentCommerce

On Ground

Activation

Organizational

Capabilities

Monetization

Models

• Subscription

• Ad sales

• Subscription

• Ad Sales

Retainership

Project fees

Production fee

Space selling

Performance

based fees

Conversion -

transactions,

ATV

Lead gen

Sponsorships

Ticketing

revenue

Rental/

listings fee

New selling capabilities

Editorial and Content Creation

Customer Insights and Data Analytics

Brand Solutions/ Next Generation Sales

Multi-Media Content Production

Logistics

Digital Marketing (Social Media, SEO, Customer Acquisition...)

Product Development & Tech

Event ExecutionCustomer Service

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Several publishers making inroads across these pathways

Physi

cal Engagem

ent

Distance from the core

Digital Engagement

Online Branded

Content

3 Brand Activation

(Events, radio, out-of-home)

2Agency Services

(Insights, Strategy, Creative, Execution)

0

Digital

Publishing

1

Print

Magazine

4

Commerce

(E-comm,

Lead Gen)

5

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All r

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rese

rved.Key watch outs

for operating model transformation

'Clinical brand review' to have a sustainable

core product is the starting point

Focus on opportunities relevant 'for

you' —don’t go after everything

Source content from bloggers, readers

Technology enabled editorial

Find ways to co-exist with large

distribution platforms—Google, FB

Creating a single view of

consumer across use cases

Invest in new talent

Visible change via top leadership

Strengthen the Core

Sharp Shoot Adjacencies

Open Source Editorial

Platform 'co-existence'

Data Powerhouse

Managing Change

'Watch-outs' as you embrace evolution

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11

Looking ahead…

what the

MagNet

looks like 3 years from now

360o

Brand

Management

Slim

Print Offer

Established

E-comm

Attribution

FunnelOn Ground Events

to amplify

Marketing spends

Branded

Content

Capability

Integrated

Digital + Platform

Presence

(FB, Insta,

Messaging apps)

bcg.com