Culture Welsh Language & Communications Committee - News media outlook - ENDERSIANALYSIS - National Assembly for Wales
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News media outlook
Culture Welsh Language & Communications Committee
Douglas McCabe I douglas.mccabe@endersanalysis.com I +44 20 7851 0910
Alice Pickthall I alice.pickthall@endersanalysis.com I +44 20 7851 0900
ENDERSIANALYSIS september2017
Daily print news: relentless 8% decline
Total circulation per week (m)
80 0%
75
72
70 68 -1%
59 -2%
60
55
51 -3%
50 47
60
-4%
40 50
47 -5%
42
30
-6%
20
-7%
10
-8%
0 -9%
2007 2008 2009 2010 2011 2012 2013 2014 2015
-ouality Popular -Y-o-Y % change (RH axis) [Source: ABC]
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 2
Shift from "quality" to "tabloid"
Circulation growth (Y-o-Y % change)
0% -.-----
-2%
-4%
-6%
-8%
-10%
-12%
2007 2008 2009 2010 2011 2012 2013 2014 2015
Popular •Quality [Source: ABC]
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 3
Local press volumes - falling even more quickly
Regional newspapers circulation per week
60.0 l
50.5
50.0
43.4
41.2
40.0 37.4
32-9
30.1
30.0
26.6
20.0
10.0 21.0 20.5
16.2 17.3
15-4
13.2 12.5 12.8 12.7
0.0 -----.--- -----.--- -----.--- -----,--- -----.--- -----.--- -----,---- ---,
2007 2008 2009 2010 2011 2012 2013 2014 2015
[Source: Enders Analysis]
Paid daily • Paid weekly •Free
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 4
Local press - circulation more resilient in smaller towns
UK regional newspapers circulation by geography size y-o-y % change
2010 2011 2012 2013 2014 2015
-1%
-3%
-5%
-7%
-9%
-11%
-13%
-15%
City -Region -Small town -Town
[Source: Enders Analysis based on ABC]
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 5
Welsh press volumes follow UK trend
Welsh newspapers circulation per week (ooos)
1,800 l 1,757
1,5 87
1,600 336
1,409
294
1,400
1,293
1,200 1,159
1,000
804
800 717
627
600
400
200
0
2009 2010 2011 2012 2013 2014 2015 2016
• Paid daily • Paid weekly Free
[Source: Enders Analysis based on ABC]
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 6
Smartphones are a critical driver; and have shifted to older demographics
Smartphone adoption% by age group
100%
94% 93%
90% 89%
90%
82%
80% 76%
70%
60%
50%
40%
30%
20%
10%
0% 55+
15-24 25-34 35-54
Personally use smartphone
•Jun-15 •Sep-15 • Dec-15 Mar-16 [Source: lpsos MORI, Enders Analysis]
Mar-15
Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 7
ENDERSIANALYSIS
The clear weekly trend: Saturday wins
• Erosion in daily newspaper
Sales volume growth, UK national quality press, 2012-2016
purchasing is well understood, but
the weekend market is changing
more dramatically. Quality Saturday 5%
titles are very steady, while Sunday
titles have fallen substantially. 1%
Sundays are turning into "just 1 __�---------�
O%+----------�--_r ____
another day", and the weekly digest
- a very successful format in print
sits more comfortably at the start of
the weekend than the end -5%
• Greatest resilience in print news
media- such as The Economist, the
-10%
Weekend edition of the FT, The
Week- provide weekly -11%
digest/commentary in a trusted
brand package, which is a highly -15%
relevant print product in a 24/7 news
environment
-20%
• Content that is not replicated
anywhere online- Private Eye, for
example- is relatively rare and also -23%
-25%
outperforms print media trends Mon-Fri Saturday Sunday
[Source: Enders Analysis]
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 8
Newspaper print advertising collapsed during an advertising boom
UK display advertising, national newspaper print display advertising and GDP (Y-o-Y % change)
15%
l
10%
5% ''
- '- - ...
�
0% -"1� ----,
2016 2017
-5%
-10%
''
-15%
-20% , __ _
-25% j
-GDP growth -Total UK advertising growth -Total UK national newspaper print advertising growth
[Source: AA/WARC, ONS, BoE, Enders Analysis]
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 9
£30 in print lost for every £1 gained in digital
Digital gain versus print loss in national newspapers (£m)
40 34
30 30
20
3
0
-20
-40
-60
-80
-100 (95)
(97)
-120
(130) (128)
-140
-160
2012 2013 2014 2016 01-03
Print loss • Digital gain [Source: Enders Analysis, AA/WAR(]
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 10Digital advertising has reached a tipping point - 50% digital
UK advertising spend (£bn)
Online • Offline
20
15
10
5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016e 2017f 2018f
[Source: Enders Analysis based on AA/Ware]
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 11Press to on line advertising substitution is very clear and accelerating
Share of advertising by medium(%)
100%
90%
80%
70%
60%.+-+--.....-+--+-�.......--+-+----1-+-+-+--+--+--+-+----+--+--+---1�-+--+-�1-+--+-+---+-+-+-+--+--+--+-+---+--+-t
50%
40%
30%
20%
10%
• National newspapers • Other press Online • Other media [Source: Enders Analysis, AA/WAR(]
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 12Newspapers are minnows in digital advertising and market share is falling
National news digital advertising vs total UK digital* (£m) Internet display sales by publisher type (%)
4500
l 4167
100% l
4000 90%
3522
80%
3500
2906 70%
3000
2491 60%
2500 2275
50%
2000
40%
30%
1000
20%
500
154 214 220 10%
120
0%
2011 2012 2013 2014 2015 2009 2010 2011
National newspaper digital advertising revenue •Total internet revenue
[Source: AA/WARCJ
National newspapers
*Total UK digital advertising excludes search • Content publishers [Source: Enders Analysis estimates based on IAB and
• Social media AA/WARC J
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 13Digital adspend growth is Google and Facebook growth
2016 YoY growth, select display categories(%) Google & Facebook shares of 2016 YoY growth, UK digital(%)
100% 100%
80%
80% 80%
60%
50% 60%
40%
40%
-14%
20% 54% 53%
20%
0% -+-------�------�---�---
20%
Mobile video Mobile native & Desktop display total
content 0%+-------�------�-------
Display Mobile Total
-20%
Google • Facebook •Others
[Source: Enders Analysis] [Source: Enders Analysis]
I I
ENDERSIANALYSIS
Culture Welsh Language & Communisitons Committee Enders Analysis Sept 2017 14Quality news brands chasing advertising is a fantasy
Newspaper on line usage pattern
60%
53%
Share of users(%) • Share of page views(%)
50%
40% 39%
37%
34%
30%
24%
20%
10% 7%
5%
2%
o%L_L___J•••L-�_L___
1 2-9 10 - 99 100+
Page views per user per month
Based on an anonymised newspaper, September 2014
[Source: Enders Analysis from AGOF/Zeitung 2014/15
Bonn: Bundesverband Deutscher Zeitungsverlger (p.170)]
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 15New York Times moves from split revenue to membership model
New York Times revenue mix 2000-16 (%)
80% l -Advertising -circulation -other
70%
60%
57%
50%
40%
37%
30%
20%
10%
6%
0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
[Source: New York Times Company and Enders Analysis]
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017Propensity to pay for news - signs of change?
Survey query: have you paid for online news in the last year? 1. Shift in attitude for a variety of reasons -
25 "fake news", extraordinary political
change
•2016 •2017
2. Also a shift in attitudes to content media,
with the need to pay for it replacing the
20 expectation for free
3. Also, build the right service, and
consumers subscribe - Spotify, Netflix
4. Contrary to assumptions - older
15 demographics are stubbornly reluctant
to pay
10
5
0
I 18-24 25-34 35-44 45-54 55+
[Source: Reuters Institute Digital News Report 2017, US audience data]
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 17Mediapart case study
• Profitable, membership, native news service Mediapart: subscribers (ooo), revenue (€m) and operational result (€m)
• Subscription only, hard paywall
14 131,000
• Investigation and opinionated journalism circulatio
-Revenue (€m)
11.6
• Scoops and starjournalists on TV generate brand recognition 12 120
-Operating income (€m)
and sampling
10 100
• 74 staff o/w 55journalists, transparent P&L
• Founders and employee-owned 8 80
• Brand-support biogs, events, forums, publications:
membership 6 60
• No advertising -therefore, an option to scale up?
4 40
20
o.6
0 0
-2
-2 4
-2.8 .
-4
2008 2009 2010 2011 2012 2013 2014 2015 2016
[Source: Enders Analysis from Mediapart]
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017La Presse case study
• La Presse in Canada abandoned its print edition and centred on a tablet Revamped model, rising editorial resources
service (which is HTML in a native wrapper)
• In so doing, it increased its editorial commitment, but dramatically
Revenues (c$m) Costs (c$m)
reduced all other costs 120
• It transitioned relatively small advertising revenues over
105
• Broadly speaking La Presse went from breakeven to breakeven, though 100
the business is little more than half the scale it was 100
• But the two revenue streams should be in growth, completely 85
repositioning the spirit and opportunity of the organisation
80
• Users spend 44 mins per day- 20% greater than the UK reader's 70
engagement with print editions
Go
La Presse's M-F circulation per issue (ooos) 50
300 45
248 40
30
187
200 25
20
20
100
50
Advertising Circulation Print Editorial Others
2012 •2016
Note: Print figure is average for the year [Source: La Presse, AAM certified] [Source: Enders Analysis estimates]
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 19Local news media audience scale has grown substantially
Digital traffic (monthly servers, m) H1 2009-H2 2016
58.8
60
Trinity Mirror acquired Local World in 2016
50
40
30
23-5
22.4
20
10
0 T
Newsquest Local World *Trinity Mirror Johnston Press
[Source: ABC]
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 20Young and old are looking for local info online
UK% share of age groups accessing local information online
100 L00 kfor news a b out or eventsin your oca area
• Look for information on public services providedby your local council
90
82
78 79
80 77
73 74 74
71
70 66
60 60
60 57
54
52
49
50
45
30
20
10
0
All internet users 16-24 25-34 35-44 45-54 55-64 65-74 75+
[Source: Ofcom Media Usage Survey, April 2016]
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 21Local example of local news media scale -Yorkshire
Yorkshire audience (ooo)
BBC News North .. 1-
BBC News South...•
Yahoo Local...
Search engine • National news broadcaster
Yorkshire Post - • Local news title • Local news publisher
1 • Online classified portal • Social media
Monster
York Press
CV Library I
I
Yell
Yellowbook..
I
1
Auto Trader I
Reddit
Newsquest
Indeed
Twitter
Rightmove
I
Trinity Mirror..
1
Johnston Press
I
T'.
nnity M'1rror B'19 ..
1
Facebook
Google Search
0 500 1000 1500 2000 2500 3000 3500 4000
[Source: Enders based on comScore]
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 22Use-case gap: who is looking for "an on line newspaper"?
• Most local media publishers have helpful audience segments - by demographics and lifestyle
• However, it is critical for publishers to develop detailed use-cases, to
Optimise journeys;
Encourage consumer engagement;
Create compelling marketing opportunities for local and national businesses
• Too many publishers are publishing their local newspaper online, optimised for search and social
- This model assumes the answer to any consumer query should be "a 900-word article"
• Meanwhile, publishers undervalue the power of the printed product in the multimedia strategy - perhaps this
should be the only way of consuming some long-form journalism, for example?
• Most consumers are not looking for a local online newspaper. So what are they looking for?
Most consumers are looking for information: local news brand digital content should be selected,
structured, curated as inventory in a local information database first- and, where appropriate, also
presented as news
Many consumers will be inspired by an intelligent local discovery service. Discovery takes many forms - one
of them is information; one of them is the opinion and authority of the local media brand; one of them is
news
Many consumers are looking to be engaged, inspired, or to help develop some element of control within
their local community: campaigns and engagement tools on key issues for a wide variety of age groups and
parts of the community are a critical development
• In summary, if marketing and display marketing (and also employers) are the key commercial opportunities for
local publishers, content models need to be reengineered to deliver on them - advertisers and recruiters are not
looking for "local newspapers online", any more than consumers are
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 23Trivial but revealing example - the gap between supply and demand
Scottish National Portrait Gallery- top 30 google search results
1. National Galleries (introduction) 16. Pagepark projects
Go gle scottish natlof\al portrait gallery
All Maps. New& Image. Shopping Mont� s..,,,cMools
··- Q
II
About1,970,000,,,_,,(071,,••,..,,.1s)
2. National Galleries (highlights) 17. BBC News e A privacy reminder from Google
REMINDMELATER -
"'" ::a --;
3. Wikipedia 18. Saatchi Gallery nationalgalleries.org - Scottish Natiooal Gallery
--=:;;;;-
�-=..;: Seeouts1de
BI wwwnatlonalgallerla11.orgl �
Aworld-e!as.scClllec:tionof arllnEalncurgt'I.Allmlulonlree
Scottish National Portrait
Gallery
4. Tripadvisor 19. Lonely Planet
Whatson
Cum,n! and comong soon eWtnts
V'9w the --.rs calendar on line
Shop
looking b lhA! parl'Adgift? View
our gift 11,cp online today
48 ••**' ��1e,8Yie'w1
MuseummEdinbu,gti,Soclland
National Portrait Gallery National Galleries
v..itlh.. NationalPrlr.irou-otheernmonal collections cfpatra1ts. allolwtuch amof. but ..
�'freaentrytolhisiitereslinggiallerylnaba•utlfulbuildln9.·
8. Artfund 23. Royal Collection Scottish National Portrait Gallery (Edinburgh, Scotland): Hour...
www.tripadvisor.co.uk, .•. ,Eclinburgh,Things!odoinEdlnburgh •
*"***1 R81Jng45· 1 . 618rev!aWI
e "Good Wbsiloo will p,vid. all waitor information of changing
• .,,hibitin•"
·- ··· · ·· . ·- . ·- - ·· . .. . . -
Scottish National PrtrattGallery, Edinbur,;,: S- 1616review,i,But frequency and overall engagement is far greater
Yorkshire (minutes per user)
BBC News North.�3
BBC News South.�3 Search engine • National news broadcaster
Yahoo Local.. • Local news title • Local news publisher
Press & Journal I • Online classified portal • Social media
Yellowbook.. \
Yell
Johnst n
:
r
0::::
:
�
CV Library
Newsquest •
1
Trinity Mirror Big.. •
1
Trinity Mirror.. •
1
I;::::�
Rightmove
l
Auto Trader
Twitter
Google Search
Facebook
L ---,
0.0 100.0 200.0 300.0 400.0 500.0 600.0 700.0 800.0 900.0 1,000.0
[Source: Enders based on comScore]
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 25Facebook now bigger than the whole of local press in SME display
UK SME advertising spend Google, Facebook & local newspaper brands
3,000
:2 ,797
2,500
Google JOHNSTON PRESS PLC
2,000
1,560
r
1,500 1,400
1,250
992
1,000
580
502
500 385
255
100
0
0 T T
2006 2014 2015 2016(f) 2006 2014 2015 2016(f) 2006 2014 2015 2016
[Source: Enders Analysis estimates, AA/WARC]
•All digital • Print display • Print classified Digital display Digital classified
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 26Local advertiser spend in UK as a whole
UK local advertising spend 2016 (£m)
2016 UK total local advertising spend £3.5bn
Other online , 80
Local publishers online, 158
Facebook, 580
Radio, 166
Outdoor, 100--------
Directories, 80 /2 Google, 1,560
TV, 20
[Source: Enders Analysis, AA/WARC and MTM surveys]
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 27Self-service and new marketing expectations
New marketing route
Traditional adverting route What would you
like to advertise?
"... I want to fill my hairdresser at
10am on Tuesday..."
What type of advert would you
like? What would you like
to do?
Choose your design and package Get more Promote Get new Increase Advanced
page likes page users attendance Options
posts
Enter your advert details Create your
audience
Dates Precise Relationship
Location Age Gender Languages Education
interests status
Review your advert Campaign, pricing,
and scheduling
Test multiple
adverts
[Source: Enders Analysis]
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 28Self-service is critical: but with Facebook as a competitor, the solution
has to be outstanding
Illustrative SME marketing administration self-service on a
• Local newspapers sell to circa 15% of all SM Es in
newsbrand local platform hub
their coverage area (Enders Analysis estimates,
-
How many people do How many responses Who do you want What is your budget? based on a range of conversations)
..
you want to reach? do you want to receive? to reach?
1,000 50 i
to reach? £100 • This is not to say that local newspapers are on
0 �@
£200
average missing out on 85% of expenditure
5,000 100 Personal income • value; but it does highlight a material gap
20,000 200
I £400
• Self-service is a critical means of bridging that
• Gender £600
Marita/!family status gap
50,000 500
Birthday £11 000
• With more native digital businesses, and fewer
Interests
High Street locations, the "visibility" of sales
[Source: Enders Analysis] opportunities for traditional sales teams is
inevitably declining
ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 29Disclaimer About Enders Analysis Enders Analysis is a research and advisory firm based in London. We specialise in media, entertainment, mobile and fixed telecoms, with a special focus on new technologies and media, covering all sides of the market, from consumers and leading companies to regulation. For more information go to www.endersanalysis.com or contact us at info@endersanalysis.com. Important notice: By accepting this research note, the recipient agrees to be bound by the following terms of use. This research note has been prepared by Enders Analysis Limited and published solely for guidance and general informational purposes. It may contain the personal opinions of research analysts based on research undertaken. This note has no regard to any specific recipient, including but not limited to any specific investment objectives, and should not be relied on by any recipient for investment or any other purposes. Enders Analysis Limited gives no undertaking to provide the recipient with access to any additional information or to update or keep current any information or opinions contained herein. The information and any opinions contained herein are based on sources believed to be reliable but the information relied on has not been independently verified. Enders Analysis Limited, its officers, employees and agents make no warranties or representations, express or implied, as to the accuracy or completeness of information and opinions contained herein and exclude all liability to the fullest extent permitted by law for any direct or indirect loss or damage or any other costs or expenses of any kind which may arise directly or indirectly out of the use of this note, including but not limited to anything caused by any viruses or any failures in computer transmission. The recipient hereby indemnifies Enders Analysis Limited, its officers, employees and agents and any entity which directly or indirectly controls, is controlled by, or is under direct or indirect common control with Enders Analysis Limited from time to time, against any direct or indirect loss or damage or any other costs or expenses of any kind which they may incur directly or indirectly as a result of the recipient's use of this note. © 2017 Enders Analysis Limited. All rights reserved. No part of this note may be reproduced or distributed in any manner including, but not limited to, via the internet, without the prior permission of Enders Analysis Limited. If you have not received this note directly from Enders Analysis Limited, your receipt is unauthorised. Please return this note to Enders Analysis Limited immediately. ENDERSIANALYSIS Culture Welsh Language & Communisitons Committee I Enders Analysis I Sept 2017 30
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