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1 Digital book marketing: How to capture the opportunity without breaking the bank Tools of Change Conference February 12, 2008 Final Version

Making The Most Of Digital Marketing Presentation

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Presented at the 2008 O'Reilly Tools of Change for Publishing Conference (http://toc.oreilly.com)

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Page 1: Making The Most Of Digital Marketing Presentation

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Digital book marketing: How to capture the opportunity without breaking the bank

Tools of Change ConferenceFebruary 12, 2008

Final Version

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Overview

Primary findings

Managing digital content in a new marketing era

Project background and methodology

Estimating ROI

Recommendations (including “how do I start doing this?”)

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What our studies revealed

“Every" smaller publisher who wants to compete using digital marketing assets needs a digital asset partner

”Most" mid-size publishers could still do better working with a digital asset partner than by managing it in-house

"Only" the largest publishers can justify the cost of building an infrastructure that is spread across multiple media and content assets

The rest of us will have to forge new distribution relationships through them or around them (your call)

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Graphically speaking …

Use cases specific to your house may shift your position relative to break-even, but in almost all cases the difference will not justify doing this work on your own

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The challenge of managing digital content in a new marketing era

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Increasingly, readers, book buyers and the media use the Web to learn about new titles and authors

As traditional main-stream media outlets lose their marketing effectiveness, publishers need to increase their presence in emerging online channels

The rapid emergence of these new uses for digital assets outstrips most publishers’ abilities to take advantage of them

To capitalize on these opportunities cost effectively (and maintain content control), publishers need to develop a single content repository as an authoritative source that serves a wide variety of channels

The growing importance of digital marketing

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Many literary agents see opportunity in digital marketing

Most (96%) felt that an effective author Web presence sells more books

53% believe authors should spend more than 5 hours a week on their Web sites (the median response was 5.9 hours per week)

The digital tools of greatest value were author Web sites, fan Web sites, online columns, author blogs and book excerpts (in that order)

Web site budgets were typically small (between $1K and $5K to develop, and a similar range or less to maintain)

The strongest subject areas for internet marketing were business, self-help, diet/cooking and health, followed by religion and commercial fiction

This survey, developed in concert with Market Partners, was conducted in late 2006; new survey results confirm the findings

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Almost every publisher acquires or creates multiple files for each title

All publishers manage an even higher number of versions of files for each title

Even smaller and mid-sized publishers may acquire, manage and distribute thousands of new digital files each year

The mix of formats (adult hardcover, trade paperbacks, young adult, children’s) and complexity of a publisher’s front-list has often been supported by a diverse range of content processes that don’t map consistently to a uniform content repository

As short-run production technologies come online, fewer titles are declared out of print and the breadth of backlists and the files needed to support them has increased

The content challenge is significant

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Agreements signed with new partners such as Google Book Search and Microsoft Live Search Books require support

New digital marketing and sales opportunities continue to crop up on a regular basis (most recently, BN.com) and will require support

Typically, digital assets are not stored repositories whose structure allows efficient IP discovery and distribution

Workflow and infrastructure were designed to support turnkey book production and sales so new uses must be addressed “by hand”

The fluid nature of this evolving marketing toolkit makes it difficult to realize the benefits of economies of scale while taking advantage of available opportunities

And digital marketing has grown more complex…

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Digital files for all new titles and most active backlist are indexed and stored in a single repository

Book Search, Live Search, Search Inside, and BN are supplied with new titles and most active backlist in low-cost, turnkey process

Highest potential new titles and backlist are converted for major eBook formats: Kindle, Palm, Mobipocket, Adobe; conversion costs for Sony, Microsoft and other formats can be evaluated against sales potential

All new titles are evaluated against a checklist of digital marketing assets which are stored alongside metadata, production files and final content assets

The desired state for digital marketing workflow

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Project background & methodology

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Our studies began with a specific market perspective

Market perspective

Effective use of digital marketing tools is no longer optional

To market books in the future, publishers will need to strengthen their ability to develop and distribute digital assets

Publisher options

Muddle along with the current mix of tools and processes

Create a structured, perhaps interim “mixed” solution built on Digital Asset Management (DAM) system

Manage all digital assets through or in partnership with a Digital Asset Distributor (DAD)

We looked broadly at the options, so that we could reliably establish the relative costs and benefits marketing in this emerging digital environment.

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Based our “use cases” on the most common list of digital asset recipients (DARs)

Documented the cost of supplying digital content to production, sales, and marketing partners

Identified opportunities to use partners to save money or improve sales revenues (pre-, on- and post-publication)

Evaluated the likely cost of engaging leading digital asset distributors

Examined what would help make a publisher “DAD-ready”

Created a business case for digital distribution of book content

How we approached the project

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Market structure influenced our choice of use cases

An evolving part of the market

There is substantial overlap among DARs (merchants run web sites and book search programs, etc.)

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Improving your digital asset workflow returns benefits in two forms

Reducing both hard and soft costs of managing digital files for current uses

Making corrections on reprints

Subsidiary rights (both pre-sales and post-sale support)

Licensing and maintenance of current digital asset management system(s)

Economies of scale when converting files

Enabling greater revenues

Increased sales at Amazon driven by fuller participation in programs such as Search Inside, Browse Inside, and Amazon Upgrade

Increased sales throughout online and offline merchants, due to stronger online presence of titles and authors on search engines, Web sites, etc.

Incremental revenues from eBook sales

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Cost savings and new revenues associated with an efficient digital workflow can more than offset associated investments (as shown in the following section)

The benefits stem from having a single, authoritative source of digital content and a simplified workflow enabled by it

The extent of both savings and revenues depends on the ability of publishers to take full advantage of partner capabilities

The single biggest benefit may be the avoided cost of building and maintaining an in-house DAM system

A better workflow helps on several fronts

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Estimating ROI

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Guidelines for analysis

Assumptions Between 300 and 350 new titles per year, with a backlist of 1,500 titles

At this volume, the direct costs of working with a DAD total $400K to $550K over three years

This total is front-end loaded: $250K to $350K to set up and convert a backlist in the first year, followed by $75K to $100K in ongoing conversion and maintenance

Conversion costs

How deep do you go into your backlist?

Do you need to support all formats for all titles?

Can updated workflows reduce downstream conversion costs?

Other considerations

A limited implementation would cost less (total expense estimated at $275K to $350K over three years), but the benefits would be significantly lower

The estimates are based on hard costs; internal staff allocations and any additional consulting are excluded in this analysis

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Assessing costs and benefits of a digital workflow

Cumulative over 3 years;

assumes a staged

accrual of benefits

starting with hard costs in year 1 and a

portion of soft (staff)

costs in years 2, 3

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Per-title benefits of a digital workflow

Cumulative over 3 years;

costs and benefits vary by publisher,

with the relative

benefits available in each area subject to

some variations.

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Estimated return on investment

A net benefit of about $124K over 3 years

Depending on assumptions about initial expense and the timing of benefits, ROI can vary from 9% to over 60%, calculated over the 3 years

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Recommendations, including “How do I start doing this?”

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Getting ready to implement a digital workflow

Printers Create a more uniform workflow for text and illustrated books

Determine the level of content disaggregation (i.e., book, chapter, page, components) that you need to support in the future

Once the level of disaggregation is established, look for opportunities to migrate disparate storage (printer, color separator, compositors) to a uniform, central repository

Merchants Consolidate (possibly outsource or contract) content conversion that may now occur now in multiple departments

Sub rights Develop subsets of use cases that are linked to either the level of content disaggregation (see “printers”, above) or the point at which content is required

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Other ways to prepare for a digital future

Web sites and syndicators

Simplify and automate the title data feeds (including subsets that require manual intervention)

Consolidate (possibly outsource or contract) content conversion that may occur in multiple departments

Online book search

Confirm standards that will allow you to automatically use the files returned from printers or compositors as direct feeds to online book search programs

eBooks Confirm standards that will allow you to automatically use the files returned from printers or compositors as direct feeds to online book search programs (variant of “online book search” recommendation, above)

Simplify and automate the downsizing of title data feeds ( including subsets that may require manual intervention; variant of “web sites” recommendation, above)

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Develop an internal set of priorities on which use cases matter, and which ones matter most

Develop a clear internal consensus on whether your house will manage or outsource digital asset management

Identify opportunities to update or revise processes to streamline content management (whether outsourced or managed internally)

Work to streamline efforts that support metadata distribution

Look downstream to prepare for use cases in which content (complete books or components) and metadata will need to travel together

You can take on this work in stages…

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If you are just starting out today …

Inventory and organize your assets

Where are they? In what format?

Create a database of assets: start with what is new and easily accessible

Who do you serve? Which digital recipients matter, and in what formats?

All four book search programs? Yes!

All titles in all eBook programs? Probably not.

Segment your list For both front and back lists: are rights clear?

Which markets offer the best near-term opportunities? Adult, YA, childrens? Fiction or non-fiction? How to treat straight text versus a childrens book?

Rank by sales at Amazon

And then… Implement the recommendations offered here

Draft your digital workflow RFP (and get to know the providers)

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Without a comprehensive DAD solution, the pain of supporting new asset uses will grow and the benefits of investments already made will not be fully realized

The DAD decision mixes both strategy (how do you best manage your content?) and tactics (what is the most cost-effective distribution option?)

This review indicates that a DAD investment offers operational agility with reasonable dividends paid over a three-year implementation period

Some benefits (online book search, syndication support) may be more significant than the use case analysis suggests, but the benefits will not be established until other enabling decisions are made

There is a healthy mix of current priorities that can be addressed now to help accrue near-term benefits and determine future paths

Conclusions

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For additional information

Ted Hill, [email protected]

Brian O’Leary, [email protected]

Thank You!