An NTMC Webinar 10/10/12 P ROTECTING AND G ROWING S UNDAY P REPRINT B USINESS

An NTMC Webinar10/10/12

PROTECTING AND GROWING

SUNDAY PREPRINT BUSINESS

Only panelists audible todayType questions into the right-hand panel

indicate who your question is forBrief survey following webinarRecording will be posted on NTMC website

PHILIP BROWN

Executive Director

Newspaper Target Marketing Coalition

Four 10-minute segments followed by Q&A: Valassis NSA motivations and weaknesses Newspaper strengths and strategies What newspapers are doing protect their Sunday

insert business

DUFF HEYL

TMC Sales and Operations Manager

Arizona Republic

JIM HART, President Integrated Advertising Solutions

KEITH GILPIN,

Direct Marketing Consultant

SILVIA SCHENCKER, G. M. - Direct Marketing

Miami Herald

STEVE TEMPLETON, Managing Director

Los Angeles Times

Copyright 2012 Jim Hart

The Valassis NSAmotivations and weaknesses

NTMC Webinar 10/10/2012


Agenda

• Financial Overview- What’s driving this?• How Markets will likely be selected• What will the program look like• The Bigger Threat• Tactics


Motivation


USPS


Valassis

• Four components to their business;– Shared Mail– FSI Coupon Book– Neighborhood Targeted– Other (International, digital, etc.)


Shared Mail Revenue/Profit


From 2006 (ADVO) to 2011 (Valassis)

• Revenue down 7%• Profits up 506%• Margin up 540%


Neighborhood Targeted

• An agency/placement service that uses:– Newspaper ROP– Newspaper Polybag and Sampling– Newspaper Inserts

• This segment of their business is the conduit to moving advertisers to shared mail

• They establish their analytics can improve ROI• Then move the retailer to Shared Mail


Neighborhood Targeted Rev/Profit


Implications

• This segment is a strong predictor of future Shared Mail revenue growth

• After a revenue jump in 2007, it had been relatively flat, dropped 22% in 2011

• Margins reflect significant pressure from other agency/analyst/placement firms

• Other agencies will not place pure shared mail at anywhere near the same rate as Valassis


FSI- Coupon Book

• Was Valassis core product prior to ADVO acquisition

• Was inserted 100% into Sunday newspapers prior to acquisition

• Have shifted 8MM insertion to Red Plum Shared Mail

• Newspapers relationships with Valassis are often framed by fear of losing the FSI


FSI Revenue and Profit


Implications

• Revenue has fallen steadily since 2005• Down 36.4% from 2005-2011• Margins are off 70% during same period• These compound to a drop in profit of 81%


Valassis Q2 Profit ($millions)

Shared Mail $52.3

NT -$2.4

FSI $7.3

Other $2.3

Total Segment Profit $59.5


This is the strategy that created the current

shared mail cash flow


SM

CB

NT


SM

CB

NT


SM

CB

NT


This is the strategy could enable Valassis to establish a second

package


SM

CB

NT

NSA


Change your perception

• Disconnect the three main components of Valassis

• They leverage CB and NT to gain shared mail advantage

• Treat NT no differently than Vertis, Novus, ACG, etc.

• Treat the CB like an insert, certainly no differently than News America


Market Selection

• HH penetration below 40%• Rates above ???• Mid-sized markets• Poor zoning• PIA Factor

– Is your FSI rate an outlier?

• Isolated broadcast markets


What will the program look like?

• Saturation mail in select zips and CR’s• 50 to 60% HH penetration• Demographic profile

– Women 35 to 54– HH income above 50 to 75K

• More vertical than horizontal– Must get 5 or 6 per market to work


4.1 Ounces

• Kmart• Sears• Walmart• Target• Bedmart• Michaels• ……and it’s limited to 10 pieces


The BIGGER threat

• Rate brokering using the NSA as leverage• Can make a lot of money by leveraging the CB,

NT and the NSA without ever mailing a thing.


TacticsCommunicate with the NAA and NTMC:•Monitor late-week RedPlum packages

– Who is in them? Do they qualify for discount?

•Are you converting from postal to alternate delivery to reduce delivery expense?•Is USPS giving preferential treatment in your market to Valassis deliveries?

Leveraging and Building on Newspaper Strengths

to be the Best Distribution Solution for our Customers

Subscribers Still drives a special connection with readers and a

higher value with advertisersOpt-ins

As valuable as subscribers to many advertisers A commitment without a required reader

investmentSunday delivery

For decades the preferred day to receive inserts Advertisers marketing plans built around Sunday

Product and solution diversity Red Plum remains essentially a one dimensional

solutionContent

Delivery costs Subscriber / opt-in delivery should still trump NSA

costs for Valassis

Compete by lowering TMC costs Replace or reduce USPS deliveries Alternate delivery advantages

Valassis saturation might require more inserts

Most Sunday inserters don’t want saturation Even ATZ’s may not solve the problem Newspapers focus on quality and accuracy vs. quantity

Develop strategies to maintain or grow Sunday paid deliveryReview and improve your opt-in program

Consider expanding the distribution footprint or penetration target as warranted

Evaluate your insert program rates Many papers may not have adjusted rates or

structures in months or years Are page count rates still relevant? How do your rates stack up against Valassis?

Expand integrated product solutions Digital, ROP, Community Newspapers Improved performance and value for clients

Ensure insert distribution meets client’s needs

Zips not zones for home delivery and single copy Sub-zip code targeting options on Sunday

Talk to your Sunday insert clients and agencies

What is their read on the Valassis NSA? Would they consider a move?

What can your paper do to enhance your relationship with these clients?

Valassis still makes it simpler to buy multiple marketsPossible ways to get newspapers on the same page:

Standardized distribution units, zips/subzips Standardized rate structures, volume vs

frequency based Centralized data warehouse Regional or national insert networks

-- Jack Welch

OR SOMEONE ELSE OR SOMEONE ELSE WILL!”WILL!”

At-Risk Assessment:Established at-risk account list

o sorted by high risk, medium risk and low risk

Most high risk are McClatchy corporate accounts

o target accounts must operate in at least 30 states

Working with McClatchy on ways to prevent these accounts from going to Valassis

Locally, what Miami is doing:Grow Sunday Select Opt-In Product

o increases planned in 2013 Re-analyzing current TMC product

o do we move more out of mail and into alternate?

o should we add more content? light news? and shopper-type advertising? build more local engagement?

Focus on local P&D growtho build better marketplace for TMC and Sunday

Select products

Perform client-centered risk assessment

real vs. perceived threats

Adopt “insight selling” as new approach

rebuilding value proposition

Shift focus from distribution to attention management

play offense not defense

Your feedback is useful and appreciated!

You will receive very brief survey following the webinar

THANKSTHANKS to all to all attendees and attendees and

panelists!!panelists!!

Documents

An NTMC Webinar 10/10/12 P ROTECTING AND G ROWING S UNDAY P REPRINT B USINESS