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Strategic TransformationJames S. GoldSenior Vice-President and Chief Marketing OfficerNew York Times Regional Media Group
PANPA Queensland, Australia September 10, 2008
Today’s Agenda:
• The NYTCO Brand Portfolio
• Current US Media Landscape
• Strategic Transformation
• Balanced Management Approach: The “Ambidextrous” Organization
• Triad Management Principle
• Transformational Change @ NYTRMG
2
The New York Times Company Major Brand Portfolio
3
D: 2.5 million c S: 3.0 million c O: 47.2 million u (11th)
Regional Media Group
The Growth Imperative: Challenges US Circulation/Penetration
While US Households continue to grow, paid circulation and penetration falls.Increasingly, a once powerful mass medium appears to be evolving into an ageing niche player.
Source: Editor and Publisher Yearbook data; U.S. Census Bureau
Num
ber i
n M
illio
ns
Source: NAA
4
The Growth Imperative: Challenges US Newspaper Print Ad Revenue Trend 1996-2007
Advertising growth remained strong through the advent of the Internet. While recent troubles are both cyclical and secular, how deep is the secular change?
Billi
ons
Total Print (National, Retail & Classified)
Source: NAA
5
The Growth Imperative: Challenges US Classified Revenue Trend 1996-2007
Classifieds, now under siege from online players, is the site of much of the revenue erosion.Automotive revenue has declined for 15 consecutive quarters.
Source: NAA
Billi
ons
6
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The Growth Imperative: Challenges Print & Digital: Crossing The Chasm The Migration of Print to Digital
The Outlook: Print’s decline, even with digital growth, will drive revenues and earnings downward for years
Source: Concept from “Crossing the Chasm, The Life and Death Threat that Newspapers face in Transitioning from Print to Online-And what they can do to Survive.” Copyright 2007 by Mark Potts. Data from Newspaper
Association of America, Mark Potts projection
The Growth Imperative: Challenges US Newspaper Stocks: 2003 - 2008
Source: Yahoo Finance, Merrill Lynch research 2008 INMA Outlook
With years to go before digital growth will balance print declines, investors see little opportunity
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The Growth Imperative: Solutions
Radical Reorganization
“Long-term success inevitably requires that leaders
reallocate resources away from mature and declining businesses toward emerging growth opportunities.
The key to sustained, profitable growth is the ability to
recombine and reconfigure assets and organizational structures as markets and technologies change.”
-Teece, Explicating Dynamic Capabilities: The nature and micro foundations of (sustainable) enterprise performance (2006)
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The Growth Imperative: Solutions Radical Re-Organization: Ambidextrous Management
“Asset orchestration is how organizations evolve to maintain ecological fitness.
Exploitation is about efficiency, increasing productivity, control certainty and variance reduction.
Exploration is about search, discovery, autonomy, innovation and embracing variation.
Ambidexterity is about doing both.”
-O’Reilly III & Tushman, Ambidexterity as a Dynamic Capability: Resolving the Innovator’s Dilemma (2007)
Strategic Transformational Change Ambidextrous Management Principles
• Simultaneously pursue immediate & sustained growth
• The ability to simultaneously “exploit” and “explore.”
• To configure and reconfigure organizational resources.
• To simultaneously pursue mature and emerging strategies.
• To gain greater efficiencies in the mature business.
• To sharpen the organization’s ability to innovate.
Based on “Ambidexterity as a Dynamic Capability: Resolving the Innovator’s Dilemma.” (O’Reilly III and Tushman, Harvard Business School, 2007)
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Strategic Transformation Re-Engineering the Organization for Immediate and Sustained Growth
Consumer Advertising
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Strategic Transformational Change Re-Engineering The Organization: Triad Management Principle
A new management approach allocates traditional and key emerging expertise and resources to maximize return, encourage innovation and accelerate growth
Shared Resources
StrategicPartnerships
LocalManagement
Open Technology
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Strategic Transformational Change
Triad: Circulation Management Key Strategic & Operational Issues (Circa: 2003)
• Traditional Group Management: Independent Islands. No Group Synergy or Scale
• Heavily Reliant on Primitive “Sequential” Mass Telemarketing…DNC Looming
• No Analytical Metrics or Performance Management, Low New Start Retention
• Brand and Distribution Management Combined, Poor Branding Quality
• Call Center Management Issues (Abandonment)
• No CRM Strategy, Technology or Practices
• No Knowledge or Expertise in Emerging Digital Marketing or CRM Practices
Strategic Transformational Change Triad: Circulation >Audience Development
Distribution and single copy sales remain a local management responsibility. Subscriber acquisition & retention management and overall strategic planning is centralized. Call center management is outsourced.
Clerical and administrative tasks are automated and provide resource to hire new talent required going forward.Costs are reduced and the organization gains momentum for moving toward total audience management.
Shared Resources
StrategicPartnerships
LocalManagement
Open Technology
Distribution, Single Copy SalesCall Center, E-Mail,
Direct Mail, Telemarketing, Technology, Data Management
Strategic Planning, Analytics, Campaign Management,
CRM Strategy
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Strategic Transformation Circulation Audience/Development
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2003
Add Demographics to Database
Consolidate & OutsourceCall Center
2004
Build Total HH Database
Provide DBM/DM Services
2005
2006
2008
2009
Add PRIZM Lifestage Data
2007
Multi-market DM, TM, EM Campaign CalendarAudience Management for Brand Portfolio
Develop Campaign Mgmt. & AnalyticsAutomate Admin & Clerical, Centralize
Strategy, Budgets, Planning & Implementation, Consolidate Vendors
Migrate Call Center to Philippines
Digital CRM, E-Marketing
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Strategic Transformational Change Circulation > Audience Development Immediate Growth Impact: 2008 vs. 2006
• Annualized Source Savings Exceeds $1 Million (> 20%)
• Reduction in Discount Investment of 30%
• Increase Revenue/Subscriber of 8.4%
Source: NYTRMG Marketing
Online
20%
0%
100%
40%
60%
80% Segment Penetration
Mature Years59% of Market
Family Life10% of Market
Younger Years31% of Market
Daily Newspaper Weekly Newspapers Magazines
Strategic Transformational Change: Brand/Audience Portfolio Map
Consumer Marketing expertise broadens to include entire print and digital brand portfolio
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Strategic Transformation Re-Engineering the Organization for Immediate and Sustained Growth
Advertising
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Strategic Transformational Change
Triad: Advertising Management Key Strategic & Operational Issues (Circa: 2006)
• Management Islands
• Duplication of Creative Services
• Little Resource Share or Best Practice Development
• Little Rep or Management Visibility into Account History or Prospects
• No Continuity (Attrition and Absences)
• Only 20% Time in Sales. Travel, Administration & Clerical Dominates Day
• Questionable SMB Account Profitability
• Little NBD (Creative or Prospecting): Only 20% Market Penetration
• Low Consultative Sales Approach
• Little Digital Expertise
Strategic Transformational Change Triad: Advertising Management
Major Retail & Classified accounts are managed locally or centralized. Classified Transient and SMB accounts are outsourced.Creative Services are centralized with some work outsourced to India. Marginally profitable accounts are migrated to self-serve technology
or call center.
Shared Resources
StrategicPartnerships
LocalManagement
Open Technology
Select Mid- Major Account Management
Call Center/SMB Management, Self-Serve Ad Production and
Select Creative Services
Strategic Planning,Analytics, Campaign Management,
National/Regional Account Management,Creative Services and CRM Strategy
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Strategic Transformation Advertising Management CRM
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2006
2007
Self-Serve Pilots
Digital Sales Development
2009
Strategy Formula: NBD + LCV + Ops E = EG
Complete Business DatabaseInteractive SFDC Rollout/Ops Efficiency13 markets in 18 months
Creative Tech Due Diligence Sales Channel Strategy
Call Center Migration
E Campaign Management/Lead GenTest India Outsourced CreativeCreative Centralization
SuperSite in TuscaloosaIterative Creative Rollout
CRM due diligence
Profitability Analysis
2008
Strategic Transformational Change Networked Advertising Management
Sales Presentations
DataResearch
Local Creative
Group Creative
Offshore Creative
Creative Services
Spec Ad Database
Ad Rep
Ad Rep
Ad Rep
EM
DM
TM
Advertising & Marketing Managers
Call Center
Ad Rep
Local Sales
Ad Rep
Ad Rep
Business Continuity
Wireless Connectivity
Campaign Management
Web-based CRM connects each rep and all customers to a global network of support
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Ad Director
Publisher
Controller
CFO
Biz Office
Reporting
COO
CMO
Strategic Transformational Change NYTRMG Marketing Assets & Strategic Partners
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Classified Call CenterGreen Bay, WI
Sales ManagementMadison, WI
Strategic SourcingNorfolk, VA
NYTRMG FinancialLakeland, FL
NYTRMG MarketingTampa, FL
Creative ServicesTuscaloosa, AL
Acquisition Call CenterPhoenix, AZ
Creative ServicesGurgaon, India
Circulation Call CenterManila, Philippines
Marketing DatabaseDenver, CO
Strategic Transformational Change Summary & Recommendations:
Strategic:• Growth requires clear vision and strategic organizational transformation
• Gain efficiencies in mature business & sharpen innovation capability in emerging business
• Develop Triad perspective. Centralize and/or Outsource. Keep Local only what must be Local
• Identify key expertise and positions going forward
• Develop 3 year Strategic Roadmap, financials and major earnings initiatives
• Insist on accountability
• In all things, think & act: Transformational, not Incremental
Tactical:• Strong change leaders & project management coordination to orchestrate the Roadmap
• Transformation will be full time employment for many for years.
• Standardize and simplify before you Centralize or Outsource
• Out of sight is not out of mind. Learn Virtual management
• Leave no stone unturned, no sacred cows.
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