11/13/11

Whats next for newspapers?

Alan D. Mutter alan.mutter@broadbandxxi.com. 415.519.2495
x

Where we were
Yesterday Media 1.0

Traditional media Advertisers Consumers

| 2011 Alan D. Mutter | www.newsosaur.blogspot.com | alan.mutter@broadbandxxi.com | 415.519.2495 | Page 2 |

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Newspaper ad sales, 1950-2005

$50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 1950 1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010

$49.4

In $billions
Source: NAA

Where we are today

Yesterday Media 1.0 Today Media 2.0

Traditional media Advertisers Consumers New media

| 2011 Alan D. Mutter | www.newsosaur.blogspot.com | alan.mutter@broadbandxxi.com | 415.519.2495 | Page 4 |

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Newspaper vs. online ad sales

$50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 1950 1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010

$49.4

In $billions
Sources: NAA

$24.0P

Newspaper vs. online ad sales

$50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 1950 1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010

$49.4

In $billions
Sources: NAA and IAB

Newspaper
$27.5P

$24.0P

Online
$8.1

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Where we are going

Yesterday Media 1.0 Today Media 2.0 Tomorrow Media 3.0

Traditional media Advertisers Consumers New media

| 2011 Alan D. Mutter | www.newsosaur.blogspot.com | alan.mutter@broadbandxxi.com | 415.519.2495 | Page 7 |

Key audience trend: Aging and shrinking

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Arts/culture Com events Crime Realty Jobs Local biz Local politics Schools Taxes Traf/tran Weather Zoning/dev 18-39 40-up

Breaking news

Other govt

Rest/clubs Soc services

Source: Pew Internet Center for Excellence in Journalism

| 2011 Alan D. Mutter | www.newsosaur.blogspot.com | alan.mutter@broadbandxxi.com | 415.519.2495 | Page 8 |

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Key ad trend: Continued contraction

Mass
Print or broadcast ad Reach Multiple impressions Large buys Brand and image Pay upfront for impressions Higher cost per sale Inefficient ad buy Advantage: Publisher

Targeted
Web/mobile keyword Precision Limited impressions Small buys Transactional Pay for performance Lower cost per sale Efficient ad buy Advantage: Advertiser

Implications
Geographic monopolies are losing value The one-size-fits-all content model is failing Big iron is a burden, not a barrier to entry High-priced reach advertising is not defensible Traditional high margins face continued pressure

| 2011 Alan D. Mutter | www.newsosaur.blogspot.com | alan.mutter@broadbandxxi.com | 415.519.2495 | Page 10 |

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You have an edge

Brand visibility and awareness Large content-creation organizations Large, well-connected sales forces Significant, free marketing impressions You are authentically local You still have time, but

| 2011 Alan D. Mutter | www.newsosaur.blogspot.com | alan.mutter@broadbandxxi.com | 415.519.2495 | Page 11 |

You are not alone

Technology democratizes publishing and marketing Unlimited choice empowers consumers Direct-to-consumer solutions erode advertising With loyalty transient, your brand power is waning

| 2011 Alan D. Mutter | www.newsosaur.blogspot.com | alan.mutter@broadbandxxi.com | 415.519.2495 | Page 12 |

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What you have to do

Expand beyond traditional media and audiences Widen client base and revenue opportunities Diversify beyond legacy products

| 2011 Alan D. Mutter | www.newsosaur.blogspot.com | alan.mutter@broadbandxxi.com | 415.519.2495 | Page 13 |

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Reasons to expand beyond traditional media

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1 2

Half of all Americans will have smart phones by the end of 2011 and they won't be afraid to use them

We are months, not years, away from the point that more page views will be consumed on small, mobile screens than on desktops

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This is a big deal
Faster and more disruptive change for media than the arrival of the Internet

Facebook is grabbing increasing amounts of consumer engagement and mindshare, beating all others in page views and time on site

The ME Media

The WE Media

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Mobile media are different

More individualized Knowing who and where you are More immediate A tool to get things done More intimate Putting the ME in media

Social media are even more different

Peer support Community confers belonging and trust among the like-minded Peer pressure Community influences what you read, think, watch and buy Peer power Puts the WE in media

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Why you have to get beyond advertising

1990 2015P

Advertising 70% Marketing 30%

Source: NAA

Advertising 30% Marketing 70%

Your advertisers are now marketers

eCommerce Search ads Banner ads Mobile ads eCoupons Online video Write blog Facebook ad Email marketing Social marketing Maintain website 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Survey in Q2-2011 Source: ITZ/Belden

$63B
market

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15,000 of your customers say

They need to be on the web and in social media They are overwhelmed with options They don't have the time or money to be everywhere They don't know what to do and how to manage it
Source: ITZ/Belden

| 2011 Alan D. Mutter | www.newsosaur.blogspot.com | alan.mutter@broadbandxxi.com | 415.519.2495 | Page 23 |

The solution: Agency model

Traditional advertising: Print, broadcast and outdoor Online advertising: Banners, plus SEO/SEM Data-driven direct mail (print and digital) Web design and hosting* Mobile design and hosting* Mobile and location-aware advertising/couponing Social campaign/reputation management* Local ad networks*
* Recurring revenue opportunity

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We know this works

Page views
200M

Rev/view
$.40

Avg ticket
$293k

$.20 90M $123k

Owned Agency

Owned Agency

Owned Agency

Broadening the customer base

2%
100+ EEs

Current target
(Direct sales)

20..99 10% / $5.6M / 13.0%

22%

10-99 EEs
10..19 12% / $1.8M / 5.0%

5..9 employees 21% / $880K / 4.1%

Forefeited

1..4 employees 1-9 EEs 55% of companies $385K average annual revenue 4.3% total business revenue

76%

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Heres where to look

2%
100+ EEs
20..99 10% / $5.6M / 13.0%

22%

New target
(Direct sales + self-serve + agency)

10-99 EEs
10..19 12% / $1.8M / 5.0%

5..9 employees 21% / $880K / 4.1%

1..4 employees 1-9 EEs 55% of companies $385K average annual revenue 4.3% total business revenue

76%

Newspapers need a portfolio strategy

Social Print Web Mobile

Geography

Audiences

Interests

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Strategic strategy in action

Evening Post Publishing Company

New audiences
Revenues from valuable niches beyond the core media

New products
New and current consumers on mobile and social platforms

New revenues
Diversified, recurring sales from new and existing clients

| 2011 Alan D. Mutter | www.newsosaur.blogspot.com | alan.mutter@broadbandxxi.com | 415.519.2495 | Page 29 |

New audiences
The Eagle, Bryan-College Station, TX (circ 20k) AggieSports

Website Mobile app Freemium iPad app Social media Gigem 247 premium Mobile Print Social media

Entertainment guide

More to come

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New products
Salisbury (NC) Post (circ 20k) FarmCarolina

Website Social media Mobile app Geo-aware content Aggregated content User-generated content Social media outreach Self-serve advertising Free classifieds + upsells

Key characteristics

New revenues
Charleston (SC) Post & Courier (circ 90k) Charleston Scene (local)

Web/social/mobile/print Print hotel wrap Print visitor guide New SMBs/recurring revs Print, web and mobile ads Directory upsells Web/mobile hosting Transactions

My Charleston (inbound)

Key revenue streams

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This is not like buying a press

You face a number of constantly moving targets:

Trends, technologies and opportunities will change Consumer preferences will continue to evolve Marketers will demand more accountability and efficiency New, well-financed competitors will emerge relentlessly

You have to be prepared to evolve in real time

| 2011 Alan D. Mutter | www.newsosaur.blogspot.com | alan.mutter@broadbandxxi.com | 415.519.2495 | Page 33 |

Required core competencies

Market research to identify audiences and revenues Product marketing to guide efficient development Technology acquisition, integration and support Go-to-market strategy and tactics Sales training and support

| 2011 Alan D. Mutter | www.newsosaur.blogspot.com | alan.mutter@broadbandxxi.com | 415.519.2495 | Page 34 |

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You cant do it individually

This will not succeed as a side project to core business This requires a dedicated, talented and fully focused team You have to do a lot in a short time with limited resources Budget, headcount, skills and bandwidth are insufficient None of you can afford do it alone Working together will enhance your chances of success

| 2011 Alan D. Mutter | www.newsosaur.blogspot.com | alan.mutter@broadbandxxi.com | 415.519.2495 | Page 35 |

Mission critical
It will require major commitment and cultural change You may have to re-organize your core business You may have to redeploy your capital You have to teach people new skills or find new people Time is not your friend

| 2011 Alan D. Mutter | www.newsosaur.blogspot.com | alan.mutter@broadbandxxi.com | 415.519.2495 | Page 36 |

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