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Premium Content Business Evaluation & Insider Marketing Plan + Strategy

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Premium Content Business Evaluation & Insider Marketing Plan + Strategy

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  1. Premium Content Business Evaluation&Insider Marketing Plan + Strategy December 2005

  2. Table of Contents • Situation Overview and Analysis • Challenges • Possible Future Models • 2006 Goals and Objectives • Target Market Defined • Marketing Strategy and Plan • Short and Long-term • Appendix

  3. Paid Sports Content Shows Strong Growth +38% • 2004 Overall paid spend totaled $1.8 billion, +14%VYAG • Entertainment (music downloads) led growth +90% VYAG

  4. Sports Content Model Yet to Be Proven Online content models apply best to communities, digital distribution, and decision based information such as financial news and consumer product information (Consumer Reports) Speed/Convenience Personal Growth Greeting Cards General News Sports* *Note: Sports includes Fantasy Games Games WSJ.com/ Biz/Financial iTunes/ Entertainment Consumer Reports Community Vital Dating Research Narrow Retail/Content Lifestyle Red = Growing Black = Flat to down Long Tail

  5. 2005 Insider Annual Growth +35% • Peak sign up periods are during key times in the sporting world calendar - March Madness, MLB Season, and NFL (Fantasy) season

  6. Inside Information Drives Insider Trials • Analysis as well as rumors and breaking news are top choices Competitive Advantage Source: Insider Survey Insights: Audience Profiler, April 2005

  7. Sub-segments Drive Majority Of Signups Content Buckets Driving Signup Source: May ’04- December ’05 Hitbox Data

  8. Context, Time Of Year, Single Article/Writer Power • Top 75 Articles Driving Signup • Top 25 Account for 80% of sign ups

  9. Insider Strengths and Weaknesses What value does ESPN Insider have to potential fans for its price? Key Vulnerabilities Strategic Advantages Quality of Articles Uniqueness of Articles Price/Value Ease of Use / Navigation Amount of Articles Fantasy Information Potential Vulnerabilities Advantages/ Differentiators Appearance of Insider Area

  10. Top User Identified Reasons For Cancellations Definitions • Time & Interest • Not enough time to use • Don’t use enough • Lost interest • Not satisfied with content and features • Free Trial Only • Short-term Usage • Seasonal purchase • Signed up for one article • Content Available Elsewhere • Perception content is on ESPN.com or other sites Source: Stream Call Logs 7/05 – 10/05

  11. Challenges to Insider Success • Brand value unclear and undefined to users • Perception Insider content can be found elsewhere (ESPN or Other) • Price point to value (real and perceived) • Overall market adoption of paying for content online • Consumer motivations remain unclear • Consumer awareness of key Insider attributes remain low • Magazine subscribers slow to convert to “FREE Insider” • Monthly retention low - 32% after 13 months • Annual retention low – 69% after 13 months • Conversion within sign up process is low • November 200,000 visits to sign up page with 5% conversion to free trial

  12. A Business Shared by Two BU’s Has Two Goals Reaching maximum effectiveness for one goal causes a decrease in effectiveness for achieving the second goal New Media Revenue Magazine Circulation

  13. ABC Rules for Insider and ESPN the Magazine • Currently, ABC accepts Insider as a component to the purchase of ESPN the Magazine with no monetary value and views it as an editorial extension and therefore not a premium with purchase • The purchase price must be about $15.08 • The duration must be include a minimum of one issue • Insider can not be sold without the Magazine • Any premium offers to Insiders must be deducted from the purchase price of the subscription • The digital issue of the magazine may not substitute for print delivery

  14. Other ABC Rules for Consideration • Premium sold with subscription • Premiums are anything offered to a subscriber at time of solicitation, in addition to regular issues of the publication itself, and shall be reported in Bureau reports as a premium, regardless of whether said extraneous thing be given with or without additional payment above the subscription price and whether or not such extraneous thing is given only to new subscribers or to all subscribers. In addition, any presentation to current subscribers which, in the opinion of the managing director, implies future receipt of such extraneous things in conjunction with continued (or future) subscriptions will cause renewal subscriptions to be judged as premium induced. The number of subscriptions, whether new or renewal, involving such premiums taken during any period for which Publisher's Statement is filed shall be reported in the paragraph designated for that purpose and the nature of the premium and the provisions of the offer and the distribution thereof shall be described in Publisher's Statements and Audit Reports. Premiums are anything except: • (1) Complete issues of newspapers or periodicals sent to all subscribers for the period included in the offer. • Partnership Sales • All copies served to individuals and tied to a partnership agreement (e.g. subscription to a magazine partnered with the purchase of season tickets to sporting or cultural events) shall be classified as "Partnership" subscriptions or single copy sales and shall be reported in Publisher's Statements and Audit Reports except as otherwise permitted or prohibited • Club/Membership sales • All copies served to individuals as a result of membership in a club or similar organization shall be classified as "club/membership" subscriptions and shall be reported in Publisher's Statements and Audit Reports except as otherwise permitted or prohibited • Sponsored Sales • All copies or subscriptions purchased in quantities of 11 or more, which in the opinion of the managing director promote the professional or business interests of the purchaser, shall be considered "Sponsored" subscriptions or single copy sales and shall be reported in Publisher's Statements and Audit Reports per the provisions For More Detail visit: http://www.accessabc.com/bylaws/bylaw2426.htm

  15. The Big Question? Do We Change the Business?

  16. Premium Content Considerations Vertical Content with Access To Tools That Cut Across • Other Considerations • Role and position of video • Development of multimedia/interactive content and “shows” • Providing content and information that informs gambling

  17. Possible Payment Models • Range of prices based on value and demand • Multi-subscription discounts • Day or week(s) pass - ie Super Bowl, Draft, March Madness • A la carte article/video purchases (iTunes)

  18. Key Consideration To Be Determined How and when do we transition current Insiders to any new plan to maintain circulation?

  19. Next Steps • Outline product considerations and pricing • Evaluate options to include Magazine participation in all steps • Do we need to present and discuss with ABC? • ESPN should partner with ABC as an innovative leader in multimedia for the magazine industry • Research what the consumer wants • Better define and understand the target market • What products appeal to them • Validate product concepts • What is the market potential • What are the pricing scenarios that maximize the market

  20. Table of Contents • Situation Overview and Analysis • Challenges • 2006 Goals and Objectives – Status Quo Insider • Target Market Defined • Marketing Strategy and Plan • Short and Long-term • Appendix

  21. 2006 Insider Goals

  22. 2006 Objectives • Identify Insider target audience • Clearly define Insider brand and value • Support Magazine Circulation and ABC requirements • Launch a comprehensive on and offline acquisition plan that is targeted and relevant based on time and place • Test: price, trial length, messaging, sign up process • Address questions of proper business model for magazine and paid content • Launch retention plan that includes communication to Insiders throughout the lifecycle and targets key moments of attrition • Build additional on and offline product features and values

  23. Table of Contents • Situation Overview and Analysis • Challenges • 2006 Goals and Objectives • Target Market Defined – Online Paid Sports Content • Marketing Strategy and Plan • Short and Long-term • Appendix

  24. Core Consumer Insight – Key Segments Drive Usage • Online 3+ per week with a broadband connection, have a credit card, and watched sports tv programming in the past 7 days and: • Fantasy Avid(1.8 million) participated yesterday fantasy game • Fantasy Moderate(3.6 million) participated past 30 days fantasy game • Gambler(3.1 million) Games online casino gambling past 30 days • Sports Fanatic(2.7 million) News sports yesterday, any sports magazine read last 30 days, sports newspaper last 7 days, any sports radio last 7 days • Digital Lifestyle(1.3 million) Home banking online, newspaper reading primary online, any online purchase past 30 days • ESPN Fanatic (1.7 million) ESPN tv last 7 days, ESPN the Magazine last 30 days • League Fanatics Heavy users of league specific sites Source: @plan Winter 2005

  25. Table of Contents • Situation Overview and Analysis • Challenges • 2006 Goals and Objectives • Target Market Defined – Online Paid Sports Content • Marketing Strategy and Plan • Short and Long-term • Appendix

  26. Move Insider Forward While Evaluating Long-term • Short-term • Better define communication of brand value when building awareness • Test promotional initiatives • Focus on contextual optimization and targeting • 89% of 2005 trials came from content links • Replicate principals of context and targeting within ad serving • Optimize sign-up process • Trial duration and price • Test search engine marketing • Long-term • Research to better understand consumer needs • Launch Lifecycle communication plan • Product modifications and enhancements

  27. Insider Brand Architecture: Focus Acquisition Marketing on Vertical Interests and Brand Name Contributors – Demonstrate How the Insider Knows Insider Original Content Technology First Source for Knowledge ESPN the Magazine ESPN Inc, Access to the Brand USP: The first to know

  28. Drive Reach Awareness When Interest Is Peaked First Half Communication Themes • Consistent building of brand awareness and higher R&F around key events on the calendar • Key Events: March Madness, MLB season, Football/Fantasy • Promotional Tests Q1 – Q2 • Open House - Basketball content • Sweepstakes – waiting confirmation of advertiser support • Premium with purchase - fleece • Pricing promotions - $19.95

  29. Contextual Optimization • With 89% of trials coming from editorial links, this is a key area to focus and measure • Improved reporting and analyses of what is working: • Content type • Writer • Headline language • Placement

  30. Insider Prospect Target Cookie • Conversion focus by targeting qualified audience with impact units and frequency goal of 12-15 impressions per month • Factors and actions to consider for cookie • Frequent visitors to ESPN.com, 4+ days per week • Non-Insiders frequent visits to Insider • Visitors to Insider sign up page • Visitors to “Today’s Line” • Visitors to Injury Reports • Fantasy Sports Players • ESPN.com commerce transactors (Gameplan, FullCourt, Fantasy) • ESPN the Magazine readers on database • Lapsed users – trial & paid • Targeted Acquisition Communication to TwinTops • We will need to monitor this activity for the first 90 days to understand the activities of the converted and optimal frequency • Minimum to convert, maximum before ineffective • Targets that convert

  31. Optimization of Sign Up Process is Vital • Determine proper entry points to deliver right amount of information with least amount of clicks needed to convert • Minimize loss from additional clicks Offline media Online media Editorial Benefits Sell Page Content Sample Testing of embedded form in Benefits page is being designed Signup Form We are currently evaluating multivariate testing firms to help us measure and optimize this process

  32. Trial Duration and Price Tests • Determine optimal price, trial and duration mix to maximize sign up, retention, and revenue

  33. Search Engine Recommendation • SEM takes a great deal of time, focus, and knowledge to maximize the media investment • Partner with top SEM firm such as iProspect, iCrossing etc • Bundle ESPN New Media search into the effort to create efficiencies • Current learning from past ESPN SEM efforts: • Most targeted words deliver greatest ROI • Need to understand balance between reach keywords and targeted words in search process • Not enough knowledge of frequency before conversion • Need to customize landing page to keyword • Develop RFP for SEM firms • Work with SEM firms to understand proper level of investment required to get comprehensive learning

  34. Retention Strategy: Maintain Engagement • Lifecycle communication plan • Trial Retention: Drive product engagement in first 45 days • Benefits and values communication • Renewal Engagement: reinforce value of product with communication on and offline benefits prior to expiration • Monitor inactivity • Up sell monthly users at key attrition points • Cancellation saves • Total Cancels 142,490 • Total Saves 8,519 • Work with West to train staff on key save triggers • Identify pricing and pay options that may increase save percentage • Credit Card Failures (FY ’05 66,997) • Optimize all technical capabilities to limit CC failure

  35. Communication To Existing Subscribers • Lifecycle communication to inform, develop engagement, and prove need state to subscribers so that by the time subscribers get to renewal, they can’t imagine being a fan without Insider • There are sports fans and there are Insiders RENEWAL PROCESS 1. Update Info Request 2. CC Failure notification 3. Retry Continuously Monitor of 45 days of inactivity: Deliver customized email with offer and relevant content 1. Discount Pricing Offer 2. Satisfaction Survey 3. Second discount offer 1. Key Event/Offer 2. Satisfaction Survey Bi-monthly event invite or special Insider Only offer, New Feature announcements Monthly Newsletter First 45 Days 60 days to Renewal 60 Day Non-Renewal • Passive login • 1. Discount Pricing Offer banner • Active login • 2. Discount Pricing Offer Page: We Want You Back with relevant content • 3. Satisfaction Survey • Special Insider Only offers • New Feature announcements • Seasonal content reminders: Free agency rumors, drafts, season previews, playoffs, etc • “Big” article highlights

  36. First 45 Days Upon Completion of sign up and payment, extend the multimedia tour into a guided “setup” of how to get the most from Insider Highlighting key features and link to relevant article based on indicated team/sport interest Develop a communication plan that sequentially gets Trial users to adopt usage of more features

  37. Monthly to Annual Up Sell • Monthly subscribers stay on for an average of 6-8 months • By that time they have spent $42-56 • Targeted, proactive annual offers will engender greater loyalty expanding lifetime value Invitation for Annual offer at $29.95 Invitation for Annual offer at $19.95 Event/Special Offer Invitation Satisfaction Survey 60 Day Non-Renewal First 45 Days Month 2 Month 3 Month 4 Month 5 Month 7+ Month 6

  38. Saves Consideration Set for Testing • Better train call center reps on connection between cancellation reason and benefits of Insider components • Maintain better dialogue of up coming features reps can highlight to callers • Identify pricing options and scenarios • “Seasonal buyers” • Bridge to next season pricing gap • Monthly buyers to annual • Pricing scale for number of months already paid • Too “expensive” • What does the user think a fair price is – last offer pricing bands

  39. Credit Card Improvement Actions & Plans • Email • Renewal Notification email sent out 10 days prior to renewal (Annual subs Only, about 100 updated CC far) • Email Notification sent each month to users whose Credit Card tied to Insider Account is expired (started in September, 1,200 users updated CC) • Email Notification sent to users once renewal fails due to bad CC (4,700 users updated CC so far in 2005) • On-Site • User is asked to update credit card before they can access Insider content during retry period (8,500 users updated CC so far in 2005) • Users can now pay with PayPal, which should have a higher success rate. • Back-end Processes • Paymentech auto updater. We send CC info to Paymentech and see if they have any updates to the record. We see a 3-4% match rate, but need to dig into how successful transactions are for those accounts. • Settlement Retry Period: We retry the users credit card 5 times before canceling the subscription (Period currently set to 15 days. Working with Mag on feasibility of extending). In October 3.44% of all renewals occurred after the first renewal attempt failed (4,400 subs). • Set up as a Recurring Biller at Paymentech, should ease some restrictions on allowing CC's to go through even if expired. • Other • Met with WSJ.com and other ESPN contacts to discuss what they do to combat this problem. Seems we do the majority that everyone else is doing. • Working on a test with Chase to determine exactly why some of these transactions fail. The codes we get back from Paymentech are too general, so hopefully this will give us some better information.

  40. Internal Partnerships • Editorial: identify Insider contributors with in logo across channels including TV, radio, and print • Extending the recognition of top name talent contributing to Insider further builds the radnd’s value and justifies the premium • Commerce partnership: up sells, inclusions, and free trials • ESPNShop, PPV, and Fantasy • Upsell and free trial opt-in check box in shopping cart check out • Promotional value and incentive for inclusion with purchase • Ie. ESPNShop – spend $100 and get 6 months of Insider where ESPNShop contributes the value of 6 months back to Insider for ABC purposes • ESPNZone – trial passes and up sells • Sign up for Insider by adding it to your bill and get a food item free • Develop sales incentive plan for waiters/bartenders • Give one day trial passes

  41. External Partnerships • Local newspapers: ESPN local is already driving traffic to these sites, many require registration • Develop co-registration plan within their sports sections • Pay local papers a bounty per paid Insider • Need to identify top papers in top markets to target efforts towards • May be able to leverage some corporate newspaper ownership structures • Retail and Advertiser Partnerships • Option 1 – included with purchase of product or price point is Insider. Partner buys Insider from ESPN at negotiated rate. Partner gets additional communication to this audience through email and onsite promotion to their group during the year • Option 2 – Sponsored trials and “Open House” offers • Example Targets: • Consumer electronics around big events – Super Bowl, Playoffs, March Madness etc.: Best Buy, Circuit City, Walmart, iTunes • Sporting Goods retailers: Dick’s Sports, Sports Authority, Modell’s • Automotive –Test drive incentive, best customer reward • Financial Services – reward redemption, best customer reward, consultation premium

  42. Insider Enhancement Suggestions • Develop additional benefits and features both edit and non-edit that bring the Brand Essence to life • Greatest Access to Sports • Access to ESPN Inc. • Preview of new .com and fantasy features/games • EOE premiers online for Insiders only (Yahoo/NBC) • Invitation to Insider only Editorial Panels w/Q&A at the Zone • Participation in exclusive research panel helping guide the next generation of ESPN products • Insider only Bristol tour • VIP treatment at ESPNZone – call ahead reservation privilege • Advance ticket access to ESPN events • Access to buy tickets to sporting events, personalized list of events (including active.com content) for their location – MySports Calendar • Presale of ESPN Enterprise products • Free shipping from ESPNShop

  43. Insider Enhancement Suggestions • Editorially driven features • Enhanced Fantasy section • Fantasy information is the #2 most desired feature with 72% of Insiders interested/very interested • Only 53% are aware of Insider Fantasy Features • Fantasy content is Top 4 reason for sign up • Insiders only message board and chat (SportsNation) • VIP call-in/email for radio and interactive TV • More video – ie Game Plan and Full Court highlights • Personalized Index page • Stats and tools enhancements • Past issue magazine archive

  44. Develop Interactive Multimedia Insider Tour • Rationale: Video and multimedia allows the product to come to life while demonstrating the brand value • Utilizing top name talent that contribute to Insider, develop a multimedia, interactive tour of the features and benefits of being an Insider • To the extent possible, we show our “sources” as representation of the access contributors have and bring to the Insider editorial product (SportsCenter concept) • If space and budget allow, this could be tied to television advertising

  45. Appendix

  46. ABC and ESPN Insider Guidelines • ABC MAGAZINE RULING • In October of 2002, the Audit Bureau of Circulation (ABC) approved ESPN Insider as an editorial extension of ESPN The Magazine. Therefore, ESPN Insider is a subset of ESPN The Magazine and does not exist without The Magazine. • Since ESPN Insider is now an editorial extension of ESPN The Magazine as determined by ABC, this product has no monetary value. The monetary value is associated with the subscription to The Magazine only. Any sales that are generated are for subscriptions to The Magazine, which includes access to ESPN Insider. ESPN Insider CANNOT be sold as a stand-alone product. • ESPN Insider also cannot be separated from ESPN The Magazine. Anytime ESPN Insider is offered to a consumer so must an accompanying subscription for the same duration. ESPN Insider can be compared to a section of ESPN The Magazine, such as The Jump. In this example ESPN The Magazine can exist without The Jump section but The Jump cannot exist without ESPN The Magazine. • ESPN Insider is not consider a premium to an ESPN The Magazine subscription and cannot be compared to the marketing tactics and ABC guidelines of other premium sold subs, such as the fleece. • FREE OFFERS • ESPN The Magazine’s circulation department must approve any free offer over 2 months. The free offer must have a continued option of a paid subscription term. Free offers that do not continue as a paid subscription cannot be counted in The Magazine’s rate base and become a pure expense in fulfilling the issues ($1 per issue), which will not be carried by The Magazine and must be paid by the requesting party. • PRICE • Subscription price must not be below .58 cents per issue or .58 cents for two weeks of Insider. • TERM • Subscription term must include at least one issue of the magazine. ESPN The Magazine comes out every two weeks with 26 issues in one year. • PREMIUM OFFERS • Any time a premium is offered with the sale of an Insider subscription, the retail cost of that product or service must be deducted from the total price of the subscription and be reported as the sale price to ABC. Example offer: Get ESPN The Magazine Insider for one year for $39.95 and get a Fleece. The cost of the fleece is $7, so the reported price of the subscription to ABC is $32.95. The above price guidelines should be taken into consideration when offering premiums. • ESPN THE MAGAZINE DIGITAL EDITION • ESPN The Magazine Digital is an added value to the subscriber and must never be used as a substitute to delivering the print edition.

  47. Monthly Slide Continuous While Annual Occurs At Key Moments in Lifecycle

  48. ATTRIBUTES Rumors & Breaking News RealTime Scoreboards ESPN Radio Podcasts Local Sports Aggregation Wireless Alerts Customization Biggest Names in Sports Journalism with insider access Fantasy Tools College/Pro Recruiting – Scouts, Inc ESPN The Magazine Blogs 365/24/7 coverage of sports Brand Power Leverage Brand Essence to Develop Creative that Speaks to the Product and Measure Value of New Attributes VALUE • Convenience • In The Know • Knowledge • Mobility • Bragging rights • Behind the scenes with more than one perspective (GM, player, coach) • Access Insider Brand Essence PERSONALITY • Connected • Authoritative • Trusted (WWLIS) • ESPN brand voice • Bold • Knowledgeable • Omnipresent • Experienced BENEFITS • KnowNews before it hits the headlines • Magazine Previews and Next • Insider Access/Perspective of contributors • Integration across .com - FANTASY • Technology • Presentation to user • User convenience • Brings everything together, customizable and convenient Greatest Access to Sports

  49. User Interest vs. Awareness Source: Insider Survey Insights: Audience Profiler, April 2005

  50. Perception of Insider as Fantasy Source Among those who pay to participate in fantasy games and own Insider: Source: Insider Survey Insights: Audience Profiler, April 2005