Cannibalisation is a myth: digital complements rather than competes with print

Blogs and user generated content supplements rather than threatens

Digital publishing is delivering returns, with leading digital publishers predicting that by 2012 digital activities will contribute up to 40% of revenues. This is according to a report launched today by Deloitte, the business advisory firm, and the UK Association of Online Publishers (AOP) in a survey of UK publishers.

Mark Lee Amies, media partner at Deloitte comments:
“Publishers no longer see the digital world as a threat to traditional print publishing, and believe that it can complement rather than threaten print products. Digital revenue generation is averaging 17% of overall revenues, and most publishers agree that the growth of online advertising spending has boosted these overall, and has not cannibalised existing print revenues.”

Other key findings of the report include:
• Overall, print is still regarded as an efficient and valued means of consumption. Book, magazine and newspaper lovers may always prefer the feel and portability of paper, even if they supplement some of their consumption online or have chosen or bought the book online.

• 70% of participants in the survey did not perceive blogs or user-generated content as a threat, with many looking at ways to integrate blogs into their consumer offerings. This content will be an important component to building communities, with the potential to be used as a source of closer customer contact and as a marketing tool.

• When it comes to management, the Digital Director role is becoming increasingly powerful. In many organisations, this individual has a strong voice at the board if not a direct seat at the table. The Digital Director is no longer subservient to the Editor or Marketing Director of the printed product.

• The most coherent and fully developed digital strategies were in the business publishing sector. Revenue models of business publishers focus on subscriptions, but with advertising playing an important role. Many digital publishers were impressed and surprised by how much easier it is to retain subscribers for their print and online products ordered through the web.

• In contrast with business publishing, consumer-focused newspapers and magazine markets are more complex with less focused digital offerings. Newspapers and consumer magazines’ primary digital strategy is to build audiences to drive advertising revenue, based on brand strength, with only a few seeking to monetise content. These businesses are currently benefiting from a buoyant advertising market, and have found double digit growth for online advertising.

“One of the main challenges that came through in the survey was the difficulty in ensuring an integrated digital strategy for all stakeholders across the business. From an editorial perspective, the answer is a single editorial team on a title or brand which publishes content to the various platforms used – mainly print, web and mobile, with different types of content according to the media channel. In contrast, the advertising sales team of successful publishers are usually platform-specific and separate.

“Participants in the survey were asked to name the organisations they most admired in the digital space. Three digital businesses were seen as having played a key role in forging the digital publishing world: BBC (23%), Guardian (12%), and Amazon (10%). Key qualities for a successful digital business were seen as: content (19%), understanding of customers (16%), followed by infrastructure and flexibility (14%),” concludes Lee Amies.

Alexandra White, director of AOP comments:
"This research from Deloitte will be well received by AOP members and demonstrates the scale of change, both in terms of product offering but also in terms of business culture, through which publishers are responding to the arrival of the digital age. These qualitative interviews, many of which were conducted with AOP members, serve to complement our own research into changing media habits and audience attitudes towards quality content delivered over multiple platforms."

Based on the findings of this survey, Deloitte extracted 5 key principles which we believe will drive future success for digital publishers:

1. Make it simple
Develop and clearly articulate a simple overarching strategy that sets out how your offline, online and mobile offerings interplay. Ensure it delivers incremental value to customers;

2. Know your customer
Get to know your customers and grow with them. Don’t ignore the young – they are your future;

3. Profit from personalisation
Personalise to provide what customers want at the right price and they will come. Don’t be afraid of breaking your traditional one-to-many publishing model;

4. If you can’t beat them, join them
Embrace those who won’t opine about or contribute to your product; they will ultimately enhance and support your brand;
5. Fee or free
Look beyond the printed word and focus on the brand at the centerpiece for generating revenue.

- ENDS -

Notes to editors

About the survey
Deloitte talked to 30 UK publishers, with a turnover ranging from £30 million to over £1 billion, about how they are adapting their businesses to the digital world.

About Deloitte
In this press release references to Deloitte are references to Deloitte & Touche LLP which is among the country’s leading professional services firms, providing audit, tax, consulting and corporate finance services. Known as an employer of choice for innovative human resources programmes, it is dedicated to helping its clients and people excel. Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein whose member firms are separate and independent legal entities. Neither DTT nor any of its member firms has any liability for each other’s omissions. Services are provided by member firms or their subsidiaries and not by DTT. Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority. The information contained in this press release is correct at the time of going to press. For further information, visit our website at www.deloitte.co.uk

Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority.

The information contained in this press release is correct at the time of going to press.

About AOP
The UK Association of Online Publishers (AOP) is an industry body representing online publishing companies that create original, branded, quality content. AOP champions the interests of approximately 160 publishing companies from diverse backgrounds including newspaper and magazine publishing, TV and radio broadcasting, and pure online media.
Together they publish around 1,828 products (AOP Census 2006) and their websites have a combined audience of almost 20m users, or an active reach of 68 per cent of the entire internet population (source, Nielsen/NetRatings, Q4 2005).
AOP presents a unified voice to industry and Government, specifically to address issues and concerns relating to all areas of online publishing. AOP publishes original research, hosts forums, conferences and events, covering a range of topics from paid-for-content, subscription models and data protection, through to copyright, content management, new technologies and audience measurement.
The AOP autumn Online Publishing Conference & Awards is its annual industry event. It attracts the biggest names in online publishing to discuss the challenges and opportunities facing the industry and celebrate outstanding achievement. The 2006 event will be held on 4 October at the London Hilton, Park Lane.
Members include Associated New Media, BBC, BSkyB, Channel 4, CMP Information, CNET Networks, Condé Nast Interactive, Dennis Interactive, The Economist Group, Emap, Financial Times, Future Publishing, GCap Media, Guardian Unlimited, Haymarket Publishing, Incisive Media, Independent Digital, IPC Media, ITV Online, The National Magazine Company, News International, Reed Business Information, Reuters, Telegraph Media Group, VNU Business Publications and Which? In addition, PPAi (Periodical Publishers Association Interactive) retains a corporate seat on AOP board: representing the interests of magazine publishers online.
www.ukaop.org.uk

Contact:
Charlotte Hanson
immediate future Ltd.
0845 408 2031
charlotte.hanson@immediatefuture.co.uk

Published on: 12:00AM on 10th July 2006