Advertising Age - March 5, 2012

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THE DIGITAL A-LIST, CONTENT MARKETING WEBCAST, AND FREE WHITE PAPER THE DIGITAL A-LIST

This list celebrates the brands, media and technologies that are not only changing the way we think about digital, but have also shown us how powerful digital can be for business.

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Programming is bountiful on
cable nets, but ideas are few

Research Group. “Advertisers
know what they are getting. While
it is unlikely the copycat will be a
runaway success, they are certainly
salable.”
Though not necessarily as
expensive. “Networks want to
charge a high [cost per thousand]
for the knockoff based upon what
the original did, but it is up to us to
determine the appropriate rating
and negotiate a CPM,” said Marc
Morse, senior VP-national buying
at RJ Palmer.

Lyle Schwartz, head of Implementation Research and Marketplace Analysis at Group M, said, “If multiple networks begin to attract the same type of audience, for buyers it becomes purely about efficiency and where you can find the same spot” for less.

Another threat could come from cable and satellite providers, which may start taking a harder look at how these programs will affect negotiations when it’s time to renew affiliate deals.

“Cable operators should be more concerned about the lack of differ-

CABLE WARS from p. 2

entiation,” Mr. Wieser said.
“Operators want channels because
they contribute something that is
different than the rest of the pack-
age. If you are a network trying to
convince [operators] to pay a 10%
increase next year, you don’t have
much leverage in negotiating affili-
ate fees if there are several mirror
channels from different parent
companies.”
Maureen Huff, spokesperson for
Time Warner Cable, said that, in
deciding what channels to carry, it
looks at ratings and set-top-box data
as well as at “whether the program-
ming is unique and compelling to
our customers.” As cable operators
expand low-tiered packages, such as
Time Warner’s TV Essentials, low-
rated and “copycat” networks could
become the casualties that save con-
sumers money, said Brad Adgate,
analyst at Horizon Media.

“When a channel is dropped, one of the talking points is ‘Can viewers get this elsewhere?’” said one cable insider. “Networks will lose leverage when negotiating affiliate fees.”

SEEMFAMILIAR?

Spike TV’s “Auction Hunters” is one of many in its genre.

Travel Channel and Oxygen believe their recently revealed programs are different enough—and that niche programming will find niche viewers.

“It’s a fresh take on the subject,” said Laureen Ong, president of the Travel Channel Media, comparing “Baggage Battles” to “Storage Wars.” “We are going beyond what entertainment networks do” in helping viewers learn what to do when they’ve lost their luggage, she added.

As Susan Malfa, senior VP-sales for Bravo Media, Oxygen Media and Women at NBC Universal, justifies “Thrift Wars”: “There are a ton of cars in the market, but each one has special features that fulfill the needs of a different customer.”

Mags turn to bundling to redefine
subscriptions in the digital age

ROLLBACK from p. 3

includes Hearst and Bonnier, who
believe bundling leaves money on
the table and makes digital content
seem “free.”
“It’s such a hot topic right now,”
said Sharon Sennefelder, managing
director for print at Horizon
Media. “Nobody knows where it’s
going to pan out.”
Hearst, whose titles include
Cosmopolitan and Esquire,
Hearst, however, has
been testing bundled
offers—it sometimes charges an
extra dollar or more to include dig-
ital access and sometimes doesn’t
charge any premium, but it has
found that consumers overwhelm-
ingly prefer one format over the
other, Mr. Loughlin said.

Hearst magazines have about 600,000 paid monthly digital editions, about 80% of which are part of digital-only subscriptions, and the company expects to reach 1 million by the end of the year. Many of Hearst’s digital subscribers are new to its brands. And they’re often paying more than

$20 for digital-only subscriptions, compared with about $12 for print.

“We’re very encouraged because we’re seeing a meaningful increase in yield by selling this content as opposed to bundling it,” Mr. Loughlin said.

But those on either side of the
strategic split can point to some
successes. Time Inc. execs said they
tablets,” Mr. Sachs said. “They’ll
start an issue of Sports Illustrated
in print when they have it with
them, and then when they’re at
home at night they may pick up
the tablet and have it there. That’s
why All Access is our main offer.”
Time Inc. does sell digital-only
subscriptions on Barnes & Noble’s
But the company has a rigorous
schedule of other tests this year,
necessary because Ms. Ray consid-
ers it an industry imperative to get
the next-generation subscription
model right. “We’re not going to
figure that out in a month.”

Nook, where new subscribers are
in fact paying almost $48 for
Sports Illustrated—via $3.99-per-
month subscriptions. Why will
consumers pay roughly $48 for
Nook-only access but not for
print-plus-digital subscriptions?
Time Inc. said it believes it’s part-
ly because they’re compar-
ing the Nook offer to other
apps, where a $3.99 price
looks familiar. A $48 price
tag for print is unusual,
however, especially among
magazines as big as Sports
Illustrated. Although some
smaller weeklies are more
expensive, only People
charges more than Sports
Illustrated and still main-
tains a larger circulation.
Other bundlers are also
trying different approach-
es. Condé Nast is testing
what happens when it charges
New Yorker subscribers more to
renew if they’ve activated their
digital access. “We’ve been very
aggressive in marketing to our
print base to get them to unlock
their digital, and we’re increasing
the price on the back end,” said
Ms. Ray.

ALL-ACCESSPASSFAIL:

Time Inc. had hoped that bundling digital and print would let SI increase its price.

believe Sports Illustrated’s rollback largely indicates that it’s hard to get people to pay nearly $50 for most magazines, while Time magazine’s increase demonstrates that bundling digital with print can, in fact, support significant price increases.