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Big Data. Data is the new content: How publishers can use Big Data to increase revenues. September 2014

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Big Data

Data is the new content: How publishers can use Big Data to increase revenues

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Big Data revolutionizes publishing business

Executive Summary

 Qualitative enquiry with 15 German publishers

 Period of data collection: May/June 2014

 Authors: Dr. Alexander Henschel, Marc Ziegler, Alexander Schumm About this report

 Publishers generally own valuable sets of data, but mostly not being adequately monetized. Out of 25 currently possible Big Data use cases along the publishing value chain, less than one fourth are

applied by interviewed publishers

 Publishers, consequently applying Big Data technologies for processes optimization and digital portfolio enhancements, have a higher digital revenue share (>40%) and, as a rule, achieve above average profits. Especially international B2B publishers, such as Thomson Reuters, Reed Elsevier and Wolters Kluwer are Big Data pioneers in the publishing industry with EBITDA margins between 20-30%

 Indicators that differentiate Big Data leader from the rest are:

 Clear and consistent Big Data roadmap for implementation of new technologies/tools

 Development of various, closely interlinked Big Data use cases along the value chain

 Utilization of predictive analytics tools to identify upcoming opportunities

 Dedicated data analytics teams, centrally organized and reporting to CEO/CDO

 Continuous investments in digital infrastructures and process optimization

 Seeing opportunities in monetizing data products

 This report describes opportunities how publishers can make use of Big Data technologies to achieve cost savings and exploit new revenues opportunities along the value chain

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Publishers own a treasury of data, but do not use it as

an asset

What is Big Data and which part is important for publishers?

 For publishers Big Data results in an availability of more data from various sources in a higher frequency and the capability to gain real-time business insights

 Data collection, access and storage via multiple touch-points become increasingly important for publishers. However, these processes can be outsourced if potential provider meets high data security standards

 Data analytics and visuali-zation of gained insights should become core

competencies of publishers

[1] (Apache) Hadoop is an open-source software framework for storage and large-scale processing of data-sets that is being used within most Big Data systems/applications

Source: goetzpartners At a glance Variety: Share of un-structured and semi-structured data amounts to 90% of all collected data Volume: Continuously growing data-sets exceed capacity of conven-tional databases Velocity: Increased data velocity increases demand for collection, storage and proces-sing in real-time Decision-relevant insights at an as-yet unknown level DATEN- SOURCES ERP CRM Social Media E-Mail Web Analytics Real-time data Records of staff … External analytics BIG DATA

CHARACTERISTICS BIG DATA ARCHITECTURE

Data access &

data storage Data analytics Application/ visualization

 Data

collec-tion from va-rious sources

 Hadoop[1]

for better data access  Faster in-me-mory data storage  Data Mining/ Discovery  Pattern Recognition  Predictive Analytics  Visualization & discovery of trends and correlations  Integration of gained insights in applications BIG DATA RESULTS

Future core competencies of publishers

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Big Data provides levers to accelerate the process of

digital transformation

 Increased data availability and analytics capabilities across all fields of business, Big Data provides levers along entire publishing value chain

 Big Data accelerates the digital transformation process and serves as a driver for expansion into new fields of business

 The addressed potentials can only be exploited by combi-ning various Big Data tools; an accompanying change management program is also mandatory

At a glance

Big Data has two levers in general …  Optimization of business processes  Tool-based atomization of processes  Adoption to changed value chains 2 . O p e rat io n al E xc e lle n ce 1 . S tr at eg y Development of new data-driven revenue models Increased value

creation within existing revenues models through targeting and personalization

These use cases support key drivers for digital transformation efforts

Revenue driver

Significant boost of reach Increase Customer Experience Data-driven journalism

Reduced time-to-market Revenue boost

Content-Monetarisierung

Developing new revenue sources Mindset, organization, processes Mindset shift

Strategic partnerships Digitalization of structures & processes

… that provide use cases along the entire value chain Content production Content aggregation Content transformation Multi-platform- distribution Monetization User Engagement B ig D at a u se c as e s al o n g t h e e n ti re v al u e c h ai n

Key levers of Big Data for digital transformation

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The multitude of Big Data use cases along the value

chain requires prioritization

Potentials, use cases and impact of Big Data in publishing houses

 Use of Big Data is currently low in publishing industries, scattered along the value chain

 Driven by further digitalization and dedicated Big Data tools for publishers, Big Data use cases will increase

significantly

1] see use cases on following use cases Source: goetzpartners At a glance Big Data Use today Potentials within next 3 years Impact Reduction of time needed for research and article creation Gaining lead on competitors with respect to information and time Reduction of

manual work Significant boost of reach Increased sales through highly targeted customer approach Increased content consumption, reach Use Case 1[1] Automated text body sugges-tions based on algorithms Example Predictive Analytics to identify upcoming, trending topics Automated content adoption to multiple devices Highly targeted campaign delivery based on user and behavior analytics Identifying and targeting of “valuable” customers for up- and cross selling cam-paigns Identification of Social Media Multipliers (opinion formers) within social network goetzpartners has identified over 25 Big Data use cases in the publishing business

Use Case 2[1] Use Case 3[1] Publishing

value chain production Content

Content & service aggre-gation Content transfor-mation (Web, Mobile, Apps, E-Edition) Cross platform distri-bution and consump-tion Content moneti-zation User engage-ment / Social Media

= Big Data potential

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Consistent use of Big Data results in a more

successful digital business

Publishers, consequently

applying Big Data technologies for processes optimization and digital portfolio enhancements, have a higher digital revenue share.

Especially B2B media companies, who have consistently

transformed their business based on data-driven products and business models, achieve the highest margins in the industry.

Further indicators that

differentiate Big Data leaders from the rest are:

 Consolidated, company-wide data collection, storage and processing

 Significant investments in Big Data tools

 CIO on Board level

 Chief data scientist that orchestrates data teams of various use cases

 Highly active and consistent digital transformation

Successful digital business based on Big Data

Digital revenue share (in % total revenues)

E B IT D A -M ar g e in % "Big Data-Leader" in B2B media business with own innovative big data products

"Big Data-Leader" in newspaper business who consistently use Big Data tools for process

optimization and monetization

NYT obviously belongs to the peer group of heavy Big Data users, but has started transformation later than other leaders

Digital revenues and EBITDA margins of selected publishing houses

Source: goetzpartners, company information = Revenues in MEUR 2013

3.786 2.070 264 1.880 879 9.197 3.565 7.121 2.801 1.156 844 396 0 25 50 75 100 40 -20 20 10 30 0 Axel Springer Gannett Thomson Reuters Wolters Kluwer Reed Elsevier G+J 564 Financial Times Group 1.812 Schibsted

Guardian Media Group NY Times

Ringier

Tamedia NZZ

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About goetzpartners

Advisory for strategy, M&A and transformation

goetzpartners is an independent advisory firm for all key issues of entrepreneurial activity:

strategy, M&A and transformation. This unique approach makes clients measurably more successful. Worldwide, some 250 professionals working out of 12 locations in 9 countries support these activities.

goetzpartners ranks among the 10 biggest German advisory firms (Lünendonk®). In

WirtschaftsWoche magazine’s “Best of Consulting 2014” awards, the company took first place in the “Project Excellence” category.

 250 professionals

 Offices: Munich, Düsseldorf, Frankfurt, London, Madrid, Milan, Moscow, Paris, Prague, Zurich, Beijing and Shanghai

 Industries:

 TMT

 Energy

 Industrials & Automotive

 Healthcare

 Financial Institutions

 Retail & FMCG Facts & figures

Disclaimer

This study is copyright-protected. The reproduction, rental or any other form of distribution or publication, including in extract form, is subject to the consent of goetzpartners. This report is based on public information taken from different sources. In preparing this report, the authors have relied upon and assumed, without independent verification, the accuracy and completeness of information from these public sources. The authors point out that, if only limited, partly outdated, and/or inconsistent information was available on the topics covered in this report, they amended this information by own analysis and assumptions. The authors accept no liability whatsoever for the accurateness of these analysis or assumptions. This report should not be used as sole source of information for any decisions related to the topics covered in this report. Any information taken from the report should be verified independently and completed by information from additional sources.

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Munich l Düsseldorf l Frankfurt l London l Madrid l Milan | Moscow l Paris l Prague l Zurich | Beijing | Shanghai goetzpartners Prinzregentenstr. 56 80538 Munich T +49 – 89 – 290 725 – 0 www.goetzpartners.com Dr. Alexander Henschel Managing Director henschel@goetzpartners.com Marc Ziegler

Head of Digital Business

References

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