Global Digital Magazine Media 2.0. Conference

Digital Strategies for Magazines

Didier Quillot - Lagardère Active Media

Hanover – 15/03/2007

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Agenda

Opening remarks : A time of convergence

I. In this rocky period of transition, magazines are not doomed to decline

II. Lagardère Active Media Digital Strategy Keys and Implementation

III. A quiet revolution

p.3 to 6

p.7 to 15

p.16 to 27

p.28 to 44

3

A time of convergence

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• 1922: first BBC radio broadcast

• 1928: first BBC TV broadcast “Television Queen’s Messenger”

• 1995: first free daily newspaper launched in Stockholm by Metro

• 2006: US Online advertising growth : +24%

(Source : Merrill Lynch, MediaPost)

“Print is dead”

“Radio is dead. And so is print, by the way”

“Paying print is dead”

“TV and radio are dead. And print is even

deader”

EVENT MEDIA “EXPERTS”

A time of convergence

5

MASTERING THE STRATEGY FOR

DIGITAL SUCCESSThe website widens

brand recognition and increases print

circulation

MASTERING THE STRATEGY FOR PRINT

SUCCESS

The magazine anchors web traffic and

recognition

Developing a virtuous print / web model

MASTERING THE STRATEGY FOR CONTENT SUCCESS

A time of convergence

6

A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. Sir Winston Churchill

A time of convergence

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I. In this rocky period of transition, magazines are not doomed to decline

8

The magazine industry has strong assets to succeed on the web :

• Readers communities

• Trusted brands

• In-depth content

• Specific segment expertise

• Relationships with advertisers

Internet is an opportunity to :

• Leverage those assets

• Broaden brands’ audiences

• Generate additional revenues

Magazine are not doomed to decline

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A rocky environment

Advertising growth has been slow or negative

• French magazines’ net advertising revenue 2006 compared to 2005 : -1.0%• American magazines’ gross advertising revenue 2006 compared to 2005 : +0.1%

Rationalizating of portfolios is necessaryPublisher US editions closed in 2006

(Source : IREP, Publishers Information Bureau)

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Prejudice N°1 : "Time spent on the Internet is subtracted from magazine reading”

+4%-1%+28%+4%+1%+5%+5%

2000484 min per day

2006575min per day

0

100

200

300

400

500

600

700

2000 2006

MagazinesNewspapersInternetTVRadioMusicVideo

Total +4%

2000-2006 CAGR

Germany : Time Spent Daily w. Media (> 14 y.old)

Minutes per day

(Source :ARD/ZDF - Studie Massenkommunikation – 01/2007)

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Prejudice N°1 : "Time spent on the Internet is subtracted from magazine reading”

AEPM French Magazine Audience Study – March 2007

97,2% of the French read magazines every month

58,9% of the French read magazines every day

65% read at least one magazine published by Lagardère Active Media in 2006

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Prejudice N°2 : "Online advertising budgets are subtracted from magazine advertising budgets”

(Source :BIPE – Russia and China include B2B magazines)

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Prejudice N°3 : "The global magazine market is negatively impacted by the Internet "

WomenKidsCarsShelterTeensNewsCelebsLadsParentingSportsTravel

…

Weekly Monthly Bimonthly …CATEGORY

FREQUENCY

THERE IS NO GLOBAL TRUTH ABOUT THE MAGAZINE MARKET

THE SITUATION IS VERY DIFFERENT ACCORDING TO THE

SEGMENTS AND FREQUENCY

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Publisher PublicationAd Pages

March 07 / March 06

+23%

+5%

+19%

+11%

+20%

+21%

+51%

+2%

Ad sales growth of US Women Magazines

(source : Publishers Information Bureau)

Prejudice N°3 : "The global magazine market is negatively impacted by the Internet”

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Internet : a strategic move for magazines

Assured downside

• Some magazine content is available free of charge on the Internet (for instance Der Spiegel, Le Nouvel Observateur etc.)

• Internet takes away ad revenue from magazines

• Ease of entry for new competitors, while some pure plays have already established authoritative brand loyalty (Allociné, Aufeminin etc.)

• Internet giants want to take ad revenue (Yahoo!, MSN, Google etc.)

Potential upside

• Significant savings on production & distribution

• Potential new paying services (commercial referrals, users databases, classified ads, paying archive, etc. For instance DailyCandy.com)

• New digital opportunities to strengthen brands and re-publish magazine contents

• New communities with a new loyalty

• Internet giants look for premium content

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II. Lagardère Active Media Digital Strategy – Keys and Implementation

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Hachette Filipacchi Medias : a global leading magazine publisher

More than 250 magazines

35%

65%

Magazine revenue

International France

• 2006 revenue : 1 848 M €

• Publisher in 41 countries

18

Lagardère Active Medias : a multiplatform content producer

More than 250 magazinesMovie / TV production

Radios

TV Channels

New Media

Movie / TV distributionMulti-media ad sales house

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Lagardère Active Media growth strategy

1. Rationalise our Portfolio

2. Shift from operating to licensing magazines in some countries

3. Exit from some underperforming segments

4. Address issues of scale

5. Develop web capacity

6. Benefit from the merger of our advertising sales housesStrong management commitment to achieve Lagardère Active Media’s transformation

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First priority : WHAT?

Monitoring the business by categories

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Second priority : WHERE?

LAM Magazine portfolio (as % of 2005 revenue)

Global growth for global brands

Take advantage of fast growing countries (China, Russia)

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• Improve overall productivity and reduce purchasing costs by implementing pre-press automated copy flow management

• Improve coordinated paper and printing negotiation and review specifications at international level

• Improve distribution practices and develop collaboration with distributors in the US and Russia

• Invest in core business titles and segments (for instance Elle and Tele 7 Jours in France)

Third priority: HOW?

Improving print publishing efficiency

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Websites

Magazines

TV

Radio

Production

Mobile

Events

Web distribution

Developing a virtuous ecosystem with group assets and partners

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4 levers to develop our websites in all key segments / themes by 2010

1. Organic growth (launch or relaunch of content websites)

2. Digital acquisitions ( november 2006)

3. Digital alliances ( + )

4. Dedicated organisational structure (250-strong staff by the end of 2007)

Our multiplatform strategy implies that print and web editorial teams collaborate closely

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1. Segment expertise (women, auto, celebrities, news, kids etc.)

2. International brands

3. Current advertising market trends

4. Ad attractiveness of brands and contents

A strategy built on Lagardère Active Media assets

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Merger of own advertising sales houses

27

Cross-media campaigns

Audience aggregation based on Lagardère Active Media portfolio and integrated sales house

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III. A Quiet Revolution

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Premiere : accompanying the readership move to digital

A content-driven website

Premium content (Reviews, Interviews, News)

Rich Media Content (Trailers, Slideshows)

Community content (forums, user comments)

Exclusive box-office game (develops loyalty)

Premiere.fr was launched in Februrary 2007

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Spiderman3 – UGC Les Halles – Mon Tue 11:20

Showtimes anywhere in France

Integration of Google Maps to find movie theaters

Free showtimes by SMS

A service-driven website

Premiere : accompanying the readership move to digital

31

Content synergies : website is feeded with L.A.M.’s databanks

Movie reviews

Movie Showtimes

Celeb news

Theatres & Restaurants

TV Listings & reviews

News

TODAY

TOMORROW

Premiere : accompanying the readership move to digital

32

PREMIERE.FR TARGET : 1 MILLION UNIQUE USERS ON MOVIE CONTENTS AT

THE END OF 2007

Premiere : accompanying the readership move to digital

33

Digital transition for the Premiere brand in the US

Premiere : accompanying the readership move to digital

Premiere.com October 06

November 06

Page Views 1,3M 5,2M

Print edition will end in April 07

The Premiere brand will continue to grow online…

… and on mobile phones (Premiere mobile launched in november 06)

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Caranddriver.com : maximizing brand audience and revenue

80% of Caranddriver.com users are new to the brand

Online traffic growth benefits to the brand

Caranddriver.com January 06 December 06

Unique Users 1,1 M 1,5 M

Page Views 16M 21M

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In-market content (buying guide, vehicle reports, used car pricing, comparisons, dealer quotes)

Rich media content (Slideshows, video road tests and interviews)

Community content (forums, user-provided road tests)

Video advertorials (Virtual Test Drive)

For in-market users, deeper content than in print magazine

Caranddriver.com : maximizing brand audience and revenue

36

2005-2006 AD

REVENUE EVOLUTION

Print ad revenue

evolution-1,931M$

Web ad revenue

evolution+2,972M$

BRAND AD REVENUE

EVOLUTION +1,041M$

The US auto magazine ad market is depressive :2006 vs 2005 auto ad pages : -13.8%

Fast-growing revenue

But LAM’s investment in Caranddriver.com allows online growth to exceed print erosion

Caranddriver.com : maximizing brand audience and revenue

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TARGET : 2008 WEB AD REVENUES = 40% OF PRINT AD REVENUES

Caranddriver.com : maximizing brand audience and revenue

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Creating value for a multimedia group strategy

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Elle.fr : building a leading women’s portal

Relaunch of the website

Elle.fr will cover all the women subcategories : Fashion, Beauty, Diet, Food, Entertainment etc.

Each category is built as a proper web site (ex : the food subcategory Elle à Table includes 11 700 pages)

Elle à table, launched in october 2006, was the first element of the new portal

Video recipes

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Four ways to increase content and service

In-house premium content (Recipes, Astrology)

Group synergies (Nanny Finder with Parents.fr and Infobebes.com, Evening Planner with T7J.fr and Premiere.fr)

Partnerships with category experts (dating, ecommerce)

Community contents (blogs, forums)

Elle.fr : building a leading women’s portal

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TARGET : 1 MILLION UNIQUE USERS AT THE END OF S1 2007

Elle.fr : building a leading women’s portal

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Creating value for a multimedia group strategy

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Digital growth

October 06 February 07 Growth

Page Views per week 7,49 M 9,32 M + 24%

Visits per week 1,0 M 1,26 M + 26%

LAGARDERE ACTIVE MEDIAS FRENCH WEBSITES GROWTH

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Conclusion

1. Magazines will still be there for years• Target : save quality content

Think added value contentAdapt content to segmented audiences

• Digital usage will grow because of digital generation

• Digital ad spending will follow

• Need to reverse paradigm and to come to :• Multiplatform content publishing• Management of segments / brands• Internal digital transformation : editors, publishers, salesforce, production

1. A general and cultural (r)evolution

2. Timing is everything