World Digital Media Trends. Shaping the Future of the Newspaper

Transcription

1 Shaping the Future of the Newspaper ANALYSING STRATEGIC DEVELOPMENTS AND OPPORTUNITIES IN THE PRESS INDUSTRY SPECIAL REPORT SEPTEMBER 21 WAN-IFRA 21 World Digital Media Trends Digital media usage and revenues are growing in double- and tripledigits worldwide, presenting a staggering amount of opportunities for newspaper companies All the strategy reports are available to WAN-IFRA members and subscribers at the SFN Web site

2 Shaping the Future of the Newspaper A WORLD ASSOCIATION OF NEWSPAPERS AND NEWS PUBLISHERS PROJECT, SUPPORTED BY WORLD LEADING BUSINESS PARTNERS THE LEADING SUPPLIER OF SOLUTIONS AND SERVICES FOR DIGITAL, ADVERTISING, CONTENT MANAGEMENT AND SUBSCRIPTION APPLICATIONS. A LEADING COMPANY FOR NEWSPAPER PRODUCTION SYSTEMS THE LEADING NORWEGIAN TELECOMMUNICATIONS, IT AND MEDIA GROUP A WORLD LEADING PRODUCER OF NEWSPRINT AND MAGAZINE PAPER, WITH 18 PAPER MILLS AROUND THE WORLD WORLD ASSOCIATION OF NEWSPAPERS AND NEWS PUBLISHERS, 21

3 VOLUME 6 REPORT N 2 WORLD DIGITAL MEDIA TRENDS TABLE OF CONTENTS Executive Summary 1 Global Entertainment and Media Market 13 Global Advertising 17 Advertising: Print Newspapers vs. the Internet 2 Internet Market 2 Video Games 41 Social Media 4 Appendix 47 2 Media Usage Trends Digital Hot Spots 6 General Media Usage Trends 7 Online Usage and User Profiles 6 Broadband and Wireless 84 Online Video 86 Search 89 Advertising 9 Smartphone Applications 96 Social Networking and Content Sharing 98 Video Games 113 Online Gaming 11 3 Mobile Trends 119 Telecom 119 Mobile Usage and User Profiles 122 Mobile Internet 13 Mobile Internet Access Spending 143 Content Development for Mobile Devices 1 4 Impact on the Newspaper Industry 19 Newspaper Industry Overview 19 News Sources and News Consumption 168 Printed Newspapers vs. Newspaper Websites 176 Paid News Websites 178 Conclusion 18 WDMT Research Content Partners 189 3

4 SEPTEMBER 21 SHAPING THE FUTURE OF THE NEWSPAPER 4

5 VOLUME 6 REPORT N 2 WORLD DIGITAL MEDIA TRENDS Executive Summary Digital media and advertising have continued to grow despite a global economic downturn that has stunted or reversed growth across media industries since 28. In fact, they are forecast to continue their expansions well into 214, according to research firm PricewaterhouseCoopers LLP and Wilkofsky Gruen & Associates. As technologies evolve and digital sectors advance, new media platforms are gaining market share while traditional media see limited growth or decreasing shares overall. Newspapers around the world are charged with mapping out both the media mix best suited for their readership, as well as revenue streams and monetization possibilities that fit their needs best. Publishers are learning that challenges and solutions are no longer the same at every newspaper, and are digging into demographic and geographic data that can best inform and help them tailor plans for the future to the unique needs and wants of their readers. The World Association of Newspapers and News Publishers World Digital Media Trends 21 partnered with 66 research companies to piece together the world s media and advertising landscapes, as well as media usage trends on different platforms and a look at how those trends impact the newspaper industry. As technology accelerates change, publishers today are tasked with making good decisions quickly, and this report aims to better inform those decisions. The overall entertainment and media market worldwide was valued at US$1.17 trillion in 2, and grew to more than $1.32 trillion in 29, according to data from PwC and W&G. It is expected to exceed $1.69 trillion in 214, as detailed in Chapter 1. In 2, newspaper publishing was the leading segment, with a 1.2 percent share, or $179 billion market value. Next came business-tobusiness publishing, with a 13 percent share, or $13 billion value. Television advertising and TV subscription and license fees also accounted for about 12 percent each, or $146 and $142 billion, respectively. However, in 214, a shakeup in the market share ranking among segments is expected. Internet access, including wired and mobile, is forecast to reach 2.4 percent, or $31 billion

6 SEPTEMBER 21 SHAPING THE FUTURE OF THE NEWSPAPER value, up from only 11.7 percent, or $137 billion, in 2. TV subscription and license fees will come in second place, with 1 percent, or $28 billion. TV advertising is expected to follow, with 11.4 percent, or $196 billion. change Global Entertainment and Media Market by Segment, US$ millions 1,8, 1,6, 1,4, 1,2, 1,, 8, 6, 4, 2, Internet access: wired and mobile Internet advertising: wired and mobile TV subscriptions and license fees TV advertising Recorded music Filmed entertainment Video games Consumer magazine publishing Newspaper publishing Radio Out-of-home advertising Consumer and educational book publishing Business-to-business publishing Total 1,69,298 31,9 1,36,74 1,174, ,43 13,843 28,13 137,82 66, ,88 19,29 19, ,17 16,271 17,31 79,717 87,38 86,76 78,6 8,168 73,97 69,48 179,419 16, ,317 4,487 44,212 1,36 12,467 18,16 118,833 13, ,31 16, CAGR Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates WAN-IFRA 21 Digital Migration of Entertainment and Marketing Spending Worldwide, 28 vs. 213 Non-digital Digital 21 Non-digital 69 Digital 31 Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates WAN-IFRA 21 6

7 VOLUME 6 REPORT N 2 WORLD DIGITAL MEDIA TRENDS Share of Global Entertainment and Media Market Internet access: wired and mobile Internet advertising: wired and mobile TV subscriptions and license fees TV advertising Recorded music Filmed entertainment Video games Consumer magazine publishing Newspaper publishing Radio Out-of-home advertising Consumer and educational book publishing Business-to-business publishing Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates WAN-IFRA 21 In 28, non-digital accounted for about 8 percent of all entertainment and marketing spending worldwide, while digital only made up 21 percent, PwC and W&G found. However, digital migration is an inevitable trend in 213, non-digital is expected to shrink to 69 percent, while digital will gain market share, reaching 31 percent. Advertising has been a slippery slope in the years leading up to 21. According to PwC and W&G, global advertising totalled US$418 billion in 2, and reached its highest point at $464 billion in 27. Then it declined to $4 billion in 29. The advertising market is expected to bounce back after 21. With a CAGR of 4.2 percent from 21 to 214, it is forecast to reach about $498 billion in 214. In 2, the global advertising market was dominated by television and newspapers, which accounted for 3 percent and 26 percent, or $146 billion and $112 billion, respectively. The research shows that TV will remain on top in 214, with a 37 percent share, or $196 billion. However, the Internet, including wired and mobile, will surpass print newspapers and claim the number two spot, up from 6.1 percent, or just $2.8 billion in 2, to about 2 percent, or $13.8 billion in 214. Newspapers are expected to decline to 16.7 percent, or $88 billion. The only other segment expected to see an increase in advertising share is video games, up from a very niche share of $173 million in 2, to. percent, or $2.8 billion, in 214. The media economy s shift from scarcity to surfeit has created a new media ecosystem of consumers in control instead of media companies in control of media usage patterns. As media channels proliferate, media users gravitate toward more refined and specific media preferences in usage. By understanding the media usage patterns, media companies can create content at the right time, in the right format, for a variety of targeted audiences. The Shaping the Future of the Newspaper project has aggregated dozens of data sets to show trends in usage patterns of a variety of target groups in various regions of the world. The data show how consumers use media across channels, during different times of day, depending on life stages and other demographic data, as detailed in Chapter 2. 7

8 SEPTEMBER 21 SHAPING THE FUTURE OF THE NEWSPAPER US$ millions 6, Global Advertising by Segment, 2-214, 13,843 4, 3, 2,78 66, ,17 16,271 19,689 2, 1, 32,924 28,44 33,74 24,1 24,86 29,939 31,114 28,761 29,479 18,78 13,977 1,982 change Internet: wired and mobile Television Video games Consumer magazines Newspapers Radio Out-of-home Directories Trade magazines Total 32, ,634 26,21 8,24 29,429 88, CAGR Each of TV, radio, newspaper consumer magazine, trade magazine, and directory Web site and mobile advertising is included in the respective segment and in the Internet advertising segment but only once in the overall total. Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates WAN-IFRA 21 Digital Hot Spots, 21 Hottest Mobile 7 Internet 4 Hot in mobile Mobile 7 Internet < 4 Hot in Internet Mobile < 7 Internet 4 Coolest Mobile < 7 Internet < 4 Source: 21 World Factbook, Central Intelligence Agency WAN-IFRA 21 8

9 VOLUME 6 REPORT N 2 WORLD DIGITAL MEDIA TRENDS Share of Global Advertising Internet: wired and mobile Television Video games Consumer magazines Newspapers Radio Out-of-home Directories Trade magazines The World Association of Newspapers and News Publishers (WAN-IFRA) conducts Digital Hot Spots research each year to better understand which countries show promise in mobile and Internet access, which is a key indicator for showing possible usage growth, and therefore, revenue potential. By indexing key digital media categories, WDMT has found the most digital countries in the world include those in Western, Central and Northern Europe, the United States, South Korea, Japan, Taiwan, Australia and New Zealand. From 2 to 29, Internet usage grew by 4 percent, according to Internet World Stats. While the United States represented about two-thirds of Internet usage a decade ago, U.S. Internet usage only represents one-third of Asia s use in Emerging regions represent the most impressive Internet usage growth from 2 to 29, including Africa (1,81 percent), the Middle East (1,67 percent), Latin America/ Caribbean (93 percent) and Asia (69 percent). The number of Internet users stands at 1.8 billion in 29, according to Internet World Stats, with Asia leading the pack at million, followed by Europe at 42.8 million, North America at 29.6 million and Latin America/Caribbean at million. Internet penetration as a percentage of population is led by the most established market, North America, with 76.2 percent, followed by Oceania/Australia at 6.8 percent, Europe at 3. percent, Latin America at 31.9 percent and Asia at 2.1 percent. Mobile is growing rapidly around the world, and as its penetration level rises, Internet access also grows, enabling more people to access content via their mobiles around the world. As more people have access to online content, publishers are increasingly tailoring their offerings to mobile platforms, developing apps, new advertising offerings and more Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates WAN-IFRA 21 The year of mobile media is said to be 21: the year mobile users access a critical mass of content on media company mobile sites and applications, and the year that some media companies are projected to make a healthy start to revenue-making with advertising and subscriptions. Mobile usership trends worldwide illuminate clear opportunities for newspaper companies including developing 9

10 SEPTEMBER 21 SHAPING THE FUTURE OF THE NEWSPAPER Increase in Internet Users Worldwide, ( of total population) Japan United States Russia Germany France Worldwide Canada Source: Internet World Stats, Q2 27 and 28 WAN-IFRA 21 content for smartphones, including text, photos, video and social networking, as detailed in Chapter 3. The global telecom services market has grown from 81 billion to 997 billion from 2 to 28, according to research firm IDATE. Mobile services include search, , weather, news, photos, sports, maps and other non-data download services. The most dramatic surges in telecom services are in the Asia Pacific region, particularly in China and India, as well as in Latin America, Africa and the Middle East. During the same time period, the more established markets of North America and Europe have grown slightly in global telecom services. Global Telecom Services Market by Region, 2-28 Region/Country North America Europe France Germany Italy Spain United Kingdom Asia/Pacific China India Japan Latin America Africa/Middle East Total Source: IDATE WAN-IFRA 21 The largest growth has occurred in Africa and the Middle East, growing 44.9 percent. This is followed by growth in India, at 44.4 percent; Latin America, 3.1 percent; and China, 2.8 percent. Established markets, including Japan, Germany, France, and North America, remained stable. According to emarketer, mobile subscriptions have reached 4.6 billion worldwide, with a projected.7 billion subscriptions by 214. Meanwhile,mobile Internet users are pegged at million at the end of 29, with a projected tripled growth by 214, in which billion people are expected to use the mobile Internet. Mobile social networking users, meanwhile, are expected to grow fivefold from 29 to 214, from million to 76.1 million. This means 3.1 percent of mobile phone subscribers in 29 used social networking on their mobiles, growing to 13.3 percent, and expanding from 28 percent of mobile Internet users to 4 percent by 214. Mobile is another important platform for which publishers must develop strong offerings. Already, hundreds of newspapers around the world publish text as well as video content on mobile phones through mobile Web and smartphone applications. Newspaper companies are redistributing their content via apps on smartphones such as iphones and Blackberries, and are monetizing content by deploying search, text and display advertising. Currently, major news titles like The New York Times and USA Today have relied on advertising and sponsorships to monetize mobile apps, and have built substantial subscription lists through free downloads. 1

11 VOLUME 6 REPORT N 2 WORLD DIGITAL MEDIA TRENDS Mobile Phones Subscribers, Internet Users and Social Network Users Worldwide, Millions 1,8 1,6 1,4 1,2 1, Mobile phone subscibers (in millions) Mobile Internet users Mobile social network users Mobile social network users of mobile phone subscribers Mobile social network users of mobile Internet users , , , ,. 4,6, 4,9.,2.,4.,6.,7. Source: emarketer, November 29, and Internetional Telecommunication Union (ITU) October 6, 29 WAN-IFRA Meanwhile, a handful of media companies are charging for their smartphone apps, such as CNN (US$1.99), the Guardian (US$3.99) and Drudge Report (US$.99). With hundreds of thousands of smartphone apps on the market, and thousands of news and information apps, an app should be differentiated from the competition, relevant and compelling in order to be salable. As digital grows, the global print newspaper publishing market's growth has slowed, due to downturns in many western countries, despite large growth spurts in many developing countries. As the North American market shrinks, the region including Europe, the Middle East and Africa has taken over as the world's largest market, and is expected to hold that position, while the Asia Pacific region is growing into the second spot and Latin America sees continued growth, as detailed in Chapter 4. In 2, the worldwide newspaper publishing US$ millions 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, 179,419 67,78 111,634 Global Newspaper Publishing Market by Component, ,317 69,293 8,24 16,633 72,28 88,1 change CAGR Circulation Total advertising Total Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates WAN-IFRA 21 11

12 SEPTEMBER 21 SHAPING THE FUTURE OF THE NEWSPAPER market reached $179.4 billion, according to PwC and W&G. The numbers for 29 are projected to have dropped 11.4 percent, to $14.9 billion. The decline is expected to taper off, falling 3.6 percent by the end of 21, and then stabilising in 211. Growth is projected to pick up again in 212, at 1.7 percent overall, and 3 percent overall in 213. In 214, total growth is expected to reach 3.1 percent. For most of the Internet's relatively short lifespan, the economics of online journalism have said that the more page views an article received, the better. However, as the value of online advertising decreases, experts agree that this strategy will likely lead to failure, endangering important news that may be overlooked because it won't drive enough traffic, and causing online ad values to continue eroding. As the value of page views decreases, news publishers around the world are continuing to experiment with different types of online paid content models, from making some content paid, to putting all content behind a paywall. The basics of an online paid content business model are based on both attracting enough paying customers while also attracting highyield advertisements to that very dedicated audience. Some publishers, such as MediaNews Group and Financial Times Ltd, use a metered paywall, which allows occasional readers, such as those drawn in by search results, to continue to read articles for free. Regular readers who access the site often, and read many articles, are monitored, and forced to pay a fee once they reach a certain threshold. Another paywall example is a partial paywall, which gives away certain content for free, and puts other content behind a paywall. In the case of financial newspapers, value is derived by top financial news that can't be found on other websites, for example. In the case of community newspapers, value is derived by local information that can't be found elsewhere. Those who have adopted a partial paywall include the Nikkei, Le Monde and Axel Springer. Other publications, including The Times and The Sunday Times, owned by News International, have chosen a full paywall, which means all their online content must be paid for. WAN-IFRA wishes to thank a long list of esteemed global and country specific research organisations that have shared their data for the purposes of this compilation. WAN-IFRA hopes this collection provides the reader with a clearer picture of the globe's digital landscape, by analysing the context of the data, and the opportunities the trends may represent. A list of contributing research houses and their corresponding websites can be found in this book s appendix. Web addresses have been provided so readers can access a wealth of data that goes well beyond the published charts in WDMT. This publication is a work in progress. As years go on, we will continue to illuminate the emergence of many more digital channel frontiers. We rely on the sources of data and the generosity of research houses in order to act on our commitment to bring the widest array of information to our publisher colleagues. To contribute research to this compilation, please contact Martha Stone, director of WAN- IFRA's Shaping the Future of the Newspaper project, at martha.stone@wan-ifra.org. 12

13 VOLUME 6 REPORT N 2 WORLD DIGITAL MEDIA TRENDS 1. Global Entertainment and Media Market The overall entertainment and media market worldwide was valued at US$1.17 trillion in 2, and grew to more than $1.32 trillion in 29, according to research from PricewaterhouseCoopers LLP and Wilkofsky Gruen & Associates. It is expected to exceed $1.69 trillion in 214. In 2, newspaper publishing was the leading segment, with a 1.2 percent share, or $179 billion market value. Next came business-tobusiness publishing, with a 13 percent share, or $13 billion value. Television advertising and TV subscription and license fees also accounted for about 12 percent each, or $146 and $142 billion, respectively. However, in 214, a shakeup in the market share ranking among segments is expected. Internet access, including wired and mobile, is forecast to reach 2.4 percent, or a $31 billion value, up from only 11.7 percent, or $137 billion, in 2. TV subscription and license fees will come in second place, with 1 percent, or $28 billion. TV advertising is expected to follow, with 11.4 percent, or $196 billion. Newspaper and business-to-business publishing, which were the top two leaders in 2, will lose their advantage to 9.3 percent and 9.1 percent, or $16 and $16 billion market value, according to the research. Other segments worth observing are Internet advertising, including wired and mobile, as well as video games, which are expected to grow from 2.2 percent and 2. percent, to 6 percent and percent, respectively. From 29 to 21, the worldwide economy was tough, with the CAGR of seven segments going down. The overall CAGR of was also in a decline, at about -2 percent. According to PwC and W&G, the economy seems to revive in the period of 211 to 213, with the CAGR of all the segments expected to be positive, except that of recorded music. The CAGR of total entertainment and marketing spending worldwide is anticipated to be at about 6 percent. The biggest gainers in the period are expected to be Internet advertising and Internet access, up more than 12 percent. Television 13

14 SEPTEMBER 21 SHAPING THE FUTURE OF THE NEWSPAPER change Global Entertainment and Media Market by Segment, US$ millions 1,8, 1,6, 1,4, 1,2, 1,, 8, 6, 4, 2, Internet access: wired and mobile Internet advertising: wired and mobile TV subscriptions and license fees TV advertising Recorded music Filmed entertainment Video games Consumer magazine publishing Newspaper publishing Radio Out-of-home advertising Consumer and educational book publishing Business-to-business publishing Total 1,69,298 31,9 1,36,74 1,174, ,43 13,843 28,13 137,82 66, ,88 19,29 19, ,17 16,271 17,31 79,717 87,38 86,76 78,6 8,168 73,97 69,48 179,419 16, ,317 4,487 44,212 1,36 12,467 18,16 118,833 13, ,31 16, CAGR Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates WAN-IFRA Growth of Entertainment and Marketing Spending Worldwide by Segment, vs Internet access Internet advertising TV subscription and license fees TV advertising Recorded music Filmed entertainment Video games Consumer magazine publishing Newspaper publishing Radio and out-of-home Consumer and educational book publishing Business-to-business publishing Total Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates WAN-IFRA 21 14

15 VOLUME 6 REPORT N 2 WORLD DIGITAL MEDIA TRENDS Share of Global Entertainment and Media Market Internet access: wired and mobile Internet advertising: wired and mobile TV subscriptions and license fees TV advertising Recorded music Filmed entertainment Video games Consumer magazine publishing Newspaper publishing Radio Out-of-home advertising Consumer and educational book publishing Business-to-business publishing subscriptions and license fees, video games and filmed entertainment are also set to rise by more than percent on average from 211 to 213. Publishing segments, however, have a relatively low CAGR, less than 3 percent. DIGITAL MIGRATION In 28, non-digital accounted for about 8 percent of all entertainment and marketing spending worldwide, while digital only made up 21 percent, the research from PwC and W&G shows. However, digital migration is an inevitable trend in 213, non-digital is expected to shrink to 69 percent, while digital will gain market share, reaching 31 percent. Total spending on digital and mobile platforms was less than $1 billion worldwide in 24, but it is on track to keep growing steadily, reaching more than $4 billion in 213, the study found Digital Migration of Entertainment and Marketing Spending Worldwide, 28 vs. 213 Non-digital Digital Non-digital Digital Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates WAN-IFRA 21 Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates WAN-IFRA 21 1

16 SEPTEMBER 21 SHAPING THE FUTURE OF THE NEWSPAPER US$ millions 8, 7, 6,, 4, 3, 2, 1, Growth of Consumer Spending on Digital/Mobile Platforms Worldwide, Other consumer/end-user/access spending Total spending on digital/mobile platforms Digital/mobile spending comprises wired broadband, mobile broadband access, online and wireless video games, video-on-demand, mobile TV, digital downloads of movies, online movie rental subscriptions, Internet music, mobile music and electronic books. Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates WAN-IFRA 21 Media Channels Likely to Benefit/Suffer from Budget Shifts Away from Other Media in 29 Benefit Suffer from budget shifts Internet 9 TV 4 Direct mail PR Point-of-sale activities Radio Outdoor advertising TV National daily newspapers Local daily newspapers Outdoor advertising National daily newspapers Direct mail Local daily newspapers Radio Point-of-sale activities PR Internet Note: Study conducted between February 28 and February 29 across the entire client base (marketing decision makers) of Digitas and Perfomics. Source: Digitas, 2nd Digital Investment Barometer, March 29 WAN-IFRA 21 Other spending totalled more than $6 billion in 24, but then stayed almost stagnant in the following years. It is expected to grow a little, but total no more than $8 billion in 213. Budget shifts among media are common now. According to a Digitas study conducted in February 28 and February 29, the Internet is the most likely sector to benefit from budget shifts from other media, with nearly 6 percent of respondents saying so, followed by direct mail and public relations. Meanwhile, the media most likely to suffer from budget shifts include TV, outdoor advertising, national daily newspapers, direct mail, local daily newspapers and radio, each with more than 3 percent of respondents saying so. 16

17 VOLUME 6 REPORT N 2 WORLD DIGITAL MEDIA TRENDS US$ millions 6, Global Advertising by Segment, 2-214, 13,843 4, 3, 2,78 66, ,17 16,271 19,689 2, 1, 32,924 28,44 33,74 24,1 24,86 29,939 31,114 28,761 29,479 18,78 13,977 1,982 change Internet: wired and mobile Television Video games Consumer magazines Newspapers Radio Out-of-home Directories Trade magazines Total Global Advertising 32, ,634 Advertising has been on the decline in the years leading up to 21. According to PricewaterhouseCoopers LLC and Wilkofsky Gruen & Associates, global advertising totalled US$418 billion in 2, and reached its highest point at $464 billion in 27. Then it declined to $4 billion in ,21 8,24 29,429 88, CAGR Each of TV, radio, newspaper consumer magazine, trade magazine, and directory Web site and mobile advertising is included in the respective segment and in the Internet advertising segment but only once in the overall total. Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates WAN-IFRA 21 US$ millions 8, 6, 4, 2, 1, 8, 6, 4, 2, Digital newspapers Digital consumer magazines The advertising market is expected to bounce back after 21. With a CAGR of 4.2 percent from 21 to 214, it is forecast to reach about $498 billion in 214. In 2, the global advertising market was dominated by television and newspapers, which accounted for 3 percent and 26 percent, or $146 billion and $112 billion, respectively. Advertising Targeted to New Consumer Behaviours, Digital directories Digital trade magazines Wired Internet Mobile Video games Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates WAN-IFRA 21 17

18 SEPTEMBER 21 SHAPING THE FUTURE OF THE NEWSPAPER Share of Global Advertising Internet: wired and mobile Television Video games Consumer magazines Newspapers Radio Out-of-home Directories Trade magazines Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates WAN-IFRA 21 of total ad dollars Ad Share Growth by Modern Media, Mobile (F) Broadcast TV Web Cable TV Source: Borrell Associates, Inc. WAN-IFRA 21 The research shows that TV will remain on top in 214, with a 37 percent share, or $196 billion. However, Internet, including wired and mobile, will surpass newspapers and become number two, up from 6.1 percent, or just $2.8 billion in 2, to about 2 percent, or $13.8 billion in 214. Newspapers are expected to lose share, declining to 16.7 percent, or $88 billion. The only other segment expected to see an increase in advertising share is video games, up from a very niche share of $173 million in 2, to. percent, or $2.8 billion, in 214. Wired Internet advertising is on the top of all ads targeted to new consumer behaviours in 24, which totalled about $2 billion that year, according to PwC and W&G. Digital newspaper advertising came next, with less than $2 billion, while others were still all very small sectors at that time. In 213, wired Internet advertising is set to reach nearly $8 billion, while mobile ads will account for about $9 billion, and digital newspaper ads about $8 billion. Digital directory ads will exceed $6 billion, the study states. According to Borrell Associates, Inc., in 29, the growth of broadcast television advertising outpaced others, at more than 6 percent, while the Web, cable TV, and mobile ads all grew less than 2 percent. In 214, however, the growth of mobile advertising is expected to skyrocket to nearly 1 percent, outperforming others. Broadcast TV's ad share is also forecast to increase, at around 11 percent that year, while Web s 18

19 VOLUME 6 REPORT N 2 WORLD DIGITAL MEDIA TRENDS 14 CAGR of Global Media Supplier Advertising Revenues, Television Search Other Total online Newspapers Magazines Radio Outdoor online media Source: MAGNA Global 21 Advertising Forecast, December 29 WAN-IFRA 21 growth of 8 percent and cable TV's growth of 3 percent are also expected. According to research firm Magna Global, search and total online are the top two leaders in terms of the compound annual growth rate of global media supplier advertising revenues from 21 to 21. The CAGR of search is 12.1 percent, and that of total online is 1. percent. Other online media sectors combined follows with 8.8 percent CAGR, while outdoor and TV also report 6.7 percent and percent CAGR, respectively. Radio and newspapers have the relatively low CAGR, at 2. percent and 1.9 percent, respectively. Magazines are the only media reporting negative CAGR, at -.6 percent. Total advertising annual growth worldwide exceeded more than 1 percent in 23 and 24, after a sharp dip to more than - percent in 21. The growth was down again in 29, at about -1 percent, but is expected to bounce back to positive figures after 21, and will remain at the range between percent and 1 percent from 212 to 21, according to Magna. TV advertising annual growth worldwide dropped to more than - percent in 21, but reached a peak of around 1 percent in 23. It marked a nearly 1 percent growth in 27, and then plunged to nearly -1 percent in 29. After 21, it is expected to return to positive growth, fluctuating between percent and 1 percent. Search advertising and other online advertising emerged in the beginning of the 2s, and started high at more than 4 percent annual growth and 7 percent, respectively. Other online advertising annual growth, impacted by the Internet bubble, was at negative growth in 21 and 22, at more than -1 percent, according to Magna. It bounced back and remained at more than 3 percent from 24 to 27, and then dropped again in 29. After 21, its annual growth rate is expected to fluctuate at around 1 percent. Search advertising s annual growth began to slow down after 23. After 21, it will stay steadily at around 1 percent, the research states. Newspaper advertising worldwide had about a percent annual growth in 2, but dropped to nearly -1 percent in 21. Its growth rate was back to positive from 22 to 27, and then plunged to more than -2 percent in 29. It will be steadily back to positive figures after 212, at less than percent, Magna predicts. Magazine advertising grew at about percent in 2, and the growth rate dropped to - percent in 21. In 23 and 27, it was back to around percent to 1 percent. The growth rate then plunged to a low of around -2 percent in 29. After 21, it fluctuated at around 2 percent and -2 percent, according to Magna. Radio advertising's annual growth worldwide was about 1 percent in 2, and like other platforms, fell to nearly -1 percent in the year 19

20 SEPTEMBER 21 SHAPING THE FUTURE OF THE NEWSPAPER after. The growth rate from 22 to 28 was at a range of percent to 1 percent. It plunged to the lowest point at around -2 percent in 29. After that, the growth rate is expected to stay stable, at between percent to percent. Outdoor advertising annual growth worldwide in 2 was at nearly 1 percent, but it also dropped to a the low negative single digits the year after. The growth rate fluctuated between 1 percent and 1 percent from 23 to 29, and plunged to more than -1 percent in 29. After 21, it will back to positive and remain between percent and 1 percent, Magna forecasts Annual Growth of Global Media Advertising by Segment, Total Advertising Annual Growth e 21e 211e 212e 213e 214e 21e Search Advertising Annual Growth e 21e 211e 212e 213e 214e 21e TV Advertising Annual Growth e 21e 211e 212e e 21e 211e 212e 213e 214e 21e Other Online Advertising Annual Growth 213e 214e 21e Newspaper Advertising Annual Growth e 21e 211e 212e e 21e 211e 212e 213e 214e 21e Radio Advertising Annual Growth 213e 214e 21e Magazine Advertising Annual Growth e 21e 211e 212e e 21e 211e 212e 213e 214e 21e Outdoor Advertising Annual Growth 213e 214e 21e Source: MAGNA Global 21 Advertising Forecast, December 29 WAN-IFRA 21 2

21 VOLUME 6 REPORT N 2 WORLD DIGITAL MEDIA TRENDS ASIA The advertising market in the Asia Pacific region totalled $88.6 billion in 2, and reached $9.4 billion in 29, according to PwC and W&G. It is expected to grow at a rate of 6.6 percent from 21 each year and reach $131.1 billion in 214. Television was the top contributor in 2, valued at $33.9 billion, followed by newspapers with $23.9 billion. In 214, TV advertising is expected to remain as number one, with $49.2 billion. Internet advertising will outperform newspaper and claim the second spot, with $29.8 billion. Newspaper advertising will total $27.3 billion, the research predicts. The fastest growers from 21 to 214 go to video games and the Internet, with a CAGR of 1.8 percent and 14.3 percent, respectively. EUROPE, THE MIDDLE EAST AND AFRICA The advertising market in countries in Europe, the Middle East and Africa totalled $119 billion in 2, and surpassed $123.1 billion in 29, according to PwC and W&G. In 214, the market is expected to grow to $147.9 billion, with a CAGR of 3.7 percent. TV and newspaper advertising altogether accounted for more than half of the ad market in EMEA countries in 2, with $37.3 billion and $33. billion, respectively. In 214, TV is expected to still be the leader, with $47.4 billion, while Internet will jump to second place, with $36.2 billion, and newspapers will take the third spot, with $31.1 billion. Video games and Internet are the two segments with the highest CAGR, which are both over 12 percent. LATIN AMERICA Advertising in Latin America was valued at $13 billion in 2, and went up to $19.1 billion in 29. PwC and W&G research shows it will continue to grow after 21, at a yearly rate of 7.7 percent, reaching $27.6 billion in 214. Television dominated the ad market in 2, with $6.8 billion in advertising. It is expected to keep its edge in 214, reaching $1.3 billion. Newspaper advertising is in the second spot over the years, increasing from $2. billion in 2 to $4.6 billion in 214. Internet and video games are the two outperformers from 21 to 214, growing at more than 14 percent each year to $1.7 billion and $47 million in 214, the research concludes. US$ millions 14, 12, Advertising by Segment, Asia Pacific, ,763 1, 8, 6, 4, 17,272,929 33,919 36,12,66 4,32 23,86 23,7 49,226,33 27,28 2, 6,379 4,277 4,94 11,412 8,412 8,69,222 4,836,266 change Internet: wired and mobile Television Video games Consumer magazines Newspapers Radio Out-of-home Directories Trade magazines Total CAGR Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates WAN-IFRA 21 21

22 SEPTEMBER 21 SHAPING THE FUTURE OF THE NEWSPAPER US$ millions 18, 16, 14, 12, 1, 8, 6, 4, 6,847 6,24 6,939 2, 8,287 8,161 9,3 9,641 8,912 8,844,13 4,82,728 change Internet: wired and mobile Television Video games Consumer magazines Newspapers Radio Out-of-home Directories Trade magazines Total Advertising by Segment, EMEA, ,61 37,21 12,281 33, ,6 11,24 28,347 31, CAGR Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates WAN-IFRA 21 22,29 39,439 36,247 47,417 US$ millions 3, 6,78 1, 1,8 1,323 4,8, 98 3,6 2,49 1, , ,19 1, ,8 change Internet: wired and mobile Television Video games Consumer magazines Newspapers Radio Out-of-home Directories Trade magazines Total Advertising by Segment, Latin America, , 2, 1, 12,93 2, ,28 27,67 1, CAGR _ Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates WAN-IFRA 21 1,346 22

23 VOLUME 6 REPORT N 2 WORLD DIGITAL MEDIA TRENDS NORTH AMERICA In North America, the ad market was valued at $197.9 billion in 2, and dropped to $168 billion in 29. PwC and W&G report that it will bounce back to $191 billion in 214, with a 2.6 percent CAGR from 21 to 214. In 2, TV ads totalled $68.2 billion, more than any other segment, and will likely grow to $83.7 billion in 214. Newspaper ads, which in 2 were ranked second, will recess from $1.8 billion to $2 billion in 214. Video game is the biggest gainer, from $11 million in 2 to $1. billion in 214. The CAGR from 21 to 214 is anticipated to total 11.7 percent. The Internet also has a relatively high CAGR, calculated at about 8 percent. It increased from $13 billion in 2 to an expected $36.1 billion in 214. UNITED STATES According to Borrell Associates, in 29, U.S. direct mail ad spending reached $39.4 billion, while online ads totalled $3.2 billion, and broadcast TV accounted for $34. billion. U.S. newspaper ad spending in 29 totalled $31.1 billion, while other print added up to $2.2 billion. Radio ad accounted for $16.4 billion, and cable $14.4 billion. Advertising spending on directories was $9.9 billion, and out-of-home ads made up $6.3 billion. Telemarketing ad spending in the country was valued at $2.2 billion, while cinema was $1.8 U.S. Total Ad Spending by Medium, 29 Direct mail Online Broadcast TV Newspapers Other print Radio Cable Directories Out of home Telemarketing Cinema Mobile $ billions Source: Borrell Associates, Inc. WAN-IFRA 21 Advertising by Segment, North America, US$ millions ,34 68,242 2,942 69,62 36,129 83,7 1 1,813 11,342 2,114 2,99 2,984 16,44 18,628 6,62 6,121 7,46 1,71 14,11 14,311 11,328 7,69 8,488 change Internet: wired and mobile Television Video games Consumer magazines Newspapers Radio Out-of-home Directories Trade magazines Total 13,62 1, CAGR Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates WAN-IFRA 21 23

24 SEPTEMBER 21 SHAPING THE FUTURE OF THE NEWSPAPER Ad Expenditures by Media Quarterly Trends, U.S. US$ millions 4, 4, 3, 3, 2, 2, 1, 1,, Q2 7 Q3 7 Q4 7 Q1 8 Q2 8 Q3 8 Q4 8 Q1 9 Q2 9 Other Newspapers Magazines Internet TV Source: Nielsen Monitor Plus WAN-IFRA 21 billion. Mobile ad spending was still in an early stage, only accounting for $1.7 billion. In the second quarter of 29, television accounted for more than 6 percent of overall U.S. ad expenditures, or more than $2.3 billion, according to Nielsen Monitor Plus. Magazines contributed 13 percent, or $4.3 billion, while newspapers' share was 9 percent, or about $2.9 billion. Internet ads accounted for $2.2 billion, making it 7 percent of total ad expenditures. Data from Nielsen Monitor Plus also showed that U.S. TV advertising fluctuated between $18 billion and $2 billion between the second quarter of 27 and that of 29, but continued to be a leader in the category. Magazine ads came next, followed by newspapers. Internet accounted for about $2. billion in each quarter. According to the study, The State of the News Media 21, released by the U.S.-based Pew Project for Excellence in Journalism, cable was the only medium to see a positive change in ad revenue from 28 to 29. However, that change was small, at less than 1 percent. Online was down nearly percent, while network dropped more than 6 percent from 28 to 29. Audio and magazines were down almost 2 percent, while local TV plunged nearly 2 percent. The biggest decrease went to newspapers, with a decline of more than 2 percent. According to Veronis Suhler Stevenson, 46 percent of the U.S. advertising and marketing came from traditional marketing in 22, while 47 percent was from traditional advertising. Alternative interactive channels, however, only accounted for 7 percent. growth Ad Expenditures by Media U.S., Q2 29 ($ millions) TV $2,32 63 Change in Ad Revenue by Medium, U.S., 28 to 29 Cable Internet $2,169 7 Magazines $4, Newspapers $2,936 9 Local TV Other $2,1 8 Source: Nielsen Monitor Plus WAN-IFRA 21 Online Network Audio Magazines Newspapers Source: The State of News Media 21, the Pew Research Center's Project for Excellence in Journalism; Cable: SNL Kagan; Online: emarketer; Network:TNS Intelligence; Audio: Radio Advertising Bureau; Magazines: Publishers Information Bureau and is for ad pages sold, not revenue; Newspapers: estimate derived b by Rick Edmonds of the Poynter Institute based on data provided by the National Newspaper Association; Local TV: Television Bureau of Advertising WAN-IFRA 21 24

25 VOLUME 6 REPORT N 2 WORLD DIGITAL MEDIA TRENDS In 27, alternative interactive channels stole some of traditional advertising's share, which accounted for 41 percent, to 13 percent. Traditional marketing remained intact at 46 percent. In 212, alternative interactive channels are expected to account for 27 percent, while traditional advertising will shrink to 32 percent, and traditional marketing 42 percent, VSS reported U.S. Advertising and Marketing Share, Traditional advertising Traditional marketing Alternative interactive channels e Source: Veronis Suhler 29 WAN-IFRA 21 Advertising: Print Newspapers vs. the Internet According to PricewaterhouseCoopers LLC and Wilkofsky Gruen Associates Inc., global Internet advertising spending, including wired and mobile, totalled US$2.8 billion, or 6.1 percent of total advertising spending in 2. In the same year, newspaper advertising spending reached $111.6 billion, making it more than 26 percent of total ad spending. In 29, Internet ad spending worldwide increased by more than double, to $6.6 billion, with a market share of up to 14.4 percent. Newspaper ad spending, however, recessed to $8.2 billion, or a 2.2 percent share. The market share Internet ads have is expected to surpass that of newspaper ads in 214, at 19.6 percent and 16.7 percent, respectively. Internet ad spending in that year will exceed $13.8 billion, while newspaper ad spending will account for $88.1 billion, according to data from PwC and W&G. Internet Market In 2, the global Internet access spending market totalled US$137.6 billion, and rose to $228 billion in 29. With a 9 percent CAGR from 21 to 214, it is expected to reach $31 billion in 214. Total wired Internet access spending was $112 billion in 2, with nearly $7 billion from broadband, and the rest, $37 billion, from dialup. In 29, dial-up shrunk to $23.8 billion, and broadband almost doubled to $14.7 billion, making the total wired Internet access market $169. billion. Broadband spending will increase with a 9.7 percent CAGR from 21 to 214 and surpass $231.1 billion in 214, while dial-up will Global Advertising Spending and Market Share: Internet and Newspapers, US$ millions Internet: Wired and Mobile Advertising Spending Newspaper Advertising Spending 14, Internet: Wired and Mobile Market Share Newspaper Market Share 3 12, 1, 8, 6, 4, 2, ,36 111, , ,37 13, ,1 92, ,24 79,7 81,422 84,377 88, , ,642 66, , , , , , Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates WAN-IFRA 21 2