1. 1 Power User 2004 Newspapers' Online Audience in a Broadband World Michael Fibison Assistant Director, Digital MORI Research Michael_Fibison@moriresearch.com 952.835.3050, ext. 232

2. 2 In This Presentation  Business Model Review  Existing and Emergent Models  Study Overview & Key Findings  Sites and Methods  Power User  Who are They?  What are Their Content Interests?  Marketshare  Online/Print Interplay  Advertising & Commerce  Recommendations

3. 3 Sites involved The 2004 sitesThe 2004 sites  AJC.com  AZCentral.com  Boston.com  ChicagoTribune.com  ContraCostaTimes.com  DallasNews.com  LubbockOnline.com  MaineToday.com  NewsOK.com  QuadCityTimes.com  SignOnSanDiego.com  TBO.com Interviews  2,000 Phone Interviews  23,414 News sites Fielded in November-December The 2004 sitesThe 2004 sites  AJC.com  AZCentral.com  Boston.com  ChicagoTribune.com  ContraCostaTimes.com  DallasNews.com  LubbockOnline.com  MaineToday.com  NewsOK.com  QuadCityTimes.com  SignOnSanDiego.com  TBO.com Interviews  2,000 Phone Interviews  23,414 News sites Fielded in November-December

4. 4 Comparisons & Weighting  Methodologies –General Internet Users 18-minute telephone survey Random-digit dialing Must have used Internet in past month National sample of 2,000 –Online Newspaper Users Online “pop-up” Survey 12 Sites, chosen by NAA Minimum of 1,000 per site  Weighting –General/Phone Weighted to U.S. Census for age, gender, ethnicity & census zones –Online Data balanced across markets Respondents

5. 5 Dominant online business models  Classified upsells:  Allocation model, forced bundles, upsell  Enhanced classifieds products:  Real estate builder, agent, broker and apartment and rental packages, auto dealer inventories, employment products/services  Banner ad sales:  National sales, network sales, i.e. Real Cities network, remnant deals  Local sales  Rich media  Sales blitzes  Email campaigns:  Contests and rewards programs  Direct mail and email bundled buys

6. 6  Digitized Display Ads:  Upsell and allocation models  Search  Local search – opportunities  Yellow Pages  Contextual Search  Google Ads  Paid Content  Subscription to Web content  News archives  Packer Insider/Journal Interactive  Digitized versions/subscriptions  NYTimes News Tracker  Online only classifieds Emerging online business models  Digitized Display Ads:  Upsell and allocation models  Search  Local search – opportunities  Yellow Pages  Contextual Search  Google Ads     

7. 7 Key Findings  Connectivity: Home broadband doubles, affecting everything  Competition: Yahoo! remains threat; AOL declines  Utility: After news, top online content drivers are online banking, maps and movie times  Tracking: Number of people paying for online content doubles from 2002  Google: Search site goes from 0 to superpower in news, entertainment and shopping In the distant future, historians will have a common term for the period prior to the appearance of Google: the Dark Ages. -- Joel Achenbach, WashingtonPost.com In the distant future, historians will have a common term for the period prior to the appearance of Google: the Dark Ages. -- Joel Achenbach, WashingtonPost.com

8. 8 Key Findings  Buyers: Seven in 10 newspaper Web site users have bought online in the past month  Influencing: Internet, TV & newspapers seen as equals for influencing purchases  Disintermediation: Online store sites (Target.com) show growth in online shopping; newspaper sites flat

9. 9 Profile of a Power User Why advertise to NP.com users? Because they’re not losers. Who uses newspaper Web sites? –84 percent recently shopped online –82 percent recently bought online –88 percent are employed –69 percent are online daily @ work –63 percent check news daily –58 percent frequently bank online –57 percent have home broadband –54 percent have college degrees – Mean age: 38 – Income: $71,000 – Hours online/week: 19

10. 10 Hours Spent Online Mean, Past Seven Days Base: ’02 & ’04 Telephone respondents; ’02 & ’04 Online respondents %

11. 11 Most Frequently Go Online Base: ’02 & ’04 Telephone respondents; ’02 & ’04 Online respondents % Power Users

12. 12 Type of Internet Connection Base: ’02 & ’04 Telephone respondents; ’02 & ’04 Online respondents %

13. 13 Times Go Online Daypart Trending; Note modified dayparts Base: ’02 & ’04 Telephone respondents; ’02 & ’04 Online respondents % %

14. 14 Content: A Need to Know News Content Utility & Functionality Power User Differences Paid Content Pioneer X plaque, launched 1972. Currently 6.5 billion miles from Earth, still communicating.

15. 15 Content & Services Used Most Often Combining Daily, Several times a week & Several times a month Base: ’02 & ’04 Telephone respondents; ’02 & ’04 Online respondents News Hounds

16. 16 Content & Services Used Most Often Combining Daily, Several times a week & Several times a month Base: ’04 Telephone respondents; ’04 Online respondents

17. 17 Paid for Online Content/Services Past Year Base: ’02 & ’04 Telephone respondents; ’02 & ’04 Online respondents % Most likely to pay: - Men - Broadband users - Newspaper site users

18. 18 Local Online Marketshare Online Reach –The Issue of Never –News –Entertainment Alternate Distribution Courtesy Parul Vora, MIT Lab new media scientist

19. 19 Reach: EVER used Internet for… The Issue of Never Phone ‘02 Phone ‘04 Base: ’02 & ’04 Telephone respondents Phone ‘04 Phone ‘02 Local News Local Entertainment Info

20. 20 Reach: Ever Used Online for Local News/ET Demographic Insights Base: ‘04 Telephone % %

21. 21 Marketshare: Local News Online Sources Base: ’02 & ’04 Telephone & ’02 & ’04 Online respondents – used online service for local news past 6 months % %

22. 22 Marketshare: Local Entertainment Online Sources Base: ’02 & ’04 Telephone & ’02 & ’04 Online respondents – used online for local entertainment past 6 months % %

23. 23 Interest in Receiving News On… Shown: Very/Somewhat Interested Base: ’02 & ’04 Telephone respondents; ’02 & ’04 Online respondents %

24. 24 Online/Print Interplay Newspaper Readership Audience Duplication Effect on Other Media Why Use Newspaper Sites Instead of Print Newspapers ‘The Future of the Newspaper is printed via Radio’ Teknik för Alla, Swedish popular science magazine Issue 5, March 29th, 1940

25. 25 Read Print or Online Newspaper, Past Week Demographic Insights Base: ‘04 Telephone % %

26. 26 Duplication: Newspaper Print/Site Read in the Past 7 Days Market Average Read Print Only - 55-plus: 68% - Modem users: 60% Base: ’04 Telephone respondents Read Online Only - 18-34: 8% - Home broadband: 7% Read Neither - 18-34: 30% - Earn <$50k: 25% Demographic Insights

27. 27 Media Use Since Reading Online Newspapers % Saying “About the Same” Base: ’02 & ’04 Telephone respondents; ’02 & ’04 Online respondents read online in past 6 months %

28. 28 Media Use Since Reading Online Newspapers % Saying “Use Less” Base: ’02 & ’04 Telephone respondents; ’02 & ’04 Online respondents read online in past 6 months %

29. 29 Why Use Internet instead of Print Base: ’02 & ’04 Telephone respondents; ’02 & ’04 Online respondents read online in past 6 months Expectation is for more …

30. 30 Online Advertising Local Advertising Source Influencing Purchases Frequent Behaviors Classified/Display Online Bundling Expectations

31. 31 Primary Source for Local Advertising Base: ’02 & ’04 Telephone respondents; ’02 & ’04 Online respondents

32. 32 Advertising Influenced to Make Purchase Base: ’04 Telephone respondents; ’04 Online respondents

33. 33 Frequent Shopping Behaviors Combining Daily, Several times a week & Several times a month Base: ’04 Online respondents; ‘04 Telephone respondents

34. 34 Print-to-Online Advertising Ever Used Base: ’02 & ’04 Telephone respondents; ’02 & ’04 Online respondents

35. 35 Interest in Print Classifieds Online Base: ’04 Telephone respondents; ’04 Online respondents 83% 64%

36. 36 Online Sellers Sold online in past six months? Base: ’02 & ’04 Telephone respondents; ’02 & ’04 Online respondents Telephone E-bay (77%) Half.com (4%) Amazon.com (3%) AOL (1%) Newspaper site (4%) Other local media site (4%) Other (20%) Base: If sold online Online E-bay (77%) Half.com (9%) Amazon.com (8%) Newspaper site (8%) Yahoo! Classifieds (3%) AOL (1%) Other (15%) Top Sources

37. 37 Online Commerce Online Shoppers Online Buyers Amount Spent Online Online Sellers

38. 38 Researched Goods/Services Online Past Six Months Base: ’04 Telephone respondents; ’04 Online respondents Phone ‘04 Online ‘04 75% of online respondents have researched merchandise, goods or services online in the past month

39. 39 Purchased Merchandise, Goods or Services Online Past six months Base: ’02 & ’04 Telephone respondents; ’02 & ’04 Online respondents 68% of online respondents purchased something online in the past month.

40. 40 Amount Spent Online Base: If made purchase online past six months, ’02 & ’04 Telephone & Online respondents Mean Spent Online Phone 2002: $990 Phone 2004: $980 Online 2002: $1,190 Online 2004: $902

41. 41 Sites Used to Research Purchases Past six months Base: ’04 Telephone respondents & ’04 Online respondents researched on Internet past six months Phone ‘04 Online ‘04

42. 42 Wrapping Up Conclusions & Next Steps Audience Content Marketshare Media Interplay Advertising Commerce

43. 43 Key Findings: Audience & Content Audience –Newspaper site users are Power Users. They are: Better educated and more likely to be employed Spend more days and more time online than general Internet user More likely to have home and office broadband access –Home broadband use has skyrocketed from 2002 –Influence of dayparts increases as morning/night use increase Content –Breaking news, national/world news nearly as hot as e-mail –Utility features - movie times, maps - drive second-tier frequency –Online banking growth offers opportunities in audience & revenue –Home broadband increases online use of all content categories –Use of paid content has grown twofold from 2002

44. 44 Key Findings: Marketshare & Media Marketshare –Half of online users have never gone online for local news –Local newspaper sites are No. 1 online destination for local news –The Google Factor: 2002: 3 percent of online users go to Google for local news 2004: 39 percent of online users go to Google for local news Newspaper sites trail Yahoo! and Google for local entertainment –Interest in receiving info via e-mail remains steady; wireless falls Media Interplay –75 percent of online users read printed newspapers –Duplication 54 percent read print only 20 percent read print and online 6 percent read online only

45. 45 Key Findings: Advertising & Commerce Advertising –Print newspapers are No. 1 source of local advertising –The Internet influences purchases as much as TV & radio, but: Google and store Web sites are top choice Newspaper sites lag as online sources for informing purchases –Online users are very interested in seeing print classifieds online –Interest and use of online display ads shows promise Commerce –75 percent of NP site users have shopped online in past month –70 percent of NP site users have bought online in past month –Search engines are prime sources for initiating online commerce –‘Old’ directory services & functionality may be due for comeback

46. 46 What can I do? Examine existing business models –Based on daypart use of content, focus existing website users on classifieds and shopping opportunities –Tailor sales collateral to exploit demographics of online audience – Power Users are Power Shoppers Train print sales staff on the value of online and then give them incentives and goals (and give managers goals and incentives) Examine emerging business models –Know your marketplace and try new things Will paid content work for you? Will digital subscriptions sell? Should you develop or partner for local search? How do you continue the use of display ads online? How do you grow online-only classified sales?

47. 47 Thanks Michael Fibison MORI Research Biz: 952.835.3050 Cell: 651.324.1244 E: Michael_Fibison@moriresearch.com Available online: http://www.digitaledge.org/