Competitive Position and Analysis

Competitive Position and Analysis
Daniel Moreno
Foundations of Business Strategy
1
Competitive Position and Analysis
Introduction
ElDiario.es, as they state in their webpage, is a new Spanish digital newspaper “with a
focus on politics and the economy in its broadest sense: the one that affects people
more than the parties or markets..”. Established in August 2012, they try to offer
rigorous, independent and honest journalism, with focus in freedom, justice, solidarity,
sustainable progress of society and the general interest of citizens.
50% of the business has been financed by its own workers, as a key point of their
strategy to maintain economic independence. While traditional press in Spain is
struggling to survive due to the economic recession and the decrease of the
advertising market, ElDiario.es has managed to get a nearly flat balance in their first
year of life. Now they face the challenge to improve their competitive position and
economy of scale.
Competitive Position
With 4,7 Million visits in August 2013, and after 12 months of daily publishing,
ElDiario.es has built a known brand, recognized by its exclusive articles. They also have
a good position in social media. In its first year of pusblishing, ElDiario.es achieved
159.000 followers in Twitter and 113.382 likes in Facebook. [Exhibit 1]
Regarding the accountancy results, from August 2012 to September 2013 ElDiario.es
had an income of 841.744€, 68% generated from Advertisement and 30% via
subscribers. The Outcome for the same period was 842.123€, obtaining a nearly flat
balance. 42% of the outcome was assigned to salaries, 37,5% to affiliate writers and
press agencies and the rest to general expenses. Taking into account the hard times for
the industry, the first year balance is a success. [Exhibit 2]
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Competitive Position and Analysis
The 5.290 subscribers of ElDiario.es pay a 5€/month fee to obtain some added value,
such as early access to articles, highlighted comments on the website, free quarterly
printed magazines… But on top of this there’s a high loyalty relations between the
newspaper and its subscribers. Most of them are located on the areas with associated
regional editions, so new regional editions will be added shortly. [Exhibits 3 and 4]
ElDiario.es plays a small role on the Spanish online media market. With an average
market of 900 million euros a year on online advertisement in Spain, their 575K€
represents just a 0,06% of share. But with 4,7 Million visits in August 2013, and after
12 months of daily publishing, they’ve built a known brand, recognized by their
exclusive articles. [Exhibits 5 and 6]
Spanish Media Industry
The Spanish online media market has an intense level of rivalry, due to the high range
of competitors, attracted by the easy access to the market. The high offer and the
innovations on the online advertisement models and delivery processes reduced the
economic margins. The global recession reduced the demand for advertising space,
and traditional media with high cost structures are forced to reduce their staff and
their value proposition to maintain profitability.
Despite the availability of external press agencies to get external content, exclusive
articles, one of the main values of a newspaper, are usually provided by internal staff,
which increases the costs.
The improvements of online content publishing technologies and advertising made
really easy to entry in the online media market, and we have a lot of substitute
products, such as other online newspapers, specialized blogs, etc… [Exhibit 11]
Having a look at the Industry Environmental Analysis [Exhibit 7] we discover a decrease
in online press and information consumption, from 57,2% in 2012 to 50,8% in 2013).
While the increase of adoption of Internet in Spain is slowing down, the number of
online news readers is also decreasing.
Apart from that, the economic recession has severely impacted the investment in
advertising, and the expense is migrating from display to search engines.
On the other hand, we can see an opportunity in the increase of users using mobile
apps, from 18,9% to 20,9% in the last study of EGM (Spanish Association for Media
Investigations) [Exhibit 8]
In [Exhibit 12] we can discover ElDiario.es’ main competitors could be could be splitted
between:
1. Online versions of traditional spanish newspapers. They are defined by a high
cost structure wich is only supported by their belonging to big media groups. In
the last 5 years the top traditional newspapers ‘El País’, ‘El Mundo’, ‘ABC’ and
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Competitive Position and Analysis
‘La Razón’ have lost 40% of their sales, and they are struggling to survive. Some
months ago they started massive redundancy processes.
2. Other independent online newspapers: These online publications have
appeared as a result of the transfers of offline to online readers for the last 5
years. They are usually based on low cost structures and small teams.
3. Blogs, blog networks and alternative online publications: these players base
their strategy on the specialization of their contents and their position on
search engines results for queries and readers loyalty. The appeareance of new
advertisement platforms allowed them to take a share of the top
advertisement market, usually closed to main media groups.
We can see in the SWOT Analysis of [Exhibit 9] that ElDiario.es has a strong position in
this scenario. Their quality journalism value proposition, well aligned with Spanish
latest social trends, is based on a low cost structure, with a high ability to scale.
The fact that 50% of the ownership of the bussines is in the workers’ hands and the
subscription commercial system avoids dependencies on economic groups and
permits a high level of exclusive information. This positions ElDiario.es in a niche
strategy for those readers looking for a different approach on journalism. They are
focused in maintain the independency through economic sustainability, and their
members, which are increasing every month, understand the monthly fee as a way to
obtain trustable information.
On the other hand, the fact of not belonging to a bigger media group limits their
capacity to offer all the extra categories a reader would expect on a newspaper, like
sports, music, lifestyle, etc.. ElDiario.es is currently trying to solve this issue adding
affiliate websites, like Vertele.es for TV contents. Also the lack of local articles is being
addressed by adding affiliated journalists to the staff.
Also the low economy of scale, the limited articles categories and the lack of
integration with mobile devices do not allow to adopt alternative commercial models,
like newsletter marketing or online lead campaigns to diversify their income. The
limited local approach and the lack of additional multimedia content moves readers
away to get information about their area.
Apart from that, having a 68% of the income generated via advertising puts a lot of
pressure on the subscription levels to maintain the profits, mainly when Internet
advertising is migrating from display to search engines, and lately privacy restrictions
over cookies limit advertising posibilities.
Taking all these into account, ElDiario.es could take advantage of the increase og
mobile devices and use of apps, the new types of online advertisement and the online
press markets trend to Online Quiosks systems, like Orbyt and KioskoyMas in Spain.
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Competitive Position and Analysis
Conclusion and recommendations
ElDiario.es has a good competitive position in the current online media press market.
Their ultra low cost strategy, the high quality journalism brand reader perception, the
loyalty of their subscribers and the economic independence made possible a good
growth in their first year of life. The hard times for the traditional media open a bunch
of exiting opportunities, and ElDiario.es has the proper structure to scale the business
without taking a high risk.
But in order to success in this scenario, ElDiario.es needs to improve in some areas:
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Mobile Strategy: Taking into account the expected growth for the channel,
having the website adapted to mobile devices is a must. A responsive design
template would improve the SEO (Search Engine Optimization) results and
provide a much better user experience. IOS and Android Apps would also
improve the user experience, and could add additional revenues as a
marketplace for editorial and multimedia business. Suscribers may have
additional values based on the app, like free access to publications.
Diversification: 98% of the income relays on advertising and subscriptions. A
change in the internet consumption trends may put in risk the viability of the
project. The quality perception of ElDiario.es, the staff and the contents may
favour other income channels, like private education (journalism masters and
courses) or publishing house business.
Content: The limitation on the areas of the information provided forces readers
to consult other sources of information. Extending the affiliation agreements
with niche websites (sports, motor, travel…) may improve the commercial
results.
Commercial offer: An increase on the readers and subscribers would allow to
extend the posibilites of the commercial strategy, adopting new advertising
models (Affiliation, RTB, CPA, Newsletter Marketing…). Also a more aggressive
approach on the subscription program, like external Pay per Lead campaigns or
viral free time-limited membership may increase the number of subscribers to
a level that would allow an extensive loyalty program, wich would offer
discounts on others businesses and new commercial opportunities.
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Competitive Position and Analysis
Exhibit 1
ElDiario.es Audience
(*) OJD (www.ojdinteractiva.es) is a private Spanish media audit agency
Source: http://www.eldiario.es/primeraniversario/
Exhibit 2
ElDiario.es Accountancy results (August 2012 – September 2013)
Source: http://www.eldiario.es/primeraniversario/
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Competitive Position and Analysis
Exhibit 3
ElDiario.es percentage of paid member in every spanish county over total
subscriptions (August 2013)
Source: http://www.eldiario.es/primeraniversario/
Exhibit 4
ElDiario.es associated regional editions (August 2013)
Source: http://www.eldiario.es/primeraniversario/
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Competitive Position and Analysis
Exhibit 5
ElDiario.es audience versus online press competitors (August 2013)
Source: OJDinteractiva.es
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Competitive Position and Analysis
Exhibit 6
Google Brand Searches for ElDiario.es and main traditional competitors
Source: Google Trends
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Competitive Position and Analysis
Exhibit 7
Spanish Media Industry Environmental Analysis
Industry Analysis
Demographic Trends
Socio-Cultural Influence
 Decrease in press and information
 Growing concern on politics,
consumption in Internet (from
environmental issues & human
57,2% in 2012 to 50,8% in 2013)
rights
 Younger generation habits for
 Increase in multimedia
information consumption are
consumption (text, audio, video)
focused on online media
 Social tendence for paid online
 The trend in use of Internet in
press (online quiosk)
Spain is slowing down
Technological Developments
 High online advertisement
technology development in the
last years
 High availability of Press Content
Management Systems
 Recent developments on Online
Quiosk Systems (paid press, own
systems and third party, Apple…)
Political-Legal Pressures
 Economical crisis puts under
pressure the left-wing media
Macroeconomic Impacts
 Global crisis affects investment in
advertising
 Main media groups in Spain
struggling to survive due to
economic crisis and high cost
structure. 4 main tradicional
newspapers in Spain have lost
40% of their sales in the last 5
years
 Global trend in advertising
expense migration from display to
search
Global Trade Issues
Source:
InfoAdex - www.infoadex.es/InfoAdex_Resumen_Est_Inv_2013.pdf
INE – Spanish National Statistics Institute – www.ine.es
VOZpopuli - http://vozpopuli.com/empresas/32472-el-pais-el-mundo-abc-y-la-razon-han-perdido-el-40-de-sus-ventasen-los-cinco-anos-de-crisis
Price WaterHouse Cooper:
http://kc3.pwc.es/local/es/kc3/publicaciones.nsf/V1/3E1934DE8999D0F3C1257933004F9F4D/$FILE/resumenejecutivo-gemo2011.pdf
IAB - http://www.slideshare.net/IAB_Spain/estudio-de-inversin-en-publicidad-digital-total-ao-2012%20%7C
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Competitive Position and Analysis
Using mobile Apps
Reading Information and News
Exhibit 8
Spanish audience Internet services used last month (May 2013)
Source: EGM (Spanish Association for Media Investigations)
http://www.aimc.es/-Audiencia-de-Internet-en-el-EGM-.html
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Competitive Position and Analysis
Exhibit 9
SWOT Analysis
ElDiario.es SWOT ANALYSIS
Strengths
Weaknesses
 Low cost structure and processes
 Low level of economy of scale
 High ability to scale
 Limited categories for news (just
politics, culture, opinion blogs and TV
 50% of the ownership of the
information)
bussines is in the workers’ hands
avoids dependencies on economic
 Limited local approach
groups
 No connections or belonging to bigger
 High level of exclusive information
media groups, wich limits
crosselling/crossreading opportunities
 Quality journalism perception
among readers
 No Multimedia offer (Audio, Video)
 Subscription commercial system
 Low level of diversification, 99% of the
income is generated through
 Good connection with left party,
advertisement and readers’ monthly
sustainability and environmental
tendencies in society
fee
 Regular publication in spanish main  Low integration with mobile devices
newss aggregator meneame.net,
boosting the site traffic
 Additional contents and cultural
offerings to paid members
 Quality printed magazine
distributed quarterly to paid
members
Opportunities
 Mobile devices and use of apps
increasing, with the possibility of
offering added value to paid
members or in-app purchases
 Online market for other
advertisement areas (Business,
Motor, Travel…)
 New types of advertisement
 Online Press Markets trend to
Online Quiosks systems
Source:
Threats
 Internet advertising migration from
display to search
 Privacy restrictions over cookies limit
advertising posibilities
 Spain Internet adaoption trend stuck
below 60%
 Decrease of information/press
consumption in the last years
InfoAdex - www.infoadex.es/InfoAdex_Resumen_Est_Inv_2013.pdf
INE – Spanish National Statistics Institute – www.ine.es
VOZpopuli - http://vozpopuli.com/empresas/32472-el-pais-el-mundo-abc-y-la-razon-han-perdido-el-40-de-sus-ventasen-los-cinco-anos-de-crisis
Price WaterHouse Cooper:
http://kc3.pwc.es/local/es/kc3/publicaciones.nsf/V1/3E1934DE8999D0F3C1257933004F9F4D/$FILE/resumenejecutivo-gemo2011.pdf
IAB - http://www.slideshare.net/IAB_Spain/estudio-de-inversin-en-publicidad-digital-total-ao-2012%20%7C
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Competitive Position and Analysis
Exhibit 10
ElDiario.es Capability Analysis
Processes
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People (skills)
Systems/Tech
Alignment &
Sustainability
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Low cost process structure
Main articles provided by internal staff, focused on exclusive
contents
External press agencies to support contents
Additional contents by affiliated writers (blogs and opinion)
Affiliated blogs (Vertele.com)
Content distributed through webpage
Advance of next day headlines sent by email
Headlines syndicated in vertele.es
Articles frecuently promoted in Meneame.net
Printed magazines distributed quarterly through regular mail to
the membership network
Small team of highly and well known experienced journalists
Low cost Content Management and newsletters systems
High scalability
Strong relationship with members
Strong implication in social movements and left wing politics
No dependency on economic groups
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Competitive Position and Analysis
Exhibit 11
ElDiario.es Porter’s Five Forces Analysis
Suppliers
Entry
• Main exclusive articles provided by internal staff
• Several Press Agencies available to get external content (+)
• High cost of Press Agencies, and their contents should be
processed in order to get original articles (-)
• Low barriers to entry online media market (-)
• Low barriers to scale, national or international, or even in
business model (+)
Rivalry
· Intense rivalry with low margins (-)
· High range of competitors, online & offline (-)
· Traditional spanish media struggling to survive due to high cost structure
and reduction of advertising market (+)
· Exit barriers are low (+)
Substitutes
• Other online newspapers (-)
• Traditional media (online & offline) (-)
• Specialized blogs (-)
• Search engines and web pages (space for advertisers) (-)
• Alternative online media (video, radio...) (-)
Buyers
• Readers have easy access to several free sources on online and
offline information (-)
• Strong relationship with clients, +5000 paying a monthly fee (+)
• Online information is easier to access and carry (mobile devices)
Source: INE.es and http://www.eldiario.es/escolar/gastamos-dinero-ano-eldiarioes_6_176442363.html
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Competitive Position and Analysis
Exhibit 12
Competitor Analysis
Performance Metrics
ElDiario.es
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Traditional Newspapers
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Independent Online
Newspapers

Good economic
performance during their
first year of life
Increasing trends of readers,
traffic and subscribers
Very bad economic
performance during for the
last 5 years
Main 4 players in Spain lost
40% of their readers in the
last 5 years
Good performance on
readers and traffic
Capabilities
Objetives/Values
Strategy
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Offer serious, high
quality and
independent
information to their
readers

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Blogs, Blog Networks and
online alternative
publications

Good performance on
readers and traffic

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High scalability at a low cost
Loyalty relationship with
readers
Exclusive information and
articles
Low scalability due to high
cost structure
Capable of offering
multimedia information
(audio, video…)from their
Media Group
High scalability at a low cost
High volume of information
(press agencies)
Low level of exclusive
information

Their objetive is the
leadership in the
spanish media
industry

High scalability at a low cost
Loyalty relationship with
readers
Exclusive information and
articles

Offer free access to
quality information to
their readers
Earn enough economy
of scale to provide
extra value to
advertisers
Offer free access to
specialized quality
information to their
readers
Earn enough economy
of scale to provide
extra value to
advertisers
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
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Niche ultra low cost strategy to
avoid economical dependance.
Focused on politics and culture
information
Alternative revenue sources
(subscription)
Move to an online kiosk
newsstand model to offer a
medium price subscription
model based on mobile apps

Offer as much information as
possible in all possible
categories at a sustainable
cost


Niche ultra low cost strategy
Focused on specialized areas
information
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Competitive Position and Analysis
References
INE: Instituto Nacional de Estadística
http://www.ine.es/jaxi/menu.do?type=pcaxis&path=/t12/a110/a01&file=pcaxis&L=0
OJD Interactiva:
http://www.ojdinteractiva.es/muestra_acta/medios-digitales/734/09/2013/
http://www.ojdinteractiva.es/muestra_acta/medios-digitales/734/09/2013/
El Diario.es
ElEconomista.es
http://www.eldiario.es/escolar/gastamos-dinero-ano-eldiarioes_6_176442363.html and
http://www.eldiario.es/primeraniversario/ - http://www.eldiario.es/redaccion/eldiarioes-premiado-partida-premiosperiodismo_6_181341869.html
http://ecoteuve.eleconomista.es/publicidad/noticias/5203093/10/13/Los-medios-confirman-los-brotes-verdes-en-lainversion-publicitaria-espanola-.html
ThinkEpi – On Digital Kiosks and Newsstands
http://www.thinkepi.net/prensa-digital-2011-2012
InfoAdex – Advertisements analysis
http://www.infoadex.es/estudios.html#
Vozpopuli
http://vozpopuli.com/empresas/32472-el-pais-el-mundo-abc-y-la-razon-han-perdido-el-40-de-sus-ventas-en-los-cincoanos-de-crisis
Price WaterHouse Cooper
http://kc3.pwc.es/local/es/kc3/publicaciones.nsf/V1/3E1934DE8999D0F3C1257933004F9F4D/$FILE/resumen-ejecutivogemo2011.pdf
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Competitive Position and Analysis
IAB Advertising Studies
http://www.slideshare.net/IAB_Spain/estudio-de-inversin-en-publicidad-digital-total-ao-2012%20%7C
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