This presentation gives an example of how market analysis can be done using micropayments for the online newspaper industry as an example

1. BizcampBe 2011 – Market Research & Case Study
Pieter Dubois (duboisp@myonline.be)

2. Why do market research?
Why not just, you know … build stuff?
Survivor bias – “It worked for Twitter, no?”
Building solutions looking for a problem
Is there a market … and if so, what is it?
Who are your customers … really?
What competitors are you up against?
Will your company make money in this market?
Market research answers these questions

3. Primary Vs. Secondary Market Research
Primary:
Direct feedback from end-users
How: Interviews, A/B testing, Surveys, Adwords
You generate data. Hard work but rewarding. Get out!
Secondary:
Analyst reports
Expensive
Almost but not quite what you need
Scour the Internet
Gold digging through trash
Google is your friend. Try also Brekiri.com

4. Market Sizing
Top Down:
Starting from population numbers, industry size,
geographies … casting a wide net
Narrowing down to market size by assumptions
Value Source
Population 305 million US Census
Dept. of
Working Population X 50.5%
Labor
Changing Jobs Annually X 15% Assumed
Using Online Job Postings X 50% Assumed
Willing to Pay $50 for
X 20% Assumed
Posting
Brekiri.com
Market Size in Revenue = $115.5 million

5. Market Sizing
Bottom up:
Starting from individual company numbers,
country data, visitors, links clicked, segments …
Aggregating up to market size using 80/20 rule
Gives a view on unit economics like revenue/user
Gives insight on who your customer base is
Example Mint.com (http://vimeo.com/6959602)
20m-65m users x $30/user CPM/yr = $0.6-$1.8B
Focus on your segment of the industry you are in

6. Addressable Market
This is the market that is available for capture by you
Example:
You make canned dog food … in Belgium
WW food market is $100 billion
Belgium has 2% of the WW market
Only 10% dog owners buy dog food
50% of sold dog food is canned
Addressable market is $100m, or 1 ‰ of market

7. Other considerations
Triangulating
Reconciling top down/bottom up market sizes
If similar – OK, otherwise redo.
Industry growth rates
Growing: lot of competition & innovation.
Stable: Consolidated. How to create space for you?
Dying: Cash flow generation is important.
Never say the market doesn’t exist
You’re probably not that original
Expensive to educate your customers
Competition shows there is a market

8. Case Study – The Digital Content market

9. Scavenging for Data
Press articles often contain conclusion of studies

10. Looking at drivers for Digital Content
Broadband, PC and mobile drive growth
%
90
Netherlands
80 Denmark
70 Canada
Australia
60
United States
50
Japan
40 United Kingdom
Germany
30
Finland
20
New Zealand Mintel Oxygen, comScore, Internet World Stats,
10 France
0 Point Topic, Plunkett Research, Ebay, PayPal,
eMarketer, Mastercard, Eurostat, Price
Waterhouse Coopers, the OECD, Research and
Markets, IFPI, IDC, Strategy Analytics,
WikiPedia, Lazard Capital Markets, World
Association of Newspapers, eMarketer, Outsell
Inc., Piper Jeffrey, InStat, Business Insight,
GroupM, Universal McCann, JP Morgan,
Datamonitor, Euromonitor, Duncan William and
Javelin Strategy & Research

11. Compare with parent Market
E-Commerce vs. Digital Goods Online News 6 -> 8.3
2011 E-Books 0.35 -> 9
2011 WW e-commerce Market
$870B Virtual goods 2.2 -> 6
2008 WW e-commerce market ($870 billion)
2008 Online Video Games 11 -> 24
($530 billion)
$530B Asia Online Video 1.2->8.5
20%
USA Online Music 4.2 -> 13.75
E-Commerce 34%
Asia
16%
USA 2013
45%
goods Digital World-wide digital goods market 2013
World-wide digital2008 market 2008 goods $70B
($25 billion) Virtual goods, 2.2 ($70 billion)
Europe $25B
39% Europe e-book sales US,
46% 0.35 Online news, 8.5 e-book sales US,
9
Virtual goods, 6
Digital goods is only Online news, 6
Online Music,
13.75
5% - 8% of e-commerce Online Music, 4.2
Online Video
Games, 11
All data comes from Online Film &
Video, 8.5
Online Video
Games, 24
different sources Online Film &
Video, 1.2

12. “Dude, don’t boil the Ocean. Choose a target market”
Adeo Ressi – Founder Institute
Online Newspapers
….
starting in Belgium
…
Then in Western
Europe

13. Newspaper Industry
Online vs. Offline
60% 52%
50%
40% 32% 34%
$6B
30% 19%
40%
20% 12% Google & Yahoo
6%
10%
60%
0%
Via Search
25% Online Ad Revenue
Offline Ad
Revenue
Only
10%
Online Ad Revenue
50-80% of revenues are from advertisements

14. Belgian Newspaper Industry
Concentrated Market
No individual Digital
Content figures available
Top-down doesn’t bring
us further …

15. Online Usage Patterns
Bottom Up Analysis – Finally
Kranten Visitors Page Requests Visitors Page Requests Visitors Page Requests
Daily Monthly (extrapolated) Yearly (extrapolated)
De_Morgen 93,910 518,670 2,817,300 15,560,100 34,277,150 189,314,550
De_Tijd_Website 123,636 873,091 3,709,080 26,192,730 45,127,140 318,678,215
DH.be_Website 132,149 1,193,217 3,964,470 35,796,510 48,234,385 435,524,205
Gazet_van_Antwerpen_Website 114,088 648,939 3,422,640 19,468,170 41,642,120 236,862,735
GRENZECHO.net 4,380 37,490 131,400 1,124,700 1,598,700 13,683,850
Het_Belang_van_Limburg_Website 99,776 638,619 2,993,280 19,158,570 36,418,240 233,095,935
HLN.be—7sur7.be_Website 577,989 5,415,047 17,339,670 162,451,410 210,965,985 1,976,492,155
L’Echo_Website 35,671 258,623 1,070,130 7,758,690 13,019,915 94,397,395
La_Libre.be_Website 68,941 382,782 2,068,230 11,483,460 25,163,465 139,715,430
LeSoir.be_Website 153,612 1,046,322 4,608,360 31,389,660 56,068,380 381,907,530
L’avenir_Website 74,832 477,193 2,244,960 14,315,790 27,313,680 174,175,445
Nieuwsblad_Website 359,958 2,150,925 10,798,740 64,527,750 131,384,670 785,087,625
Standaard_Website 260,266 1,552,923 7,807,980 46,587,690 94,997,090 566,816,895
Standard_Sudpresse 15,021 78,486 450,630 2,354,580 5,482,665 28,647,390
Sudpresse_Website 28,811 174,831 864,330 5,244,930 10,516,015 63,813,315
Totaal 2,143,040 15,447,158 64,291,200 463,414,740 782,209,600 5,638,212,670
Average 37,948 371,487 4,286,080 30,894,316 52,147,307 375,880,845
www.cim.be

16. Calculation of Belgium and Western-Europe
Belgian addressable market is 60-80 million Euro
Average rule: # page requests * 0,15 Euro * 10% readers
80-20 rule: 10% readers * 1 Euro day pass
West-European market online news: 2.3 billion Euro
Through proxy of Belgian offline market
Belgium online market is 6.5% offline of 900m Euro
Land Oplage Oplage opbrengst Reclame opbrengst Totale opbrengst
Frankrijk 8.8 miljoen 2,640 miljard 1,785 miljard 4,4 miljard
Nederland 4.4 miljoen 1,320 miljard 1,771 miljard 3,1 miljard
Engeland 19 miljoen 5,7 miljard 5 miljard 10,7 miljard
Duitsland 24 miljoen 7,2 miljard 8,45 miljard 15,65 miljard
6.5% of 33.5 billion Euro + 60m Euro = 2.3 billion Euro

17. What is our fair market share?
Assume 10% readers prepared to pay
Recall 19% WTP & 27% make 82% of page requests.
Assume 25% of pages payable
Assume only those 27% loyal readers pay.
Assume 0.1 Euro is the price per page
Assume 10% profit margin
Assume 10% market share (15 newspapers)
82% of 375million average page requests/year x
25% paying x 0.1 Euro per page x 10% profit margin x
10 % market share = 1.15 million Euro in Belgium
In Europe = 2.3b Euro x 10% x 10% x 25%= 5.75m Euro

18. Conclusion
You won’t find your numbers pre-canned
Assumptions make conclusions uncertain
But will give you ball park figures that you can act on