Will News Corp get its apps right where NY Times may have gone wrong?

NewYorkTimesBuildingRumours that News Corp is launching a news app targeted at ‘millennial’ readers comes hot on the heels of The New York Times launching three new apps. The New York Times has admitted that subscription numbers for these weren’t as high as expected, blaming consumer confusion.

The common theme of both of these initiatives is the desire to attract and monetise different consumers by moving away from ‘one-size-fits-all’ product and subscription offerings.

It’s a smart move – identifying different consumer segments and adjusting the marketing mix to serve their needs. That could be with different products, such as Times Premier, different pricing models and promotions (The New York Times’ Opinion is $1.50 a week, for example) and different communication and channels.

But it’s hard to get right. To segment properly you need to collect and mine consumer data to create sensible and statistically distinct segments. Overlap or confusing segments will not gain traction and will fail or cannibalise sales. Fear of cannibalisation may be why there aren’t well-established pay-as-you-go models in digital targeting the casual segment, unlike with print newspapers, but with smart segmentation it could be done.

A good segmentation model has the following characteristics:

•    It describes homogenous groups that want and need different things – they don’t just look different but act differently – millennials may look different, but will they act how Murdoch might want them to, i.e. pay?

•    It can be measured, quantified and acted upon, so targets can be identified and reached – The New York Times’ problem seems to have been that it couldn’t reach the people its products were targeted at, and it may have overestimated the size of the groups.

•    It will achieve organisational acceptance and form the basis of all marketing and product investment decisions – often this means it tends to be ‘obvious’ or simple. If there was public confusion on who The New York Times apps were targeted at, it’s likely this was the same internally.

•    It generates higher returns than the cost of managing it – focus on the money.

I believe we will see a lot more of this from traditional media that is struggling to monetise those users unwilling to subscribe – they will segment this huge group and work out what to offer them. But they can’t just guess – they must research and analyse in depth to make sure they get it right. And new media that does not rely on subscription? If they are smart they will be using data collected about you to show you articles you will be interested in or advertisers’ products you like.

Whilst there are signs that traditional media is starting to understand that one-size-fits-all is never the best model, the lack of clear cut successes as they move away from this indicates they still have a lot to learn.

Nick Zarb is director at Simon-Kucher and Partners