BizcampBe 2011 – Market Research & Case Study
Pieter Dubois ([email protected])
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
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
Value Source
Population 305 million US Census
Working Population X 50.5% Dept. of Labor
Changing Jobs Annually X 15% Assumed
Using Online Job Postings X 50% Assumed
Willing to Pay $50 for Posting
X 20% Assumed
Market Size in Revenue = $115.5 million Brekiri.com
Market Sizing
Top Down: Starting from population numbers, industry size, geographies … casting a wide net Narrowing down to market size by assumptions
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
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
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
Case Study – The Digital Content market
Scavenging for Data
Press articles often contain conclusion of studies
Looking at drivers for Digital Content
Broadband, PC and mobile drive growth
0
10
20
30
40
50
60
70
80
90Netherlands
Denmark
Canada
Australia
United States
Japan
United Kingdom
Germany
Finland
New Zealand
France
%
Mintel Oxygen, comScore, Internet World Stats, 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
e-book sales US, 0.35
Virtual goods, 2.2
Online Video Games, 11
Online Film & Video, 1.2
Online Music, 4.2
Online news, 6
World-wide digital goods market 2008 ($25 billion)
e-book sales US, 9
Virtual goods, 6
Online Video Games, 24
Online Film & Video, 8.5
Online Music, 13.75
Online news, 8.5
World-wide digital goods market 2013 ($70 billion)
Compare with parent Market
E-Commerce vs. Digital Goods
USA34%
Europe46%
Asia20%
2011 WW e-commerce Market($870 billion)
USA45%
Europe39%
Asia16%
2008 WW e-commerce market ($530 billion)2008 $530B
2011 $870B
2008 $25B
2013 $70B
E-Commerce
Digital goods
Online News 6 -> 8.3 E-Books 0.35 -> 9 Virtual goods 2.2 -> 6 Online Video Games 11 -> 24 Online Video 1.2->8.5 Online Music 4.2 -> 13.75
All data comes from different sources
Digital goods is only 5% - 8% of e-commerce
“Dude, don’t boil the Ocean. Choose a target market”
Adeo Ressi – Founder Institute
Online Newspapers …. starting in Belgium … Then in Western Europe
Newspaper Industry
50-80% of revenues are from advertisements
25% Offline Ad Revenue
Only
10% Online Ad Revenue
Online vs. Offline
$6B
0%
10%
20%
30%
40%
50%
60%
6%
32%
19%
52%
12%
34%
40% Via Search
Google & Yahoo
60% Online Ad Revenue
Belgian Newspaper Industry
Concentrated Market
No individual Digital Content figures available
Top-down doesn’t bring us further …
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
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
6.5% of 33.5 billion Euro + 60m Euro = 2.3 billion 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
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
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
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