March 2015 Chairman’s Report

Progress the American Kennel Club is making.

New York, NY - As I am sure you will recall, before Ronald Reagan became President of the United States, he had a very successful career as a television and film star and as the head of the Screen Actors Guild. What you might not remember was his long-running role as GE spokesman. Starting in 1954 Reagan appeared as the host of the General Electric Theater every Sunday night. The GE slogan then was "progress is our most important product." And every Sunday night Reagan explained the progress GE was making.

Today, I will take my cue from President Reagan and talk about the progress the American Kennel Club is making.

Our progress is usually reported to you in year-over-year comparisons. Certainly that is good business practice. But I believe progress can be best understood when viewed over time. It's like watching the puppy at home grow over time versus seeing the littermate six months later at a show. The change is surprising even though your puppy has grown just as much.

A good place to start is a look at financial performance. Like your clubs, a strong financial performance means you can do more in the future. For the AKC, our ability to deliver our mission is made possible by the health of our finances. In 2010, our health wasn't as good as we would have liked. That year we had an operating loss of over $400,000. Staff and your Board worked together to address the business challenges with good results. For 2014, operating profit was almost $6 million. During that same five-year period from 2010 to 2014, AKC's total assets increased by one-third to almost $140 million.

Some of that growth has come from new programs like Canine Partners, which grew 600% to $900,000 in AKC revenue (and also delivered over $1.5 million in entry fees to clubs); CGC/Star Puppy which grew 54% to almost $1,000,000; GoodDog Helpline which ended its first year with revenues of almost $900,000; Global Services, which grew 145% to almost $300,000, and a brand new product – ReggieBox – which delivered almost $250,000 in its first year.

Our financial success allows us to deliver on our mission – and to keep expanding our programs.

Certainly, a crucial part of our mission is our events. Participation in our events grew from about 3 million entries in 2010 to about 3.2 million entries in 2014. Just to be clear, events do not make money. They never have. Our goal is to have them break even, but we have a long way to go. For now, we invest in our events and will continue to do so.

Our healthy financial picture enables our commitments of support for the AKC Canine Health Foundation, with cash and in-kind contributions totaling $800,000 last year; provides financial aid for veterinary students; provides the management of the AKC PAC, as allowed by Federal law; provides responsible breeding and dog ownership education; provides our government relations team headed by Sheila Goffe to help grassroots efforts for laws that truly benefit dogs; and provides a robust public relations program to engage the public with the AKC, build greater awareness of responsible breeders, and further the understanding and desirability of purebred dogs. None of that would be possible without a financial performance like last year.

For the first time in a decade, last year's total number of dogs registered was higher than the total of the prior year. Mark Dunn's leadership with the support of marketing, operations, and field staff all contributed to that progress through various initiatives, including: our Good Works campaign that directly links registration of a puppy to fund activities that protect and support all dogs, and the people who love them; our Breeder of Merit program which to date has directly resulted in the registration of more than 200,000 dogs; our Unregistered Dog Program that partners with breeders to help owners complete the registration of their new dog; and our newest initiative, Breeder EZ Reg, that allows breeders to complete a full litter registration online.

AKC's public outreach has enjoyed significant progress, also. Our PR program delivered 33% more clips in 2014 than 2010. And those clips had more views than ever before – from 4 billion in 2010 to a total audience of almost 26 billion in 2014 – and that was without Meet the Breeds in 2014.

In the past couple of years we have taken on many challenges that some people thought were not believable. Through our commitment to relentless positive action, we are on the path to making the unbelievable, achievable. While we continue to face challenges in registrations, event participation, club sustainability, and legislation, I am excited about how we are preparing for the future.

At the crux of our future plans is an understanding of some crucial facts. Our core constituency of clubs, exhibitors, judges, and breeders represents about 105,000 households. However, today in America about 57 million households have at least one dog. What causes that gap? Our research revealed the vast majority of people with dogs in their lives have great respect for the AKC. They just do not find us relevant to them. In fact many do not even think they are welcome.

The first step in changing that perception has been our social media efforts. For years our Facebook outreach languished in the tens of thousands – which makes sense if the prevailing thinking is we are not relevant to most dog owners. Two years ago we began changing that perception. Today, AKC's social media reaches almost three million people. Engagement, or people talking about us, peaked at an incredible 148%, a colossal number compared to benchmark and competitor engagement of less than 3%. In fact, the total reach of our entire social media audience was 35.6 million people last year.

There are numerous examples of how our social media and PR efforts are getting people to not accept perception as reality, but instead see our reality as their perception. The Los Angeles Times, which in the past accepted PETA's view, noted the following after visiting Meet the Breeds in New York last month:

This may or may not be news to PETA, but even if you're made a little queasy by the way humans have shaped the dog gene pool, and even if you'd never dream of not adopting from a shelter, you'd still be hard pressed to find among the Meet the Breed gang anything but animals that are deeply loved and responsibly bred.

"Responsibly bred." We are now seeing social media leading news media to the understanding that there are differences between breeders - and the AKC represents the responsible breeders. I believe we are at the tipping point of bringing the distinction of responsible breeders to the forefront of the conversation about purebred dogs. It is a conversation we will fuel through our current efforts and some new ones this year.

We recently released two breeder myth videos that speak to the positive qualities of purebred dogs and responsible breeders – and they reached more than 1.5 million people with the truth about responsible breeding.

The redesign of AKC.org will fast become the hub for everything about dogs, for everyone who loves dogs. Chris Walker and his team are creating a platform that will be the pathway to the 57 million dog households in America. As with any new digital release, there are bound to be corrections and improvements along the way – just like the apps on your phone get upgraded to improve the experience. The first phase of improvements to AKC.org are mostly executed now. Probably the best measurement of its success is growth in users – now over four million – with 58% being new visitors. In addition, the number of daily sign-ups to create a personal login went from 150 per day prior to the new website to 3000 per day after the launch – a 20X increase driven solely by the redesign!

We know new visitors come to AKC.org primarily to learn about breeds and find a responsible breeder. The ability for owners to upload photos of their dogs is a breakthrough concept that is singularly driving engagement to new heights. People who thought we would not welcome them or their dogs are amazed that we encourage them to share the photos of their purebred dogs on our website. Suddenly for them, AKC goes from not accepting of them and their dogs, to giving them a warm embrace. We are working with Parent Clubs to further enhance the new breed profile pages and improve the experience for the public.

Soon, we will launch a new breeder listing section with improved breeder profiles, including custom breeder websites. The new listing will include both breeders' dogs and rescue dogs from our Parent Club approved rescue network.

The website will also become the hub for our new health microsite – an education resource for breeders and owners. This will allow us to engage and educate a wide scope of breeders on best breeding practices and health screening. The health microsite works in tandem with the soon-to-be launched Bred with H.E.A.R.T. program that creates a resource for the general public to find puppies from responsible breeders who are demonstrating a validated commitment to continuing education and health testing. In addition, we will be announcing our new Chief Veterinary Officer very soon; the doctor will have an important role in this site, also.

As we are creating a new focus on breeds and breeders, we are also creating a new focus on our clubs. For those clubs interested in expanding their membership, we will have programs to inform and connect owners of the opportunities for their breed and their area – no matter what their interest might be. Stay tuned for more about those initiatives.

We recognize that not all dog owners have an interest in competing. Some just want to enjoy fellowship with a shared interest – their particular breed or community. The marketplace is a dynamic ecosystem that abhors a vacuum. Owners perceived a lack of organized interaction for fun, so they created their own. They are loosely called "meetup groups." They are ubiquitous and they are robust, with local membership that dwarfs ours. We have reached out to some to learn more and to understand how we could become part of that experience. I believe this concept could become a gateway to bringing new members to our clubs and new participants to our events - much like the Boy Scouts, Girl Scouts and 4-H clubs do now.

As a learning experience for us, we recently held a CGC test for a meetup group in New York and 18 dogs earned their title in one night. It was an amazing experience for the owners – they didn't realize their dogs could achieve success and they certainly did not realize there is a place for them in the AKC world. We learned an important lesson that night: inclusion goes a long way to change people's hearts and minds.

In 2015 we will be expanding our club event support program. We have an email-marketing program for AKC sanctioned matches that invites AKC registrants within 100 miles of the event to attract potential new exhibitors and club members. If you have a sanctioned match coming up, please notify Stephanie Smith (sxs2@akc.org) so we may be of help in promoting your match. There is no charge to the club for this service.

We are producing a Marketing the Sport eBook providing tips about how to best promote your shows, trials, and events. Interviews with successful cluster chairs about how they have increased show entries and public gate, successfully promoted their events, and recruited new club members will be included. The eBook will be available in the second quarter.

We have made great progress in the last five years. I am pragmatically optimistic that with your partnership, we will make even greater progress in the next five years. I believe that because I know we all do this for one common purpose.

About ten years ago, I brought two simple sentences to Dennis Sprung in response to his quest for a definition and rallying cry for the AKC.

"We're more than champion dogs. We're the dog's champion."

I know everyone on staff at AKC and all of you believe that, because you all live it.

Today, that commitment to dogs will help the American Kennel Club continue on its path of progress. We must believe in ourselves, take courage from our ideals, and stand tall. The dogs deserve nothing less.

As always, your comments and suggestions are most welcome at atk@akc.org.

Sincerely,
Alan Kalter
Chairman

Addendum: As requested at the Delegate meeting this past Tuesday, the link to the video shown at the meeting, God Made a Dog, can be found below. Enjoy.
https://www.youtube.com/watch?v=lJ7AfSO2fKs